Philips

Résumé du document

Philips' decline of success over the last thirty years has been mainly due to the lack of consistency and the lack of ability to deal with a changing competitive international environment. In terms of structure, the company has had to change many times and in very different ways due to the different policies of CEOs. Similarly, it had no clear strategy or focus since they faced difficulties in the 1960's.

Extraits

[...] Whether strategy follows structure of vice versa is a matter of great debate which we will look at in depth later. A problematic area for Philips has been the struggle to balance the respective roles and power of the National Organizations (NOs) and the Product Divisions (PDs). This matrix, which was finally eliminated in the 1990's, did not seem to be hugely successful as there always existed conflict in terms of power and responsibilities. The power that the NOs enjoyed seemed detrimental to the PDs, as they often found it difficult to get their voices heard. [...]

[...] Therefore it should either retain some of its production to fall back on in case of failure, or invest heavily in its new strategy and encourage participation of everyone in order to ensure that it is not another failed strategic change. Philips also needs to find the correct structure to suit its operations and its strategy. As Mintzberg (1990) says, ‘structure follows strategy as the left foot follows the right'. Bearing this in mind, Philips need to find a structure and strategy which are compatible, as oppose to changing one and trying to make the other one fit. [...]

[...] This outdated management system, however, held Philips back at a time when they needed to be looking to the future. A strategy which has been employed by many of Philips CEO's has been to reduce the number of products in order to concentrate on making the more basic ones perform to their full potential. Defining certain products as core for instance, which was basically those with strategic importance, was one way of focusing on certain areas and attaining specialization. This seems to be a very negative strategy as instead of trying to make this work, they have historically cut their losses and given up on various products. [...]

[...] It is clear to see that Philips' quest to build efficiency into its global operations has failed. The most recent CEO's, Boonstra and Kleisterlee, have therefore been outsourcing various products and have turned their attentions to looking for other ways in which Philips can return to compete with the industry leaders. It possesses capabilities that some of its competitors does not, and should therefore try to exploit these further. Its ability to innovate and develop technology is what brought Philips to the forefront of their field many years ago, and it seems that further investment in R&D and marketing may be the only way in which its can match the low-cost Japanese advantage of efficiency. [...]

[...] This desire to recreate the past as opposed to changing and looking to the future shows a weakness in Philips culture. This was however eventually replaced by a more orthodox single management set-up at both corporate and NO level. Nowadays, the PDNO matrix no longer exists, as the PDs have been replaced by 7 divisions, and day to day responsibility has been passed onto 100 business units. This change was a very successful one for Boonstra, who managed to change the fortunes of Philips in just a few years. [...]