Panasonic: A Case Study on Constant

Change and Reinvention of a World Brand

Uli Mathies

Abstract
Panasonic’s nearly one hunderd-year history can be divided into several phases.
The constant factor in Panasonic’s history was—and is—change. And this may
also contain the simple answer to the question about Panasonic’s secret of
success: the ability to transform as required by an ever-changing environment,
the willingness to keep developing, and the openness to learn and take risks have
been engrained in the company’s collective memory. Giving up is not an option,
and the only way out is the way forward. Therefore it can be boldly concluded
that Panasonic as a corporation will still exist 50 years from now, and maybe
even a 100 years from now. The company may look differently, produce
different products or services, and market them in a completely different way,
but chances are high that Panasonic will still be a major player in the domestic
and global markets.

1 Introduction

Contrary to the other companies featured in this book, Japanese electronic product
manufacturer Panasonic can look back on a long and colorful history. Founded in
the early twentieth century as ‘Matsushita Electric Housewares Manufacturing
Works’, Panasonic grew from a modest dirt-floor workshop to a gigantic global
corporation with a vast scope of markets and a product range including appliances,
TVs and monitors, phones and computers, car audio and satellite navigation
systems, and even entire building systems and home interiors. In its almost
100 years of existence, Panasonic has undergone as many changes and ups and
downs as the national and international environment it has operated in. One could

U. Mathies (*)
International Business School, Hanze University OAS, Groningen, The Netherlands
e-mail: [email protected]

# Springer International Publishing Switzerland 2016 173

R.T. Segers (ed.), Multinational Management, DOI 10.1007/978-3-319-23012-2_10
174 U. Mathies

almost say the one constant factor in Panasonic’s history is change. Nevertheless, in
March 2013 Panasonic was voted among the top ten of “Japanese companies
expected to still be around in 50 years” in an industry survey conducted by Risk
Monster, a credit management outsourcing service that calculates bankruptcy risk
(Japan Today 2013). The analysis concluded that the ability “to survive fierce
global competition and still exist 50 years later” depended on possessing the right
technical capability, but “companies will also need to be able to effectively
leverage that capability.” Other significant factors named were product quality,
market share, originality, management philosophy/approach, and trustworthiness—
all variables also determined by Segers and Stam (2013) as being crucial in the fast-
growing competitiveness of Asian firms.
What, one therefore wants to ask, is Panasonic’s secret of success? Which
elements in their company strategy, their products and technology, and their
approach to human resources have secured the company a competitive advantage
that has lasted almost a 100 years and is deemed strong enough to make it at least
another 50? What has helped the dated company through times of economic turmoil
and persistent recession to time and again beat the competition in the global
business arena?
In order to answer these questions, we will conduct a thorough case study
covering Panasonic’s rich history from 1918 onwards, consider recent
developments and strategic choices, and examine the national and international
context of the company. Conclusions will be drawn and translated into practical
recommendations, the latter specifically with the interests and opportunities of the
Northern Netherlands in mind.

2 The History and Rise of the Company

2.1 Foundation and Early Years (1918–1950)

2.1.1 Foundation
Panasonic was founded in 1918 as ‘Matsushita Electric Housewares Manufacturing
Works’ in Osaka in Japan by 23 year old Konosuke Matsushita (1894–1989).
Initially a tiny three-man workshop producing self-designed electric light sockets
and insulator plates, the company quickly earned a reputation for high quality at
low prices (Panasonic Company website 2014). The young founder Matsushita,
who due to life circumstances was thrown into poverty and lacked any formal
education, combined technical inventiveness with clever entrepreneurship, a com-
mitment to lifelong learning, and great determination. Thanks to his perception for
market potential, his innovative marketing practices, and most of all his outstanding
visionary leadership, the company turned into a textbook example for the post-
WWII Japanese economic miracle. John Kotter (1997) dedicated an entire bio-
graphy to Matsushita, celebrating him as the most inspirational leader, author,
educator, philanthropist, and management innovator of his time. It was
Matsushita’s accomplishment that from its modest beginnings in Japan the
Panasonic: A Case Study on Constant Change and Reinvention of a World Brand 175

company gradually and continuously grew into one of the largest and most affluent
global electronic corporations.

2.1.2 1920s
By the early twenties, Matsushita was launching new items every month, all of
them said to be better and less expensive than the ones from his competitors; in
addition, he paid special attention to customer needs and after-sales services (Kotter
1997). In 1923, he came up with a bullet-shaped battery-powered bicycle lamp that
would operate reliably much longer than all previous models and which he boldly
sold directly to bike stores by circumventing wholesalers. The second generation of
battery-powered bicycle lamps, with a square-shaped design, was the first one to
carry the ‘National’ brand name in 1927.
Matsushita felt a strong obligation to society and made it his mission to make
electrical products that were considered luxury goods available to a wide clientele.
With the National “Super-Iron” in 1929, the company started on mass production
and formulated the ‘Basic Management Objective and Company Creed’, which
stated the company’s goal of “contributing to the development of society and the
improvement of people’s lives” (Panasonic Company website 2014). More inven-
tion followed, including among others an electric space heater, an electrically-
heated table, a new type of thermostat, and later electric motors and electric fans.
Matsushita’s inexpensive three-vacuum-tube radio won first prize in a broadcasting
contest in 1931.

2.1.3 1930s
In the early thirties, the company was manufacturing around 200 products, had
grown to more than 100 office staff, and employed more than 1,000 factory workers
(Dayao 2000). Matsushita took action to formalize the company’s mission and
structure: At the first commemoration of the company’s foundation in 1932, he
announced that “the mission of a manufacturer is to overcome poverty by producing
an abundant supply of goods” (Panasonic Company website 2014). He divided the
company into three autonomously managed divisions each with its own adminis-
tration, product development and manufacturing facilities. In addition, he set up a
trade department to explore overseas sales opportunities. Following Matsushita’s
belief that “business is people”, the ‘Employee Training Institute’ was opened in
1934 at the new Kadoma factory and head office; it offered primary school
graduates a 3-year study that combined engineering and business. And in December
1935, setting the step towards international business, Matsushita incorporated the
company, renaming it ‘Matsushita Electric Industrial Co. Ltd.’ (MEI). As during
the Great Depression of the thirties, the firm’s sales dropped dramatically, but
Matsushita’s endurance and foresight prevented bankruptcy: by moving employees
around instead of laying them off, cutting work hours and production schedules
instead of shutting down facilities, and asking workers to help sell merchandise, the
company survived where others failed (Kotter 1997).
176 U. Mathies

2.1.4 WWII
Like Japan’s economy at large, MEI was hit hard by WWII. While military
contracts led to the establishment of ‘Matsushita Shipbuilding Company’ and
‘Matsushita Airplane Company’, by the end of the war the company had lost
most factories and offices. To make things worse, as a former supplier to the
Japanese army, MEI was burdened with severe restrictions by the Allied powers
(Kotter 1997). Many years were spent struggling to regain control of the company’s
operations. Eventually, Matsushita, with the massive help of his workers,
succeeded in convincing the military government that his company should be
allowed to restart production of peacetime goods. Declaring it their duty to “address
the task of rebuilding the nation and enriching people’s lives”, Matsushita gradually
resumed the production of consumer wares (Panasonic Company website 2014). In
1947, Sanyo was established as a subcontractor for components (Sanyo later turned
into a competitor and was acquired by Panasonic in 2009). After many years of
hardship and financial crisis, the company started over from scratch in 1950, soon to
be back in business and thriving.

