26809764 Philips vs Matsushita
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Transcript of 26809764 Philips vs Matsushita
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
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◦ “One-product-one-division”◦ Internal competition fostered among divisions
Flood of products in post war boom Matsushita built its success on its
centralized, highly efficient operations in Japan
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
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
5.) Lack of coherence in strategy and structure Failed to adapt to the changing demands and the
strengths of the competition
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
Pursued a multinational approach Managing risks against impending wars Autonomous national organizations -
controlled their own marketing, production and R&D decisions to respond to country specific demands
Opening up of trade barriers – Shift in strategy to low cost scale intensive approach
Matsushita’s main internationalization motive was market seeking and cost reduction
It aimed to get benefits from economies of scale by pooling production & other activities
Exploited lower factor costs by moving production to low cost countries
Increased operational & production flexibility Increased bargaining power with suppliers Global availability, serviceability and recognition
National Differences Scale Economies Scope Economies
Achieving Efficiencies
Matsushita benefitted from differences in factor costs such as wages and cost of capital
Matsushita expanded and exploited potential scale economies in each activity
Matsushita shared investments and costs across products, markets and businesses
Managing RisksPhilips managed different kinds of risks arising from market or policy induced changes
Philips did portfolio diversification to create options for various kinds of consumers in different markets
Innovating, Learning &
Adapting
Philips learned from societal differences in organizational and managerial processes and systems as well as consumer choice
Matsushita benefitted from experience, cost reduction and innovation and exploited it in foreign markets
Routine Company policy to renew plant machinery Power conflict between NOs and PDs Shutdown of a number of inefficient plants
marked by a great deal of turnover Structural changes incompatible with strategy
of the firmCulture Joint leadership, cultivated competitive
behaviour, Decentralized structure to cater to different
market tastes
METC and the product divisions used to set detailed sales and profit targets
The company hired Japanese managers and technicians on foreign assignments to build relationships
Regular face-to-face meetings between managers of foreign subsidiaries and the headquarters
Independent product centers; One product- one division structure to maintain the ‘hungry spirit’.
Various product divisions competed amongst themselves for market, funds, R&D etc
Centralised decision making Reliance of foreign subsidiaries on centre Japanese collectivist culture clashed with
American individualist culture Lack of technological innovation Tendency to outsource Internal competition amongst divisions Global strategy not aligned to structure:
Lack of integration of business decisions
Sustained investments in R&D and marketing
Increase employee morale, reestablish innovations and efficiencies
Find a structure in tune with the operational strategy
The current organizational structure, designed around – healthcare, lighting, and consumer lifestyle
Improve delegation of responsibilities to avoid lag in response time
Multi-product divisions created by Nakamura might be a loss making step for short term but it may prove beneficial for long term
Matsushita should encourage innovation in its own organization and subsidiaries
Prevent excessive interference of centre in foreign subsidiaries
Engage workforce and understand their issues before implementing organizational changes
Integrate structure to pursue global strategy
Simplified its organizational structure under vision 2010: only 3 product divisions/ sectors
Employs134,000 people, holds more than 60,000 registered patents and has sales of EUR 27.0 billion (39 billion US $)
Presence in 60 countries Brand promise: Sense and Simplicity Product innovation main business focus Supervisory board above Executive
management board- To integrate decision making
Renamed as Panasonic Corporation, Oct 2008
All brands consolidated under Panasonic 556 companies, 14 business domains Own R&D, production & sales divisions Links global risk management activities with
business plans Brand slogan: Ideas for life Increasing focus on innovation: Usability
Centres Working on digital technology, speech
recognition etc.