| BUSINESSWEEK ONLINE : JULY 31, 2000 ISSUE | ||||||||
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| INTERNATIONAL -- ASIAN BUSINESS
A Bold Mechanic for Matsushita's Creaky Machine (int'l edition) Nakamura must drag the conglomerate into the Net Age When Kunio Nakamura was tapped to become president and CEO at Matsushita Electric Industrial Co. last March, he had one big demand: to keep doing what he'd been doing. As a senior exec at the world's largest consumer electronics conglomerate, Nakamura had reshaped almost everything he'd gotten his hands on--including U.S. operations. So when he assumed his new duties on June 29, the tall, tanned 61-year-old was given free rein to restructure the sprawling company. ''I didn't want to be a CEO unless I could implement my own policies,'' he says. ''My job is to instigate change.'' It's about time. Nakamura must transform a stodgy giant, with 290,000 employees in 46 countries, into a fleet-footed player in the information technology age. He must also keep its edge in components for next-generation electronics. In what promises to be the largest shake-up in the 82-year-old company's history, nothing will be sacred--not Matsushita's $68 billion in sales, and not its cherished tradition of career-long job security. ''Preserving sales levels and the size of the workforce are no longer key factors for us,'' Nakamura told BUSINESS WEEK. ''It'll be necessary for people to adjust their skills to the IT Age.'' Nakamura has a lot of ground to cover. True, the Panasonic brand is still immensely popular, and the company commands top market share in Japan for Net-capable phones, car-navigation systems, and DVD products. But it has never produced a mega-hit like Sony's Walkman. And it has been battered by falling profits on conventional items such as TVs and VCRs. Operating profit for consumer products fell 60% in the year to Mar. 31; group operating profit dropped 18%, to $1.8 billion. Management-wise, Nakamura inherits a creaky machine. Matsushita lags far behind Sony, NEC, and others in terms of restructuring. Its bureaucracy is mammoth, with too many business divisions--some 140 in Japan alone. No wonder investors have been less than exuberant about the stock: Over the past year, it has underperformed both the broad market and the electronics sector. So Nakamura is moving fast. A day after taking over, he pledged in a videotaped speech to ''empower'' employees by rewarding proven talent, not age or seniority. Nakamura also handed out 500 Net-ready cell phones to senior execs. ''This way they can be reached anytime,'' says Nakamura. He plans to invest $1 billion over the next three years to boost Matsushita's IT capacities. Nakamura's forte seems to be just such lightning-fast makeovers. After streamlining Matsushita's U.S. operations, he turned all 35 of Matsushita's money-losing Chinese subsidiaries into profitable units in less than two years. ''He carried out drastic restructuring in the U.S. and China,'' points out Kazushige Hata, consumer electronics analyst at ING Barings Securities (Japan) Ltd. ''He should be able do it here, too.'' WARY ANALYSTS. Under Nakamura, Matsushita will make a serious push into e-commerce. In October, it will begin selling Panasonic products online via a new portal site, LifeVit.com. Plans are also in the works to convert 7,000 of its 20,000 retail shops around Japan into e-commerce hubs that will supply and service goods ordered online. If it flies, the site will be recreated in the U.S. and Europe. With a reorganization plan due in October, analysts are looking over Nakamura's shoulder. They want him to fold the subsidiary JVC, a maker of audiovisual equipment, into the consumer electronics division. They advocate a similar move for Matsushita Electric Works Ltd., a maker of lighting equipment and building materials. Nakamura hasn't ruled out such moves. He also aims to boost sales 5% annually by leveraging his strengths in five key areas: cell phones, high-end chips, digital TV, displays, and DVD and other optical discs. These already generate 20% of group revenue. While investors are cautiously upbeat now that Nakamura has been named CEO, the new mood will evaporate fast if setbacks materialize. Nakamura hasn't a moment to spare. By Irene M. Kunii in Osaka _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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