2.2 Rebuilding of the Company (1950–1989)

2.2.1 Post-war period

During the Japanese post-war boom (Segers and Stam 2013), Matsushita Electric
continued their expansion course, founding and acquiring other companies on the
way. In 1949 and 1951, the company’s shares were listed at the Tokyo Stock
Exchange, the Osaka Securities Exchange, and the Nagoya Stock Exchange,
respectively. Realizing that his company needed more specialized knowledge of
electronics and Western technologies before entering the international stage,
Matsushita set up a technical cooperation agreement with Philips of the
Netherlands, creating ‘Matsushita Electronics Corporation’ as a joint venture in
1952. Six years later, he received the honor of being decorated Commander in the
Order of Orange Nassau by Her Majesty Queen Juliana of the Netherlands for his
contributions to economic cooperation and to promoting friendship between the
two nations. Subsequently, he initiated the establishment, and became first chair-
man, of the Japan-Netherlands Society in Kansai which was independent from that
in Tokyo (still active as the Netherlands Society in West-Japan).
In 1959, Matsushita founded Matsushita ‘Electric Corporation of America’ in
New York as the first post-war overseas sales company. During this period, many
products were introduced by MEI: an agitator-type washing machine (1951), the
company’s first black and white television sets (1952), their first electric refrigera-
tor (1953), a portable radio (1954), the electric rice cooker (1956), the first tape
recorder, and an air conditioner (both 1958). The company’s first color television
set was marketed in 1960 (Panasonic Company website 2014). New local
companies were ‘Kyushu Matsushita Electric Company’, the ‘Osaka Precision
Machinery Company’ (later renamed ‘Matsushita Seiko’), and the ‘Matsushita
Communication Industrial Group’ (which manufactured the first tape recorder).
Panasonic: A Case Study on Constant Change and Reinvention of a World Brand 177

Rapid growth led to the opening of manufacturing plants around the world, starting
with ‘National Thai’, the first overseas factory, in 1961 and ‘Matsushita Electric’
(Taiwan) in 1962; plants in Mexico, Puerto Rico, Costa Rica, Peru, Tanzania, the
former Malays, the Philippines and Australia followed.

2.2.2 1960s
At the beginning of this new phase of globalization, at the age of 65, Matsushita
announced his resignation as president and that he would “support the company from
behind the scenes as chairman” (Panasonic Company website 2014). With his son-in
law, Masaharu Matsushita, as president, the company entered into a period of
seemingly unlimited growth. The implementation of a groundbreaking sales and
distribution system and the development of new hit products further accelerated
MEI’s rapid expansion. Popular products included console stereos and speakers, a
fully automatic washing machine, and a console TV (all 1965), which were marketed
under various brand-names, among which National, Panasonic, and Technics.
To demonstrate the astonishing advances of the company and to solicit customer
reactions and input, the company held their first major technological exhibition in
1969 in Tokyo. Only 17 years after the technical cooperation agreement with
Philips, MEI was capable of presenting cutting edge technology that mesmerized
more than 15,000 visitors, including academics, researchers, and industry insiders.
Believing that MEI should contribute to worldwide prosperity, Matsushita
advised that the company take a global perspective. Over the years, MEI built up
their international capabilities, expanded support operations for overseas business,
and trained staff to act internationally. In 1971, the company entered the commu-
nity of international enterprises by registering for trading of its shares on the
New York Stock Exchange (Panasonic Company website 2014).

2.2.3 1970s
Economic turbulences in the wake of the oil crisis of the seventies also affected
MEI. In order to deal with the constantly changing domestic and international
situations and to regain profitability, the company renewed its top management in
1977. The new president Toshihiko Yamashita returned to the foundations of the
corporate division system and implement a policy of personnel exchange, which
would activate the company’s organizational structure (Panansonic Company
website, 2014).

2.2.4 1980s
In 1986, triggered by a dooming financial crisis in Japan, vice-president Akio Tanii
took over and restructured the company, guided by a Management Innovation Plan.
Four product groups were given priority (information and communications equip-
ment, computerized manufacturing equipment, semiconductor devices, AV equip-
ment), and the company’s marketing focus was changed. Under the motto “Human
Electronics”, a campaign for better product design was launched, combining
sensitivity to human needs with advanced technologies (Panasonic Company
website 2014).
178 U. Mathies

2.2.5 The founder

Konosuke Matsushita himself retired in 1973 from active service, but remained
executive adviser until his death in 1989. During these later years, as MEI’s success
started to spread abroad, Matsushita started to be recognized as one of the world’s
great entrepreneurs. He was featured on the covers of Time (1962) and Life (1964)
magazine; he welcomed foreign statesmen and VIPs on his premises; and his
management methods were studied as role models for executives (Kotter 1997).
He wrote numerous books on management philosophy, leadership, and ethics;
studied human nature with a group of researchers; acted as a philanthropist;
founded an independent graduate school of government to reform Japan’s politics
(1980); and created a Japanese version of the Nobel Prize (1985). By the time of his
death at age 94, MEI produced more than 14,000 products. Few organizations had
more customers; the company employed 120,000 people worldwide and had
estimated revenues of above 49 billion US$; and Matsushita’s personal wealth
was estimated at three billion US$ (Kotter 1997). In his home country, he was
canonized as “God of management” and considered a national saint (Katayama
1989).

2.3 Stagnation and First Restructuring (1989–2006)

2.3.1 1990s
In the early nineties, after a record-setting period of economic expansion, the
Japanese economic bubble burst. Both real estate and stock market indices crashed,
and in the aftermath of a credit crunch in the financial markets, the Japanese
economy was thrown into a serious prolonged recession (Segers and Stam 2013).
MEI registered a steep drop in sales, as a consequence of which Tanii stepped down
in 1993. The new president Yoichi Morishita announced a four-point strategy to
rebuild the company, which reinforced the company’s corporate mission and
responsibilities to society and their tradition of autonomous management. In addi-
tion, management innovation was to be based on a new concept of “creativity and
daring” (Panasonic Company website 2014).

2.3.2 The new century

Despite of all efforts, MEI increasingly suffered from stagnation. At this point, the
company was worth 72 billion US$ in sales, employing 293,000 people around the
world, and ranked as the tenth largest industrial company not in oil or autos.
McInerney’s (2007) analysis of Panasonic’s problems and account of the
subsequent 11-year restructuring (1995–2006) poignantly dissects the factors that
had contributed to the situation:
“Like other Japanese industrial giants, Matsushita had thrived by investing in dedicated
engineering staffs and relentlessly entering electronics markets with high-quality, lower-
cost products. That worked well in the decades after World War II, when the corporation’s
fine execution gave it a solid position in Japan and elsewhere. But . . . success led to
complacency and ossification, as problems were hidden by the large, semi-protected
Panasonic: A Case Study on Constant Change and Reinvention of a World Brand 179

domestic market. The company characteristically reacted to stagnation in the late 1980s
with a huge investment in R&D, but that only eroded margins faster. . . . [The company]
was isolated from customers, with factories determining output levels and its understaffed
sales offices lacking in rudimentary account management skills.” (Landry 2007)

The, by McInerney’s (2007) account, “largest corporate restructuring in history”

was accomplished without importing an outside CEO by following the template
drafted by McInerney and his partner, two New York-based Japan specialists,
investors and business advisors. Company-wide changes took off with the appoint-
ment of Kunio Nakamura, formerly head of the American subsidiary, to MEI
president in 2000. As part of the company’s first 3-year mid-term plan, Value
Creation 21 and its follow-up Leap Ahead 21 (see notes), he aggressively
restructured the company to enable adaptation to competitive forces in the environ-
ment and increase market responsiveness (Kosuga 2009). Bureaucratic
complexities were removed and structures flattened, management information
flow and decision making mechanisms (re-) instated, branding and marketing
revamped, and the sales and distribution system reformed (Reorganization 2004).
Full ownership of a number of subdivisions of the Matsushita Group had to be
acquired before the whole company was restructured into 14 independent business
domains in 2003. This was a huge break with MEI’s tradition of virtually autono-
mous business units organized along product lines, each functioning like a self-
sufficient corporate kingdom. Now, efficiencies could be gained by eliminating
overlapping redundancies, centralizing investments into research and development,
and integrating functions of manufacturing, marketing, and sales (Tanikawa 2004).
Another one of Matsushita’s most sacred corporate principles was discarded: for the
first time in history, workers were laid off. Cultural changes included the establish-
ment of a “customer first” attitude and a corporate culture that fostered diversity and
competitiveness.
Also in 2003, the global brand was unified as ‘Panasonic’ and accompanied by
the establishment of the global brand slogan “Panasonic ideas for life.” Still, the
name National was kept as a region-specific brand for Japan only, and the name
Technics as product-specific brand in tandem with Panasonic. In a bold move in
2005, the company decided to cease the domestic production of money-losing tube
TV sets and to entirely focus on the—then high-margin—flat-screen plasma display
panel (PDP) technology. A year later the scale of PDP production reached a
combined monthly output of 460,000 units at four plants, and the company captured
half the global market, again proving the company’s “long-nurtured traditions of
engineering excellence, which empowered managers and employees to commit to
the intense work involved in developing a world-class product” (Landry 2007).
This example also shows how easily technological change can turn fate, as in the
fall of 2013 Panasonic announced their immediate stop of all plasma research and
development due to price pressure from more affordable LCD TVs (Reuters 2013).
As this last fact indicates, even Nakamura’s “largest corporate restructuring in
history” was only temporarily blessed with success (see Fig. 1). Rapid and drastic
changes to the business environment, markets, and technology kept challenging the
company.
180 U. Mathies

