Matsushita Electric

Economy and culture are deeply interrelated and cultural changes always lead to the difference in business attitude since with the culture, the lifestyle of employees and common values also change. The great example of such process is Japan in the 1990s, when there were dynamic changes from the traditional culture to westernization, from collectivism to individualism. These changes helped the Japanese economy to overcome the economic crisis and helped to rise the economy to a high level. One of the most successful companies that show this transition was Matsushita.

In the 1990s, Japan’s economy was in recession. That long period of economic decline encouraged many Japanese firms and companies to change their traditional attitude in business. For example, they stopped to consider their workplace as lifetime employment, and they became more dynamic. The main factor for young people in choosing a job was loyalty, and companies, which worked in the traditional way of business, did not meet the requirements of a new generation of employees. Many younger people decided that it did not make sense to work for a single company for the whole life; instead, it could be better to face new opportunities on the market.

Moreover, the generation of the 1980s was richer, so people started to worry not only about money or about the material aspect of life, but their self-actualization was at the first place. Due to the informational development of society, the Japanese felt the impact of the Western world and adopted Western values, which led to economic changes.

The difference between the young people and the older generation was in many aspects: culture, lifestyle, and the dynamics of development. Companies were interested in hiring young people as they were more creative, active, and open-minded; therefore, they could deal with any challenges that the informational era had generated. Those factors caused changes in the traditional values in Japan in the 1990s.

Thus, the cultural change had a huge impact on the traditional values in Japan – the development of traditional workplace orientation, the westernization of business culture, transition from collectivism to individualism, and refusing lifetime employment system.

Matsushita Corporations culture can be characterized as a pyramid of people with a deep connection of all of the employees. The other points that show traditionalism in Matsushitas management are a high level of collectivism and a high masculinity index, with the emphasis on competitiveness and materialism. The leaderships role is that of planning, organizing, coordinating, controlling, and facilitating team effort and integration. Decision-making is centralized, with coordination at the highest; however, collective buy-in is assured through the utilization of the Ringi system. With this, call proposals are circulated, requiring people to sign on, signifying support of the decision; opinions of superiors are implicitly sought-after, so the Japanese managers devote time beyond regulation in trying to browse their boss. There is less delegation, and employees play a powerful role with high degree of specialization. The management vogue worries with the setting of exacting targets, accomplishing tasks, and making certain profitableness.

The Japanese managers have a broad knowledge of the corporate culture that is usually inexplicit and gained through years of observation and on-the-job expertise. Tasks are allotted to the teams, not people, and these produce sturdy links between individuals, the group, and the organization, creating information company-specific and reducing career quality outside the organization. Inside the organization, there are social systems, wherever personal networks and social positioning are vital, and goals are achieved through relationships. Roles and relationships are outlined formally by the hierarchy and the informally supported power, status, and authority. Communication is high context, additional implicit, and imbedded in relationships and things. At times, informal personal networks are also used to avoid the hierarchy likewise because of the rules and laws.

Japans changing culture influences the conduction of the Japanese businesses in the future. As it was said before, the Japanese culture changes has influenced the way of business, especially between young generations: they have become individualists, who deny working in the company for lifetime, who are dynamic and move from one work place to another very quickly. These social and cultural changes have led to the modifications and modernization of companies and their style of business. The most important part of modernization was to change their HR strategies and to develop a new pay scheme and recruiting system.

As the example, it is worth mentioning Matsushita, the company that changed the pay scheme for its 11,000 managers. Before the 1990s, it had the traditional twice-a-year bonuses system that had been based almost on seniority. According to new system, Matsushita started evaluating the employees by their performance through half a year. The salary due to work performance was considered as the best way to motivate workers and to stimulate employees to do their best for the company. In addition, this bonus became the key to the success of the company but not a gift for the years in the same firm.

Besides changing the HR and payment policy, companies were ready to fire even the experienced but not effective employees to motivate the other workers, which gradually changed the business approach and start staff refreshment. Particularly, reducing the apparatus could easily change and decrease the personnel costs and management costs in period of economic regress. Therefore, the other problem of the lifetime system was the low capability to solve the issues of new dynamic economic. The old employees could not face the challenges of the 1990s they were stuck in the stable system that was not enough flexible for new trade requirements. Modern approach would be convenient for the young workers who had creative ideas and power. The companies task was to create the most comfortable conditions for the young talents, to organize very pleasant business environment, and to motivate them to give the company all their resources. The main point was to make the incentive to entice and keep the creativity of fresh minds, make them gain knowledge of company but be risky and bold in the business decisions at the same time.

