Summary of Article
This article is about Japanese tech giant Panasonic’s decision to revamp and refocus its efforts after reports of a 1.5 trillion yen loss in the last two years ending in spring of 2013. As a result of the approximately $14.8 billion loss Chief Executive Officer Kazuhiro Tsuga has planned to trim any unprofitable divisions of the company by March of 2016. With an exponential rise in competition in Asian tech manufacturers especially in China and South Korea, Panasonic was forced to make some drastic changes in efforts to reposition itself ahead of its competitors.
The article goes ahead and explains in detail the change in strategy and direction taken by Panasonics management, as well as its recent success. With reallocation of innovative and operational resources Panasonic has taken a greater role in its automotive and industrial systems departments. Tsuga has decided to cut the companies losses by either suspending, trimming or completely shutting down operations in plasma TVs, circuit board manufacturing and smartphone production. As the article explains, Panasonic for a long time has been reliant on a highly competitive consumer electronic market, which is now crowded by companies such as Apple and Samsung. Therefore Tsuga is pointing Panasonic away from consumer electronics and into more stable, longer lasting relationships with other companies such as Tesla Motors. Aside a redirection, Tsuga is also dealing with high production costs in Japan which is causing losses in the semiconductor manufacturing sector or Panasonic as well.
Summary of Illustrated Concepts
This article resonates upon several of the concepts covered in class. Aforementioned, Panasonic has been forced to implement new strategy due to the increase in competitors and change in the landscape of the market. In doing so CEO Tsuga, is seeking to take advantage of new market opportunities, bar off future external threats, and remain profitable in the midst of an ever changing industry and economic changes. These changes have allowed for Panasonic to become a nimbler, leaner organization, bail out of unprofitable businesses and take a path to recovery. In order to properly demonstrate these changes I have chosen to highlight external opportunities and threats, as well as Panasonic’s ability recognize its position amongst its industry and competitors.
In regards to opportunities & threats; Panasonic, unlike Sony, was able implement a strategy to take advantage of changes in the industry as competition grew exponentially over the last ten years as well as the landscape of the consumer electronic market. These two threats as well as the unprofitable businesses Panasonic was able to recognize it was involved in led to what now Panasonic can consider a recovery from its heavy losses. Had Panasonic not recognized these shifts and made the appropriate changes to these changes early on, they could have ended up where Sony now stands. Instead, they executed two major movements in these areas, which converted threats to opportunities for Panasonic.
The changes Panasonic underwent in the past year have repositioned the company. These two changes were not only the slow exit from the consumer electronic market but also the shutdown of unprofitable businesses. Then to address its semiconductor production issue it merged its operations into joint ventures with Fujitsu and Tower Semiconductor Inc., as well as sell three plants to UTAC Manufacturing services. These changes have been the genius of Panasonic’s management and seem to be just the right ones as Panasonic’s numbers are all projected to be favorable in their coming quarters.
How the Article Contributes to my Concept Understanding
I found this article actually very interesting. I was not aware that Panasonic and Sony were impacted so much by the rise of Apple and Samsung among many other brands now on the consumer electronics market. However, as a fan of Panasonic it was also interesting and nice to see management recognizing external changes and reacting to them appropriately. I also liked and saw the value in partnerships with Tesla Motors and other industries as they are much better moves than trying to compete with the outrageously advancing speed of the consumer electronics world. With this article I saw not only real life applications and identities to problems that giant multinational companies have but also how to deal with them and find profitable solutions.
Additionally, as the sample also concluded, when looking at what elements discussed in class to apply to this case, it was probably the most difficult part due to their interconnectedness. Many of the concepts and elements are very related and tough to easily identify without simply going through all that may possibly apply. Even though I realized this during this assignment, I was not surprised that everything was so connected, simply because one aspect of business always has almost endless effects on the others.
Amano, Takashi. Einhorn, Bruce & Yasu, Mariko (2014, February 13). Panasonic Revives as Other Japansese Tech Giants Falter. Retrieved February 16, 2011, from Bloomberg Businessweek: