Philips & Matsushita

Portrait of Two Evolving Companies

 Case Theme

Environment

Structure

Culture

Global Strategy
Philips

Pre 1960’s
 Internationalization Process
Local production
facilities

Holding Company
Centralized to
S decentralized
T
R Tech and patent
A sharing agreements

T
E Backward Integration
G
Y Sales Organization
&
Joint Ventures

Exports
managers
hired

Mass prod Overcapacity WW I Counter Internationalization challenge Great depression

& Dutch control
GE
Local acceptance
ENVIRONMENT
 Matrix
Head Quarters
Eindhoven
Management Board

National Organizations 14 Product Divisions

Research

finance managerial development Local dist.

technical production
 National Organization
Level 1

Product Teams
Product policies and admin functions

Local Management Team Level 2

Technical manager Group Management Teams
Commercial manager
Finance manager Review progress and
resolve inter functional differences

Level 3

Senior Management committee

Product group directions and
national strategies alliance
 Competencies
• Strategic Competencies
– Two headed managerial board
• Commitment to technological innovation that allowed the
organization to retain its leading edge of product and process
innovations
• Strong market focused commercial bias
• Strategic Incompetencies
– Inability to bring competition to market
– Inefficiencies, high cost base
Philips

Post 1960’s
Rodenburg Chairmen
Dekker

Klugt

Timmer

Boonstra

Kleisterlee
 Tilting the Matrix
Defining
relationships Yellow Booklet NO was still powerful
IPCs

Corporate Council
Creating a Product Planning process Cultural Shift
sense of urgency Layoff

Core/Non-core
New group Mgt Committee
Beating the PD linked to mkts Financial Losses
Japanese Competition
Cross-functional rotations
&
Financial Recovery
Performance Rules Unable to shift
Cost Cutting Proven mkt niches focus to
being mkt driven

Move to Asia
Elimination of NO/PD
 Where does Philips stand?
1930s -Decentralized
high

1950’s - Matrix

Local
Autonomy

1970s -Centralized

low

low Central integration high

Matsushita

Pre 1980’s
 Internationalization Process
Matsushita: Expanding through Color TV

• Plant in Canada
• Manufacturing in
Quasar of US
Production base
S in US and Europe
• Plant in Cardiff
T
R Manufacturing
A facilities in
Low-wage countries
T
E Branch Office
MECA &
G Sales companies
Y
Exports

Post war Trade Pressure from Rising Protectionist 1972 - 1976

Slow down liberalization national govts sentiment
in growth
 MATSUSHITA
• Organizational Structure: Product Divisional Structure

Headquarter

METC
Product divisions Corporate Overseas Sales & Marketing Finance & accounting
Personnel Division
36 Divisions Mgt Subsidiaries Division
 Product Divisions

Tape recorder
Radio division Television division
division

Overseas sourcing
companies
Matsushita

Post 1980’s
 OPERATION LOCALIZATION

Had difficulty
creating
PERSONNEL desired
flexibility &
creativity.

TECHNOLOGY

MATERIAL

CAPITAL
 New Structure
Matsushita
Electric
Industrial Co.

METC

Industrial goods Finance and MIS &

Import Division Regional operations Service Planning Personnel
export division Accounting Administration
 Regional Operations

Latin America North America

China divisions Europe Divisions Asia Division Middle east division
Division Division

Manufacturing
Planning section Sales Section
Section
 Where does Matsushita stand?
high

Local
Autonomy
centralized

Decentralized

low

low high
Central integration
 Where were they on the strategy matrix?
high

Local
Responsive-
ness

low

low Global integration high

 Where are they on the strategy matrix?
high

Local
Responsive-
ness

low

low Global integration high

 The Balanced Organization
high

Need for
Local TRANSNATIONAL
Responsive-
ness

low

low Need for Global integration high

Q&A