There were some future effects of such changes for the Japanese economy. The Western attitude in the Japanese economy of the 1990s had both advantages and disadvantages, like any other economical view. The accent on individualism brings benefits for small entrepreneurship grows, opens new opportunities for new products on market, and increases the level of competition. It is obvious that competition leads to increasing the quality of products on the market. These points cause economic growth and pull the country out of the economic slump. On the other hand, this tendency could be bad for many companies. For example, when a worker frequently changes workplaces, he cannot gain the company-specific knowledge and the experience needed, and as a result, he might not be so valuable for a company. In the same way, the high fluctuation leads to the problems with building a team within an organization to solve collective issues. Therefore, these factors have the impact on the pros and cons of Japans economy in different ways.

Matsushita was established in 1920, and after a few decades, it became one of the most successful electronics companies in Japan. When the company started its business, it worked with traditional Japanese principles that were based on the strong group identification, reciprocal obligations, and loyalty to the company. According to these culture specifics, it was possible for Matsushita to conduct such a recruitment policy that it was obligated to hire employees who worked hard for the success of the company. On the other side, Matsushita had loyalty to its workers and provided them with a wide range of benefits. After World War II, people had many problems in the economic sphere, and a few years later, they were thankful for every job they could get and did their best to achieve the prosperity. After getting the job, they would spend their lifetime working for the same company, which supported the development of the unique firm-specific knowledge as the result of experience and hard work. As a result, Matsushita was one of the first companies that influenced the rise of Japan to the status of major economic powerful country.

Despite the fact that individualistic approach has many advantages, in the period of 1950-1980, traditional values effected the Japanese economy in a very positive way. Group identification, reciprocal obligations, and loyalty to the company brought the company a great brand reputation. Everybody knew that Matsushita took care of its employees for the time they worked there; according to the Japanese work habits, it could be for a lifetime. Matsushita provided benefits, such as subsidized housing and retirement bonuses, as the result of hard work and high proficiency of workers. Employees did their best for the greater good of Matsushita and in return, Matsushita provided the employees with all possible social and material support.

The key for the motivation of Matsushita workers was not only in the benefits that company provided but also in the deepest culture specifics such as respect for hierarchy, stability of interests, and absolute commitment to the business. This helped the company become a leader in the industry at that time. Japans traditional culture was the main point for Matsushita to become a major economic power during the post war years and through the 1980s.

The traditional culture of Japan during in the years of 1950-1980 was influenced mostly by Confucian values. That is why the structure of business was manageable by the specifics of their culture. Traditional values became a liability during the 1990s and early 2000s because after the time of economic regress, Matsushita started to implement new forms of organization. As a result, many other companies changed business attitude from collectivism and seniority form of compensation to individualistic evaluation of an employee. The performance level became the most important aspect of work.

The problems caused by the traditional approach were the manufacturing equipment slowdown and rising cost. Therefore, modernization was the best solution to these problems not only in the technologies but also in the culture development. Traditional values became an accountability, although the generation of the 1990s did not show interest to the traditional ways of doing business. The ponderous, inflexible, and uncreative apparatus led to losing competitive advantage possibilities, and that was a sign of the needed changes.

Matsushita provides an excellent example in how the company has handled this challenge with its macro and micro approach. This huge, Japanese MNC has developed a number of guidelines that it uses in setting up and operating its more than 150 industrial units.

At the same time, the corporate enhances these macro tips with on-site micro techniques that facilitate the production of the foremost applicable structure culture within the subsidiary. At the macro level, Matsushita employs six overall tips that the area unit followed all told locales. They are as follows: to be a decent company subject in each country, among alternative things, by respecting culture, customs, and languages and to provide the overseas operations with the most effective producing technology the corporate has. Other tips are to maintain the expatriate head count low and groom the native management to require over and to let the plants set their own rules, fine-tuning producing processes to match the abilities of the staff. Furthermore, the units should make native analysis and development to tailor the product for markets and encourage competition between the overseas outposts and plants back home. By using these macro tips, Matsushita then permits every native unit to make its own culture.