Op. & Net

income
Bil. yen
Panasonic's business results
600

400

200

–200
Sales
Bill. yen
9,000 –400

–600

8,000
–800

7,000

6,000
FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12
Forecast

Sales Operation income Net income Break even

Fig. 1 Panasonic’s business results FY2000-2012 (SemiconPortal 2012)

2.4 Continuing Reforms (2006–2012)

In 2006, president Fumio Ohtsubo took over from Nakamura, while continuing
reforms with his 3-year mid-term business plans GP3 and Green Transformation
12 (see notes). During his tenure, Matsushita Electric Industrial Co. Ltd. officially
became Panasonic Corporation Worldwide on the 90th anniversary of the company
in 2008. This final step in a multiyear effort to eliminate the multitude of brand
names reflected the company’s unified brand positioning and its new digital net-
work product strategy. Ohtsubo explained: “Now we have one brand. Under one
brand we can propose a total solution for our daily lives” (Tarr 2008). At the same
time, he announced that Panasonic would venture into the development of whole-
some integrated solutions consisting of AV electronics, appliances, and energy
generation components. With reference to company founder Matsushita’s ideals
of serving society, the company made a commitment to environmental management
in the “Eco Ideas Declaration” (Laposky 2008). This comprehensive company-
wide effort included three approaches relating to (1) manufacturing/production
Panasonic: A Case Study on Constant Change and Reinvention of a World Brand 181

(reduction of CO2 emissions; proper management and disposal of chemical

substances; saving resources through enhanced productivity), (2) product design
(increasing the energy-efficiency of products, recycling initiatives), and (3) outreach
(ecological activities with employees and their families, inclusion of local commu-
nity, initiatives beyond national borders). In order to illustrate the earth-friendly
ambitions, an “Eco & Ud House” was built at the Ariake facility in Tokyo, “a
prototype residence that incorporates cutting-edge technologies that help deliver on
the ecological principles, as well as follow a design philosophy that is user-friendly
and supportive of the needs of all people to be healthy and happy” (Laposky 2008).
The Eco Ideas strategy found continuation in the 2010 announcement that
Panasonic aimed to become the “No. 1 Green Innovation Company in the Electron-
ics Industry” by its 100th anniversary in 2018. Its declared aim is “integrating
contributing to the environment and attaining business growth” by making green
targets, such as for CO2 reduction and recycling, part of the corporate vision
(Miyai 2011).
Panasonic’s new concepts and intermittent improvements notwithstanding, the
company kept writing losses, and over a period of 6 years their shares dropped by
two thirds, double the decline on the benchmark Nikkei average over the same
period (Kelly 2012). The 2009 acquisition of rival Sanyo Electric—producer of
among others solar panels and lithium batteries and seen as needed for Panasonic’s
repositioning as green technology company—in combination with the exuberant
restructuring expenditures, contributed to the company spreading itself even further
(Kelly 2012). Aggravating external factors were the 2011 Fukushima earthquake,
which damaged the supply chain; a strong yen which kept prices high; stern foreign
competition led by Samsung; and production halts caused by floods in Thailand in
2012 (Cooper 2012; Yasu 2012). A massive restructuring plan was implemented
between January and March 2012 (Panasonic Announcement 2011). The number of
employees was reduced by roughly 17,000–350,000, and the 2010 organizational
structure of six business segments based on technology platform (digital AVC
networks, home appliances, Panasonic Electric Works and Panahome, components
and devices, Sanyo, and Other) was converted to one of three business sectors based
on business model (“B2C” consumer business sector, “B2B” components and
devices business sector, and “B2B” solutions sector, comprising nine business
domain companies and one marketing sector). Still, in their 2012 quarterly report
for the fiscal year ending in March (FY 2012), Panasonic announced a record net
loss of 780 billion yen (9.7 billion US$), and the Big Three credit rating agencies—
Standard & Poor’s, Moody’s, and Fitch Group—downgraded Panasonic amid
concerns over weak demand for many of its products; even worse: “Its overall
lackluster performance adds up to a lost decade for the electronics pioneer—with a
10-year cumulative loss of close to 454 billion yen” (Kelly 2012). The key financial
figures are summarized in Fig. 1 and the notes.
182 U. Mathies

2.5 The Turn-Around (2012 to Present)

Reacting to the disastrous financial reports, Panasonic decided to remove president

Ohtsubo in a Japanese corporate coup d’état-like manner and to install the younger
Kazuhiro Tsuga as new CEO (Harner 2013). When Tsuga came into office in June
2012, he described the company as “chaotic” (Harner 2013) and no longer a
“normal” company capable of delivering solid returns to shareholders
(Wakabayashi 2013). Although a new massive restructuring plan, devised under
Tsuga’s predecessor, had just cut the number of employees, Panasonic still had
about three times the workforce of competitor Samsung and double that of Sony’s.
Of the vast range of Panasonic’s product groups, only appliances managed to attain
remotely healthy operating margins (Kelly 2012), and Panasonic’s financial stand-
ing continued to deteriorate during the first year of his tenure. Tsuga immediately
got into action by reducing the company’s headcount by another 20,000 jobs or
about 6 % and by reforming the Head Office (Wakabayashi 2013). He indicated
that—contrary to his predecessors—his business model was to reinvest business
earnings instead of making big capital equipment investments, and to compete in
the business-to-business market instead of only focusing on mass consumers
(Harner 2013).
In March 2013, Tsuga revealed a new 3-year business plan, Cross-Value 2015,
as his first major initiative to reshape the company. The plan contained two main
objectives:

1. Eliminate unprofitable businesses;

2. Develop strategies for future growth in a group formation through its business
division system to revitalize each business.

To this end, four action points were described:

• Restructure all unprofitable businesses by the fiscal year ending in March 2016
(FY 2016): In order to generate operating profit, the structure of the money-losing
TV, semiconductor, mobile phone, circuit board, and optical product businesses
had to be changed. Panasonic took the first steps by deciding to cease the
production of plasma display panels (PDP) and to focus entirely on the LED
technology segment, and in this way moving its TV business more towards the
major market. Similarly, affiliated companies in, among others, the mobile phone
and digital camera businesses were sold off, transferred or merged.
• Expand business and improve efficiency by shifting from in-house approach:
Examples can be found in the logistics business, where the decision had been
made to sell off the majority 66.7 % stake to Nippon Express Co., Ltd.; and in the
medical business, where external capital is supposed to be injected into
Panasonic Healthcare Co., Ltd.
• Improve financial position: The company set the ambitious target of generating a
free cash flow of 600 billion yen over a 3-year period by narrowing down capital
expenditures, disposing of assets, and reducing working capital, in addition to
improving profitability of business itself.
Panasonic: A Case Study on Constant Change and Reinvention of a World Brand 183

• Follow a growth strategy from the customer’s viewpoint: This included pursuing
a “better life” for customers and strengthening the relationships with industrial
partners.

A major change in the organizational structure, namely the establishment of a

business division system supported by four companies, was considered pivotal to
the actions and objectives named above. Panasonic consolidated 88 business units
into 49 business divisions, each of which is responsible for everything related to the
division from product planning to production and sales. The business divisions
were grouped under four companies: Appliance Company, Eco Solutions Com-
pany, AVC Networks Company, and Automotive & Industrial Systems Company.
The companies combine the forces of their divisions by centralizing resources for
managing business development, creating new business, and strengthening key
devices.

