Matsushita Electric Corporation of America

founded: 1959

Contact Information:

headquarters: 1 panasonic way
secaucus, nj 07094-2917 phone: (201)348-7000 fax: (201)392-6007 url: http://www.panasonic.com/

OVERVIEW

Matsushita Electric Corporation of America (MECA) is the North American division of the world's leading consumer electronics producer, Matsushita Electric Industrial Company, Ltd., which posted sales of over $64.3 billion in 1997. Its MECA division contributed $7.4 billion in revenues to the parent company's sales. MECA manufactures popular-brand Panasonic, Quasar, and Technics electronics and appliances like televisions, VCRs, audio components, and microwave ovens. MECA also operates 23 manufacturing plants with 150 business locations, including the United States, Canada, Puerto Rico, and Mexico. In 1996 MECA controlled 17.7 percent of the U.S. camcorder market, 4.2 percent of the total color TV market, and over 10.0 percent of the large-screen TV market.

MECA restructured its operations in the mid-1990s and sold most of its ownership in the MCA movie studio to focus on consumer electronics. The company also took steps to differentiate between the Panasonic, Quasar, and Technics brands, in order to sell more products to more customers. As the consumer electronics industry slumped in 1997, MECA began introducing new products, including DVD-RAM drives, digital cameras, and the LCD micro-camera. As new technologies translate into consumer products, MECA hopes to be the leader of the industry.

COMPANY FINANCES

Matsushita Electric Industrial of Japan was listed number 23 in Fortune's "Top 25 Of The Fortune Global 500" list in 1998, with total sales of $64.3 billion in 1997. MECA's 1996 performance represented a marginal increase over 1995's $7.3 billion and 1994's $7.2 billion in sales, but well above 1993's $6.5 billion in revenues. Since 1989, when the company brought in $4.8 billion, MECA's sales have grown by 54 percent.

HISTORY

In 1918 Konosuke Matsushita founded his first company, Matsushita Electric Housewares Manufacturing works, which later became Matsushita Electric Industrial Company (MEI), based in Osaka, Japan. MEI's early products included radios and dry cell batteries and, by the 1930s the company was aggressively researching television technology, which would become one of its North American division's core products. In 1959 MEI established Matsushita Electric Corporation of America (MECA) in Secaucus, New Jersey, as its principal subsidiary to oversee North American operations. In the ensuing decades MECA followed the parent company's lead in researching and developing televisions, VCRs, microwave ovens, audio components, and other products.

As home computer demand increased MECA launched its computer company, Personal Communications & Systems, in 1990. The new company handled the production of both desktop and laptop computers until 1994, when MECA created a separate unit for its notebook computers and accessories, Panasonic Personal Computer Company. Later in the 1990s, MECA experimented with new laser disk and television technology, hoping to have a strong market presence if these new technologies proved successful and popular.

In 1997 MECA underwent a restructuring of its management team upon the retirement of president and COO Richard Kraft after an eight-year tenure. The company appointed a nine-person executive management committee to handle operations in North America. MECA's chairman, Kunio Nakamura, was named to head the new committee, whose goal was to coordinate the efforts of increasingly diverse MECA divisions, which represented a range of products from the old Pana-sonic brand to the emerging DVD and plasma flat-panel display technologies.

STRATEGY

MECA planned to emphasize its Panasonic brand more in the 1990s and therefore changed the name of some of its divisions to reflect the added emphasis and more aggressive marketing of Panasonic. The company also formed Panasonic Corporate Enterprises Co. in 1996, in part to strengthen Panasonic's brand image. In 1997 a new subsidiary, Panasonic Digital Contents Inc., was established to produce DVD software for the well-known Panasonic label.

In addition, MECA strove to create a leaner and more efficient network of operations in North America by closing down smaller plants, such as its microwave facility in Franklin, Illinois, and consolidating microwave production with its appliance production. In 1995 MECA also sold 80 percent of MCA movie studios to Seagram's, while retaining 20 percent, in an effort to focus on the company's core products, electronics.

As a leader in the large-screen television market, MECA increased its production of television parts and sets in the United States. Then-president and COO, Richard Kraft, announced the company's goal of producing in the United States 50 percent of the equipment sold there. By 1996 MECA domestically produced 40 percent of its goods sold in the United States.

FAST FACTS: About Matsushita Electric Corporation of America

Ownership: Matsushita Electric Corporation of America is the umbrella organization for the North American operations of Matsushita Electric Industrial Co., which is a publicly held company traded on the New York Stock Exchange.

