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Bhavna Gaule, 157/45

Deepika Raj, 172/45

IIM Calcutta

Philips versus

Matsushita

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Founded in 1892, Gerard Philips, Eindhoven,Holland

Single product focus, employee welfareTechnology and product development core

strengths Decentralized, joint leadership management

style Highly autonomous responsive national

organizations

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Founded in 1918 by Konosuke Matsushitain Osaka, Japan Invested 100 yen to produce double-ended

sockets. Expanded to various products

First Japanese company to adopt thedivisional 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 inJapan

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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

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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

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Highly centralized and inflexible organizationstructure: Slow to manage change

Dependence on competitors for technologicalinnovation

Threat of discontinuous innovation which maydrastically change product technology

Excess capacity and evaporating profits Disgruntled overseas staff Lack of initiative by foreign plants Chaos by Destruction and Creationprogram

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Matsushita

Philips

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Pursued a multinational approach Managing risks against impending wars

Autonomous national organizations -controlled their own marketing, productionand R&D decisions to respond to countryspecific demands

Opening up of trade barriers Shift instrategy to low cost scale intensive approach

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Matsushitas main internationalization motive wasmarket seeking and cost reduction

It aimed to get benefits from economies of scale bypooling production & other activities

Exploited lower factor costs by moving production to lowcost countries

Increased operational & production flexibility

Increased bargaining power with suppliers

Global availability, serviceability and recognition

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Matsushita

Philips

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National Differences Scale Economies ScopeEconomies

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, marketsand businesses

Managing

Risks

Philips managed

different kinds of risks

arising from market or

policy induced changes

Philips did

portfolio

diversification to

create options forvarious kinds of

consumers in

different markets

Innovating,

Learning &

Adapting

Philips learned from

societal differences in

organizational and

Matsushita

benefitted from

experience, cost

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FORMAL NETWORK INFORMAL NETWORK

Architecture

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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 firmCultureJoint leadership, cultivated competitive behaviour, Decentralized structure to cater to different market

tastes

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METC and the product divisions used to set detailedsales and profit targets

The company hired Japanese managers andtechnicians on foreign assignments to buildrelationships

Regular face-to-face meetings between managers offoreign subsidiaries and the headquarters

Independent product centers; One product- onedivision structure to maintain the hungry spirit.

Various product divisions competed amongst

themselves for market, funds, R&D etc

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Centralised decision making Reliance of foreign subsidiaries on centreJapanese collectivist culture clashed with

American individualist culture Lack of technological innovationTendency to outsource Internal competition amongst divisions

Global strategy not aligned to structure:Lack of integration of business decisions

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Sustained investments in R&D and marketing Increase employee morale, reestablish

innovations and efficiencies Find a structure in tune with the operational

strategyThe current organizational structure, designedaround healthcare, lighting, and consumerlifestyle

Improve delegation of responsibilities to avoidlag in response time

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Multi-product divisions created by Nakamura mightbe a loss making step for short term but it mayprove 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

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Simplified its organizational structure undervision 2010: only 3 product divisions/ sectors

Employs134,000 people, holds more than 60,000registered patents and has sales of EUR 27.0billion (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

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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.