Philips versus Matsushita

Group 4 - Section E
Philips: Background
- Founded in 1892, Gerard Philips, Eindhoven, Holland
- Single product focus, employee welfare
- Technology and product development core strengths
- Decentralized, joint leadership management style
- Highly autonomous responsive national organizations
Matsushita: Background
- Founded in 1918 by Konosuke Matsushita in Osaka, Japan
- Invested 100 yen to produce double-ended sockets. Expanded to various products
- First Japanese company to adopt the divisional structure
- Internal competition fostered among divisions
- Flood of products in post war boom
- Matsushita built its success on its centralized, highly efficient operations in Japan
Philips: Issues
1.) Power struggle between Nos and PDs

- Nos had the real power

- PDs found it difficult to get their voices heard
- Difficult to account responsibility

2.) Late to market

- Decentralized organizational structure and autonomous national organizations

- Example: failure of V2000
Philips: Issues
3.) Closure of inefficient plants – huge loss of manpower

- Loss of human resource capability on account of cost cutting

- Example : Failure of HDTV technology owing to 37% cut in R&D personnel

4.) Trade barrier erosion – independent country level subsidiaries rendered unnecessary

- Rivals moving to low cost regions

Matsushita: Issues
- Highly centralized and inflexible organization structure: Slow to manage change
- Dependence on competitors for technological innovation
- Threat of discontinuous innovation which may drastically change product
technology
- Excess capacity and evaporating profits
- Disgruntled overseas staff
- Lack of initiative by foreign plants
- Chaos by ‘Destruction and Creation Program
Questions
Q.1 Examine the environment at the time of the founding of Philips and Matshusita

Matsushita Philips
● Founded in 1918 ● Founded in 1892
● First Japanese company to adopt the divisional ● Decentralized joint leadership
structure management style
● Decentralized structure ● Single product focused
● Introduced new products to the market ● Local key staff
● Ex-pats key staff ● Technical innovation strategy
● Fast follower strategy
Q2. How has the environment of Philips and Matshusita changed since then? What are
the implications of the changes in environment on Philips and Matshushita and in terms
of their strategy and structure?

- Due to the falling trade barriers, there has been increased international competition
especially from economical Japanese companies
- The fixed cost required to develop a new product has seen a rise
- The major implication of the change has been that having a global dominant design
has acted as a source of competitive advantage
Q.3. What should Philips and Matshusita do in order to survive and excel?

Matshusita

- They should push their boundaries and elevate themselves in Innovation

- The need to prevent excessive interference of foreign entries to the center
- They should reform their structure to pursue a global strategy
- Multi-product divisions created by Nakamura might be a reforming step for short term but it may prove
beneficial for long term

Philips

- It should focus on reducing its cost by decreasing redundancy

- They should increase the amount of Research & development to drive innovation
- Reduce its headquarters-based bureaucracy
- They need to adopt a transitional strategy, due to which they will be able to increase its operations in the
foreign markets
- They also need to create a strategic alliance with various electronic companies to drive innovations and
reduce cost in the market for the consumer
Q.4. What is your learning with respect to the importance of legacy, strategy, structure
and systems on the performance of a firm?
Legacy
A legacy for today and for tomorrow : Cultivating respect and a positive business culture will tackle some of
the biggest challenges facing businesses today. Employee loyalty shores up a company against many
disruptors, and it has a big positive impact on retaining talented people. This, in turn, will increase the value
of a business today, as well as in the future.
Strategy

Ensures that goals are set, primary issues are outlined, time and resources are pivoted, functioning is
consolidated, internal environment is set towards achieving the objectives, consequences and results are
concurred upon, and the organization remains flexible. Identify their strengths and weaknesses, an effective
strategy will help you decide where your efforts and resources are best spent.

Structure

A sound organization structure ensures that the company has the right people in the right positions. A well-
designed organization structure facilitates the completion of projects. Project managers can better identify
the human resources available to them if the scope of each department’s responsibility – and each team
member’s capabilities are clear.
 THANK YOU

GROUP - 4

Akshat Bhargava - 133065

Pankaj Chandna - 133085
Rishabh Sharma - 133096
Vaibhav Bhatia - 133112
Yash Bhatia - 133119