PORTERS FIVE FORCES MODEL

The risk of new entry by potential

competitors

Low.

The degree of rivalry among established

companies within an industry

High

The bargaining power of buyers

Low

The bargaining power of suppliers

The threat of substitute products

I.

Low

Low

Electronics industry needs a high

amount of capital to be entered into
High economies of scale and
constant innovation is needed to
survive
Government regulations serve as
barriers to entry
Brand loyalty helps keep entrants as
a non-threatening force
Panasonic has been in competition
with Sony, also a Japanese
electronics company, for a long time.
It has been performing under the
weather compared to its rival until
Pres. Nakamura took the reins of the
firm.
The buyers in the consumer
electronics industry are individual
that do not have the capacity to
adversely influence the performance
of the industry. Their actions do not
pose great threats to the industrys
profitability.
Panasonic is a multinational
company with a global band of
suppliers. This gives the firm an
upper hand over its suppliers, who
are comparatively smaller entities
than Panasonic, making the
bargaining power of its suppliers
low.
Being in the consumer electronics
industry, there are few substitutes to
the products that the industry offers.
This gives Panasonic and its
competitors the ability to charge
premium prices.

The risk of new entry by potential competitors

a. Economies of Scale
Because of faster (shorter) cycle time brought by the new management
system, the company was able to gain economies of scale through mass

production of its products with flexible machine cells and a competitive

workforce.
b. Brand loyalty
Panasonic is an international brand and is recognizable all over the world.
It has posted respectable
Operating since 1918, Panasonic has built a strong brand loyalty across
the world, especially in its home country, Japan. It has been a household
name for years ever since it was founded until today. Panasonic enjoys the
brand loyalty built through years of service that potential entrants cant
easily match.
c. Absolute cost advantage
Panasonic has implemented using flexible machine cells coupled with
factory employees that pay close attention to quality. This has boosted
productivity and reduced the rate of defective products to 1% of its output.
With this low defect rate, Panasonic poses a cost advantage over its
competitors, especially prospective entrants.
d. Customer switching costs
Panasonic belongs to an industry that has low switching costs. This is an
advantage for its competitors. Panasonic offers home appliances that do
not require special features (e.g., unique software) to be used. It can be
easily replaced without accruing additional costs.
There is no immediate threat of any other brand entering the market and
becoming dominant. Panasonic is a leading electronics manufacturer however; it
must offer customers an array of electronic products that are cheaper to the
market than those of the competition. This strategy will enable them to create
significant entry barriers to competition.
II.

The degree of rivalry among established companies within an industry

a. Industry competitive structure
b. Industry demand
c. Cost conditions
d. Exit barriers
Panasonic has invested deeply in the use of robots and software in
manufacturing its products. This has been done to reduce labor costs,
reduce cycle time, increase output, and increase overall efficiency.
However, these machines and software are of little value when sold off
should the company choose to exit the industry.
Panasonic must be able to get their products to market quicker and cheaper than
their competitors in order to gain any measure of first-mover advantage. Margins
tend to be low in this industry and the consolidation of global data is one way of
making that will allow them to keep their costs down and the efficiencies high. By
following this strategy they will be able to process faster, cheaper, and more
accurate that their competition. This equates to lower prices for customers and
increased rivalry among existing competitors

III.

The bargaining power of buyers

The bargaining power of buyers in the electronics and home appliance industry is
very high as there is little to no switching costs. If a customer is not willing to pay
the price that Matsushita offers, they can easily opt to choose the competitors
products. Although buyers cant threaten the firm by entering the industry, they
have numerous economically feasible alternatives to choose from.
Buyer power is high when buyers have many choices of whom to buy from and
low when their choices are few. To reduce buyer power (and create a competitive
advantage), Panasonic must make it more attractive for customers to buy from
them than from their competition. Consumers expect the price of new technology
to decrease over time, and they would not accept price increases. In todays global
economy, customers quickly search the Internet to locate competing product
offerings and pricing structures

IV.

