The philosophy of a company is crucial for its effective functioning and further development. Matsushita Electric Industrial was among the first in the world to apply corporate philosophy to its business environment. The company emphasized the importance of harmonious interactions between business and society with a philosophy that stated that business operations should not be limited to organizational development and profit-making.
Any business should be based on a correct perception of life, society, and the world, as well as on the awareness of its own responsibility to society and the quest for progress. In order to understand how Matsushita Electric Industrial has influenced Japanese business culture, and vice versa, it is necessary to refer to the establishment of the company and the process of its development.
Traditional Japanese Culture and Matsushita During the 1950s-1980s
The company was established in 1920 and successively become a giant multinational corporation. The culture of Japan was important for the success of Matsushita during the 1950s to 1980s. The company provided guidelines for employee care, and it established among its employees and members a sense of company identification, mutual obligation, and loyalty (Kotter 29).
The leading principle was Matsushita’s lifelong care of its employees and its provision of all kinds of benefits to them; in turn, the company employees were supposed to work hard for the good of the company and prove their loyalty. Because many of the traditional cultural values in Japan are rooted in Confucianism, the company executed Confucian values throughout the work environment.
The founder of the company, Konosuke Matsushita, created an organizational culture based on national values and promoted the importance of the idea of individual involvement in the public welfare (Sato 204). This philosophy was based on a system of values that reflected a direct relationship between the prosperity of the company and each employee, as well as the overall prosperity of the Japanese nation.
Spiritual values implied an awareness of the individual worker’s responsibility for the progress of society and dedication to the development of the global civilization (Kotter 29). Each employee had to bear in mind that he or she contributed to the development of not only the company but also society. Devotion to the company was viewed as the key to success. Matsushita wanted to propagate prosperity by serving the needs of society. The fundamental idea of his ethical approach was the necessity to create an individual prior to creating a thing.
The founder of the company believed that its employees should honor Japanese cultural heritage while the company at the same time honored its employees and provided them with different benefits. Matsushita employees were offered inexpensive housing, the opportunity for lifelong employment, possibilities of promotion, and additional benefits upon retirement. Matsushita benefited from the values his company promoted, while the business experienced significant growth and maintained a loyal workforce. Because employees remained with the company, it was able to gain greater benefits from their accumulated knowledge and experience (Hirschmeier and Yui 11). The company did not experience high employee turnover, as all the members were loyal to Matsushita, which in turn enabled more effective operations in the market. The company encouraged continuity across generations and fostered employees’ children to follow the path of their parents.
Changing Culture in Japan
As time passed, a change in cultural attitudes in Japan became clear. Starting in the 1990s, many companies began to change their business models as the traditional Japanese values became more and more of a liability (Hirschmeier and Yui 307). Many of these values were no longer sustainable, and the companies had to reflect societal changes by improving their own corporate cultures and policies. Apart from the cultural changes, Japan’s economy also faced significant changes as it went through a deflationary cycle with increasing unemployment and decreasing wages.
During the 1990s, it became evident that the country was experiencing an economic slump. Many companies did not promote lifelong employment anymore, and workers started doubting whether the propagated traditional values would still guarantee a secure work environment and career prospects in the future. Moreover, the younger generation grew up in an environment in which Western ideas started to appear more attractive and sticking to outdated loyalty seemed irrelevant (“Panasonic: A Case Study” 173). Many of the younger people decided to seize the opportunity to cut ties with traditional companies and instead try finding better positions with progressive companies in Japan.
The change in values provoked a change in the general approach to work as well, especially in terms of how Japanese employees perceived their workplaces. As companies could no longer expect their employees to simply work for the good of society, the traditional work environment approach turned into a relic of the past (Taplin 65). Individualistic views replaced traditional group identification; indeed, many of the employees started focusing on their own futures and considering their own personal objectives above all else. In this way, the emphasis at work moved from cooperative goals to individual performance.
Despite this fact, the younger generation brought new perspectives to companies, as these employees tended to be more imaginative, creative, and goal-oriented. Nonetheless, the cultural change led to many other changes in terms of employment and organizational structure of companies in Japan. Regarding Matsushita Electric Industrial, its performance became significantly worse. The company started losing its competitive advantage and had a lack of flexibility. It was evident that the company needed to shift away from its traditional values and instead try to keep pace with more contemporary moods and attitudes.
Implementing Changes
Matsushita decided to make changes to their human resource strategy and address the changing workplace expectations of the era. Changes were made to different levels of the organization. The company introduced a three-tiered employment option, which gave the employees an opportunity to choose from three options: a higher salary without any benefits, housing subsidized by Matsushita, or a combination of the two (Sato 203). Despite the positive predictions, the implementation of the following systems went slowly, and apart from that, the company faced the issue of an aging workforce.
