Philips versus Matsushita

Essay by Faizaa May 2006

download word file, 3 pages 1.0

Case Overview

The case describes the development of the international strategies and improvement efforts made by two major competitors in the global consumer electronics industry. The history of both companies is traced and their changing strategic postures and organizational capabilities are documented. Particular attention has been given to the major restructuring each company is forced to undertake as its competitive position is eroded.

PHILIPS: Pre-world war II scenario Analysis

1892: The founder set a corporate culture of employee care and market leading compensation. Philips also stayed on a single product focus for a long time.

1899: Operational strategy of mass production to support which Philips emerged as a decentralized sales organization.

1918-1919: Philips began product line extensions

In the pre World War II scenario, therefore, PHILPS was making strategic planned moves that carried a vision of growth both in terms of product line and sales volume. Its adaptive orientation at that point in time was of Transformational management

The structure of Philips before war was that of a functional structure with several functions spread geographically worldwide.

PHILIPs: Post war Scenario

The NOs (National Organizations) created by Philips were given a great degree of independence during World War II: product development got decentralized. Production units were also transferred to many countries. As a result the NOs became geographic divisions (though undeclaredly so), which controlled their own finances, product development, production, sales etc. The corporate management layer however stayed at the headquarters.

When this happened Philips went into problems because one the divisional structure is somehow always more autonomous and second the divisions were distanced by national boundaries.

Trigger of Reorganization

The basic trigger and reason for Philips to change was therefore the organizational structure? However Philips in their 30 yrs of reorganization effort were treating the symptom i.e. over autonomy...