Boosting Efficiency at Matsushita

Case Study 4  - Boosting Efficiency at Matsushita

Question 1

There are several benefits of eliminating the longstanding policy at Matsushita that different divisions should be allowed to develop the same basic product.

First, by removing the fact that divisions were developing the same products, Matsushita allowed its departments to stop competing with each other. Indeed, this internal competition was counterproductive and did not create an overall teamwork within the company because each department was perceiving the other departments as threats and enemies in a way. By adopting this new strategy, harmony has gradually  been put in place.

Second, such perspective allowed Matsushita to boost the entrepreneurial abilities of its employees. Indeed, by having more autonomy and different goals depending on the departments, the employees got the ability to be more creative in their ways of meeting their objectives, which strengthened their relationships between each other. These elements cultivate a work culture based on collaboration instead of internal

As observed in this case study, there are possible drawbacks of such policy change in Matsushita. Indeed, in our society, internal competition can sometimes yield to better products and foster the creativity of organizational members. For instance, competitive advantage can be a drawback for many companies in the case where another company does a better product than yours and also makes it of better quality. This will drive customers away and reduce your company’s market share for the benefit of another. We can apply this concept by considering different departments instead of different companies.

Another very significant example is how internal competition is very common in the fashion industry and in the pharmaceutical company. Let's take the fashion industry where different designers design similar products for a target group but ultimately a small amount of designs one design will be manufactured, for instance in our society Zara copies every model of its competitors and manufacture at a greater to speed to get the materials going and limiting resources and possible stock.

In addition, there is one possible drawback of such policy change in Matsushita. In fact, it is very hard to improve technology in different industries as everything to its core is similar in so many ways, industries are trying to compete with their point of differentiation in order to attract as many consumers as possible but it is often hard.

Question 2

Matsushita was the first major group to imagine an alternative to the traditional social model based on lifetime employment, promotion to seniority and eternal loyalty to the company. No doubt because of his image of conservatism. Indeed, since 1998, the recruited staff has had the choice between two types of careers: the classic way with all the usual social benefits like housing in a building of the group, which offers a better return and especially the accumulation of a nest egg paid in one time on the day of retirement, or a different way of raising the monthly salary on the sum put aside to constitute the famous nest egg, so retired, the employee will receive a simple pension but no nest egg. But it has been found that the majority of employees have chosen this route. The advantage is that employees get a better salary and have the opportunity to leave the business more easily because they will still receive a pension.

This system is also attractive for Matsushita because it makes it easier to recruit mid-career employees or high-level specialists who prefer a flexible form of employment. The basic idea is not only to recruit employees from the university to train them internally and to become faithful until retirement. There is no dismissal of staff at Matsushita. So the benefits of lifetime employment at Matsushita are that they got the loyalty and hard work of their employees.

Nakamura ended this practice because it was too costly for the company to take care of its employees; they had all the advantages but that did not prevent some from leaving the company. He decided to end this practice by removing bonuses, free or cheaper housing and the guarantees they had. Matsushita then are having high costs while getting low profits.

Taking care of its employees in this way did not help the company because it was not profitable and its profits could not rise. It reduced the workforce and could be profitable as well. Given that the company was working at a loss, Nakamura reduced the workforce and had to work hard to get bonuses. This was very beneficial for the company because after losing $ 3.7 billion in 2002, it recorded in 2006 profits of $ 1.37 billion. In addition, profits increased by 20% to $ 1.7 billion in 2007, its highest turnover.

Finally, I think Matsushita's method of reducing the company’s costs was the best solution to increase its figure to have; after that, the company can afford to give bonuses and lifestyle to employees.

Question 3

As explored in this case study, the example of the Saga factory at Matsushita tells us a lot about the benefits of optimizing workflows. What is very interesting is that phones, for example, can now be assembled in one. Therefore, this case defines that optimizing workflows for work in progress such as partly finished products or even separate sets of pieces, such as little components like chipsets, keypads, and circuit boards now spent far less time in the factory. Indeed, shorter cycle times enabled the factory to slash inventories which means that problems in the product are given further attention and therefore productivity progresses over time.

In addition, optimizing workflows for the productivity of employees is an essential part of the workflow process. Indeed, this leads to faster production and increases the products being made per production period, which therefore doubles the weekly outputs from the same plant with the same number of employees and results in high productivity levels. This is a very interesting point, as we understand their influence on how the Saga factory at Matsushita influenced the workforce of today and redefined the way in which the productivity of both employees and the capital invested in plant and equipment are positively correlated.