Why Giants Change Their Minds

Both Matsushita and Sony were based in Japan, both manufacture consumer electronics, and both were similar to each other in size and brand reputation. Both of them were also facing the same problem: escalating manufacturing costs in Japan were eroding Japan's traditional advantages in manufacturing, especially when its neighbor China was emerging as the "workshop of the world" with low cost advantage. These two players, however, selected totally different manufacturing strategies. While Matsushita aggressively moved its manufacturing business to China, Sony suddenly shifted some of its production back to Japan. Matsushita's and Sony's supply-chain rebuilding strategies were diametric opposites with the same objectives — to improve their competitiveness by optimizing their critical success factors across their supply chains.Today's competition is not really company versus company, but supply chain versus supply chain. Managers and executives should realize that what they had done before for single firms is now being examined from the perspective of a chain of firms. The contemporary issues in Matsushita and Sony provide an extremely interesting lesson about how to establish competitive advantage by using effective supply chain management and how an advantage can be eroded by using incorrect supply chain management.