The aim of this paper is to analyze the process by which Matsushita Electric branched out into radio manufacturing in the first half of 1930s and the organizational reform the company undertook as a result. The originality of Matsushita's divisional restructuring of 1933 is well known, and it was the earliest one to take place in Japan.
In 1930, Matsushita, which had succeeded in the electrical appliance industry, decided to expand into radio manufacturing. Its founder Kohnosuke Matsushita wished to produce trouble-free radio sets, which seemed a promising idea as the radio market at that time was flooded with inferior products.
It was, however, not easy to make Matsushita's dream a reality. The resulting radios were too idealistic and consequently too expensive, and Matsushita's radio business showed a considerable deficit. It forced the company to reorganize its radio business on July 1933 by integrating the manufacturing and the sales sections.
Following the reorganization, Matsushita was able to develop new models that were suitable to market needs, and its radio business expanded rapidly. Leaning from this success, Matsushita introduced its multidivisional structure on March 1934. It is clear that Matsushita's creation of a multidivisional structure was based on the same logic as that of Du Pont and GM in 1920-21 which were analyzed by A.D. Chandler.
