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Panasonic SWOT & PESTLE Analysis

ID : 52387053 | May 2018

COMPANY PROFILE - Panasonic

Business Sector : Consumer Electronics, Housing Equipments, Automotive Systems, B2B solutions.

Operating Geography : Asia, Japan, Global

About Panasonic : Panasonic is a Japanese multinational company founded in 1918 by Konosuke Matsushita and was originally known as Matsushita Electric Industrial Co which was later changed to Panasonic in 2008. Panasonic has its headquarters in Osaka, Japan. The company started with producing electric lamps from there they later expanded in to producing consumer electronics. By 1961 they expanded their operations to America by producing television sets and by the 1970’s they ventured in the European market. Sanyo initially a competitor to Panasonic was acquired by the latter in 2009. Panasonic employs around 250,000 people in more than 75 countries covering the seven continents as of 2018.

Its mission statement states 'A business won’t survive without profits. Still, profit is not the sole purpose of business. Improving people’s lives through creating goods needed for society or through providing wholehearted services are vitally important. After all, business is ultimately for the betterment of our society. That is where the mission and value of every business exist. If business underscored by that mission is conducted forcefully, it will generate appropriate profits as a natural result of being supported by society.'

Panasonic Revenue : $64.78 as of FY 2017 (YOY increase of 1.6%).

Competitive Analysis of Panasonic

The SWOT analysis of Panasonic is presented below:
Strengths
Weaknesses
1. Strong auto business and joint venture with Toyota and Tesla Motors.
2. Diversified Business portfolio
3. Strong global presence and highly reputed brand image.
1. Decreasing R&D expenditure compared to industry rivals
2. Retracting products from key markets.
3. Low Spending on Marketing
Opportunities
Threats
1. Shifting their focus on providing B2B solutions.
2. Creating new business opportunity through Blue Ocean Strategy.
1. Low cost Chinese entrants
2. Hostile takeover and acquisition by other competitors

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Detailed SWOT Analysis of Panasonic

 

Strength

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Weakness

1. Decreasing R&D expenditure compared to industry rivals: Since the global recession in 2008 the R&D expenditure of Panasonic Corp has steadily decreased from more than $5 Billion to slightly less than $4 Billion in 2017. These figures seem to be small when compared to its industry rivals such as its South Korean counterparts Samsung, LG, and even some of the new Chinese entrants such as Haier. Samsung R&D expenditure last year stood just below $ 13 Billion whereas LG’s expenditure stood above $ 4 Billion with a steady growth rate of around 7%. The Japanese firms such as Sony, Panasonic, Hitachi and Toshiba that cater the white goods market segment have experienced stagnation in sales and revenues in the past decade because of low R&D expense.

2. Retracting their products from the key markets: When Panasonic introduced their plasma televisions in Europe and North American markets they sold them like hot cakes apart from their home turf, but in 2014 they exited the plasma TV market in America, while other competitors in the TV segment moved onto the LED displays and then onto the 4K televisions. Panasonic fell short as they launched their products late when compared to their competitors and they lost the first mover advantage that they previously held with their plasma televisions. Similarly, Panasonic exited the smartphone market in India and several other developing countries in Asia by offering their brand to other manufacturers. The burgeoning smartphone market could have provided them a high growth opportunity but they faced stiff competition from the local as well as international manufacturers catering the lower price segment because of their low-cost leadership which Panasonic was not able to sustain for long.

3. Low Spending on Marketing: Samsung last year spend an estimated amount of around $10 Billion as their marketing and $4 Billion as advertising expenditure in 2017 which was a 15 % increase from their last year’s budget, similarly LG’s advertising and marketing budget was just more than $5 Billion up by 13% from their last years expense whereas Panasonic lacks severely in this context where Panasonic ended up spending less than LG last year even though Panasonic earns $12 Billion more revenue than LG head to head in their global operations. In India the Chinese duo of Oppo and Vivo spend a sum of Rs2200 crores in 2017 which vastly outnumbered Panasonic marketing budget of Rs 200 crores for their smartphone business. Though trailing when compared to the industry leaders Panasonic does make an attempt to showcase their products on global platforms such as the $350 Million deal that they have with the International Olympic Committee for a period of 8 years and with this deal Panasonic are targeting the 2020 Tokyo Olympic Games to showcase their products on a global scale.

Opportunity

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Threat

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The PESTLE/PESTEL analysis of Panasonic is presented below:
Political
Economical
1. Conflict between China and Japan over East China Sea affects the business environment.
2. Damage to business because of looming US-China trade war.
1. Favourable operations and demand for tech products in emerging markets.
2. High demand for goods and government willing to increase the ease of doing business.
Social
Technological
1. Decline in population of Japan
2. High average age of Japanese population and labour cost.
1. High technical expertise and presence across several locations.
2. Skill development and innovation of new technologies.
Legal
Environmental
1. Stringent laws implemented by many countries to curb pollution levels.1. Curbing harmful emissions by inventing better technologies.
2. Initiatives taken towards building a sustainable future.
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Detailed PESTLE Analysis of Panasonic

 

Political

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Economic

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Social

1. Decline in population of Japan translates to lower revenue in Japan: Panasonic and other homegrown Japanese companies such as Sony, Sharp, Toshiba and other have seen a decline in their business on their own home turf, a reason that contributes to this decline in business is that Japan is suffering a cultural malaise where in the major population of Japan has aversion to human contact in a society dominated by technology, this leads to an extremely low birth rates in Japan because of which Japan is experiencing an irreversible decline in its population, Japan’s population peaked in 2010 at 128 million and since then it has been on a steady decline, Japan is also one of the very few countries to have a negative population growth (-0.1%). Because of this declining population the growth of Panasonic has stagnated severely in their own home country which contributes a significant portion of their international revenues.

