Philips Versus Matsushita: Competing Strategic and Organizational Choices

Philips versus Matsushita: Competing Strategic and Organizational Choices

Summary

It is not an easy assignment to decide the more effective way to create a change in a company in order to remain competitive in the current aggressive market of consumer electronics; it gets more complicated when competition is global now. Most of the companies have presence and subsidiaries in several places around the world with members of different cultures. How to make the organizational design and restructure the heritage of the company to survive the current market environment? Quite different the approaches these two companies selected. We need to state that the original structure of these companies was dictated by the environment and methodologies in the dates of foundation and international growth. Philips, an European company under decentralized system and Matsushita, Japanese company created under the centralized hub. Philips trying to reduce autonomy of the product divisions (PD) and national organizations (NO) and Matsushita, encountering difficulties with too centralized organization wanted to find a middle point in this relationship.

Major Issues.

Both companies face external factors such as worldwide economic crisis, in order to improve their financial results, they had to implement control systems that sometimes lower morale among middle management caused by cutting costs and layoffs policy, policies that both companies were not used to apply. They both choose to concentrate in core business and outsource the manufacturing of still profitable areas/product, as well going through standardization , ignoring worldwide market demands for more segmented products and higher consumer’s needs. Both companies face similar difficulties as global environment changed, they need to create major restructuring over the years to come order to make a significant change in its organization. Philips has developed local responsiveness through its decentralized structure of national organizations (NO), being able to sense and quickly respond to the differences in the local markets. However, these inventions were not shared with the rest of the NOs in Philips because of the lack of communication within divisions. In order to prevent these strategic mistakes, CEO and headquarters should be scanning of business activities across countries and identifying