Phillips Versus Matsushita

Subject: Philips versus Matsushita: The Competitive Battle Continues Case Analysis

Philips and Matsushita followed different strategies since their foundation. Philips built a worldwide portfolio of independent national organizations while Matsushita managed efficient and centralized operations based in Japan. However, during the 21st century both companies experienced significant challenges to their competitive and organizational models and were forced to restructure as their competitive position decreased. The companies’ CEOs embarked on complicated initiatives and reorganizations; thus observers wondered how these initiatives would affect the companies’ competitive battle.

In anticipation of WWII, Philips decided to move its assets to Great Britain and the USA. In turn, the company’s national organizations became more independent and self-sufficient. In addition, the company responded more to country specific market conditions which made the company more focused on consumer’s preferences and behavior, making Philips more flexible and able to respond rapidly to changes in each country’s environment. Eventually, the NOs started to develop their own technical capabilities based on the market’s conditions. These capabilities allowed Philips to use their competencies in localization and research to lead the industry. In addition, in the beginning Philips focused on one product rather than diversifying, which helped them to develop the best quality product. The company also had strong R&D funding and reputation for quality that also allowed the company to lead and grow within the industry. However, the creation of the European Common Market crumbled trade barriers and diminished the rationale for the NOs. In addition, the company was slow to the market, had a poor global strategy due to the poor control over NOs, lost market share to low-cost competitors due to their inability to innovate and lacked of economies of scale. Combining these factors with a leadership void and low morale caused Philips poor financial health and its demise within the industry

While Philips was losing market share, Matsushita expanded rapidly and focused on producing standardized, high-quality, low-cost, and consumer electronic products. Indeed, the company developed successfully a superior and more efficient VHS production. In addition, the company introduced numerous new products after the war and opened 25,000 local outlets, which assured the company sales volume and access to market trends. In addition, with the post-war growth slowed, the company looked at exports. Matsushita adopted a divisional structure and ran them like small businesses to maintain growth and flexibility via constant competition among each division. Even though the company was not an innovator, it was fast to the market and was able to take advantage of outsourcing manufacturing to low-wage countries.

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