Question

In the 1990s, consumer appliances, Matsu**a's leading revenue generating category, registered a decline in profits. The Japanese style of management resulted in a large and aging workforce. The close monitoring of the subsidiaries by the holding company acted as a hindrance to the growth of the subsidiary companies. Matsu**a’s policy of acquiring technology from the partners and mass manufacturing failed in the 21st century. The diversified group was difficult to manage. In 1990, Matsu**a acquired MCA Inc., a US movie studio, with the idea of including the hardware and software products in the field of electronic entertainment in its portfolio. The acquired firm had problems with Matsu**a’s bureaucratic style of management. Matsu**a executives would turn down MCA’s request for funds and there was a communication gap because Matsu**a executives didn’t know English.


At the beginning of 2000, Kunio Nakamura (Nakamura) was appointed as the new president of Matsu**a. Nakamura made a mid-term plan “Value Creation 21” with the aim of transforming the company into a lean and agile “Super Manufacturing company”. The plan consisted of two parts - destruction of the old management structure and creation of a new one to compete in the 21st century. The destruction phase was aimed at reducing the inefficiencies in the company with the help of structural reforms. In the creation phase, the company wanted to develop V-products (products with high margins) and launch them in the domestic and overseas market. The concrete objectives of the plan were to increase the operating margin from 2.2% in 2000 to 5% in 2004 and make consolidated annual sales of $81 billion, by 2004, increase overseas production to 40% of total manufacturing by 2004 from 30% of total manufacturing in 2000.
Answer the following Questions:

A. Discuss the reasons for Matsu**a’s declining performance.

B. Examine how Matsu**a improved its performance using several restructuring initiatives.

Answer 1

Answer:

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