Philips And Matsushita Essay

870 words - 3 pages

In the post World War II era, Philips became the leading consumer electronics company in the world. Philips' success in this postwar era can be attributed to their strong Research & Development efforts, their independent National Organizations and the communication between these National Organizations. However, with the creation of the Common Market in the 1960's, the same National Organizations to which Philips attributed its postwar success soon became the reason why Matsushita displaced Philips as the leading consumer electronics company.Early in Philips history, Gerard and Anton Philips agreed that strong research and development efforts were vital to the Philips success. The importance of research and development is evident in the physics and chemistry lab that developed a tungsten metal filament bulb that was a great commercial success enabling Philips to compete against its giant rivals. In the postwar era, Philips continued this tradition with fourteen product divisions responsible for development, production and global distribution.Another contributing factor to Philips' success is the National Organizations. These postwar organizations were highly self-sufficient and extremely adept at responding to country-specific market conditions and needs. Each of the National Organizations had commercial and technical capabilities. And, despite the centralized research and development product divisions, the National Organizations were capable of designing, producing and marketing products tailored to the local needs.Communication ensured that product group directions fit with the national strategies and priorities. Despite their autonomy, each of the National Organizations sent envoys to the parent company to represent their interests and top management from the parent company also made frequent trips to the national organizations. Furthermore, all top managers had been with Philips for the majority of their careers and many had worked at other National Organizations during foreign tours of duty. Communication between the National Organizations was further facilitated by the fact that a common language, English, was established as the primary language used in all key communications.The National Organizations also contributed to Philips decline and Matsushita's ultimate displacement of Philips as the leading consumer electronics company in the world. During the 1960's, with the creation of the Common Market, trade barriers within Europe eroded. Each of the National Organizations had a strategy within their organization; however, Philips as a business lacked global strategy linking and leveraging all of the National Organizations.As Philips competitors moved production of electronics to low-wage areas (East Asia, Central America, South America), Philips' country-level subsidiaries were not able to run global-scale production runs. The autonomy of the National Organizations further hurt Philips ability to develop a global strategy. Since the...

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