[ Panasonic SWOT Analysis ]
Panasonic is mainly recognised as a consumer electronics brand worldwide. However, there are some less well known aspects of its business which are also operating profitably. The brand operates in four business areas – consumer electronics, automotive, B2B and Housing. Its global footprint is one of its most important strengths. A customer focused company, Panasonic strives to build better lives for people around the world. The brand has some important strengths and is getting aggressive about its future growth in key regions of the world including Asia and Europe.
Despite a small fall in revenue in 2016, the brand registered good profits. Now, Panasonic is geared for its next stage of growth for which it will start reorganising its business. However, a large global business also means large risks including economic, political and structural. This is a SWOT analysis that highlights how the brand is doing in its respective areas and the key pillars driving performance for Panasonic around the globe. This SWOT analysis will help you understand the key strengths and weaknesses before the brand as well as its opportunities and challenges in the short and the long run.
- Well known brand name globally – Panasonic’s main strength is its brand name and a strong brand image. Its business has grown stronger through technological innovation. While it is mainly known for its consumer electronics business, the brand is also operating in other areas including automotives and B2B.
- Large and rich product portfolio – The brand has a large and rich portfolio of products. It makes and sells several products and services in each of the four business categories. From Air conditioning and housekeeping equipments to Housing equipment, remodelling, infotainment systems, automotive electronics, aviation solutions, factory solutions, food distribution solutions and many more, the brand provides a very large line of products and services.
- – Strong financial position. – The brand is in a financially strong position and the reason behind it are the strong sales of its products and services in various markets. While there was a slight fall in its sales in 2016 compared to 2015, the operating profit and net income of the brand have risen. Net sales of the brand reached 7.7 trillion Yen in 2015 and fell to 7.6 trillion yens in 2016. However, the profit margins grew stronger in 2016 and from 381.9 Billion Yen in 2015, it reached 415.7 Billion Yen in 2016. The net income attributable to panasonic corporation also rose from 179.5 Billion yen to 193.3 Billion Yen in 2016.
- – Innovative technology to support fast business growth – The brand is achieving faster growth through investment in innovative technology. It has brought innovative security solutions that combine ruggedised PCs and tablets with security cameras or wearable cameras to make policing effective. It has also increased the level of investment in IoT in the service industry. In the field of avionics too it has brought innovative solutions that are used for in-flight communication and entertainment. These things have helped it achieve faster growth globally. It is why its partnership with car and flight manufacturers has kept growing. Panasonic’s ‘Tough Book’ has a distinct image for its quality and usability which even the best brands in laptop industry have found difficult to imitate.
- – Strong position in growing Asian markets – Panasonic has a strong position in the automotive battery business where it is a leader and is continuously investing in quality and controlling prices so as to retain its leadership position. The level of quality that Panasonic provides in this area would be difficult for any Asian company to catch up and it is why its leadership position there cannot be easily challenged. Its washing machines and vacuum cleaners have also achieved very high level of sales in the Asian countries. Sales of the LED lighting fixtures and lamps in the Asian markets has also grown. All of these things indicate that to challenge Panasonic’s position in the short term would remain difficult for the other brands in the Asian markets.
- – Strong focus on R&D – The brand is focused on innovation to bring new solutions to the market that address unaddressed needs of its customers. It has got a separate R&D department and is investing in research and development in all the four business areas. In the automotive segment, it has focused its resources on strengthening its existing Advanced Driver Assistance System and Battery Business. The Advanced Research Division of Panasonic is involved in innovative research so as to promote faster growth of Nex-Gen Technology solutions. The R&D division of Panasonic is a very well managed aspect and also one of the most critical strengths of its business.
- – Focus on CSR and HR diversity– Panasonic has not remained behind in other areas either. Like the other best global brands, Panasonic too has invested in social and environmental responsibility as well as innovative HR management. CSR at Panasonic is an inherent part of its management philosophy. Apart from responsible business in its core business areas, the brand has formulated specific guidelines to drive honest behavior throughout the organization. It has invested in CSR initiatives in a variety of areas that include environment, human and labor rights, safety and health and has maintained a special focus on ethics. These initiatives extend to its supply chain as well where the brand has maintained strong relationships with its partners. It has also set milestones for itself for the future so as to create the image of a brand that believes in sustainable growth. Its Green Plan 2018 is an environment action plan that designates its key targets and includes the “Key Performance Indicators” which will help it measure its achievements.
– Weaker marketing strategy – The fast changing business world is putting the brand’s marketing capabilities to test which is why it has been feeling challenged by the aggressive marketing strategies of the other consumer electronics brands. Its marketing capabilities have not still grown as sharp as its nearest competitors. The brand must focus on designing localised marketing strategies for its various markets globally. While its marketing strategy for Japan is effective, for the global markets, it will need to invest more in marketing to come on par with brands like LG and Samsung.