3 Current Company Profile

3.1 Company Structure

In March 2014, the Panasonic Group consists of the parent Panasonic Corporation
and 522 consolidated subsidiaries in and outside of Japan. The company employs
almost 286,000 people worldwide, and generates net sales of ca. 7,400 billion yen.
More than half of the company’s sales are generated on the domestic market.
Based on the 2013 restructuring plan, Panasonic’s wide spectrum of products
and services is grouped into four comprehensive companies, which supply elec-
tronics for all areas of their customers’ lives (Appliances Company, Eco Solutions
Company, AVC Networks Company and Automotive & Industrial Systems Com-
pany). The companies are designed to support the underlying business divisions and
to help facilitate partnerships with the industry. Ambitious financial targets have
been set for each company. In order to get a more complete picture of the current
standing of Panasonic as a corporation, we will discuss each divisional company
separately: their set-up and purpose, declared objectives, and devised strategies as
laid out in the annual reports (FY2013 and FY2014) and on the company website
(Table 1).

Table 1 Financial targets FY2013-16 (based on Panasonic Corporation 2013)

Eco AVC Automotive and
Appliances solutions networks industrial systems
company company company company
Net sales 1,650 1,770 billion 1,980 billion 2,700 billion yen
billion yena yen yena
Operating profit Over 5.5 %a 4.9 % Over 5.0 %a 5.0 %
ratio
Cumulative free 108 billion 120 billion Over 265 billion yen
cash flows yen yen 50 billion yen
a
Production and sales consolidated
184 U. Mathies

3.2 Appliance Company (AP)

• Overview: AP has approximately 42,000 employees worldwide distributed over

56 production sites, of which nine are in Japan, 41 in the rest of Asia, five in the
Americas, and one in Europe. The company comprises nine main business
divisions (major products in parenthesis), namely: Cooking (including
refrigerators, microwave ovens, rice cookers); House-keeping (including
dishwashers, washer-dryers); Health & Beauty (including water purifier, health
care appliances, beauty care appliances); Air Conditioning; Energy; Heating;
Water Heating; Cold Chain (including food service/store/kitchen equipment,
beverage vending machines); Devices (including compressors, motors).
• Objectives: AP wants to contribute to the realization of “comfortable living” and
a “comfortable society”. The company’s designated goal is to become the
“Global No. 1 Appliance Company” by 2018. Opportunity for growth is seen
in both B2C and B2B businesses by (1) expanding market share, especially
oversees; and (2) by capturing the increasing demand for high-value-added
products in emerging countries.

Strategy: Specific initiatives include (1) establishing stable profitability in the B2C
segment as a pillar business with the key markets China, Asia, Europe and Brazil;
(2) establishing a foundation of highly profitable businesses for the medium- and
long-term in the B2B facilities segment, especially in China and Asia; and
(3) improving profitability in the B2B devices segment by transforming business
strategies. For FY2015, an integration of consumer electronics under AP and AVC
is planned.

3.3 AVC Networks Company (AVC)

• Overview: Panasonic’s new AVC Networks Company, employer of ca. 47,000

people, integrates the audio-visual technology of the former AVC Networks
Company with the wireless-communications technology of the former Systems
& Communications Company. It is made up of four divisions: Digital AV
Business (digital TV, DVD, audio, display devices); Imaging Business (includ-
ing digital cameras and camcorders); System Network Business (in-flight AV
equipment for airplanes, projectors, PC, security cameras, fixed-line
telephones); Mobile Communication Business (mobile and smart phones).
• Objectives: AVC wants to create cross-value by fusing strong AV and ICT
technologies backed by patents in both areas. The main strategic goals are to
rigorously restructure underperforming B2C businesses while driving growth by
strengthening B2B businesses, focussing the latter on Japan, Asia, and the USA.
New opportunities are seen in the cooperation with IT companies for the
research and development of cloud-connected products.
Panasonic: A Case Study on Constant Change and Reinvention of a World Brand 185

Strategy: Specific initiatives include the above-mentioned elimination of unprofit-

able businesses, especially in the areas of flat-panel TVs, digital cameras, and
mobile phones. Changes are ongoing as reflected by the quarterly reports of FY
2013 and 2014.

3.4 Automotive and Industrial Systems Company (AIS)

• Overview: The AIS Company has ca. 111,000 employees and comprises
152 group companies in Japan and oversees. It develops, manufactures, sells
and services products related to the automotive industry (multimedia- and
eco-car related equipment, electrical components), industrial (electronic
components and materials, semiconductors, optical devices, primary/secondary
batteries, chargers, battery appliances and components), and manufacturing
businesses (electronic component mounting systems, welding and robot
systems), and bicycle-related products.
• Objectives: Due to its large share of sales (2,510 billion yen in FY2013) and with
its broad range of B2B possibilities, AIS is positioned as a new “growth engine”
for the Panasonic Group. It is designated to take a lead role in realizing ecologi-
cal and smart solutions and in creating “Cross-Value Innovation” that transcends
business division boundaries. In collaboration with their customers, AIS wants
to contribute to “creating a better world” in the fields of automotive, industry
and ICT.

Strategy: Profit improvement plans focus on four unprofitable businesses (portable

rechargeable batteries, optical, printed circuit boards, and semiconductors); they
include reducing fixed costs, streamlining production, and shifting to new business
areas. In order to create new businesses, a globally operating Business Develop-
ment Division of 400 people from different professional backgrounds has been
established. The latest strategic ideas for AIS relate to “computerization and
electrification” and to shifting focus from ICT to industrial areas.

3.5 Eco Solutions Company (ES)

• Overview: ES employs 55,000 people worldwide and consists of four divisions:

Lighting Business Division, Energy Systems Business Division (active and
passive products to save energy), Housing Systems Business Division (home
remodeling), Panasonic Ecology Systems Co. (technologies to purify air, water
and soil), in addition to the Marketing Division (Japan) and Global Marketing
Division.
• Objectives: In continuation of Panasonic’s 2008 “Eco Ideas Declaration” and its
objective to become the “No. 1 Green Innovation Company in the Electronics
Industry” by 2018, ES’s idealistic goal is to “offer solutions for creating com-
fortable environments for homes” and non-residential buildings, “while reducing
186 U. Mathies

environmental burden” and thus contributing to “the development of a sustain-

able society” (F. Ohtsubo 2013). This “synergy between comfort and
eco-friendliness” aims at taking environmental concerns into consideration
throughout the whole life-cycle of a product and in all managerial operations.

Strategy: With ES, Panasonic introduces a novel concept that only at second sight
reveals its radical newness (see discussion in Paragraph 4 “Future Developments”
below). ES sells products of the other Panasonic companies (AP, AVC, AIS) in
addition to the specific products and services of ES itself. The basic idea is to “shift
focus from selling individual products to providing added value, including in
design, construction, maintenance, monitoring, and services.” (F. Ohtsubo 2013).
By building a high-profit business structure, ES wants to become a driving force for
the growth of the whole Panasonic Group. Domestic and international expansion
plans are set for FY2015.

3.6 Current Market Position

Panasonic’s market position varies depending on the industry and divisional

company.

3.6.1 Appliance Company (AP)

As can be seen in Table 2, both B2B and B2C businesses show considerable room
to expand their global market share. The percentage of the main B2C products—
washing machines, refrigerators, and air conditioners—is in the single digits and
that of the B2B products—cold chains and compressors—is in the low double
digits. Panasonic, aware of the fact that with these numbers they are more a regional
appliance company, set plans to become the “Global No. 1” by 2018. Main growth
opportunities are seen in B2B facilities and devices, the sales and operating profits
of which are supposed to expand to 50–60 % of AP’s overall sales and profits
(currently ca. 40 %).

