Philips Vs. Matsushita

Yuxuan Huang

Case Memo 7 – Philips vs. Matsushita

1. How did Philips become the leading consumer electronics company in the world in the post war era? What were Philips capabilities and organizational structure?

The second world war greatly effected the electronic markets, and also it creates a number of threats for such companies. But Philips focus on their product, that’s why I think Philips become the leading consumer electronics company. First, Philips did extensive and innovative research. With the help of these researches, Philips identified different country's customer requirements and preferences that vary from country's for electronics. Second, they utilized new advances in production technology. Also, they built their own technical capabilities to address local market conditions to address local market conditions.

There are several key capabilities that contribute to this success such as the capabilities of local subsidiaries, the shared leadership within management and the strong and consistent research. And I think the most important is decentralized structure. It supports Philips in competing effectively with local competitors and enables them to adapt with the diverse local market.

The organizational structure of Philips is competitive form of the multidivisional structure.

1. Later, how did these capabilities and structure impede Philips business?

First, the structure of Philips is too decentralized, and they lacked of good centralized structure. So I think this is one of the impediment of Philips. Then, there is no economy of scale in manufacturing, many technological innovations, but its ability to bring products to market was weak. Difficulties in reorganizing the company when dealing with its growing problems.

1. How was Matsushita able to overtake Philips? What were Matsushita strategic capabilities and organizational structure?

In my opinion, the reasons why Matsushita displace Philips is Matsushita focused its competitiveness in high quality, low cost, and standardized products during the 1970s and 1980s. Also they had rapid product and process innovation and their company wanted to focus on exporting sales to world markets. In the content: “Matsushita represented 40% of appliance stores in Japan as they capitalized greatly on their broad line of 5,000 products by opening 25,000 domestic retail outlets.” This resulted in a direct access to market trends and consumer reaction as well as an increase in sales volume.

For Matsushita, it has fast and efficient operations, also they quick introduction of new products to market.

Unlike Philips, Matsushita has a centralized R&D structure, which aligned with global strategy.

1. What are the limits of Matsushita capabilities and structure? What does Matsushita want to change?

The centralized structure is too much, inflexible, it would cause they are slow to manage change. The change was hard due to the difficulty of changing their culture. Also, the R&D structure is good at making marketable products but not good at creating new technologies.

First, I think they want to change their culture, because it lacks of independent thinking by overseas subsidiaries. Then, I think they should change their organizational structure.