Philips versus Matsushita

Résumé du document

Philips developed new technologies in the 1950s and 1960s. By doing so, the company also wanted to convert these technologies into products while adapting, producing, and selling these products in different markets. During this period, most of the companies in the electrical products market were racing to diversify. Nonetheless, Philips decided to concentrate itself on its best. It made only light-bulbs.

Matsushita, started as a small electrical house-ware manufacturer in 1918, expanded rapidly and soon introduced a lot of new products. By the end of the century, Matsushita grew into a global performer with powerful brand names such as Panasonic, Quasar Technics, and JVC.

Matsushita implemented a "one product one division" structure. In addition to creating a small business environment, it generated internal competition and encouraged growth.

Extraits

[...] The major priority for expatriate general managers of foreign divisions was the translation of Matsushita philosophy. Over the years, the number of locals in key management positions abroad increased to take advantage over their expertise and understanding of local specifics. Being the first Japanese company to adopt a divisional structure really helped Matsushita, which gave each division of the company a clearly defined profit responsibility. This structure created a small business environment to maintain growth and flexibility. It also generated competition amongst divisions and encouraged them to drive growth. [...]

[...] This put coordination and cooperation among divisions at an insufficient level. NOs were developing their own products and brands based on the local market conditions. Company's culture based on constant technical innovation lead to numerous new products developed by NOs (with the first color TV, first stereo TV). All these factors contributed to the dilution of Philips brand name and the need of scale economies. Reorganization for Philips began around the 1970s when the CEO van Reimsdijk proposed rebalancing managerial relationships between product divisions (PDs) and national organizations (NOs). [...]

[...] His successor, Yoichi Morishita, had the task of restructuring. He began by decentralising more responsibility, but according to Hill management seemed unwilling to radically restructure its increasingly inefficient portfolio of production “facilities” in Japan. This could be seen as an example of resistance to change, as the management were unwilling to drastically decrease production in Japan. Moreover, it is also an example of strategic drift as the strategy pursued is not coherent with its environment. This inability to change has prohibited Matsushita sufficiently recuperating from the economic crash in Japan. [...]

[...] Philips eliminated products that had been considered core competencies, such as the semi-conductor business. Its ability to produce semi-conductors globally, even back to the days of PDs and NOs, had produced consistent cash flow for the company. In the mid 80s, three of the four businesses defined as core (components, consumer electronics and telecommunications and data systems) were linked. Taking away the focus on its core competencies meant that the company was going to lose revenue from these products, or have to outsource their production to companies who would be considered competitors. [...]

[...] The new CEO restructured the company by outsourcing mobile phone production to CEC of China and the production of VCRs to Funai in Japan. This was followed by the outsourcing of TVs, CD players and components with simultaneous movement of remaining in-house production to countries like China, Poland and Mexico, who had lower costs. He also sold off several businesses, including the core semi-conductor business. What evolved was Kleisterlee's vision for a new Philips lifestyle company centered on health and well- being), which organized around healthcare, lighting and consumer lifestyle. [...]