The Malaysian operations area unit is an honest example. Since 1987, Matsushita started thirteen new subsidiaries in this Asian country, and employment there quadrupled, to roughly 25000 people. However, 230 of those workers are area unit Japanese. From these Malaysian operations, Matsushita presently produces 1.3 million televisions, 1.8 million air-conditioners annually, and 1/19th of those units are shipped overseas. To provide this output, native plants mirror Malaysia’s cultural mosaic of Muslim Malays, ethnic Chinese, and Indians. To accommodate this diversity, Matsushita cafeterias supply Malaysian, Chinese, and Indian food; to accommodate material non-secular customs, Matsushita provides special prayer rooms at every plant and permits 2 prayer sessions per shift.

One might ask the question as to how well this Malaysian labor will perform within the Japanese MNC. In the past, the Malaysian plants’ catch phrase was Lets catch up with Japan. However, today those plants frequency surpasses their Japanese counterparts in each quality and potency. Now, the comparison with Japan is not employed.

Additionally, Matsushita has found that the Malaysian culture is incredibly versatile, and the locals are ready to work well with virtually any leader. Commenting on Malaysia’s doctrine, Matsushita’s decision maker notes They square measure accustomed accommodating alternative cultures, and then they think about North American country as simply another Culture. That produces it a lot of easier for North American country to manage them than another nationalities (Bartlett, 2001).

Question 4

Today, Matsushita faces a variety of vital challenges as well as tries to remain profitable in a very slow growth, high value Japanese economy. Fortuitously, this MNC is doing extraordinarily well overseas, that is shopping for time to induce its house so as back home. An excellent quantity of this success results from the MNC’s ability to nurture and manage overseas structure cultures, such as in Malaysia, that measure to be extremely productive.

What proves Matsushita seniority evaluation system and lifelong terms of work is the fact that up to the 1990s, company provided fresh employees with a dormitory; thus, a part of the staff lived together, which made the spirit of the company more stable. Therefore, the Japanese consumer-electronics giant converted their dorms for a living and started to develop a new payment plan. Instead of full reliability, the company became more flexible and reduced costs, which was very important in the time of economic deflation.

Regardless Matsushitas steps to change the management system, the common Japans problems affected the entire business as the lack of demand was the main problem. However, Matsushita was the first company that started the westernization of the top management. Deflation and falling demand for its products decreased the profits by 43% in 1999 (The Economist, 1999). The other reason that had an impact was the falling prices for semiconductors and other important products.

Furthermore, Matsushita still had too many employees and too many ineffective businesses. While the main competitors, such as Sony and Fujitsu, seemed to be interested in such foreign ideas as managing themselves for their benefit, Matsushita, by contrast, had settled for just a small restructuring and a share buyback programme, measures that seem more like a sop to awkward foreign shareholders than a sincere attempt to reform (The Economist, 1999).

Matsushita managers changed the human resource policy, but the atmosphere of the traditional happy work environment was saved in the modern workplace. However, the company did not implement the modern changes very quickly despite the fact that individual performance at that time took precedence over seniority for compensation. Matsushita had created a three-tiered employment system that included social and retirement bonuses, or a higher salary, and no subsidized services, or some combination of these. However, just 3% of new employments chose the higher salary and no benefits option, while over 40% took the combination package. As a result, Matsushita could not solve the problem of the aging staff, which confronted the reforming of workplace.

First real changes in human resources started in the early 2000s. Matsushita HR managers offered the choice of three employment positions with differences in salaries, benefits, and commitments. With this choice, it was considered to find the employees, who could believe in democratization, encourage individuality, take initiative, and seek risks. There were some difficulties to the successfully implementation of these changes. Thus, some problems with the cancellation of commitments on mode lifelong work for the employees hired under the traditional method were observed. Moreover, the cost of the reforms was too high.

