Closing case: Panasonic and Japan’s Changing Culture

week1_-_closing_case_1 x

BUSN-427- Case

Analysis

Grading Rubric

Your responses should be well-rounded and analytical, and should not just provide a conclusion or an opinion without explaining the reason for the choice. For full credit, you need to use the material from the week’s lectures, text and/or discussions when responding to the questions. It is important that you incorporate the question into your response (i.e., summarize the case in your introduction) and explain the principle(s) or concept(s) from the text that underlies your judgment. For each Caseyou should provide at least tworeferences in APA format (in-text citations and references as described in detail in the syllabus). Each answer should be double-spaced in 12 pt. Use the following Headings and length in your paper:

1.      
Summary

a.      In this section you should summarize the case in one paragraph.

2.      
Questions:

a.      
Number each question. Each specific question under the numbered Case Discussion Questions should be a paragraph in length since many Case Discussion Questions contain more than one question.Be sure to restate each question before answering it.

b.      
Apply the concepts from the appropriate chapters in your answers.

3.      
References:

a.       Include citations throughout the paper and a reference page with your sources. Use APA style citations and references.

 

Textbook Assignment Rubric

 

Analysis

 

 

   

 

Categories	Meets all Requirements (40 points)	Meets Most Requirements (26-22 points)	Meets Some Requirements (21-3 points)	Points Achieved & Comments
Organization	Student does an excellent job organizing each response to demonstrate an understanding of the question.  All required components are included in the response, including a restatement or summary of the case, an analysis of the relevant  issues, and a logical conclusion.  Paragraph transitions are present and logical and flow is maintained throughout the response. Sentences are complete, clear, and concise. (16 points)	Student does a great job demonstrating an understanding of the case.  Most required components are included in the response.  Paragraph transitions are mostly present and logical anda good flow is maintained throughout most of the response. Sentences are mostly complete, clear, and concise. (16-9 points)	Student does a good job demonstrating an understanding of the question.  Some required components are included in the response.  Some paragraph transitions are present, but response lacks logic and flow throughout.  Some sentences are complete, clear, and concise. (9-1 points)
Student does an excellent job analyzing the issue(s) and does not just provide a conclusion or an opinion without explaining the reason for the choice.  The analysis is supported by reference(s) to the course material and includes a clear and well defined explanation of the relevant principle(s) or concept(s) from the text.  (16 points)	Student does a great job analyzing the issue(s) and almost fully explains the reasoning for a conclusion or an opinion.  Most of the analysis is supported by reference(s) to the course material and includes a fairly clear and well defined explanation of the relevant  principle(s) or concept(s) from the text  (16-9 points)	Student does a good job analyzing the issue(s), but needs to further explain the reasoning for a conclusion or an opinion.  Some of the analysis is supported by reference(s) to the course material, but further explanation of the relevant principle(s) is necessary (9-1 points)
Format	Student meets all formatting requirements.  Each response is double-spaced in 12pt font and is between one and three paragraphs in length.  Responses have no grammar or spelling problems and are well-written.  At least 2 sources have been cited to correctly formatted APA citations, with both in-text parenthetical citations and an end-of-text reference list.  (8 points)	Student meets most formatting requirements.  Responses are double-spaced in 12pt font and are between one and three paragraphs in length.  Responses are have few grammar or spelling problems and are fairly well-written.  At least 2 sources have been cited to, but citation is not in correct APA format. (7-4points)	Student has not substantially complied with formatting requirements.  Responses may have major grammar or spelling problems and are not well-written.  Student may not have cited to at least 2 sourcesin APA format. (3-1points)
Total:

 

closing case: Panasonic and Japan’s Changing Culture

Established in 1920, the consumer electronics giant Panasonic was at the forefront of the rise of Japan to the status of major economic power during the 1970s and 1980s (before 2009 Panasonic was known as Matsushita). Like many other long-standing Japanese businesses, Panasonic was regarded as a bastion of traditional Japanese values based on strong group identification, reciprocal obligations, and loyalty to the company. Several commentators attributed Panasonic’s success, and that of the Japanese economy, to the existence of Confucian values in the workplace. At Panasonic, employees were taken care of by the company from “cradle to the grave.” Panasonic provided them with a wide range of benefits including cheap housing, guaranteed lifetime employment, seniority-based pay systems, and generous retirement bonuses. In return, Panasonic expected, and got, loyalty and hard work from its employees. To Japan’s postwar generation, struggling to recover from the humiliation of defeat, it seemed like a fair bargain. The employees worked hard for the greater good of Panasonic, and Panasonic reciprocated by bestowing “blessings” on employees.

However, culture does not stay constant. According to some observers, the generation born after 1964 lacked the same commitment to traditional Japanese values as their parents. They grew up in a world that was richer, where Western ideas were beginning to make themselves felt, and where the possibilities seemed greater. They did not want to be tied to a company for life, to be a “salaryman.” These trends came to the fore in the 1990s when the Japanese economy entered a prolonged economic slump. As the decade progressed, one Japanese firm after another was forced to change its traditional ways of doing business. Slowly at first, troubled companies started to lay off older workers, effectively abandoning lifetime employment guarantees. As younger people saw this happening, they concluded that loyalty to a company might not be reciprocated, effectively undermining one of the central bargains made in postwar Japan.

