A: One is those venders who had been believingthat they had been squeezed by Matsushita. They thought that Matsushita startedas a small company and they should know how hard it would be for smallbusinesses to survive. “Matsushita could survive even getting more generous.How come they come to us to taking our bloods?? They have no mercy, haven’tthey? “This is the basic idea of type one business owners. We call them as“Victimized entrepreneurs”. On the other hand, there were small number ofvenders who were willing to have price reduction request. Mr.Inamori, of coursewho was fallen into this category, thought that complaining never solves thesituation. If Matsushita wishes to ask us the price reduction, we should dealwith that. This is his idea. We call such category of entrepreneurs as“Good-faith challengers”.
Q: What happened to the “Victimizedentrepreneurs”?
A: Over the years, according to Mr. Inamori,those victimized entrepreneurs had disappeared from competition. Some shut downtheir doors and others sold their businesses.
Q: Why were they not able to survive?
A: Obviously, they were not well motivated tosurvive. Their intention was always toward Matsushita and directed Matsushita’sattitudes to them. They had never looked themselves again, made their besteffort to improve their production process, nor piling up small but effectivechanges to reduce their sales price. If they had taken the initial action, wefeel they could have survived more but they certainly spent more time to lookfor more generous purchaser for their products.
Q: What did Mr. Inamori do for this OEM pricebattle?
A: Mr. Inamori kept demonstrating his strongcommitment towards maintaining their business relation with Panasonic. Inamorisaid to Panasonic, “Ok, now you decide whatever price you would like topurchase from us. You are the one who set out the price, however, once youpropose, please stick with it. NO more reduction we accept. Please do notintervene us any further price negotiation no matter how much we generate ourprofit from the agreed price point. We are confident to drastically change ourproduction process until we get enough profit.”
Then he started developing his strategy on howKyocera can reduce the cost.
Q: At the end, was Mr. Inamori successful?
A: Yes, he was. According to his words, Kyocerakept piling up their innovative details in their production process, andachieved profitable model under the proposed price.
Q:What was the lesson learned from thisepisode?
A: Those who lost were the “Victimizedentrepreneurs” while those survived were the “Good-faith challengers”, whoalways believed that Panasonic had trained them to grow a globally competitivecompany. The important lesson from this episode is your mind set, eitherfeeling get squeezed or trained. This obviously determines your business andlife outcomes.
* Mr. Kazuo Inamori,the founder of Kyocera, KDDI (one of the top tele communication companies inJapan) and the top of revitalization project of JAL. As a well-known Japaneseentrepreneur, he has been sharing his experiences and management know-how withmanagements of small to middle companies in Japan.
