Matsushita (Panasonic) and Japan’s Changing Culture Established in 1920, the con
ID: 425488 • Letter: M
Question
Matsushita (Panasonic) and Japan’s Changing Culture
Established in 1920, the consumer electronics giant Matsushita was at the forefront of the rise of Japan to the status of major economic power during the 1970s and 1980s. Like many other long-stranding Japanese businesses, Matsushita was regarded as bastion of traditional Japanese values based on strong group identification, reciprocal obligations, and loyalty to the company. Several commentators attributed Matsushita’s success, and that of the Japanese economy, to the existence of Confucian values in the workplace. At Matsushita, employees were taken care of by the company from “cradle to the grave.” Matsushita provided them with a wide range of benefits including cheap housing, guaranteed lifetime employment, seniority-based pay systems, and generous retirement bonuses. In return, Matsushita expected, and received, loyalty and hard work from its employees. To Japan’s postwar generation, struggling to recover from the humiliation of defeat, it seemed like a bargain. The employees worked hard for the greater good of Matsushita, and Matsushita 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 is 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 “salary-men.” 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. Matsushita 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 principal agents of change were a group of managers who have extensive experience in Matsushita’s overseas operations, and included Kunio Nakamura, who became the chief executive of Matsushita in 2000. Nakamura has said the time he spent as a manager of Matsushita subsidiaries in the United States had a strong impact on him, particularly observing how American managers such as Lou Gestner (who turned around IBM) moved quickly to restructure troubled companies. Under Nakamura, Matsushita 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 Matsushita said they would be based on performance. Matsushita 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 Matsushita it represented the beginning of a revolution in human resource practices. Nakamura took aim at the lifetime employment system and the associated perks. Under the new system, recruits were given the choice of three employment operations. First, they could sign on 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 Matsushita’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. Nakamura stated he wanted younger managers to become “rational and logical in their thinking … to be aggressive and ambitious, and at the same time to create an organization that can carry out their ambitious plans.” But while such changes may be easy to articulate, they are hard to implement. For all its talk, Matsushita was slow to dismantle its lifetime employment commitment to those hired under the traditional system. This was underlined early in Nakamura’s tenure when in response to continued poor performance, Matsushita 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 slowed, Matsushita has had to cut back on its hiring, but its continued commitment to longstanding 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 Matsushita’s attempts to revolutionize the workplace, for surely those who benefitted from the old system will not give way easily to the new. Still, by the mid-2000s it was clear that Matsushita was making progress. After significant losses in 20002, the company broke even in 2003 and started to make profits again in 2004. New growth drivers, such as sales of DVD equipment an flat screen TVs, certainly helped, but so did the cultural and organizational changes that enabled the company to better exploit these new growth opportunities.
“Differences in Culture”, and understanding for following issues:
Culture and the workplace: how cultures are distinguished along the four dimensions, and how the Eastern societies, e.g. Japan, differ with the western societies in terms of national culture
Cultural change: how cultural change influence values and norms in a society, and how cultural values and norms influence the economy and businesses; How can companies respond to cultural changes in business practices.
Explanation / Answer
Answer 1 & 2:
Potential Socio-economic Impacts of Culture
Culture refers to characteristic patterns of attitudes, values, beliefs, and behaviors shared by members of a society or population. Members of a cultural group share characteristics that distinguish them from other groups. Cultural differences will affect the receptivity of a individual to indivudal education and willingness to accept information and incorporate it into his or her lifestyles. It is important to remember that even individual education interaction has a cultural dimension.
Culture is an inseparable part of the society. Both are directly proportional to each other or In other words ill say, culture cerate’s society and society created culture. Though culture is many times blended by society to serve its need. For example: Dowry was a culture in India in order to help a bride to start her new life and to use in case of emergency but, the meaning is completely changed by the society now.
Culture and society are intricately related. A culture consists of the “objects” of a society, whereas a society consists of the people who share a common culture.
Sociologists define society as the people who interact in such a way as to share a common culture. The cultural bond may be ethnic or racial, based on gender, or due to shared beliefs, values, and activities. The term society can also have a geographic meaning and refer to people who share a common culture in a particular location. For example, people living in arctic climates developed different cultures from those living in desert cultures. In time, a large variety of human cultures arose around the world.
Culture includes many elements, including language, customs, beliefs, traditions, and ways of communicating. Another way of defining culture is to describe is “as the way things are done around here.” This way one can conclude that culture plays an important role and in fact causes impacts development in several different fields of our daily life. Certain of them are direct and several indirect effects of culture of which some of them are listed below:
Valued Socio-Economic Component
Issue
Social Cohesion
Intercultural orientation vs. Xenophobia
Integration of disabled persons or refugees
Innovation and Creativity
Social relevance of new, unfamiliar ideas
Opportunity for startup firms
Propensity to entrepreneurial risk
Artistic models for the development or 'testing' of new products and services
Education
Individualist vs. collectivist cultural perspectives on education
Capacity and knowledge building
Intercultural education
Wellbeing and Health
Psychological general wellbeing
Prevention and therapy effectiveness
Welfare costs
Family cohesion & relationships between youth and elders
Health beliefs: medical treatments vs. spiritual interventions
Sustainability
Effectiveness of waste recycling
Socio-environmental responsibility
Willingness to pay for greener economies and societies
Population sustainability: In- and out-migration effects / Change in social and cultural maekup of affected communities
Economic Influences
Business competitiveness through innovation
Creative and cultural industries
Tourism and attractiveness of destinations
Cultural resources as driver for growth and employment opportunities
Cultural sponsorship and patronage
Communication and interactions
Languages
Cultural beliefs and behaviour
Minorities and their legacy
Valued Socio-Economic Component
Issue
Social Cohesion
Intercultural orientation vs. Xenophobia
Integration of disabled persons or refugees
Innovation and Creativity
Social relevance of new, unfamiliar ideas
Opportunity for startup firms
Propensity to entrepreneurial risk
Artistic models for the development or 'testing' of new products and services
Education
Individualist vs. collectivist cultural perspectives on education
Capacity and knowledge building
Intercultural education
Wellbeing and Health
Psychological general wellbeing
Prevention and therapy effectiveness
Welfare costs
Family cohesion & relationships between youth and elders
Health beliefs: medical treatments vs. spiritual interventions
Sustainability
Effectiveness of waste recycling
Socio-environmental responsibility
Willingness to pay for greener economies and societies
Population sustainability: In- and out-migration effects / Change in social and cultural maekup of affected communities
Economic Influences
Business competitiveness through innovation
Creative and cultural industries
Tourism and attractiveness of destinations
Cultural resources as driver for growth and employment opportunities
Cultural sponsorship and patronage
Communication and interactions
Languages
Cultural beliefs and behaviour
Minorities and their legacy