3.6.2 AVC Networks Company (AVC)

The AVC Networks Company shows mixed results as regards to market share. For
consumer electronics, Panasonic, amongst other Japanese consumer electronic
producers, has been surpassed and marginalized by Apple and, most importantly,
by Samsung (Harlan 2012). Looking at B2B and industrial products, however, a
different picture emerges. In the Finance and Retail industry, Panasonic is the
market leader in Japan when it comes to IC (card) readers and writers. Furthermore,
in the Public Services domain, Panasonic is the market leader in North America for
B2B PC’s (such as the Toughbook) and smartphones. In the Event, Company and
Education segment, Panasonic is even the global market leader in projectors that
produce more than 10,000 lm.
Table 2 AP company global market share (FY2013) (Based on Panasonic Corporation 2013)
Air- Cold Washing Large-scale Compressors for
conditioners Refrigerators chains machines air-conditioners air-conditioners
Total units (millions) 71 97 2.7 82 4.5 129
Panasonic units 6.6 3.5 0.4 4.9 0.18 14
(millions)
Share 9.3 % 3.6 % 14.5 % 6.0 % 4.1 % 11.1 %
Note: Air-conditioners refer to room air-conditioners. Drying machines are excluded from washing machines
Panasonic: A Case Study on Constant Change and Reinvention of a World Brand
187
188 U. Mathies

3.6.3 Automotive & Industrial Systems Company (AIS)

The automotive segment of AIS is one of the world’s largest original equipment
manufacturers of factory-installed mobile audio equipment such as head units,
speakers and navigation modules. AIS is or has been subcontractor to the most
well-renowned automobile manufacturers, such as Europe’s largest automaker
Volkswagen, Daimler, Audi, largest US automaker General Motors, Ford, Toyota,
and Nissan. The 2012 market share numbers testify to Panasonic’s success in this
industry (Panasonic IR Day 2012). For example, for display audio (audio-visual
interface used in navigation systems and on-board computers) in Japan, Panasonic
has increased its market share from 27 % in 2011 to 42 % in 2012 and a predicted
45 % in 2013; in the global multimedia business, large-screen information displays
accounted for a market share of over 70 % in 2012; and the car-navigation system
Gorilla scored 60 % in the aftermarket. With regards to the ICT field, several main
products, such as conductive polymer capacitors and mobile connectors, have a
number one global market share ranging from 35 % to over 50 % (Panasonic IR Day
2013).

3.6.4 Eco Solutions (ES)

For ES, it is exceptionally difficult to retrieve concrete and reliable figures on
market share or performance relative to competitors. Company information only
indicates that both Lighting Business Division and Energy Systems Business
Division have the number one market share in Japan, and that Panasonic Ecology
Systems holds the number one global market position for ventilation fans
(Panasonic IR Day 2012). An independent market study of Li-ion automotive
batteries conducted by Roland Berger Strategy Consultants (2012) predicted that
Panasonic, with a global share of 13 %, will be one of five forerunners to control
70 % of the world market by 2015. With regards to solar cell technology, Panasonic
was listed among the top 20 global photovoltaics (PV) module suppliers in 2013,
indicating that—despite an increase in shipment volumes compared to 2012—the
mainly Asian competition was still significantly ahead of ES (Osborne 2014).
Altogether, as of 2013, 89 % of all ES Company sales took place in Japan (F.
Ohtsubo 2013).

3.7 Brand Development

Over the years, Panasonic has marketed their products under a multitude of brand
names, including National, Technics, JVC, Quasar, and Panasonic. In May 2003,
the company announced that their most popular brand Panasonic was chosen as a
unified global brand, accompanied by the global brand slogan “Panasonic ideas for
life.” Initially, the name National was kept as regional brand in Japan, but eventu-
ally was phased out by March 2010. From September 2013 onwards, the new brand
slogan “A Better Life, A Better World” was introduced in anticipation of the
company’s 100th anniversary of its founding in 1918. The slogan is based on
Matsushita’s “Basic Management Objective” and expresses Panasonic’s corporate
Panasonic: A Case Study on Constant Change and Reinvention of a World Brand 189

vision and attitude of “striving to achieve”. “A Better Life” refers to the company’s
focus on B2C products in the segments home, society, business, travel and
automobiles. “A Better World” signifies their ambition to contribute globally
through B2B marketing in the area of environmental protection (Masumizu
2014). In February 2014, Panasonic presented a new catch phrase, “Wonders! by
Panasonic” to visualize overcoming stagnation and the positive changes in the
company; matching New Wonders! products were launched in April. The
“Wonders!” campaign was first focused on the domestic market where Panasonic
makes more than half of its sales.

3.8 HR Approach and Employees

Following Konosuke Matsushita’s belief that “business lies in people”, Panasonic’s

HR approach is exceptionally focused on training and development. The company’s
“Code of Conduct” (Chap. 3, Employee Relations) puts forth the principle “The
basis of management is people”, and describes personnel development as a
manager’s most important responsibility (Panasonic Company website 2014). In
Panasonics “Human Resources Development Policy”, it is specified that managers
must “develop people before making products”. To this end, concrete guidelines
clarify that managers should “show clear leadership based on strong beliefs; create
an organization and culture which allows employees to fulfill their potential;
encourage others to develop themselves; provide opportunities to take on new
challenges and to achieve their goals; create workplaces where diversity is valued
and respected; appreciate staff members for their efforts; develop healthy manage-
ment/employee relations”. Employees, in turn, are downright required to show a
“challenging spirit”, to keep thinking and acting innovatively, and to continuously
strive for further development (Panasonic Company website 2014). The employee
policy is about building win-win relationships between the company and
employees. This is accomplished by a variety of initiatives founded on the
principles of the participative management, performance-based evaluations, and
respect for employees. Panasonic goes beyond Japanese or even international
standards in that next to on-the-job training (which is similar to its competitors),
it has a complete employee training institute, the Human Resources Development
Company (HRDC), which gives employees the chance to get an education next to
their job. For many Japanese companies, the traditional practices of life-long
employment and senior-based compensation and advancement have led to a lack
of intrinsic motivation in employees and thus to reduced productivity (Tapp 2002).
Meanwhile, attempts to adjust to the economic challenges of the contemporary
market place by re-engineering the HRM system along the lines of strict perfor-
mance orientation Western style have suffered functional failure (Kishita 2006).
Panasonic’s policy to consequently invest in the education and (self-)development
of their employees is a golden path in the middle and gives the company a
competitive advantage over both domestic and global competitors.
190 U. Mathies

3.9 Company Philosophy

Matsushita’s “Basic Management Objective and Company Creed”, as formulated in

1929, still constitutes the declared mission of Panasonic Corporation in 2014: “Our
business is something entrusted to us by society. Therefore, we are duty-bound to
manage and develop the company in an upstanding manner, contributing to the
development of society and the improvement of people’s lives” (Panasonic Com-
pany website 2014). Many aspects of Panasonic’s business life—such as their brand
promise, their dedication to customer services, their environmental targets, or their
human resource approach—are rooted in Matsushita’s business and management
philosophy, which Katayama (1989) labeled “a curious mix of capitalism and
religion”. In his autobiography “Quest for Prosperity” (1988), when recalling the
events leading up to the company’s first mission statement in 1932, Matsushita talks
about eliminating poverty as a “sacred task” and names business in general “a holy
mission” (Dayao 2000). His life-long fervent belief was that the ultimate aim of a
manufacturer was to overcome poverty and to generate wealth for the benefit of
everyone (Kotter 1997). Matsushita’s “Seven Principles” of 1932 still guide the
company today: (1) Contribution to Society, (2) Fairness and Honesty, (3) Cooper-
ation and Team Spirit, (4) Untiring Effort for Improvement, (5) Courtesy and
Humility, (6) Adaptability, and (7) Gratitude (Dayao 2000). Panasonic’s website
explains in detail how the core values described in the Basic Management Objec-
tive and Company Creed and the Seven Principles are translated into a modern-day
code of conduct and actual business practices (Panasonic Company website 2014).

