Comprehensive Case Report #2: Philips and Matsushita: A New Century, a New Round. How did Philips become the leading consumer electronics company in the world in the postwar era? What distinctive competence did they build? What distinctive incompetencies?
Prior to the beginning of the World War II, the Philips organization was in the infancy stages of initiating a movement of technological prowess within the industry’s culture. They assumed the position as number one in the industry, consistently developing new manufacturing plants to keep in stride with innovations in the development of light bulbs because the company only made light bulbs and was not interested in diversification like other industry competitors. Philips also was in the process of converting longstanding plants in order to keep step with production technology. Philips developed its product line in the 1930’s, going from producing light bulbs exclusively, to also producing vacuum tubes, radios and X-ray tubes. But Phillips wanted more; the company did not want to limit itself to Holland. Philips was looking for international expansion.
During this time, Holland was a little market because of its lower population as compared to other competitor countries. Because of this, the company figured that exporting a considerable amount of its products in order to generate enough income to maintain the facility making method Philips is using. Philips was then converted into a “centralized company with decentralized sales and autonomous marketing in 17 countries”. So this now shows that even though Philips is a company domestic to Holland, the majority of its sales come from the exportation of its products to other countries. The marketing, advertising and promotions used for these products now depended on the country the product was being sold in. So their marketing campaign could not be universal. However, Phillips was due to encounter variables that altered the position of the company, said variables proving to be uncontrollable for the company.
Political affairs were an integral part in transitioning the Philips into a “mutli-national” organization. During the Great Depression, many nations implemented trade barriers and tariffs in order to help the domestic producers and economy. Phillips was able to work around these hindrances by developing and maintaining facility/facilities in the each of the nations/markets they sold their products. The Nazi invasion of 1939 and the ensuing exacting of World War II, assisted Philips in its conclusion to relocate its assets in Ally nations’ economies, specifically the US and England. R&D was moved to England, management to the USA. This caused Philips to rely on the independence and maintenance of the company to national organizations (NOs) since there was such growth in company resources in those area. This proved to be a positive development for Philips, allowing the company to respond to nation-specific situations faster than the competition. .
Once the war ended, Philips reaped the benefits of NO operation. Philips could now identify potential threats in a specific country in regards to industry/market and respond via production. Philips was also utilizing there competitive advantage in regards to the NOs in their research departments and their heavy existence in the local markets until the conclusion of the 1960’s. After the 1960’s, Philips competitive advantage became a disadvantage. The NOs became a detriment in that Philips was having difficulty acting in one accord as a company. This lack of organizational harmony made it very hard for Philips to innovate new products, created a lack of economies of sales in regards to production, and hindering the growth of the organization. The NOs started to do things in the best interest of the NO and not in the interest of Philips as a whole organization. Executives were no longer able to govern over the company as a whole, which created a sort of organizational...
Bibliography: 1. Bartlett, Christopher A. "Philips versus Matsushita: The Competitive Battle Continues." Harvard Business School Case 910-410, December 2009.
2. "Life, World, MBA and Universe!: Philips vs Matsushita." Life, World, MBA and Universe!: Philips vs Matsushita. N.p., n.d. Web. 01 Apr. 2013.
3. Tensa, Greg. "Phillips Vs Matsushita." N.p., n.d. Web.
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