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PHILIPS Vs PHILIPS Vs MATSHUSHITAMATSHUSHITA

STRATEGIC COMPETENCESTRATEGIC COMPETENCE

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GROUP - 2GROUP - 2

RENURENU REKHAREKHA KARANKARAN ADITYAADITYA ASHOKASHOK MANISHMANISH

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StrategyNational responsiveness

Technology-driven innovation

Entrepreneurial NOsCentral research and funding

Core IncompetenciesSlow technology to market

Poor global strategy

StrategyGlobal scale efficiency

Market-driven rapid innovation

Innovative PDsLinkages in the value chain

Core IncompetenciesOverseas subs not innovative

PHILIPS MATSUSHITA

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Value Management

CentralizedBasic scientific

innovation, develop

new products

Decentralized (NOs)Adapt, manufacture, market, and service products within national markets

Research Development Manufacturing Marketing Service, etc.

PhilipsPhilips

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MatsushitaMatsushita

Value Management

Research Development Manufacturing Marketing Service, etc.

CentralizedApplied product and

process innovation

Centralized (PDs)Develop and manufacture products

Decentralized (NOs)Market and service products within

national markets

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PHILIPSPHILIPS Gerard Philips and Gerard Philips and

Anton Anton Van Riemsdijk and Van Riemsdijk and

RodenburgRodenburg Wisse DekkerWisse Dekker Van der KlugtVan der Klugt TimmerTimmer BoonstraBoonstra KleisterleeKleisterlee

MATSUSHITAMATSUSHITA Konosuke Konosuke

MatsushitaMatsushita Yamashita’sYamashita’s Tanii’sTanii’s Yoichi Morishita’sYoichi Morishita’s Kunio Nakamura’sKunio Nakamura’s

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Gerard Philips and Anton Gerard Philips and Anton

Development of tungsten metal Development of tungsten metal filament bulbfilament bulb

Transfer of AssetsTransfer of Assets Research Laboratories shifted to Research Laboratories shifted to

EnglandEngland Top Management moved to USATop Management moved to USA

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Van Riemsdijk and Van Riemsdijk and RodenburgRodenburg

(1970)(1970) Decentralization of Authority between Decentralization of Authority between

Product Division and National Product Division and National OrganizationOrganization

Closed the inefficient Local Plants and Closed the inefficient Local Plants and convert best into International convert best into International Production CenterProduction Center

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Wisse DekkerWisse Dekker(1982)(1982)

Focused on core operationFocused on core operation Cost reduction in operationCost reduction in operation Overseas Technology Sharing Overseas Technology Sharing

AgreementAgreement

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Van der KlugtVan der Klugt(1987)(1987)

Matsushita Matsushita overtook Philipsovertook Philips Net Income

-3000

-2000

-1000

0

1000

2000

3000

4000

5000

6000

1970 1975 1980 1985 1990 1995 2000

Year

Ne

t in

co

me

(in

$ M

illio

ns

)

Philips

Matsushita

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Van der KlugtVan der Klugt(1987)(1987)

Matsushita overtook PhilipsMatsushita overtook Philips Divided business in core and non-Divided business in core and non-

corecore Divesting BusinessDivesting Business

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Timmer Timmer (1990)(1990)

Stick approachStick approach Sold the non profitable businessSold the non profitable business Ignored consumer demandIgnored consumer demand

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Boonstra (1996)Boonstra (1996)

Shifted production to low-wage Shifted production to low-wage countriescountries

Achieved 24% returns on net assetsAchieved 24% returns on net assets

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Kleisterlee (2001)Kleisterlee (2001)

Outsourced productionOutsourced production Made a loss after 1996Made a loss after 1996

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ConclusionConclusion

Philips had a complex Philips had a complex manufacturing and marketing manufacturing and marketing origanization which was not cost origanization which was not cost effective. effective.

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MATSHUSHITA

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Konosuke MatsushitaKonosuke Matsushita

Started company with Yen 100 and Started company with Yen 100 and start production of double-ended start production of double-ended stockstock

Battery Power lamps, electronic Battery Power lamps, electronic irons and radiosirons and radios

250 year Plan divided into 25 year 250 year Plan divided into 25 year section plansection plan

Post-war boom with new productsPost-war boom with new products

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CONT.CONT.

Divisional StructureDivisional Structure Business ExpansionBusiness Expansion Global LeadershipGlobal Leadership Monitoring and Operation ControlsMonitoring and Operation Controls Headquarter and subsidiaries Headquarter and subsidiaries

relationshiprelationship

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Yamashita’sYamashita’s

Local Market OperationLocal Market Operation More product alternatives were More product alternatives were

made available in overseasmade available in overseas

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Tanii’sTanii’s

Brought all subsidiaries under METCBrought all subsidiaries under METC Acquisition of MCAAcquisition of MCA Economy burstEconomy burst Less profit as compare to 1991Less profit as compare to 1991

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Yoichi Morishita’sYoichi Morishita’s

Decentralization of authorityDecentralization of authority Shifted production to Asian CountryShifted production to Asian Country Began investing in R&D PartnershipBegan investing in R&D Partnership

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Kunio Nakamura’sKunio Nakamura’s

Change the company’s vision.Change the company’s vision. Focus on customer need.Focus on customer need.

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BibliographyBibliography

online.glos.ac.uk online.glos.ac.uk HBS Case StudyHBS Case Study