4 Future Developments

4.1 General Company Success Strategies: Matsushita’s Heritage

For Panasonic, as for Japanese companies in general, performance in the past can be
seen as the best predictor for future potential. Based on Panasonic’s corporate
philosophy, a number of factors stand out as being uniquely related to the
company’s success—even beyond Matsushita’s lifetime:

4.1.1 Clever entrepreneurship

Matsushita, by trial and error, developed a range of entrepreneurial strategies and
practices that secured the early success of MEI. Remarkably, a similar set of
techniques was later researched and praised by the proponents of the culture-
excellence school of management such as by Peters and Waterman in 1982 (Kotter
1997). Among others, Matsushita felt strongly for a clear customer orientation with
focus on after-sales service; constantly improving productivity; high quality at low
price, mass production; improving products invented by others, while leaving
product invention and basic R&D to others; speedy product development; innova-
tive marketing; and a specialized retail distribution system. All of these elements
are still highly relevant for Panasonic’s strategy and functioning today.
Panasonic: A Case Study on Constant Change and Reinvention of a World Brand 191

4.1.2 Paternalistic management and empowerment

Matsushita is said to have pioneered the Japanese paternalistic management tradi-
tion, in which employees are viewed as members of the wider company “family”
and are secured by lifetime employment and senior-based compensation (Kotter
1997). In this system, Japanese firms provide far-reaching welfare-style benefits
independent from performance, which can include housing subsidies, scholarships
for children, recreation facilities, or support for family events; in return, workers
devote themselves to the job and the company, which among others is measured by
their willingness to endure uncompensated overtime and to sacrifice vacation days
(Tapp 2002). For his part in the reciprocal bond, Matsushita made a point in treating
his employees with exceptional care—at a time when in the West, in the wake of
Taylor’s scientific management, workers still were considered to be “human
machines” and subjected to control and demeaning treatment at work. Matsushita
offered, by all comparisons, outstanding working conditions, health-promoting
activities, institutions for training and development, and—as the first company in
Japan—the 5-day work-week. In order to promote loyalty and a feeling of commu-
nity, he introduced a daily-recited company song (Kotter 1997). While the pater-
nalistic system can lead to a decreased motivation to excel, especially in younger
(i.e. lower paid) and higher-educated employees (Tapp 2002), Matsushita knew to
trigger intrinsic motivation by empowering his employees and practice a naturally
inspiring leadership style. He systematically involved people in the management of
the divisionalized company, entrusted them with highly demanding tasks, and had
the faith that they would grow into their roles (Kotter 1997). This is unusual for
Japanese company culture, where typically group-ism serves to maintain harmony;
consensual decision-making, or “ringi”, discourages any individual from taking
responsibility for performance; and individual achievement is not recognized (Tapp
2002). Panasonic’s “business lies in people” and “respect for the employee”
approaches are very much in line with Matsushita’s management philosophy and
still constitute a major competitive advantage for Panasonic.

4.1.3 A commitment to life-long learning and the learning organization

If one thing was characteristic for Matsushita, it was his desire to learn and his drive
for continuous improvement. These ambitions included both his company, for
which he was in constant search for superior methods, and his own person. Up to
an old age, he tirelessly worked on educating himself and others, studying human
nature, pushing for higher and higher goals, and propagating an optimistic set of
beliefs in his own philosophy of “Peace and Happiness through Prosperity” (Kotter
1997). He also invested significantly in the training and life-long learning of his
employees. Matsushita’s motivating aspirations grew with actual accomplishments
and formed his leadership style. His willingness to remain open-minded for
learning from others and to reflect humbly on lessons learned contributed signifi-
cantly to the adaptability and flexibility of his company in an ever-changing
environment. The ability to remain a learning organization, to keep an open
mind, and to continuously make an effort to break down the boundaries between
192 U. Mathies

industries and departments, ranks and stakeholders, will be crucial for Panasonic’s
future.

4.2 Specific Success Strategy: The Integrated Systems Approach

of Eco Solutions

At first sight, Eco Solutions Company (ES) is just another one of Panasonic’s new
four divisional companies. It focuses on the development, manufacture, and sales of
products and services relating to the segments photovoltaics (HIT solar cells),
lighting (fixtures, control systems, LED bulb, fluorescent lamps), air conditioning
and purification (ventilation fan systems, humidifier, purifier), electrical construc-
tion materials (light switches/outlets, panel boards, electric tools, wiring), and home
building (kitchen and bathroom systems, self-cleaning toilets, heat pump systems);
in addition, ES company offers elderly and nursing care equipment and services.
Only when digging deeper does it becomes obvious that Panasonic is indeed doing
something rather unique with this company. ES is driven by a novel business and
marketing concept that transcends organizational boundaries and that makes it the
most spectacular and pioneering part of the whole Panasonic Group.

4.2.1 Integrated systems philosophy

ES Company has the declared purpose to promote and provide “optimized solutions
based on full utilization of the Panasonic Group’s product lineup and various
services”, thus contributing to the development of a sustainable society (Panasonic
corporation 2013). While competitors like Apple and Samsung (and Google on a
software scale) have already pioneered an integrated systems approach with their
audio-visual and communication hardware (Michael 2011), Panasonic goes one
step further. They aim not only at integrating phones, TVs, stereos and computers;
they want to integrate virtually everything. ES not only produces their own
company-related products, but also sells products of the other parts of Panasonic
Corporation while offering comprehensive integrative solutions that allow these
products to work together. Simultaneously, they want to make both the production
processes and the use of their products or services more sustainable, ecological, and
environmentally friendly. Taking all this information together, one could say that
“Eco Solutions” is not only one of Panasonic’s divisional companies, but is also the
name of an overarching concept that pulls together everything done by Panasonic.

4.2.2 Model smart town Fujisawa

The epitome of Panasonic’s sustainability ambitions and the practical application of
Eco Solutions as an umbrella organization is the eco-conscious smart city project
Fujisawa Sustainable Smart Town (SST). Conceived even before the massive
Japanese earthquakes of March 2011 and first announced in May of that year,
Fujisawa SST was promoted as one of the most advanced eco cities in the world:
Panasonic: A Case Study on Constant Change and Reinvention of a World Brand 193

Panasonic will apply its “comprehensive solutions for the entire house, entire building and
entire town” to Fujisawa SST, combining its energy saving technologies in energy creation,
storage and management with a safe and secure environment. Specifically, the company
plans to preinstall its solar power generation systems and household storage battery systems
across the town, including homes, various facilities and public zones, which would be the
first of its kind in the world. Panasonic intends to replicate Fujisawa SST as a business
model in other parts of Japan and overseas. (Panasonic Announcement 2011)

A business collaboration of initially nine partner companies and one city,

Fujisawa SST is taking shape on a cleared 19-hectare site of a former Panasonic
factory in Fujisawa City, about 50 km west of Tokyo. The neighborhood, with a
planned population of 3,000, will comprise 1,000 technologically advanced green
homes, as well as stores, healthcare facilities, a nursery school, elderly housing, a
nursing home, and public green spaces and parks. Each home will be equipped with
the means to generate most of the electricity for its inhabitants, either with a
standard photovoltaic setup or with an optional fuel cell cogeneration system for
when the sun is not shining. The overall goal for the community is to reduce CO2
emissions by 70 %, cut household water usage by 30 %, and allow for a 3-day
lifeline maintenance in case of emergency. The concept of Fujisawa SST, however,
goes beyond energy; it also takes into account aspects such as security, mobility,
and healthcare, and its mission is “to structure a smart town based on people’s
lifestyles, designed for the way people live” (Panasonic Company website 2014). In
continuation of the 2008 “Eco Ideas”, houses will be equipped with energy-saving
appliances, such as air conditioners, washing machines, LED lights, and AV
equipment. Linked with each other by an integrated Home Energy Mangement
System (HEMS), these intelligent household machines communicate with one
another for optimal energy savings.
In Panasonic’s vision, this goes as far as fridges remembering a family’s eating
habits or heating systems recognizing and targeting people entering a room
(Yoneda 2013). Construction of the first single-family homes has started in
September 2013, and the town is scheduled to open in spring 2014 (Panasonic
Company website 2014). Haruyuki Ishio, Director of Panasonic’s Corporate Divi-
sion for Promoting Energy Solutions, indicated in a recent interview that Panasonic
was proud of Fujisawa SST as it showcases the company’s home energy solutions
including the home itself and serves as a worldwide model for the realization of an
eco-friendly city in action (Yoneda 2013). Therefore, the concepts and processes
behind Fujisawa SST are being translated into other projects for Japan and—under
consideration of regional characteristics—around the world.