This chain of events led to a total company reorganization. In 2002, Matsushita established 17 stand-alone divisions around the world, each of which focuses on a particular sector to ensure a better position in the market. Apart from that, the company constantly tries to obtain new growth opportunities. After introducing the changes in policies, the company broke even in a year and became profitable soon thereafter.
Another change in Matsushita was the introduction of performance-based payment. Previously, the bonus system was based primarily on employee seniority; however, since that time, bonuses have been paid to those with higher productivity (“Panasonic: A Case Study” 189). Thus, the company has tried to stimulate its workers and promote the efficiency of the workforce. Further, to solve the aging problem, Matsushita reduced the number of staff members and gave more freedom to those with creative abilities.
Consequences of Implementing Changes
The implementation of such drastic changes to human resource policies can bring both benefits and problems to the economy of the company and the country. On the one hand, the individualistic approach to work facilitates a higher level of innovation and promotes entrepreneurial activity. On the other hand, this attitude also increases the risk of high employee turnover. In addition, it can become a challenge for the company to build a strong team to perform joint tasks on a permanent basis when the employees frequently change organizations.
In conclusion, Konosuke Matsushita was one of the manufacturers who most shaped the postwar economic success of Japan by introducing many organizational and managerial innovations that are now considered to be distinctive characteristics of Japanese business. He was the initiator of the development of the business philosophy that stresses the interdependence of different groups, including consumers, employees of enterprises, and suppliers.
By adjusting its strategy over many years, Matsushita Electric Industrial successfully evolved from a small firm into a successful giant international corporation (Aswathappa 192). This company’s case also vividly illustrates how the Japanese business management system can be regarded as a synthesis of imported ideas and cultural traditions. When companies pay attention to shifts in societal values or traditions, it is easier for them to implement timely and gradual changes to their policies and practices without experiencing drastic staffing problems and while also maintaining their competitive advantage.
Executive Summary
Matsushita Electric Industrial is a company that designs and produces electronic items for an extensive variety of multinational clients and businesses. It operates under four brand names: Panasonic, National, Technics, and Quasar. The Corporation was established in 1918 by Konosuke Matsushita. The company’s managerial legacy incorporates the “Seven Spirits of Matsushita,” an inside-oriented philosophy of relationships inside the company (Taplin 98). The recent president of the firm, Kunio Nakamura, introduced Value Creation 21, a philosophy that promotes external client orientation and expands the company’s values.
Before 2001, the company’s main capacity was its worldwide scale proficiency. The primary aim of subsidiaries was to execute the strategies of the parent company, while the hub developed the core ideas and values. The company had a divisional structure with varying degrees of decentralization, depending on the current president of the company.
Headquarters held authority regarding the product lines, while the subsidiaries could decide how to lead operations in their markets. The main task of subsidiaries was to achieve high sales and profit indicators, and international managers performed worldwide control and coordination (Aswathappa 193). However, the company was not able to achieve its objective of cross-boundary open streaming of data, and its leaders believed that the operational systems of disseminating information across the company levels were flawed.
After 2001, Matsushita leadership decided to change the company into a transnational organization with a geocentric strategy and a system of integrated networks. Currently, the company assets are spread among various units around the world. The objective of the company is to distribute resources effectively within its integrated network system.
Since 2011, the company has enhanced its performance greatly, and in 2014, Interbrand named Panasonic as the leader in “Best Global Green Brands 2014” in the electronic segment. Today, Matsushita Electric Industrial continues to strive to improve its performance; it constantly allocates resources for digital technology development and tries to maintain its leadership in the global market.
Works Cited
Aswathappa, K. International Business, New York: Tata McGraw-Hill Education, 2010. Print.
Hirschmeier, Johannes, and Tusenehiko Yui. The Development of Japanese Business: 1600-1973, Abingdon: Routledge, 2013. Print.
Kotter, John P. Matsushita Leadership, New York: Simon and Schuster, 2012. Print.
“Panasonic: A Case Study on Constant Change and Reinvention of a World Brand.” Multinational Management: A Casebook on Asia’s Global Market Leaders. Ed. Uli Mathies. New York: Springer, 2016. 173-203. Print.
Sato, Kazuo. “The Grand Strategy of Japanese Business.” The Anatomy of Japanese Business. Ed. Yasuo Okamoto. Abington: Routledge, 2010. 187-207. Print.
Taplin, Ruth. Decision-Making & Japan: A Study of Corporate Japanese Decision-Making and Its Relevance to Western Companies, Abington: Routledge, 2013. Print.