Philips vs Panasonic: Facing the 2008 Economic Crisis
IB40 SPRING 2012
Philips vs Panasonic: Facing the 2008 economic crisis
MSc. IBS
CPR 160989 – 3679 4/25/2012
1. Introduction Panasonic and Philips are two of the main consumer electronics companies in the world with different origins but similar international path. Several hurdles were faced by both companies in their evolution. This paper will analysis how the administrative heritage of Philips and Panasonic caused problem in the changing of their strategy, causing problem in the implementation of the respective strategic decisions. Moreover it tries to explain how time contingences and the external environment had influenced the strategy of the two MNEs and shape the organizational structure; sometimes leading to success, sometimes losing ground in the market field. Nowadays the main tasks of the two companies are conflictual : for Panasonic defending its leadership position, for Philips challenging the global leader. How to reach these goals? The last paragraph will address these objectives providing to the CEOs of the respective companies further steps to consider in order to remain competitive in the market field, from 2008 looking forward. 2. How the environment and culture shape companies’ strategy and organization 2.1 Philips evolution: from responsive to integrated Philips’s strategy, right after WWII, led the company to its success. The economic situation during the 30s, forced the company to transfer part of its assets and laboratories abroad. This led to a dispersion of responsibilities. Countries protectionism, high tariffs and trade barriers required local production facilities. These problems led to the adoption of a decentralized federation with independent and self sufficient units and autonomous marketing. The contingent environment spurred the management to rebuild their structures upon National Operations (NOs). Philips built its success on a worldwide portfolio of responsive national organizations. Economic conditions, tastes and
Philips vs Panasonic: Facing the 2008 economic crisis
MSc. IBS
CPR 160989 – 3679 4/25/2012
1. Introduction Panasonic and Philips are two of the main consumer electronics companies in the world with different origins but similar international path. Several hurdles were faced by both companies in their evolution. This paper will analysis how the administrative heritage of Philips and Panasonic caused problem in the changing of their strategy, causing problem in the implementation of the respective strategic decisions. Moreover it tries to explain how time contingences and the external environment had influenced the strategy of the two MNEs and shape the organizational structure; sometimes leading to success, sometimes losing ground in the market field. Nowadays the main tasks of the two companies are conflictual : for Panasonic defending its leadership position, for Philips challenging the global leader. How to reach these goals? The last paragraph will address these objectives providing to the CEOs of the respective companies further steps to consider in order to remain competitive in the market field, from 2008 looking forward. 2. How the environment and culture shape companies’ strategy and organization 2.1 Philips evolution: from responsive to integrated Philips’s strategy, right after WWII, led the company to its success. The economic situation during the 30s, forced the company to transfer part of its assets and laboratories abroad. This led to a dispersion of responsibilities. Countries protectionism, high tariffs and trade barriers required local production facilities. These problems led to the adoption of a decentralized federation with independent and self sufficient units and autonomous marketing. The contingent environment spurred the management to rebuild their structures upon National Operations (NOs). Philips built its success on a worldwide portfolio of responsive national organizations. Economic conditions, tastes and