4.3 Eco Solutions Company Focus and Development Strategy

More than the other three divisional companies, and with 89 % of all sales in 2013,
ES still has its core business in Japan (F. Ohtsubo 2013). Panasonic’s basic strategy
is to strengthen its domestic core businesses to support growth; this entails turning
mainstay products into flagship products, creating housing space networks
194 U. Mathies

(residential) as well as “eco-conscious and smart business solutions”

(non-residential), and marketing via showrooms and new distribution channels (F.
Ohtsubo 2013). International expansion, however, is slowly but steadily develop-
ing. While in 2012 overseas business was limited to the energy sector (Panasonic IR
Day 2012), ES’ international plans for 2013, as presented in Panasonic’s annual
report (FY2013), also included home remodeling and engineering. The geographic
focus rested on growing markets in Asia (China, India, and other Asian countries),
with some reference to exploring and/or expanding in Middle Eastern and African
markets, while Europe or the United States were not mentioned. Explanations for
this seemingly single-minded Japan-/Asia-focus can be found in the geographic and
market advantage ES has in that region. Here the company could profit from
existing networks and subsidiaries, and is not confronted with the bigger players
in the Western economy, where market saturation and fierce cost-competition
would make it difficult for ES to effectively position itself. In addition, the Japanese
market for photovoltaics (PV) has experienced a domestic consumer demand surge,
which for ES has led to a 10 % increase in sales in the FY2014 third quarter in
comparison to the same period a year ago (Panasonic Financial Announcement
2014). ES’ strategy to accomplish growth by strengthening domestic and regional
core business, thus, seems to be paying off. Meanwhile, as a new development in
2013, Panasonic announced “a full-scale expansion of its interior LED lighting
business” into Asia and Europe, “as part of the company’s drive to increase
overseas sales of such products” (Panasonic Company website 2014). The unique
properties of LED technology have opened the possibility to overcome country-
specific limitations and to promote lighting fixtures globally. There are more signals
that ES is about to gain share in the Western market: In January 2014 Panasonic
launched two upgraded, conversion efficient HIT photovoltaic modules in Europe,
targeting the residential rooftop markets and taking it up against dominating tier
one Chinese solar cell producers (Osborne 2014).

4.4 The Future of Panasonic

Taking all information into account, Panasonic as a whole appears to be in transi-

tion from a classic electronics provider to a leading innovative green cooperation
offering products and services through their B2C and B2B businesses. Eco Solu-
tion, both as one of the divisional companies and as an overarching vision, builds
the center stone in this development by integrating its eco-friendly concepts and
technology with the technology and products of Panasonic’s other divisions,
namely the Appliance Company (AP), AVC Networks Company, and Automotive
& Industrial Systems Company (AIS). While in 2013 ES and their energy-related
B2B businesses were pushing into the growing markets of Asia, AP and AIS
constituted the healthy, sustainable, financial base of the Panasonic Group. The
accelerating frequency of news about Panasonic entering the Western markets with
their eco- and energy technology leads to the bold assumption that the company
aims to (re-)establish a key position amongst leading European manufacturers in
Panasonic: A Case Study on Constant Change and Reinvention of a World Brand 195

that segment. Especially with their 100-year anniversary in 2018 in mind,

Panasonic is pushing heavily to regain a competitive global position and to realize
their vision of becoming the “No. 1 Green Innovation Company in the Electronics
Industry”.
Both recent financial figures (F. Ohtsubo 2014) and a number of sustainability
and innovation awards (Panasonic Company website 2014) confirm that the tides
have changed for Panasonic. It has paid off to restructure or eliminate unprofitable
businesses, to reduce reliance on consumer electronics where Panasonic has lagged
behind the competition, and to invest into new ventures (Einhorn et al. 2014). The
FY2014 third quarter results show a 10 % increase in consolidated group sales,
which exceeds original expectations; similarly, the full-year forecast predicts high
two-digit increases in operating profit for Eco Solutions and AIS in comparison to
the previous year (F. Ohtsubo 2014). All signals indicate that Panasonic is “back”
and ready to roll out their integrated systems approach in the Western world,
heading towards a “New Panasonic” in FY2019.

5 Conclusions and Recommendations

5.1 Conclusions

Panasonic’s nearly 100-year history splits into several phases. The first 30 years,
until the end of WWII, were a period of rapid growth and expansion; out of nothing,
Matsushita established a flourishing manufacturer of a vast variety of consumer
electronics with excellent domestic standing. WWII was a big incision and almost
entirely wiped out the company. After survival was secured, the company took off
on a 40-year triumphal quest for globalization; from clever entrepreneurship,
Matsushita moved on to inspirational leadership, supplying his company with a
solid foundation of moral and spiritual values. Realizing that his products lacked
technical sophistication in comparison to the West, he made sure that all knowledge
necessary to catch up was acquired. Until his death, his company was the epitome of
the “Japanese miracle”. Due mainly to external circumstances, Panasonic was
thrown into stagnation and crisis from the 1990s onwards; now it became painfully
clear that the company’s organizational structure and business processes had not
evolved in the same pace as the company’s expansion. A period of continuous
restructurings and adjustments began, which now has gone into its third decade and
the end of which is still not in sight. Through all of this, one can comfortably say
that the constant factor in Panasonic’s history was—and is—change.
And this, right here, may also be the simple answer to the question about
Panasonic’s secret of success: the ability to transform as required by an ever-
changing environment, the willingness to keep developing, and the openness to
learn and take risks have been engrained in the company’s collective memory.
Giving up is not an option, and the only way out is the way forward. Therefore it can
be boldly concluded, in sync with the colleagues mentioned in the introduction, that
Panasonic as a corporation will still exist 50 years from now, and maybe even a
196 U. Mathies

100 years from now. The company may look differently, produce different products
or services, and market them in a completely different way, but chances are high
that they will still be major players on the domestic and global markets.
Going a bit deeper in the analysis, the following elements have been detected as
contributing to the enormous success of the company:

• Company philosophy: Tradition is highly valued at Panasonic. Matsushita’s core

principles and beliefs are still as present at Panasonic today as during its
founder’s lifetime. The company’s 2014 mission, vision and core values are
direct quotes from Matsushita; other elements, such as brand promise, environ-
mental targets, dedication to establishing a relationship with the customer, and
personnel management, are firmly rooted in Matsushita’s philosophy. In addi-
tion, the company is taking a long-term perspective and shows the ability to wait
for the right moment. With Eco Solutions, Panasonic started powerfully in Japan
and Asia, leaving out any mentioning of Western markets in their communica-
tion. While generating a steady income in other, less high-ranking segments, the
company took—and keeps taking—the time to prepare everything to become a
top player in the specific field of energy and remodeling; in the meantime, almost
sneakily, facts are created by intermittently making major moves into Europe.
• Products and technology: Under Matsushita, Panasonic was known for good
quality at a low price. This was made possible by sophisticated mass production
and by an imitation strategy with regards to the company’s technology.
Panasonic’s innovative power lies in clever entrepreneurship, in recognition
and anticipation of trends, and in astute marketing and sales strategies, which
again is proven by the Eco Solutions concepts and by Panasonics declared
ambition to transform into a green company.
• Approach to human resources: As mentioned above, Matsushita’s vision on
leadership still shapes Panasonic’s human resource management approach. An
attitude of respect and care towards the employee, and above-average
investments in training and development lead to high loyalty of management
and staff towards the organization. In addition, traditionally-neglected areas,
such as gender diversity, work-life balance, and healthy ageing have recently
received increasing attention.