Prior to 2001, the company used the middle for world innovation methodology and utilized this strategy for its merchandise like the tape recorder. Its success in doing this was attributed to 3 factors – gaining the input of its subsidiaries into centralized activities, making certain that each of the useful tasks was connected to promote the needs, and making the group action price chain functions like development, production, and promoting by managing the transfer of responsibilities among them. The best risk for this strategy of the center for the world innovation was its market insensitiveness and attendant resistance of native subsidiary management.

Although the middle was innovative, rate had a history of inability to foster innovation among the existing subsidiaries. Once the no-inheritable innovative corporations like MCA, a US amusement large, it did not sustain these capabilities and it sold MCA at a $1.2 billion loss.

Theoretically, cross-boundary open flow of data was promoted. Intensive and intensive discussion was inspired at the different levels within the organization (among employees) and outside of it (with suppliers and customers). Through the informal exchange of data, rate created a learning company. Since 1990, rate promoted worldwide learning through its Human Development Center. Here, the goal was to implant the company business philosophy and to develop management, functional, and technical skills in its managers. However, the Chinese subsidiary perceived info flow as imperfect, since rate restricted international exchange of data nearly solely to its Japanese workers. No cross-subsidiary information was changed.

Nomuras price 21 has shifted the stress to domestically leveraged and globally connected innovation. Special resources and capabilities of national subsidiaries area unit transferred worldwide through information sharing across subsidiaries and headquarters. Resources of subsidiaries and parent area unit were deployed to together produce and manage activities.

Matsushita may be a company with an extended heritage of tradition that attempts to rework itself into a recent international structure. This strategic reorientation is acceptable as its stress shifts from producing to the extremely technological industries. Success is probably th exploitation of the rising amendment method, with the changes in attitudes and relationships followed by structural changes.

These days, MC faces the subsequent main issues: protecting its technological leadership through innovation and worldwide learning, defending and increasing its market share through the redoubled native flexibility, market responsiveness, and customer-oriented focus, and coordinating domestic and subsidiary operations for world potency and profitableness. The triple-crown readying of an international strategy needs the event of 3 mutually beneficial management processes. The first is a refined and thoroughly managed style of centralization, whereby management is primarily ancillary; however, it might intervene directly within the content of sure decisions. The second event is rationalization as such management is ready to structure individual and ancillary roles and ancillary systems to influence specific key decisions. Finally, there is socialization since such management establishes a broad culture of associate degreed set of relationships that give an acceptable structure context for delegated selections.

Rate has to build the four-dimensional views reconciliation of the viewpoints of national subsidiaries, world business management, and useful management to mirror the varied environmental opportunities. Assets, capabilities, associate degreed responsibilities have to be compelled to be distributed in order to create an integrated, mutually beneficial network. A versatile integrative method has to be utilized so management should differentiate its operation relationships and alter its decision-making roles by operating across businesses, among geographic units, and over time. Matsushita hopes to resolve these varied problems with success along with the price creation 21 strategy.

Societal culture and business success square measure mutualist. Matsushita had and has to think about the social group culture to realize bigger or, perhaps, any business success. As a result, the associate company desires invariably to treat the social group culture for the aim of getting and maintaining business success and desires to reply in an acceptable time to any changes of culture.

Societal culture and business culture square measure powerfully tangled. A societys culture incorporates a direct impact during a companys culture. Social culture influences business success through business culture. Business success in enterprises culture is appropriate with the leaders and staff. To succeed, the managing parties ought to anticipate changes in society that result in social-cultural changes. Every culture experience modifications should be applied slowly and they may not be changed completely. Therefore, the staff also has time to adapt to change, the employees will probably become another cessation of work, and employees are mainly conductive to a companys success. In this case, the change comes from the Confucian values to the Western ones, and the company has to adapt its working conditions.

Consequently, it is obvious, that without modernization of the business culture, Matsushita could not manage to achieve such success and to contribute to the national economy development. Culture changes in Japanese society hade influenced all aspects of peoples life, especially the material aspect. Thus, by combining the traditional approach with westernization Japan became one of the most economical powerful countries in the world. Despite all changes in the conducting business, one thing was left the Japanese mentality, with such qualities as hardworking and hierarchy respect, which helped the economy deal with recession. The other thing that helped Matsushita to become one of the world leaders in electronic industry was the national approach to employees from all over the world, which made the company popular on the labor market.