– Management issues requiring reorganisation and restructuring – A large company can also be a complex company. Panasonic is a global company and seeing the aggressive business environment globally, it must use simpler management structure for better coordination on a global scale. In the recent years, it has done a bit of simplification but that will not be sufficient in the current environment. Panasonic is planning more restructuring and reorganisation in the coming years. However, it should note that a complex structure gives rise to issues that affect sales and growth and it needs to bring more synergy in its Manufacturing and sales to win in a highly competitive and highly volatile market. Geopolitical challenges are also a hindrance to growth. Faster growth can be achieved only through a simpler and more well managed structure.
– Slow growth compared to competitors: – Compared to its competitors like Philips, Samsung, Haier etc, the brand is less aggressive in its business strategy and that’s why its growth rate is affected. Other brands have been able to make deeper forays into local markets based on their sharper and more aggressive business strategies.
– Aggressive marketing techniques of competitors – The aggressive marketing techniques used by its competitors pose a formidable challenge and so sales of Panasonic products come under pressure due to their excellent marketing capabilities. Compared to them, it is a less marketed brand despite having good technology and quality. This is an important weakness which Panasonic must focus to solve in the shorter run.
– Rising middle class income – Panasonic’s opportunities are growing in this fast changing world. The income of the middle class has grown worldwide. It has become the most important segment of consumers for the brands. Rising middle class income has also given rise to new consumption trends that will prove favourable for the consumer electronics brands like Panasonic. An income rise is significant for the middle class since it will have more disposable income and several of Panasonic’s products target the middle class consumers. So, this is a profitable trend.
– Changing consumer demographics – The changing consumer demographics are also good sign that will love favourable for Panasonic. The percentage of young consumers in the global population is growing. Millennial are more familiar with technology and spend more shopping online. They were born with technology and use it with more convenience than previous generations. This means higher sales for technology brands.
– Lifestyle changes – In this era, people’s lifestyle has also undergone a major change which is significant for consumer electronics brands. Even in the developing and underdeveloped countries, people are growing more aware about technology and technology products. They spend more time on social media and come across brands and products on a daily basis. they want more convenience in their lives and that convenience comes from technology. Panasonic makes and sells consumer electronics products which are aimed at adding more convenience and happiness to people’s lives.
– Asian markets – Asian markets have grown more open in the recent years and that brings a bigger opportunity before the innovative consumer electronics brands like Panasonic. India has also risen on this scale and China was faster to make its environment favourable for the foreign brands. Several global brands are already enjoying profitable partnerships with the local brands in the Asian countries. The rising income in these two economies is a good sign for consumer electronics businesses. India and China both are tough economies that survived some of the most bitter economic fluctuations.
– Rising Competitive Pressure – Competitive pressure has become a major threat before the consumer electronics brands in the 21st century. Panasonic has several competitors with a strong market position. From Samsung to LG and Philips, all these brands have grown more aggressive in their business strategy. As a result pressure on Panasonic remains high and therefore its focus on R&D as well. Innovation has become the key to success in this era and brands have to invest more in quality because of consumers’ rising awareness.
– Regulatory Pressures – Another major threat to the global brands comes from government and regulatory bodies. They have grown more aggressive with regard to enforcement of relevant laws and oversight of businesses. Panasonic has maintained a string brand image and good financial position which helps it overcome the pressure to a large extent and still fast expansion becomes challenging if governments continue to remain aggressive in their attitude towards business.
– Fluctuations in the economic environment – While the recession has passed, the global economy is still seeing some turbulences here and there. In some areas, local economies are still experiencing small and big jolts that can affect sales and revenue. China and India, which are important markets have been through small and big economic jolts and had to fight hard to bring things back on track. Demonetisation in India and jolts in the Chinese stock market caused fluctuations that had made the economic and business environment unfavourable.
Panasonic is a strong brand both financially and technologically. It is a consumer electronics brand with a global footprint that also operates in three other business areas including housing, B2B and Automotives. Its one major strength is its innovative technology and another is its growing focus on R&D. The brand has done financially well because its operating profits have grown and net income too. However, the brand will need to conduct some reorganisation before it can move deeper into foreign markets. A complex business structure becomes a hindrance to profitable growth. Its competitors have also grown quite aggressive in their business marketing and sales strategies. While competitive and regulatory pressures have kept growing and regular small and big economic jolts in some of its markets also mark a trouble, Panasonic is poised for further growth based on its smarter technology and focus on research and development.
- Sources: –
- Panasonic Annual report
- Panasonic Investors Website