TOKYO, NOV. 26 -- A bright heart overflowing
With life linked together,
Time goes by but as it moves along
Each day brings a new spring.
Let us bind together
A world of blooming flowers
And a verdant land
In love, light and a dream.
Matsushita company song
In an era when many Japanese companies have quietly disbanded the practice of singing a company song in the morning, "Love, Light and a Dream" is still sung every day at Matsushita Electric Industrial Co.
It is a ritual that gives a small but revealing insight into the character of Matsushita (pronounced mot-SOOSH-ta), which announced today that it plans to buy MCA Inc., the parent of Universal Studios. Quintessentially Japanese and conservative, Matsushita is about as un-Hollywood a company as they come.
The Osaka-based firm, maker of the Panasonic, Quasar and Technics brands of consumer electronics, differs substantially from its chief rival, Sony Corp., which preceded it into the movie business with the purchase last year of Columbia Pictures. Matsushita is very much a part of Japan's dull gray business establishment, in contrast with Sony, a maverick firm whose globe-trotting chairman, Akio Morita, is an outspoken corporate philosopher.
Unlike Sony, which is renown for creating dazzling new products, Matsushita has built itself into a $38 billion behemoth by engaging in "copycat" manufacturing -- making essentially the same products as the competition, but often better and cheaper. Matsushita is also a domestically oriented firm, deriving about 56 percent of its revenue from the Japanese market, compared with 30 percent at Sony.
"Matsushita is run by bureaucrats rather than innovators and marketeers," said Chuck Goto, an electronics analyst at S.G. Warburg Securities (Japan) Inc. "I have not seen too many surprising personnel moves in that company for years. That sort of indicates the character of the company."
Now Matsushita is taking a nearly $7.5 billion flier into an industry where creativity is paramount and bureaucracy is despised -- a world of budget-busting films, temperamental directors, eccentric artists and inflated expense accounts. The company declares it will leave creative decisions to MCA management, but the match still seems destined to be an uneasy one.
That the match is occurring at all reflects the belief of giant electronic hardware makers like Sony and Matsushita that a product such as a videocassette recorder, digital tape player or high-definition TV, even if it is ingeniously designed, is unlikely to succeed in the marketplace if consumers cannot obtain plenty of "software" -- movies, music, programs -- to use on it. While the reasons actually may be more complex, this was one lesson Sony drew when its Betamax VCR lost out to the VHS machines produced by Matsushita and other companies. Sony dominated the market at first, but the tables turned when movie studios began producing more videocassettes in the VHS format than in Beta format.
Conversely, a hardware product can enjoy a big advantage if it is accompanied by ample supplies of software. The example again is Sony, which gave a boost to sales of the compact disc player by buying CBS Records in 1987 and using its record library to make more CDs available.
It is hard to find an industry observer who does not see the logic of Matsushita buying a software company like MCA, however disparate the corporate cultures. With Sony now in a formidable position following its purchases of Columbia and CBS Records, "I don't think Matsushita has any choice," said Goto.
In adding a movie studio to its empire, Matsushita has come a long way from its origins in 1918, when its founder, Konosuke Matsushita, considered Japan's foremost entrepreneur, started selling cheap, reliable electric sockets and primitive radio parts. The company became Japan's leading purveyor of the rice cookers and vaccuum cleaners and VCRs and personal computers required by Japan's emerging middle class, while at the same time setting up a huge network of retail shops -- about 24,500 at last count -- that sell virtually everything in Matsushita's consumer product line.
With a strong distribution system and high-quality products to stock the shelves, Matsushita for years was able to thrive without being innovative. Despite its nickname, Maneshita (the copycat), the company beat out more glamorous rivals in numerous markets. If it couldn't produce a new product quickly enough, it simply bought the company that did: Mergers and acquisitions have been an integral part of Matsushita's spectacular growth.
But now Matsushita is having to cope with a major problem: Its retail operation is losing business steadily to discount chains.
"They have been able to get away with me-tooing a number of product developments simply because they've been able to plunk their products almost instantly into the Japanese retail distribution market," said Martin Beresford, an analyst at Jardine Fleming Securities Ltd. "But they're recognizing that this is no longer the case. So now they've got to be quicker on their toes."
Accordingly, Matsushita has been pouring substantial sums into areas such as semiconductors, industrial robots and high-definition TV, hoping to establish itself as a technology leader. Computers and factory automation have become the company's fastest-growing category, expanding at an 18 percent pace in the six months ended Sept. 30. Its laptops now carry brand names such as Tandy, Siemens and International Business Machines. And its ambitions to enter the high-end workstation market are carried by an American company in Longmont, Colo., that it has nurtured from entrepreneurial beginnings and in which it now holds a controlling interest.
"In style, they are changing," said Beresford, who credits the firm's president, Akio Tanii, with recognizing the need for a more forward-looking strategy.
The MCA merger is certainly evidence of that. It could be seen as yet another example of Matsushita copying Sony -- Tanii denied it at a press conference today -- but it also suggests a degree of flexibility and derring-do that Matsushita has not manifested in the past.
Special correspondent Yasuharu Ishizawa contributed to this story.