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Tough Sledding will Continue for Japanese Consumer Electronics Firms

September 11, 2008

Analysis of:Who Will Own Your Living Room? Consumer electronics companies say this is the year of the digital home. But many of the coolest new products are not labeled "Made in Japan." | money.cnn.com

Sony, Panasonic, Pioneer, Toshiba, JVC, Kenwood, and NEC are all venerable consumer electronics brands, but unless there are dramatic shake-ups in the way they manage their businesses, their glory days may be forever gone.  Competition from Korean companies like Samsung and LG and a myriad of competitors from Taiwan, China and other Southeast Asian countries are part of the problem.  Movement away from many of their core products in audio and video to iPods and other MP3 players, on the one hand, and to flat screen TVs, on the other, is another.Perhaps more important, however, is the same problem that has plagued U.S. auto manufacturers.  They have entrenched middle market bureaucracies and very high operating costs, partially a product of their life-time employment philosophy—not unlike the power of U.S. unions.  Even though they may own manufacturing plants in low labor cost countries or have the best purchasing power of any buyer, they are burdened with too much burden.  

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