Recognizing Our Responsibilities as Industrialists - Matushita Electricals

Company Perspectives:

Recognizing our responsibilities as industrialists, we will devote ourselves to the progress and development of society and the well-being of people through our business activities, thereby enhancing the quality of life throughout the world.

Key Dates:

1935: Konosuke Matsushita's company incorporates as Matsushita Denki Sangyo.

1953: The company begins selling washing machines, televisions, and refrigerators in Japan.

1954: A 50 percent share of JVC is acquired.

1974: The Quasar television division of Motorola is purchased.

1989: Founder Konosuke dies.

1990: MCA Inc. is acquired in a $6.1 billion deal.

1995: The company sells an 80 percent interest in MCA.

2000: Kunio Nakamura is named president and launches a major restructuring effort.

Company History:

The Matsushita Electric Industrial Co., Ltd. is one of the largest consumer electronics firms in the world. Although the company's name is virtually unknown outside of Japan, the brand names under which Matsushita sells its products are household words. Panasonic, Technics, Quasar, and JVC are all manufactured by Matsushita. The company operates four main business segments: AVC Networks, Home Appliances, Industrial Equipment, and Components and Devices. Its product line ranges from color televisions and DVDs to washing machines, industrial robots, and semiconductors. In Japan, Matsushita is as well known as its brand names. The company's founder, Konosuke Matsushita, is hailed as the patriarch of the Japanese consumer electronics industry.

Early History

Konosuke Matsushita was born in 1895, the son of a modest farmer who lost his family's savings speculating on commodity futures when Matsushita was only nine years old. At that age, Matsushita was forced to take a job in a bicycle shop to help his family survive. When he heard some years later that the city of Osaka had installed an electric railway system, Matsushita realized that great opportunities lay ahead for the Japanese electronics industry. He spent a few years working for a light bulb factory in Osaka, and by age 23 had accumulated enough business experience to found his own company to manufacture electric plugs, with his wife and brother-in-law Toshio Iue (who later founded Sanyo Electric).

Although Japan became a major international power during the 1920s, its domestic economy developed unevenly. Matsushita's small company prospered by keeping prices low and by incorporating new technological advances into its products. For this, Matsushita became very popular with consumers. He was also popular with his workers, whom he regarded as important partners with a right to participate in decisions.

After diversifying production to include bicycle lights and electric heaters, Matsushita moved boldly to secure a position as a direct supplier to Japan's large, complex retailing networks, which were historically dominated by larger, more established companies. Matsushita introduced radio sets and dry batteries in 1931 and electric motors in 1934; by creating fierce competition through discounts, the company was able to build large market shares in these selected markets. By 1935 the company had grown to several times its original size. On December 15 of that year, it was incorporated as Matsushita Denki Sangyo (Electrical Industrial).

Japan at this time was undergoing a severe political transformation as a right-wing militarist clique rose to power. The group won support from many industrialists, including Konosuke Matsushita, because it advocated the establishment of a Japanese-led pan-Asian economic community promising great profits for Japanese companies. As a leading manufacturer of electrical devices, Matsushita benefited greatly from the government's massive armament program. It soon gained markets in Japanese-controlled Taiwan, Korea, and Manchuria, and prospered during the beginning of World War II.

After the Battle of Midway, it was clear not only that Japan would lose the war, but also that the Greater East Asia Co-Prosperity Sphere promised by the militarists would never come to pass. Matsushita, locked in an uneasy partnership with the government, saw its fortunes deteriorate with Japan's.

Postwar Growth

After the war it seemed that the company's greatest task was to maintain sales in a country so thoroughly decimated by the war that the economy relied on barter. But first the company had to deal with the American occupation authority, which not only set price controls but also attacked Konosuke Matsushita for his support of the Japanese war effort and demanded that he resign his chairmanship. The labor unions, which the occupation authority sought to preserve, strongly supported Matsushita and threatened to strike if he resigned. Hoping to avoid wider labor unrest, the authority relented.

In 1951 Matsushita traveled to America for the first time to study the "rich America" he planned to make his most profitable market. An astute businessman, Matsushita recognized that his product lines must first prove themselves in their local market. His company successfully introduced washing machines, televisions, and refrigerators in Japan in 1953, and vacuum cleaners the following year. Concerned with maintaining measured and well-planned growth, Matsushita also became the first Japanese businessman to introduce five-year business plans.

When anti-monopoly laws were relaxed after the Korean War, Matsushita was permitted to make its first major corporate acquisition in 1954, a 50 percent share of the financially troubled Japan Victor Company (JVC). It was, for Matsushita, merely an investment; JVC was to remain not only independently managed, but also Matsushita's competitor in several areas.

Matsushita moved "upmarket" early, around 1957, by introducing a line of high-quality FM radio receivers, tape recorders, and a stereo sound system developed by JVC. In 1958 the company succeeded in relaying a color television signal, and soon afterward entered the television market--an especially important market as Japanese consumers became increasingly prosperous.

Until now, Matsushita had focused on the foreign market in its growth strategies, but the company began actively working to build a solid domestic market share, confident that its sales in Japan would grow