2. High average age of Japanese population and high labor cost: Besides the issue of declining population, the average age of Japanese citizen is around 48 years one of the highest in the world whereas average age of India’s population is expected to reach around 29 years by the year 2020. Because of such high average age of population, Japan is seeing a decline in overall expenditure, Last year Japan’s GDP growth rate was around 1% and to make matters worse the labor costs in the country are extremely high which makes it worrisome for companies like Panasonic to increase their revenues within the country and also the high operational cost that the company has to bear due to high labor cost to operate in Japan. Over the years Panasonic has seen decrease in the percentage of the revenues that their Japan’s operations contribute compared to their global revenues.

Technological

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Legal

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Environmental

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Check out analysis of other relevant companies

References used in Panasonic Analysis Report

https://www.lifewire.com/panasonic-slips-out-of-us-tv-market-4055689

https://gadgets.ndtv.com/mobiles/news/panasonic-confirms-smartphones-exit-to-offer-its-brand-to-other-manufacturers-in-india-elsewhere-414393

https://www.statista.com/statistics/265645/ranking-of-the-20-companies-with-the-highest-spending-on-research-and-development/

http://www.bbc.com/news/world-asia-21992700

https://timesofindia.indiatimes.com/business/india-business/panasonic-plans-rs-200-cr-marketing-spend-for-smartphone-biz/articleshow/60059968.cms

https://electrek.co/2017/07/31/tesla-model-3-battery-cells-panasonic/

https://economictimes.indiatimes.com/tech/hardware/under-pressure-from-chinese-companies-panasonic-to-exit-low-end-phones-segment/articleshow/59151074.cms

https://www.statista.com/topics/2715/panasonic/

https://www.androidauthority.com/samsung-lg-marketing-budget-2016-761744/

http://www.alistdaily.com/strategy/inside-panasonics-brand-repositioning/

https://www.forbes.com/sites/onmarketing/2016/08/04/sponsorship-and-advertising-trends-in-the-2016-rio-olympic-games-three-things-to-watch-for/#5c30d47718c7

https://www.panasonic.com/global/corporate/profile/segments.html

https://asia.nikkei.com/Business/Panasonic-takes-its-housing-equipment-on-the-road

https://hbr.org/2012/12/what-panasonic-learned-in-china

https://www.bisinfotech.com/in-talks/see-tremendous-growth-opportunity-within-wearable-camera-segment/

https://www.businessinsider.in/Panasonic-is-building-a-smart-city-in-Colorado-with-high-tech-highways-autonomous-vehicles-and-free-WiFi/articleshow/62478047.cms

https://businesswireindia.com/news/fulldetails/panasonic-scrum-ventures-announce-joint-venture-foster-innovation/57274

http://www.autonews.com/article/20170530/OEM10/170539979/panasonics-auto-business-is-the-real-driving-force

https://edition.cnn.com/2017/02/07/asia/east-china-sea-senkaku-diaoyu-islands-explainer/index.html

https://www.cnbc.com/2017/12/20/east-china-sea-could-be-riskier-than-south-china-sea.html

https://www.brookings.edu/research/the-east-china-sea-dispute-short-term-victory-and-long-term-loss-for-china/

http://english.mofcom.gov.cn/article/statistic/lanmubb/ASEAN/201704/20170402551445.shtml

https://thediplomat.com/2017/04/japans-practical-taiwan-policy/

https://asia.nikkei.com/Opinion/Japan-will-be-caught-in-the-crossfire-of-US-China-trade-war2

https://www.wsj.com/articles/bank-of-japan-chief-warns-of-trade-war-fallout-1523278668

https://www.brookings.edu/blog/order-from-chaos/2018/04/04/why-a-trade-war-with-china-would-hurt-the-u-s-and-its-allies-too/

http://www.scmp.com/week-asia/opinion/article/2094173/libido-lost-and-found-why-talk-japans-population-decline-premature

https://www.washingtonpost.com/news/worldviews/wp/2016/02/26/its-official-japans-population-is-drastically-shrinking/?noredirect=on&utm_term=.f6b1aa948d81

https://www.theatlantic.com/business/archive/2017/07/japan-mystery-low-birth-rate/534291/

https://www.statista.com/statistics/604424/median-age-of-the-population-in-japan/

https://www.businesslive.co.za/bd/world/asia/2018-04-03-japans-business-confidence-sinks/

https://www.panasonic.com/global/corporate/sustainability/eco.html

https://www.businesswire.com/news/home/20171122005248/en/Consumer-Electronics-Home-Appliances-Market-India--

Copyrights and Disclaimer

Panasonic SWOT and PESTLE analysis has been conducted by Deepanker Pandey and reviewed by senior analysts from Barakaat Consulting.

Copyright of Panasonic SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions and Disclaimer for usage guidelines.