The bargaining power of suppliers

Panasonic is a multinational company with a global band of suppliers. This gives
the firm an upper hand over its suppliers, who are comparatively smaller entities
than Panasonic, making the bargaining power of its suppliers low.

Panasonic must contribute to host countries through local

procurement. We aim to establish partnerships with
suppliers by considering the feasibility of long-term
business arrangements in addition to optimum quality and
prices. We will also develop an information network among global
production operations to make flexible and prompt responses.
V.

The threat of substitute products

The threat of substitute products is high when there are many alternatives to a
product or service and low when there are few alternatives from which to choose.
Ideally, Panasonic would like to be in a market in which there are few substitutes.
However, in the electronics market, products can be easily duplicated by
competitors. For companies who are first to market, the competitive lead is
often short lived. Competitors duplicate products and many will be offered with
more features and at a lower price

Substitute products or services the threat of substitute products is high when there are many
alternatives to a product or service and low when there are few alternatives from which to
choose. Ideally, Panasonic would like to be in a market in which there are few substitutes.
However, in the electronics market, products can be easily duplicated by competitors. For
companies who are first to market, the competitive lead is often short lived. Competitors
duplicate products and many will be offered with more features and at a lower price.

Customers bargaining power buyer power is high when buyers have many choices of whom to
buy from and low when their choices are few. To reduce buyer power (and create a competitive
advantage), Panasonic must make it more attractive for customers to buy from them than from
their competition. Consumers expect the price of new technology to decrease over time, and they
would not accept price increases. In todays global economy, customers quickly search the
Internet to locate competing product offerings and pricing structures.
Suppliers bargaining power supplier power is high when buyers have few choices of whom to
buy from and low when their choices are many. Supplier power is the converse of buyer power.
Panasonic is a very large manufacturer of electronic products and they compete on a global
scale. By streamlining their database they would be in a better position to bargain with their
suppliers who would also benefit through quality supply chain management techniques.
Threat of new entrants is high when it is easy for new competitors to enter a market and low
when there are significant entry barriers to entering a market. Panasonic is a leading electronics
manufacturer however; it must offer customers an array of electronic products that are quicker
to the market than those of the competition. This strategy will enable them to create significant
entry barriers to competition.
Positioning and rivalry among existing competitors is high when competition is fierce in a
market and low when competition is more complacent. Panasonic must be able to get their
products to market quicker and cheaper than their competitors in order to gain any measure of
first-mover advantage. Margins tend to be low in this industry and the consolidation of global
data is one way of making that will allow them to keep their costs down and the efficiencies high.
By following this strategy they will be able to process faster, cheaper, and more accurate that
their competition. This equates to lower prices for customers and increased rivalry among
existing competitors.
Value Chain Model: In using this model it is important to keep in mind that a customer is only
willing to spend a certain amount for a product. When organizations add value-created activities
they must ensure that they will not result in increasing costs as customers will not be willing to
absorb them. The result is a decline in sales and customers looking to the competitors for more
favorable results. The value chain of Panasonic is very high. This company is extremely
dependent upon technology to provide topnotch products to their customers. They are also
heavily dependent upon technology in order to maintain their competitive advantage. The
electronics industry is such the raising of prices is not an option. They must seek alternative
ways to keep their costs down and in their pricing strategy in line with competitors. They also
had to introduce products into the market place fastest than their competitors. Primary Business
Processes: Each state of this generic chain accumulates costs and adds value to the product. The
net result is the total margin of the chain, which is the difference between the total value added
and the total costs incurred.
Inbound logistics consolidated data from all operations allowed for a more detailed picture of
the operations. Could be used in areas such as automated just-in-time warehousing.
Operations better able to manufacture products to target the electronic consumer with
features and prices that they are willing to pay for.

