Philips versus Matsushita: A New Century, a New Round
How did Philips become the leading consumer electronics company in the world in the postwar era? A key success of Philips in my opinion came from a decision to build the postwar organization on the strengths of the national organizations (NOs). NOs are greatly increased self-sufficiency and became adept at responding to country-specific market conditions. What distinctive competence did they build?
Philips had 14 product divisions (PDs), and NOs built their own technical capabilities and product development. This is an adaption to local market’s needs. What were its incompetencies?
Philips had many technological innovations, but its ability to bring products to market was falter. Philips also have had problem in reorganizing the company to deal with its growing problems. 2.
How did Matsushita succeed in displacing Philips as No. 1? A key success of Matsushita in my opinion is ability to create new products to meet local market’s needs and very quick. Matsushita also adopted the divisional structure, giving each division clearly defined profit responsibility for its products, and using “one-product-one division” system. The division was acting liked entrepreneur and financed its product development from Matsushita’s banking system liked. Any division that failed over 2 consecutive years would be fixed. If the division could not be fixed, the division team would be replaced. This management strategy gave more effective and speed to react to local market in the competitive environment. In order to manage many divisions across the world, Matsushita has expatriate Japanese managers and technicians on foreign assignment for four to eight years. A few positions that is always almost reserved for them. Those are general managers whose main role was to translate Matsushita philosophy abroad, expatriate accounting managers who provide a truth of financial health, and Japanese technical managers...
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