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Experimentation With Organizational Strategy: A Matsushita Example

Japanese Management

Organization develops through experimentation. You are so lucky as an entrepreneur if your strategy works at the first time. But it’s a reality that it will not work perfectly as our wish at the first endeavor. Nothing is wrong with that. It will be wrong and suicidal if you are very strict with that defective strategy; if you are so egoistic and are denying to do further experiment. Just when you start denying to experiment, you start to drive your organization to death.

It is ok that you are doing experiment with your strategies. Before it you have to ensure that you are utilizing your available resources at your fullest possible level. Even after the full utilization of resources if the strategy doesn’t work then you can go for the change, in resources or in strategies. One thing to remember that resources are easier to change, incur less cost than that of strategies.

Generally organizational strategies and structure are formulated in coherence with the existing business culture of the community within which they are doing business. But when there is a question of survival and growth you can be a rebel. For example, Matsushita Electric Company, one of the 50 largest electronic appliance companies in the world based in Japan experimented with its strategies and became successful. They came out of the traditional way of naming a brand with Japanese word. They named their brand like National, Panasonic, Technics etc.

Instead of dealing through existing networks of independently owned manufacturer’s reps (which still are the dominant distribution system in Japan today), Matsushita, Founder of the company, created his own channels of distribution and went directly to the retailers, instead of an arm’s length relationship with them, he offered trade financing and forged a close and continuing partnership. (Pascale, Athos 1984)

The second element of the Matsushita strategy gave explicit recognition to the importance of market share. As soon as highest production volumes generated cost savings, these were passed on to the customer via reduced prices. In the 1930s, the conventional wisdom was for manufacturers to recoup their investments as quickly as possible by lowering production costs but holding prices as high as possible. Matsushita, inspired by Henry Ford’s pricing strategy for the Model T, grasped the concept of aggressively pursuing market share, gaining economies through manufacturing experience, and lowering price, thus establishing barriers to entry for competitors who found the small margins unattractive. (Pascale , Athos 1984)

The third element of Matsushita’s strategy is followership. From the outset, Matsushita did not attempt to pioneer new technology but emphasized quality and price. His second product – a bullet-shaped bicycle lamp-used styling as well as quality and price to identify itself in the marketplace: it became the most popular product of its kind and time. To this day, Matsushita rarely originates a product, but always succeeds in manufacturing it for less and marketing it best. (Pascale , Athos 1984)

Matsushita’s underlying strategic assumption is that profits are linked to growth and that investments which promote growth will eventually pay off in profits over the long term. (Pascale, Athos 1984)

It is imperative that you set your strategies thinking of your own reality. But study on the other reality and strategy taken by successful companies to cope with the reality is important for the entrepreneurs. It expands your area of consideration and increases the number of alternatives. Never keep your door closed . You need fresh air to breathe and to drive out the extra Carbon-di-Oxide that harms you.

Mr. Julfikar Islam is currently studying Marketing (4th year) at University of Dhaka. He is truly an organizational being. He has been working with a number of knowledge-based organizations for last 3 years within the University. His area of specialization is Supply Chain Management. He also has an effective knowledge about Branding, Current Market trends. He has been blogging for last 1 year about these issues in a number of national blog and community website.

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