3. Matsushita strength building process
In late 1980s, Matsushita had been able to take the opportunity from market changes and was successfully overtook Philips. As mentioned, the globalisation era shift electronics market competition from local fulfillment to global price competition. Compared to the Philips decentralized structures, the centralized Matsushita’s structure with its ability to respond to market opportunities enabled Matsushita to became global leader in this era.
Firstly, while Philips autonomous subsidiaries lowered their speed of reaction, the Matsushita ability to adopt the innovation supported by its centralised structure was providing significant productivity. As argued by Daft (2009), during the internationalisation companies usually still want to achieve ”common organizational goals”. However, it is difficult for them to choose between focusing on global standardisation or national responsiveness. Philips structure was geographic/product matrix with emphasis on the national responsiveness while Matsushita adapt the product matrix structure with power delegation to the subsidiaries. As illustrated in F During the period where forces for global integration are high and national responsiveness is low, Matsushita structure and mass production capabilities provides them advantages in delivering standardised low price product during that period.
Figure 1. Model to Fit Organisation Structure to International Advantages
Source: Roderick E. White and Thomas A. Poynter, “Organizing for Worldwide Advantage,” Business Quarterly (Summer 1989), 84–89. Adapted by permission of Business Quarterly, published by the Western Business School, the University of Western Ontario, London, Ontario, Canada.
The main strategic competence of Matsushita is efficiency, which resulted from its centralized organizational structure with localization operation strategy. The financial control, which reflected by the corporate treasury acted as a commercial bank that provides loan, triggered each product department to higher their efficiency. Matsushita also tries to maintain spirit of “hunger” by adapting “one-product-division” policy. Moreover, the internal competition that established from the historic routine was also its key advantage. Matsushita established “small business” environment that enabled them to maximise research on new products and further development of technology.
Matsushita also able to face the globalisation challenges by having control of their subsidiaries. According to Daft (2009), increased complexity and differentiation is one of the biggest challenges companies have to face during the process of globalization. To face this challenges, Matsushita established special entity called Matsushita Electric Trading Company (METC) to control the growing subsidiaries. The METC was accountable for supervising global sales and marketing as well as subsidiaries that produce broad product line. Other wholly owned single product global...