Japan s Changing Culture The Breakdown Concepts o Culture in business practices o Corporation development Thesis o Panasonic one of the last standing traditional Japanese companies has undergone drastic changes due to the forces of globalization and the influence of Western ideas This is the story of the impact of these pressures on Panasonic and the transformation of their business culture Konosuke Matsushita Born November 1894 outskirts of Osaka Age 15 starts at Osaka Electric Light Company Untapped market for high quality household consumer electronics so he looks at light sockets Matsushita Electric Housewares Manufacturing Works founded 1917 o 3 employees family business Hoichi Kai 1920 o establish healthy loyal employee relations o cooperation unity of company is key o sporting events cultural and recreation activities Winning philosophy Matsushita Philosophy 1932 Our mission as a manufacturer is to create material abundance by providing goods as plentifully and inexpensively as tap water This is how we can banish poverty bring happiness to people s lives and make this world a better place Unreasonable profit margins were dishonest business practices and he always worked to ensure fair profit Cut production by half but don t dismiss a single employee Brief Introduction to Japanese Culture Confucianism high moral conduct and loyalty to others Honesty in dealing with others Reciprocal Obligations to show appreciation of network involvement Panasonic Core Values Matsushita Panasonic was established upon traditional Japanese values influenced by Confucianism 1 Strong Group Identification 2 Reciprocal Obligations Company 3 Loyalty to the company Success Panasonic Benefits 1 Company Housing 2 Guaranteed Lifetime Employment 3 Seniority Based Payment Loyalty Hardwork 4 Generous Retirement Bonus Matsushita Post World War II Japan s postwar generation considered Panasonic s benefits a fair bargain for their loyalty Regardless of the war and the material shortages Panasonic still produces quality products Panasonic maintains values and commitment to their employees 1950s 1980s Success for Matsushita Training School Panasonic benefitted from traditional Japanese culture as the business could hold onto a knowledgeable workforce through a period of extreme growth Change 1965 Konosuke Matsushita business traveling abroad inspire him High priority on bringing employee wages productivity up to American and European Standards 1965 Panasonic became Japan s first manufacturer to introduce 5 day work week Cultural Dynamics Change in Japan Generations after 1964 lacking traditional values Japan Asia s first CONSUMER Market Embraced many Western ideas and Individualism philosophies o o Productivity o Competition More opportunities for career mobility Did not want to be tied to a company for life Cultural Change Takes Effect 1990s Panasonic suffers from the effects of an economic slump Facing bankruptcy firms begin firing lifetime employees o young people question company loyalty New generation has different perspectives on their careers o increase in average wealth and individualism Forced to Embrace Change 1999 New Pay Scheme Introduced o Based on performance o Transparency o Encouraged individualism New employee packages 3 options o Traditional o Higher Salary o Highest Salary New Employee Packages Traditional Retirement bonus of 2 High Salary Subsidized company Highest Salary Highest starting year s pay Subsidized company housing Subsidized services Access to company sponsored events housing Subsidized services Higher starting salary salary Loyalty and Collectivism Weaken In the first year of the new plan 41 chose the second option and forewent the retirement bonus With payment based on performance Panasonic begins to encourage individuality and risk taking Panasonic from 2001 2009 Cuts growth and reactions to global failure Mass Layoffs during 2001 Panasonic begins to see profit in 2004 The Global Recession and Panasonic s reaction The losses during 2001 30 000 factories closed 13 000 jobs terminated o 1 000 of those jobs being management positions The reaction of the companies culture to the cuts How did the cuts affect the culture of the company o Questions began to rise by those under the traditional system of lifetime employment o How would you feel if you were expecting to work somewhere your entire life and you were fired Profits of 2004 Matsushita wanted to re declare it s founding shift from deconstruction to construction What caused the rise in profits o digital productions The numbers behind the profit The net sales of 2004 was 7 47 trillion Yen about 71 92 billion US Dollars o Sales increased 1 from the previous year Net income increased to 42 1 billion Yen about 405 million US Dollars o the previous year had a net loss of 19 billion Yen The Global recession of 2009 With the US driving the Global Recession starting in 2008 Japan began to feel the affects in 2009 Until this point Panasonic had made improvements in their company but with the recession on it s doorstep cuts and layoffs were in the future for the company The Big Shift Major restructuring Cut 32 000 jobs since Oct 2013 Dissolution of all unprofitable departments by 2016 Kazuhiro Tsuga The Big Shift In the midst of transition from consumer to commercial markets New money makers automotive and housing Recent contract to supply 2 billion battery cells to Tesla Inc through 2017 Out of the Red Into the Black Profit increase of 116 from March 31 2013 Profit of Automotive Industrial Systems alone increased 217 in past year Third quarter Oct Dec earnings tripled from 2012 Restructuring plan to be fully implemented in 2016 already showing drastic results References http factsanddetails com japan cat24 sub157 item916 html chapter 7 Panasonic History Company Profile http www panasonic net history http panasonic net ir annual References continued http www businessweek com news 2014 02 04 panasonic profit beats analyst estimates as tsuga speeds reform Panasonic Fiscal Year Report 2014 http panasonic net ir