Panasonic was one of the last companies to turn its back on Japanese traditions, but in 1998, after years of poor performance, it began to modify traditional practices. The principle agents of change were a group of managers who had extensive experience in Panasonic’s overseas operations, and included Kunio Nakamura, who became the chief executive of Panasonic in 2000.

First, Panasonic changed the pay scheme for its 11,000 managers. In the past, the traditional twice-a-year bonuses had been based almost entirely on seniority, but now Panasonic said they would be based on performance. In 1999, Panasonic announced this process would be made transparent; managers would be shown what their performance rankings were and how these fed into pay bonuses. As elementary as this might sound in the West, for Panasonic it represented the beginning of a revolution in human resource practices.

About the same time, Panasonic took aim at the lifetime employment system and the associated perks. Under the new system, recruits were given the choice of three employment options. First, they could sign on to the traditional option. Under this, they were eligible to live in subsidized company housing, go free to company-organized social events, and buy subsidized services such as banking from group companies. They also still would receive a retirement bonus equal to two years’ salary. Under a second scheme, employees could forgo the guaranteed retirement bonus in exchange for higher starting salaries and keep perks such as cheap company housing. Under a third scheme, they would lose both the retirement bonus and the subsidized services, but they would start at a still higher salary. In its first two years of operation, only 3 percent of recruits chose the third option—suggesting there is still a hankering for the traditional paternalistic relationship—but 41 percent took the second option.

In other ways Panasonic’s designs are grander still. As the company has moved into new industries such as software engineering and network communications technology, it has begun to sing the praises of democratization of employees, and it has sought to encourage individuality, initiative taking, and risk seeking among its younger employees. But while such changes may be easy to articulate, they are hard to implement. For all of its talk, Panasonic has been slow to dismantle its lifetime employment commitment to those hired under the traditional system. This was underlined in early 2001 when, in response to continued poor performance, Panasonic announced it would close 30 factories in Japan, cut 13,000 jobs including 1,000 management jobs, and sell a “huge amount of assets” over the next three years. While this seemed to indicate a final break with the lifetime employment system—it represented the first layoffs in the company’s history—the company also said unneeded management staff would not be fired but instead transferred to higher growth areas such as health care.

With so many of its managers a product of the old way of doing things, a skeptic might question the ability of the company to turn its intentions into a reality. As growth has slowed, Panasonic has had to cut back on its hiring, but its continued commitment to long-standing employees means that the average age of its workforce is rising. In the 1960s it was around 25; by the early 2000s it was 35, a trend that might counteract Panasonic’s attempts to revolutionize the workplace, for surely those who benefited from the old system will not give way easily to the new. Still, by the mid-2000s it was clear that Panasonic was making progress. After significant losses in 2002, the company broke even in 2003 and started to make profits again in 2004. New growth drivers, such as sales of DVD equipment, helped, but so did the cultural and organizational changes that enabled the company to better exploit these new opportunities. The company continued to make solid profits until 2009, when, like most enterprises, it was hit by the global recession. Panasonic’s response to this showed how much the company had changed. The company quickly announced that it would close 27 plants and lay off 15,000 employees, half of them in Japan, signaling perhaps, the final end of it’s lifetime employment commitments.

Sources: “Putting the Bounce Back into Matsushita,” The Economist, May 22, 1999, pp. 67–68; “In Search of the New Japanese Dream,” The Economist, February 19, 2000, pp. 59–60; P. Landers, “Matsushita to Restructure in Bid to Boost Thin Profits,” The Wall Street Journal, December 1, 2000, p. A13; M. Tanikawa, “A Pillar of Japan Inc. Finally Turns Around; Work in Progress,” International Herald Tribune, August 28, 2004, pp. 17–18; and “Panasonic Will Slash Jobs, Shut 27 Plants,” Los Angeles Times, February 5, 2009, p. C3.

Case Discussion Questions

1. What were the triggers of cultural change in Japan during the 1990s? How is cultural change starting to affect traditional values in Japan?

2. How might Japan’s changing culture influence the way Japanese businesses operate in the future? What are the potential implications of such changes for the Japanese economy?

3. How did traditional Japanese culture benefit Panasonic during the 1950s–1980s? Did traditional values become more of a liability during the 1990s and early 2000s? How so?

4. What is Panasonic trying to achieve with human resource changes it has announced? What are the impediments to successfully implementing these changes? What are the implications for Panasonic if (a) the changes are made quickly or (b) it takes years or even decades to fully implement the changes?

5. What does the Panasonic case teach you about the relationship between societal culture and business success?

(Hill 127)

Hill, Charles W.L..Global Business Today, 7th Edition.McGraw-Hill Learning Solutions, 2012..