Blue Ocean Strategy @ Panasonic – Business To Business focus

Panasonic Corporation is adopting Blue Ocean Strategy wherein the company is shifting its total focus to Business to Business customers and the company is forced to take such drastic strategic move as it is facing tough completion form Korean players like Samsung, LG who are dominating the consumer durables industry. Not only Panasonic other Japanese players like Sony, Toshiba are all facing tough competition. Panasonic has been predominantly a B2B company where in B2B segment contributes 70% of revenues and 30% of its revenues contributed from consumer products. In the USA, 80% of sales come from B2B, while in Europe 40% of sales come from B2B and in India 15% sales come from B2B and 85% come from consumer sales selling kitchen appliances, air conditioners, hair dryers, dry cell batteries, switches (through its acquired subsidiary, Anchor Electricals) and televisions. Kazuhiro Tsuga came to India earlier in 2010 as head of Panasonic Automotive Systems, a B2B division that makes electronic parts for automobiles. Tsuga met Maruti and Tata Motors, though the initial contact is yet to bear fruit. "This business takes a long time to get going. In the coming years, we hope to have more B2B business in India," he says.

In future, Panasonic Corporation President, Kazuhiro Tsuga plans to move company away from traditional in-house manufacturing towards partnering with industries that range from automobiles and aviation to logistics, retail, housing and healthcare. The products will still be electronic for example the video screens that is now designed for fitting on airplane seats but they will be developed for and sold to original equipment manufacturers. "Future growth will in B2B. Our objective is now to provide a better life to consumers through their cars, their businesses, their home construction," says Tsuga. This is a classic Blue Ocean Strategy, where the company moves out of hyper-competitive waters to uncontested markets. But as Tsuga San says, "The Koreans are competitive in home electronic products like televisions, but not so in other areas like B2B products. In B2B also we have competition, but the business is different. It is more customized, rather than standardized." 

Panasonic is not doing well financially and its stock has eroded by 80% over the last four years which also touched a ten year low in November 2012, but recovered courtesy of Tsuga’s well laid out midterm management plan, which has the stated objective of raising operating profit from ¥ 140 billion in the current year to ¥250 billion next year and ¥350 billion in 2014. How does he expect to achieve that? "By eliminating unprofitable businesses like televisions, semi-conductors and mobile phones," he says. Panasonic Blue Ocean Strategy focus is on creating uncontested B2B electronics market space where it is trying to bring standardized products to market which can easily aligned and installed with other products and create value both for customers and clients. Blue Ocean Strategy is being adopted to keep the iconic brand alive and survive in the market. The company is accredited with innovating products in the past and through innovation only the company can revive its fortunes and survive in the long term. This also proves the fact that often companies facing crises will look at Blue Ocean Strategy for survival, which is also high risk strategy.

One such product it launched recently is "Front Info Display CY-DF100D" head-up display, can be linked to Panasonic's "Strada CN-R500" and "CN-R300" series of car navigation systems. The system provides drivers with information such as information about where to turn right/left during route guidance, information about a bifurcation at an interchange, etc just by slightly turning the eyes, improving driving safety. The CY-DF100D continues route guidance even when a passenger is operating the system for playing music, the radio, etc and the screen is not displaying a map. Moreover, the brightness of the HUD can be automatically adjusted with an illuminance sensor. The CY-DF100D consists of (1) the "Projection Unit," which projects an image, (2) "Combiner Unit," which reflects an image, and (3) "Multi Expand Unit," which is used for connection with a car navigation system. The Projection Unit and Combiner Unit are installed on the dashboard on the driver's side.  As of Aug 29, 2013, the CY-DF100D can be installed in Toyota Motor Corp's "Alphard," "Vellfire," "Prius α," "Isis," "Porte," "Sienta," "Spade," Nissan Motor Co Ltd's "Moco," Honda Motor Co Ltd's "Fit hybrid" and Daihatsu Motor Co Ltd's "Move Conte."