Essay about Philips and Matsushita

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International Business Strategy: General Management 2012-2013
Session 4: Learning Questions

Gabriella van der Veen

1. Which factors account for differences in strategies and structures of Philips and Matsushita? What are their distinctive competencies and incompetencies?

2. What are the key organizational challenges that each company is facing at the end of the case? What recommendations would you give to the respective CEOs?

1. The two companies, each from different regions of the world, have an extensive history that have caused for different cultures, strategies and structures to be implemented (Bartlett & Beamish, 2010: 301). Philips, as an
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From looking at this table one can see that some competencies of one company is the incompetency of the other as a result of the different implemented strategies. Where Philips, that is more centralized, is innovative, Matsushita lacks innovation. However, Matsushita experiences a rich company culture with a clear vision which is exactly what Philips lacks. | Philips | Matsushita | Competencies | * Innovative, strong R&D department * Can respond to local differences due to set up of NOs * The delegation of responsibility causes for strategic freedom | * Cheap production as a result of economies of scale. * Fast response to market * Rich culture and clear vision integrated throughout company by the implementation of Seven Spirits | Incompetencies | * Inefficiency in global aspect * Unclear responsibilities due to decentralization * Too much informal power granted to NOs * Fragmentation and restructuring leads to unclear vision and values throughout the company | * Lack of innovation at the level of the subsidiaries * Too much reliance of the subsidiaries on the domestic country * Centralized parent company lacks understanding and knowledge of market needs and production realities |
2. Because of their different strategies and competencies, both companies face different challenges. However, both face a phase of restructuring. Philips is currently going towards a Transnational