Philips Versus Matsushita Essay Example for Free

Philips Versus Matsushita Essay How did Philips become the leading consumer electronics company in the world in the postwar era? A key success of Philips in my opinion came from a decision to build the postwar organization on the strengths of the national organizations (NOs). NOs are greatly increased self-sufficiency and became adept at responding to country-specific market conditions. What distinctive competence did they build? Philips had 14 product divisions (PDs), and NOs built their own technical capabilities and product development. This is an adaption to local market’s needs. What were its incompetencies? Philips had many technological innovations, but its ability to bring products to market was falter. Philips also have had problem in reorganizing the company to deal with its growing problems. 2. How did Matsushita succeed in displacing Philips as No. 1? A key success of Matsushita in my opinion is ability to create new products to meet local market’s needs and very quick. Matsushita also adopted the divisional structure, giving each division clearly defined profit responsibility for its products, and using â€Å"one-product-one division† system. The division was acting liked entrepreneur and financed its product development from Matsushita’s banking system liked. Any division that failed over 2 consecutive years would be fixed. If the division could not be fixed, the division team would be replaced. This management strategy gave more effective and speed to react to local market in the competitive environment. In order to manage many divisions across the world, Matsushita has expatriate Japanese managers and technicians on foreign assignment for four to eight years. A few positions that is always almost reserved for them. Those are general managers whose main role was to translate Matsushita philosophy abroad, expatriate accounting managers who provide a truth of financial health, and Japanese technical managers who transfer product and process technologies and provide headquarters with local market information. This strategy helps headquarter to maintain relationship with all satellite divisions. Matsushita moved none of key production assembly to offshore factory in order to reduce the impact of trade war and utilize lower labor cost and low shipping cost. In short, the ability to market new products of Matsushita and ‘Time-To-Market’ or speed were better than Philips. What were its distinctive competencies and incompetencies? Matsushita’s distinctive competency in my opinion was â€Å"one-product-one division† system that created self competition inside the company itself. In addition, the Japanese expatriate in key positions (i. e. general managers, accounting managers and technical managers) helped headquarter to main to relationship, control, and support to other Matsushita’s divisions around the globe. Matsushita’s incompetency was happened when Nakamura announced a program of â€Å"destruction and creation,† in which he disbanded the product division structures that KM had created as Matsushita’s basic organizational building block. Attempting to reorganize the company core structure too quick seems to bring down Matsushita. 3. What recommendations would you make to Geraid Kleisterlee? To Kunio Nakamura? In my opinion, the recommendations that I would make to Geraid Kleisterlee and Kunio Nakamura will base on balancing the method of AAA’s (Adaptation, Aggregation, and Arbitrage). It seems that the large company likes Philips and Matsushita have had issues how to reorganize the company (aggregation). The key that was driven the change came from a lower profit ability of company base on the investor’s demand. In Kunio’s case, he radical changed the core structure of Matsushita to quick. Quickly change a core strategy of big company came with unstable structure in which many people would not be able to adapt in short term and could create a catastrophic. I would recommend him to make a small and slow changes or deviations as needed in core structure. Kunio shall remain individual product divisions to maintain a focus in innovation of new products, but he shall consolidate or integrate the factories to be capable of building multi-product production. The new integrated product production can switch the assembly lines quickly from producing less profit products to high profit products, and eliminate a high cost to maintain less profit product lines in the old way. In Geraid’s case, I would recommend Philips to focus in innovation of new technologies and utilize new or existing technologies to create a value in the new product, maintain outsource of its basic manufacturing. This strategy is similar to iPhone product where Apply added style/art into a mix of MP3 player and cell phone. Apply only focus on designing the new product and allowed outsource manufacturing in China to build the product.