Matsushita Electronic Industrial

1699 Words May 26th, 2005 7 Pages
Matsushita Electronic Industrial
Pham Thach
Executive summary: Matsushita Electronic Industrial (MEI) is a very successful company in both Japan and the global in the 1970s and 1980s. MEI 's success in this period came from its diversification of productions, dominance domestic market, unique corporate culture, and divisional structure in both domestic and international market. However, in 1987, under new circumstances, such as the change Yen prices, and the pressure of integration of information technologies that need international transfers, sharing, and synergies, MEI 's faced declines in sales and profits because its structure was exposed some weakness. To overcome these problems, MEI should choose Worldwide Product Division
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Therefore, Matsushita created a small-business environment in which all MEI 's divisions could maintain its growth and flexibility. The core of Matsushita 's divisional structure was "One product-One Division" system in which each product line was managed by a separate autonomous division that was expected to operate as if it were an independent corporation. Corporate management provided division with initial fund, and the corporate treasury operated essentially like a commercial bank. Divisions deposit their excess funds and received normal market interest. Request for additional corporate funds to meet expansion plans were submitted as loan applications to the central finance department. This organizational system generate a high level of internal competition among divisions, and helped drive new product development that managers saw as their best way to maintain long-term growth and profitability. The need to fund new product development also drove managers to maximize performance of existing products.
MEI managed the international business by categorizing its overseas branches and plants into three groups: The A group, the wholly owned single product global sourcing plants that reported primarily to the relevant product divisions of MEI and were tightly controlled by them; the B group was the multi-product sales and manufacturing subsidiaries that reported to corporate overseas management (COM); and the third groups of