Outbound logistics consolidation of data could assist in more efficient order processing.
Marketing and sales Push model ofdata dissemination where a centralized data bank sends
the information to all employees who need it at the same time, ensuring uniformity. Employees
receive data on a targeted basis.
Customer service retail partners and e-commerce vendors receive product information at all
stages of a product rollout. More consistent product rollouts and product information.
Customers do not become confused while researching their purchases, and helps keep them
from move to a competitor. Support Processes:

Administrative coordination and support services 3 streamling and consolidate pools of

data located throughout the company. Disparate and isolated databases contained inconsistent,
duplicate, or incomplete information. Streamling this process would increase operational
efficiency and reduce administrative costs.
Human resource management with less handling of data in a variety of formats would reduce
inefficiencies and inaccuracies. At the same time, employee productivity would be increased.
Employees would be better informed with accurate and consistent data thus be able to make
better decisions.
Technology development develop a common set of data for new techniques, methods, and
procedures to launch products globally and beat their competitors to markets.
Procurement
of resources develop processes of finding ventors, setting up contractual arrangements, and
negotiating prices. 2. How did Panasonics information management problems affect its
business performance and ability to execute its strategy? What management, organization, and
technology factors were responsible for those problems? Panasonic is a global operation,
manufacturing 15,000 products and employing 330,000 people. They needed a business
strategy to help them deal with the many different problems of dealing with their massive
amounts of data. Their disparate systems resulted in affecting their operational efficiency and
drained significant amounts of money from the corporation as a whole. Management:

Complexity of task.

Unsupportive culture and attitudes

Increase Panasonics speed of bring products to market.

supported data-sharing.

Develop an atmosphere that

Convince

manufacturing partners of the benefits associated with MDM.

Convince corporate office in Japan that their data management strategy deserved global
adoption.
Organization:

Inadequate control over its internal data

Implement a multi-step process that includes business process analysis, data assessment,
data cleansing, data consolidation and reconciliation, data migration, and development of a
master data service layer.
Implement strict policies against computing activities that could

compromise the authenticity of the data.

Develop clear MDM rules to ensure master file
remained pristine.
Consolidate and systematize busiess processes related to the data.
Technology:

Deployment of master-data-management software from IBMs WebSphere line

Merge
disparate records into one authenticated master file.
Enforce standards for the formatting
and storage of data 3. How did master data management address these problems? How
effective was this solution? The deployment of the master data management (MDM) software
enabled Panasonic Europe to consolidate data, as well as systematize the business processes
related to the data. Overall, the company gained better control over its internal data. MDM
software helped them merge disparate records into one authenticated master file. For
Panasonic, the deployment of the MDM paid quick dividends. Within a year and a half,
Panasonic Europe was getting products to market faster and spending 50% less time creating
and maintaining product information. Time-to-market for a product was reduced from five-tosix months to one-to-two months. According to internal calculations, Panasonic Europe
improved its efficiency by a factor of 5 and anticipates a million euros a year while increasing
sales by 3.5%. Pansonics solution appears to have been very effective. They were able to use the
data to reduce the amount of high-cost inventory such as large-model TVs that vendors kept in
stock from 35 to 7 days, thereby increasing their profit margins. 4. What challenges did
Panasonic face in implementing this solution? Globally:

Create a common set of data for launching products.

Lackof a common database
structure equipped to accompany a number of countries. Each country had its own unique
language and different culture. Different currencies also resulted in complicating product
launches. North America:

Reorganizing workflow and consolidating product information.

Provide consolidated
views of product information that adhered closely to industry standards.
Panasonic worked
with IBM to create an interface apparatus to collect the required data for a repository.
Information required to meet new businesses processes could not be gathered from their legacy
systems, which forced Panasonic to add new interfaces.
Multiple facilities made their own
contributions to new products.
Facilities had their own cultures and information
infrastructures. They also valued their autonomy and the flexibility it furnished.
Different
entities might be unwilling to give up control over information due to the perceived loss of
power.
Required clear MDM rules to prevent too many hands from manipulating the data
so that the master file would remain pristine.
Work environment did not appear to support
the idea of data-sharing. Manufacturing partners:

Most partners were based in Asia and were content with their manual process for managing
data.
Prove effectiveness of MDM to manufacturing partners.