Ticker symbol: MC

Officers: Yoshinori Kobe, Chmn., CEO, & COO; Takao (Ted) Takahashi, VP & CFO; Paul Liao, Chief Technology Officer

Employees: 20,000

Principal Subsidiary Companies: Matsushita Electric Corporation of America is a private subsidiary of Matsushita Electric Industrial Company, Ltd. Co.

Chief Competitors: Matsushita Electric manufactures radio and television equipment and is a wholesaler of electrical appliances and electronic parts. Key competitors include: Sony; Sharp; Zenith; Toshiba; Sanyo; RCA; Magnavox. When Matsushita moved into the realm of digital video in the late 1990s, it was in direct competition with: Hewlett Packard and Philips.

Although the differences between MECA's Pana-sonic, Quasar, and Technics brands have been minimal, in the mid-1990s the company began to differentiate them in order to prevent customer confusion and product redundancy. In 1994 MECA formed Matsushita Consumer Electronics Co. (MCEC) as an umbrella for the three brands. Later, the company phased out its Quasar audio products and refocused the brand as an economy line, targeting consumers of lower-priced electronics and competing with the lower-end products of Zenith, RCA, and Sanyo. Panasonic was repositioned as the company's premium line of diverse consumer electronics, while Technics constituted MECA's premium-grade line of audio products. With this strategy in place, retailers could sell all three lines without duplicating their stock and more effectively target various MECA goods to different customer needs. The new business unit made television sales its first priority, followed by camcorders and VCRs, audio equipment, and the 3DO interactive system.

INFLUENCES

MECA and other consumer electronics companies found themselves in a slow period in the mid-1990s when sales of traditional electronics began to slacken and decline. Even though MECA's sales rose dramatically in the late 1980s and the early 1990s, by mid-decade they began to stagnate, growing about 1 percent in 1997. Moreover, the entire consumer electronics industry's sales declined in 1996 by 2 percent, which analysts attributed to market saturation and the lack of new products. MECA looked eagerly forward to the introduction of its new digital products, including cameras, TVs, and camcorders. MECA hoped that the new technology would boost the company's revenues and spawn new growth of the type the company experienced a decade earlier.

CURRENT TRENDS

As two new fields of consumer and industrial electronics emerged in the mid-1990s, MECA took measures to ensure that it would be a key producer of the new technology. With a Federal Communications Commission mandate to begin high-definition television (HDTV) broadcasting in 1998 and to replace standard-definition television with HDTV by 2006, television broadcasters required new equipment for transmitting these signals. MECA competed with companies like Sony to become a supplier of this technology and won a contract from the National Broadcasting Company (NBC) to convert all NBC-owned stations' analog equipment to digital equipment in preparation for HDTV broadcasting, which will provide viewers with higher resolution three-dimensional pictures with greater clarity and detail, as well as CD-quality sound. MECA also will produce HDTV sets for consumers who will have to replace or upgrade their televisions when stations discontinue broadcasting standard-definition television programs in 2006.

CHRONOLOGY: Key Dates for Matsushita Corporation of America

1918:

Konosuke Matsushita establishes Matsushita Electric Housewares Manufacturing to make electric plugs

1935:

Incorporates as Matsushita Electric Industrial

1959:

Matsushita Electric Corporation of America (MECA) is established in New Jersey

1960:

Introduces its first color TV

1969:

First Matsushita Electric Technological Exhibition is held

1979:

Matsushita Battery Industrial Co., Ltd. is established

1990:

Purchases MCA Inc.

1994:

MECA creates Panasonic Personal Computer Company to handle notebook computers and accessories

1997:

Panasonic Digital Contents Inc. is created to produce DVD software under the well-known Panasonic brand

In addition, the mid-1990s brought the electronics industry a new kind of laser storage device, the digital versatile disk or digital video disk (DVD). DVDs are positioned as the new format for laser disks, providing a standardized medium for audio, video, and CD-ROM applications, which largely required separate players with the old technology. DVDs can hold substantially more data than older laser disks such as the CD and the CDROM. MECA planned to help lead this technological revolution by developing consumer DVD products. Although MECA introduced Panasonic DVD players in 1997, the technology did not exist for DVD recording, which MECA executives felt would accelerate demand because consumers could use DVDs for audio and video recording, replacing their cassette counterparts. MECA continued research into how to develop recording capabilities in mid-1997 and by the end of that year was the first to launch DVD-RAM drives and blank, rewriteable media. The products were initially marketed in the United States and Japan. The product launch occurred as Matsushita's rivals—Hewlett Packard, Philips, and Sony—prepared to introduce competing DVD-rewriteable media. Matsushita executive adviser Richard Kraft said he feared a format war over the rewriteable DVD technology.

