Philips & Matsushita

Portrait of Two Evolving Companies

Case Theme
Environment Structure

Culture

Global Strategy

Philips
Pre 1960s

Internationalization Process
Local production facilities Holding Company

S T R A T E G Y

Centralized to decentralized Tech and patent sharing agreements

Backward Integration Sales Organization & Joint Ventures Exports managers hired

Mass prod Overcapacity WW I & Local acceptance

Counter GE

Internationalization Dutch control challenge

Great depression

ENVIRONMENT

Matrix
Head Quarters Eindhoven Management Board

National Organizations Research

14 Product Divisions

finance technical

managerial

development production

Local dist.

National Organization
Level 1 Product Teams
Product policies and admin functions

Local Management Team Technical manager Commercial manager Finance manager

Level 2 Group Management Teams

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 1960s

Rodenburg Dekker

Chairmen
Klugt Timmer Boonstra Kleisterlee

Tilting the Matrix

Defining relationships

Yellow Booklet IPCs

NO was still powerful

Corporate Council Product Planning process Creating a sense of urgency Layoff

Cultural Shift

Beating the Japanese Competition & Financial Recovery

Core/Non-core New group Mgt Committee PD linked to mkts Cross-functional rotations

Financial Losses

Cost Cutting

Performance Rules Proven mkt niches

Unable to shift focus to being mkt driven

Move to Asia Elimination of NO/PD

Where does Philips stand?

high 1930s -Decentralized 1950s - Matrix

Local Autonomy 1970s -Centralized

low low Central integration high

Matsushita
Pre 1980s

Internationalization Process
Matsushita: Expanding through Color TV
Plant in Canada Manufacturing in Quasar of US Plant in Cardiff

S T R A T E G Y
Exports

Production base in US and Europe

Manufacturing facilities in Low-wage countries Branch Office MECA & Sales companies

Post war Slow down in growth

Trade liberalization

Pressure from national govts

Rising Protectionist sentiment

1972 - 1976

MATSUSHITA
Organizational Structure: Product Divisional Structure
Headquarter

Product divisions 36 Divisions

Corporate Overseas Mgt

METC Sales & Marketing Subsidiaries

Finance & accounting Division

Personnel Division

Product Divisions

Tape recorder division

Radio division

Television division

Overseas sourcing companies

Matsushita
Post 1980s

OPERATION LOCALIZATION
Had difficulty creating desired flexibility & creativity.

PERSONNEL

TECHNOLOGY

MATERIAL

CAPITAL

New Structure
Matsushita Electric Industrial Co .

METC

Import Division

Industrial goods export division

Regional operations

Service

Finance and Accounting

Planning

MIS & Administration

Personnel

Regional Operations

China divisions

Europe Divisions

Latin America Division

North America Division

Asia Division

Middle east division

Planning section

Manufacturing Section

Sales Section

high

Where does Matsushita stand?

Local Autonomy

centralized

Decentralized

low low Central integration high

Where were they on the strategy matrix?

high

Local Responsiveness

low low Global integration high

Where are they on the strategy matrix?

high

Local Responsiveness

low low Global integration high

The Balanced Organization

high

Need for Local Responsiveness

TRANSNATIONAL

low low Need for Global integration high

Q&A