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Bhavna Gaule, 157/45 Deepika Raj, 172/45 IIM Calcutta Philips versus Matsushita

26809764 Philips vs Matsushita

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Philips Matsushita

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Bhavna Gaule, 157/45Deepika Raj, 172/45

IIM Calcutta

Philips versus 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

MatsushitaMatsushitaPhilipsPhilips

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

Matsushita

Philips

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

FORMAL NETWORKFORMAL NETWORK INFORMAL NETWORKINFORMAL NETWORK

Architecture Architecture

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.