As a result of all of these factors, Panasonic manages time and time again to
reinvent itself in an ever-changing environment. It maintains the ability to survive
challenging external (crisis in industry, domestic market, or world economics) and
internal (financial, marketing, structure) situations, and to come out of them
thriving. Panasonic may not become the most profitable company, but chances
are that it will continue to be an important player in its major fields (appliances,
AVC, automotive/industrial systems). The green innovation concept and the
integrated systems approach, in turn, will open new markets and lead to new
cooperations, thus revitalizing the company as it is about to enter into its second
century of existence.
Panasonic: A Case Study on Constant Change and Reinvention of a World Brand 197

5.2 Recommendations

When looking at the possibilities to win Panasonic as a collaborating partner with

companies or other institutions in the Netherlands, the obvious point of connection
is energy. The Northern provinces of Drenthe, Friesland, Groningen and Noord-
Holland play a key role in the Dutch energy economy. Since 2003, they are the
driving forces behind the network organization Energy Valley, a joint venture of
governments, the business sector, and knowledge institutes that has the purpose to
encourage employment and to support national objectives related to renewable
energy (Energy Valley website 2014). The Dutch government has declared energy
one of nine so-called top sectors, in which the Netherlands excels globally and
which receive high government priority. In the top sectors, industry and science
cooperatively develop innovations with the ambition that their products and
technologies contribute to finding solutions to societal issues (Top Sector Energy
website 2014). Targets for the Dutch Energy sector between now and 2020 include
the transition to more sustainable, low-carbon energy, while structurally increasing
the earnings potential. The Energy Valley region is a key factor in this process and
has a wealth of initiatives to show for in the fields of biogas, solar, and heating
networks (numbers from Energy Valley website 2014): 97 % of the entire Dutch gas
production on land takes place in the Energy Valley area (to put this into perspec-
tive, in Europe only Russia and Norway produce more gas). In addition, 20 % of the
Dutch conventional and 22 % of the renewable electricity production are located in
the North, as well as 42 % of the country’s wind energy, 44 % of the green gas, and
31 % of the biogas production. Currently, there are approximately 4,200 companies
and 32,375 full-time positions in the Northern energy cluster. The energy
investments exceed 27 billion € in the coming decade. The region is strategically
positioned within the EU energy infrastructure and directly borders the North Sea
with its outstanding harbor facilities. The Energy Valley cluster works closely
together with the energy cluster in North Western Germany, joining forces on
pan-European energy issues and, since 2012, collaborating with Scotland and
Norway in the European North Sea Energy Alliance (ENSEA). Funded by the
European Union, the ENSEA project “aims to accelerate the implementation of a
resource-efficient Europe by strengthening the research and innovation potential of
European regions” (ENSEA website 2014). On a more local level, Energy Valley,
in cooperation with knowledge institutes and the Energy sector, founded the Energy
Academy Europe (EAE), an exclusive institute bundling research, education and
innovation regarding energy. Among others, the Hanze University of Applied
Sciences and the University of Groningen are offering a wide variety of educational
programs to train the next generation of energy experts; at the same time, research
on energy-related subjects is conducted in close contact with the market.
Another initiative of the Energy Valley network deserves special mentioning,
since it is reminiscent of Panasonic’s Fujisawa SST project, namely
PowerMatching City, a living lab demonstration of the future energy system in
the neighborhood of Hoogkerk in Groningen:
198 U. Mathies

PowerMatching City is, first and foremost, the European field trial to connect supply and
demand of electricity and heat in an intelligent way (smart grids). Purpose of the ongoing
project is to fully profit of characteristics of both centralised and renewable energy systems.
. . . During the first phase 25 households participated. At the end of 2011 the second phase
took off. Nowadays 42 households are taking part in Power Matching City, more clustered
together than before. Examples speak volumes: do households want to turn on the washing
machine when there’s a lot of wind and electricity from wind turbines is plentiful and
therefore much cheaper than average? Then the system will automatically choose the
optimal moment, in order to wash at the lowest possible tariffs. (PowerMatching City
website 2014).

In conclusion, the Netherlands has an agenda that fits perfectly with Panasonic’s
Eco Solutions and green innovation concepts. Considering the fact that approxi-
mately 60 years ago Panasonic’s founder Matsushita collaborated with Philips on
technical knowledge transfer and that he personally received the highest honors
from the Queen of the Netherlands, it seems appropriate to suggest a renewed
partnership between the Japanese corporation and governmental entities, knowl-
edge institutes, and businesses located in the Northern Netherlands.

6 Notes

6.1 Key Financial Figures

The following overviews of Panasonic’s balance and income statement as well as

the key financial ratios are summarizations based on the data provided by
Panasonic. All figures are in millions of Yen, for fiscal years ending March
31, for the Panasonic Corporation and its subsidiaries.
Balance Sheet

Year 2009 2010 2011 2012 2013

Long Term Debt 651,310 1,028,928 1,162,287 941,768 663,091
Total Assets 6,403,316 8,358,057 7,822,870 6,601,055 5,397,812
Panasonic Corp. 2,783,980 2,792,488 2,558,992 1,929,786 1,264,032
Shareholders Equity
Total Equity 3,212,581 3,679,773 2,946,335 1,988,566 1,304,273
Shares issued (1000s) 2,453,053 2,453,053 2,452,053 2,453,053 2,453,053
No. of shareholders 277,710 364,618 364,618 557,102 577,756
No. consolidated comp. 540 680 634 579 538

Income Statement

Year 2009 2010 2011 2012 2013

Net Sales 7,765,507 7,417,980 8,692,672 7,846,216 7,303,045
Operating Profit 72,873 190,453 305,254 43,725 160,936
Income (loss) before 382,634‐ 29,315‐ 178,807 812,844‐ 398,386‐
income taxes
(continued)
Panasonic: A Case Study on Constant Change and Reinvention of a World Brand 199

Year 2009 2010 2011 2012 2013

Net income (loss) 378,961‐ 103,465‐ 74,017 772,172‐ 754,250‐
Panasonic Corp.
Capital Investment 494,368 385,489 403,778 333,695 310,866
Depreciation 325,835 251,839 284,244 295,808 277,582
R&D Expenditures 517,913 476,903 527,798 520,217 502,233
Free Cash Flow 352,830‐ 198,674 266,250 339,893‐ 355,156

Ratios

Year 2009 2010 2011 2012 2013

Operating Profit/Sales 0.9 2.6 3.5 0.6 2.2
Income (loss) before taxes/Sales 4.9‐ 0.4‐ 2.1 10.4‐ 5.5‐
Net income (loss)/Sales 4.9‐ 1.4‐ 0.9 9.8‐ 10.3‐
Return on Equity 11.8‐ 3.7‐ 2.8 34.4‐ 47.2‐
Shareholders Equity/Total Assets 43.5 33.4 32.7 29.2 23.4
Payout Ratio - - 28.0 - -

(Panasonic Corporation 2013)

6.2 Mid-Term Management Plans

Since 2000, Panasonic (then MEI) has released five mid-term business plans: in
2001, 2004, 2007, 2010, and 2013. So far, the target figures were achieved only
once with the plan “Leap Ahead 21”.

Target
figures
(2-year
Year President Name Main objectives period)
2001 Nakamura Value Creation 21 “Deconstruct & Create”: Sales:
implementation of structural 9 trillion yen
reform (14 business domains) and OPM: 5 %
growth strategy
“Super Manufacturing Company”
Lean and agile Panasonic
2004 Nakamura Leap Ahead 21 Accelerating growth business Sales: 8.2
Reinforcing management trillion yen
structures OP:
410 billion
yen
OPM: > 5 %
2007 Ohtsubo GP3 ¼ Global Double-digit growth in overseas Sales:
Progress, Global sales (emerging markets) 10 trillion
Profit, Global Four strategic businesses yen
Panasonic Continuous selection and RoE: 10 %
concentration (plasma TV)
(continued)
200 U. Mathies

Target
figures
(2-year
Year President Name Main objectives period)
2010 Ohtsubo GT12 ¼ Green Accelerate growth with Six Key Sales:
Transformation 12 Businesses 10 trillion
Expand overseas businesses in yen
emerging countries OPM: > 5 %
Strengthen solutions & systems RoE: 10 %
businesses FCF: >
Promote/implement collaboration 800 billion
with SANYO yen (3-year
Environmental targets period)
2013 Tsuga CV2015 Business division system OP: >
supported by four companies 350 billion
yen
OPM: > 5 %
¼ Cross-Value Eliminate unprofitable businesses FCF: >
Innovation 2015 Shifting from in-house approach 600 billion
Improve financial position yen (3-year
Growth strategy from customer period)
viewpoint

(Koitabashi et al. 2013; Kosuga 2009; F. Ohtsubo/F. Ohtsubo 2010)

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