Bhavna Gaule, 157/45 Deepika Raj, 172/45
IIM Calcutta
Philips versus
Matsushita
Founded in 1892, Gerard Philips, Eindhoven, Holland
Single product focus, employee welfare
Technology and product development core strengths
Decentralized, joint leadership management style
Highly autonomous responsive national organizations
Founded in 1918 by Konosuke Matsushita
in Osaka, Japan
Invested 100 yen to produce double-ended
sockets. Expanded to various products
First Japanese company to adopt the
divisional structure
◦ “One-product-one-division”
◦ Internal competition fostered among divisions
Flood of products in post war boom
Matsushita built its success on its
centralized, highly efficient operations in
Japan
1.) Power struggle between Nos and PDs NOs had the real power
PDs found it difficult to get their voices heard Difficult to account responsibility
2.) Late to market
Decentralized organizational structure and autonomous national organizations
3.) Closure of inefficient plants – huge loss of manpower
Loss of human resource capability on account of cost cutting Example : Failure of HDTV technology owing to 37% cut in R&D
personnel
4.) Trade barrier erosion – independent country level subsidiaries rendered unnecessary
Rivals moving to low cost regions
5.) Lack of coherence in strategy and structure
Failed to adapt to the changing demands and the strengths of
Highly centralized and inflexible organization
structure: Slow to manage change
Dependence on competitors for technological
innovation
Threat of discontinuous innovation which may
drastically change product technology
Excess capacity and evaporating profits Disgruntled overseas staff
Lack of initiative by foreign plants
Matsushi ta
Pursued a multinational approach
Managing risks against impending wars Autonomous national organizations -
controlled their own marketing, production and R&D decisions to respond to country specific demands
Opening up of trade barriers – Shift in
Matsushita’s main internationalization motive was
market seeking and cost reduction
It aimed to get benefits from economies of scale by
pooling production & other activities
Exploited lower factor costs by moving production to low
cost countries
Increased operational & production flexibility Increased bargaining power with suppliers
Matsushita
National Differences Scale Economies Scope Economies Achieving Efficiencies Matsushita benefitted from differences in factor costs such as wages and cost of capital Matsushita expanded and exploited potential scale economies in each activity Matsushita shared investments and costs across products, markets and businesses Managing Risks Philips managed
different kinds of risks arising from market or policy induced changes
Philips did
portfolio
diversification to create options for various kinds of consumers in different markets Innovating, Learning & Adapting
Philips learned from
societal differences in organizational and managerial processes and systems as well as consumer choice Matsushita benefitted from experience, cost reduction and innovation and exploited it in foreign markets
FORMAL NETWORK INFORMAL NETWORK Architecture
Routine
Company policy to renew plant machinery Power conflict between NOs and PDs
Shutdown of a number of inefficient plants marked
by a great deal of turnover
Structural changes incompatible with strategy of
the firm
Culture
Joint leadership, cultivated competitive behaviour, Decentralized structure to cater to different market
METC and the product divisions used to set detailed
sales and profit targets
The company hired Japanese managers and
technicians on foreign assignments to build relationships
Regular face-to-face meetings between managers of
foreign subsidiaries and the headquarters
Independent product centers; One product- one
division structure to maintain the ‘hungry spirit’.
Various product divisions competed amongst
Centralised decision making
Reliance of foreign subsidiaries on centre Japanese collectivist culture clashed with
American individualist culture Lack of technological innovation Tendency to outsource
Internal competition amongst divisions Global strategy not aligned to structure:
Sustained investments in R&D and marketing Increase employee morale, reestablish
innovations and efficiencies
Find a structure in tune with the operational
strategy
The current organizational structure, designed around – healthcare, lighting, and consumer lifestyle
Improve delegation of responsibilities to avoid
Multi-product divisions created by Nakamura might
be a loss making step for short term but it may prove beneficial for long term
Matsushita should encourage innovation in its own
organization and subsidiaries
Prevent excessive interference of centre in foreign
subsidiaries
Engage workforce and understand their issues
before implementing organizational changes
Simplified its organizational structure under
vision 2010: only 3 product divisions/ sectors
Employs134,000 people, holds more than 60,000
registered patents and has sales of EUR 27.0 billion (39 billion US $)
Presence in 60 countries
Brand promise: Sense and Simplicity
Product innovation main business focus
Supervisory board above Executive management
Renamed as Panasonic Corporation, Oct 2008 All brands consolidated under Panasonic
556 companies, 14 business domains Own R&D, production & sales divisions
Links global risk management activities with business
plans
Brand slogan: Ideas for life
Increasing focus on innovation: Usability Centres
