Phillips versus Matsushita

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Global Entrepreneurship

Case study

Philip versus Matsushita: A New Century, a New Round

Name: Choi Ying Kai

SID: 06523393

Date completed: 11-11-2007

Case background:

This case is about two giants in the global consumer electronics market, namely Philips and Matsushita. Their international strategies and organizations are very different - while the former pursued a localization strategy, the latter pursued a global standardization strategy; while the former made use of highly self-sufficient national organizations (NOs) for strong local responsiveness, the latter adopted "1 product 1 division" structure for cost cutting. Nevertheless, both companies encountered their difficulties as the global environment changed and have then undergone major restructuring over the years.

Aspiring to create significant product innovations at the beginning, Philips later became a leader in industrial research and was selling into diverse markets in the world. Also, by anticipating the war during the late 1930s, Philips transferred its overseas assets and research laboratories abroad and decided to build the postwar organization on the strengths of the NOs.

Their greatly increased self-sufficiency during the war had allowed most to become adept at responding to country-specific market conditions and build the respective technical capabilities. In short, their technology-driven innovations and national responsiveness earned them the leading position as a consumer electronics manufacturer after WWII.

Philips' competencies:

A long track record of innovations at local subsidiaries, which have developed strong research capabilities in different areas

Self-sufficiency of NOs allowed them to become adept at responding to country-specific market conditions, for example: local TV transmission standards, consumer preferences, and economic conditions.

Technological and research labs all supported by continued strong funding.

Philips' incompetencies:

Creation of the Common market eroded trade barriers and made NOs less important

Ability to bring products to market began to falter

Company fragmentation presented by the miscommunication between NOs...