In mid-1998, Matsushita announced a formalization of their long-standing partnership with Microsoft Corporation. The two companies will combine their audio-visual and computer software experiences to develop digital technology for personal computers, digital cable advanced set-top boxes (ASTBs), and will allow Matsushita to license Microsoft Windows CE operating system in products under development, such as audio-visual and microprocessors.

PRODUCTS

In 1997 and 1998 MECA rolled out some innovative new products, including a digital camera, a LCD micro-camera, and a DVD player and drive. The digital camera, EggCam, features full video capture and adjustability capabilities for capturing images on a computer and for video conferencing. PalmCam marked the company's entrance into the mini-camera market. The LCD camera stores up to 94 images, does not require film, and comes with premier photo-editing applications by Adobe. The DVD player is MECA's initial offering for playing audio and video DVDs, offering superior sound, resolution, and user control than previous laser disk technology. MECA's Panasonic DVD drive allows computer users to explore the new data-storage technology that holds more information and runs faster than its CD-ROM drive predecessor. The DVD-RAM drive arrived in stores in January of 1998 with a retail price of $799. Two DVD disks also went on sale; a 5.2 gigabyte double-sided disk for $39.95 and a 2.6 gigabyte single-sided disk for $24.95.

CORPORATE CITIZENSHIP

In 1984 MECA established the Panasonic Foundation and operates with a $20 million grant from the parent company. The Panasonic Foundation strives to enhance public education, and thereby human life, in keeping with the visions of the company's founder, Konosuke Matsushita. By forming partnerships with entire school districts, from superintendents to teachers and parents, the Panasonic Foundation endeavors to improve public education by holding seminars, consultations, and workshops.

Matsushita encourages employees to become involved in their communities. One program, Kid Witness News, has attracted many volunteers from the company. Middle and high school students, mostly from the inner-cities of the United States and Canada, write, edit, and produce videos showing how the world looks to them. Since 1989 over 25,000 students from 200 schools have participated in the program.

MECA sponsored the 1996 Summer Olympic Games and supplied equipment for the games in Atlanta, Georgia. In addition the company donated almost $1.5 million in equipment and services to Clark Atlanta University. That allowed almost 900 students from black colleges in the South to gain experience in broadcasting. More than 600 of these students obtained paid jobs as assistants during the telecast of the games.

In Japan, Matsushita was one of the first companies to formulate a corporate environmental policy. The company decided to do away with chemicals that were destroying the ozone from their manufacturing plants. When any of Matsushita's companies develop a product, the environmental impact for the whole life cycle of the product must be accounted for. The goal is to lessen the extent of damage the product could do to the environment, so the company encourages plans for energy conservation, recycling, and pollution control.

GLOBAL PRESENCE

Matsushita of America operates over 50 different companies in Canada, Mexico, Puerto Rico, and the United States, with over 20,000 employees. Each company is allowed to develop policies and to make decisions that are best for the local region. This avoids superseding one culture over another, allowing for compatibility with local customs and conditions.

Matsushita of Japan has companies in 40 countries with over 265,000 employees and strives to make a positive impact wherever they are. The company has built schools in Thailand and has won praise for transferring technological information to local operations, aiding in the development of emerging economies.

SOURCES OF INFORMATION

Bibliography

"asian woes affect fortune global 500 list; europe provides bright spot for global economy as growth slows elsewhere." pr newswire, 14 july 1998. available at http://www.newsalert.com.

beatty, gerry. "change at the top at matsushita." hfn, 17 february 1997.

bloomfield, judy. "matsushita picture." hfn, 16 december 1996.

"a brief history of matsushita," 15 july 1998. available at http://www.panasonic.co.jp/corp/hist/hist-e.html.

"matsushita and microsoft agree to combine efforts on digital audio, video, and pc tech." presswire, 9 july 1998.

"matsushita plans 'aggressive action' against slump." television digest, 29 july 1996.

"matsushita restructures u.s. management." television digest, 17 february 1997.

The Panasonic Home Page, 15 July 1998. Available at http//www.panasonic.com.

"Panasonic to Deliver DVD-RAM Drives in January 1998." PC Business Products, 1 December 1997.

Veilleux, C. Thomas. "Total Coverage: Matsushita Finds Room for Three Brands under One Umbrella." HFN, 2 January 1995.

"We Don't Want Format War on Recordable DVD." Television Digest, 3 November 1997.

For additional industry research:

Investigate companies by their Standard Industrial Classification Codes, also known as SICs. Matsushita's primary SICs are:

3663 Radio and Television Communications Equipment

5064 Electrical Appliances—Television and Radio

5065 Electronic Parts and Equipment, NEC