Philips Matsushita

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In response to Harward Business School Case 9-392-156

Philips should pursue transnational structure by establishing integrated network of distributed and interdependent resources and capabilities in its core competencies: consumer electronics and lighting. Philips has developed local responsiveness through its decentralized structure of national organizations (NO). This structure has a great advantage in being able to sense and quickly respond to the differences in the local markets. As a result product development is a function of the local market conditions. Philips had developed 8 major R&D facilities throughout the world that are highly specialized. They have been a success introducing such products as first color TV in its Canadian NO, first stereo TV in Australia, and first TV with tele-text in the UK. However these inventions were not shared with the rest of the NOs in Philips because of the lack of communication between NOs and headquarters. For example, Philips’ Beta videocassette format wasn’t shared with other divisions as the strategically valuable invention, as a result North America Philips rejected this invention outright choosing instead to outsource and sell Matsushita’s VHS tapes. In order to prevent these strategic mistakes, the main role of the headquarters should be scanning of business activities across countries and identifying resources and capabilities that might be a source of competitive advantage for other companies in the firm Philips’ local responsiveness causes poor global efficiencies that need to be improved throughout the company. Transnational solution will help to retain local responsiveness as local companies search for new competencies that enable them to maximize profits in particular markets. International integration is realized when specific country’s operations develop unique competencies and become suppliers of that particular product in the market for the...
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