CASE STUDY ASSIGNMENT: Philips vs Matsushita
Philips and Matsushita are two principal consumer electronics companies that adopted two different strategies that lead them to some success, and later losses. Philips, as a multinational company, was more into a global organizational portfolio; whereas, Matsushita was focusing its operations in Japan. Unfortunately, both companies face loss of profitability even if their top managers were putting a lot of effort into the success of their respective business. Philips employed seven CEOs, and each used different strategy to reach the company success. Matsushita strategy was to turn the company into a cost containment mode, but the losing trend appeared by then. While Philips pursued its path into innovation and entrepreneurship by using their local resources to create new products, Matsushita was more focusing on a strategy based on standard products. Philips began closing useless plants and identifying businesses as either core or non-core.
Purchasing the North American Philips Corp was to regain control and spending on basic research was to make the R&D the direct reasonability of the business. However, the spending was wasted; NOs were unwilling to use the new technologies developed. Matsushita, on the other hand, was more focusing on its subsidiaries; for instance, it implemented the operations localization that gave more power to the subsidiaries and more choice to their managers. After collapsing, the latest CEO decided to consolidate manufacturing facilities. However, it did not focus on innovation and did not develop new products. Nevertheless, both companies had many disadvantages in their strategies. For instance, Philips lacked the ability to deal with a changing international environment, exceeded by the competition in terms of price since it was offering the most expensive products in the market, and also, faced many problems internally like disputes between its NOs and its product divisions.
On the other hand, Matsushita has a centralized production which led to losses throughout the years. Also, their cultural values were not adaptive enough to let the firm cope with the changing environment. Even by adopting strong strategies, Philips and Matsushita continue to lose profitability and now for sure, they need to restructure their businesses and risk should be spread in order to mitigate unforeseeable disasters.