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Philips vs. Matsushita

Philips became a leader in consumer electronics by developing independent national organizations that specialized in local market demands and technologies. However, its fragmented product lines led to slow market responses and loss of market share. Matsushita displaced Philips in video by focusing on high-volume VCR production and licensing to slash prices rapidly. Matsushita's competence included a global scale approach and broad product lines, while its resistance to change and overreliance on its centralized structure became incompetencies.

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Shatha Nsour
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54 views2 pages

Philips vs. Matsushita

Philips became a leader in consumer electronics by developing independent national organizations that specialized in local market demands and technologies. However, its fragmented product lines led to slow market responses and loss of market share. Matsushita displaced Philips in video by focusing on high-volume VCR production and licensing to slash prices rapidly. Matsushita's competence included a global scale approach and broad product lines, while its resistance to change and overreliance on its centralized structure became incompetencies.

Uploaded by

Shatha Nsour
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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1.

Philips becoming the leading consumer electronics company


 Focused on one product rather than diversifying in early days
 Became leader in industrial research
 Competence
 Independent national organizations
 Adept at responding to country-specific market conditions
 Built their own technical capabilities to address local market conditions
 Enforce market specific research
 Businesses being supported by the research are responsible for the R&D budget
 Incompetence
 Product division had no real power
 NO ignores main company’s welfare and focuses on local profit (Ex. V2000 case)
 Too many factories over the world
 Higher cost than simply outsourcing or having one area serves the global market

Philip’s

- Competencies:
 How they became leader: developed national organizations (NOs) that were independent,
and specialized in local market demand for specific and diverse technologies.
 Common
 Market
 Adaptive to diverse markets
 Strong R&D funding
 Strong National Organizations
 Reputation for quality
 Commitment to employees

- Incompetence’s:
 Fragmented product line (no economies of scale)
 Slow to market
 Poor global strategy
 Technologies lost in market flooded by competitors
 Loss of market shares to low wage outsourcing competitors
2. Matsushita displacing Philips
 Focused on VCR production
 High volume allowed them to slash price quickly
 License VHS format to other manufacturer
 Highly centralized system
 Competence
 Huge number of retail outlets
 6x the outlets of rival Sony
 Assured sales volume and direct access to market trends and consumer reaction
 One-product-one-division system
 Internal competition
 “Small business” environment
 Main company acts as a “bank”
 Competence
 Under fund the central research laboratory
 Force it to compete for additional funding from divisions
 Give overseas sales subsidiaries more choice over the products they sold
 Incompetence
 Over-management
 Expatriate managers located throughout foreign subsidiaries
 Strongly-held commitments to lifetime employment
 Cannot compete with companies who outsource to low-cost Asian countries
 Product divisions were not giving sufficient attention to international development
 Oversea subsidiary companies act little more than implementing agents

Matsushita
- Competencies
 How they became leader: global scale approach of rapidly bringing emerging
technologies to saturate the market
 1989 crash
 Strong culture, visionary leader
 Fast [follower] to market
 Broad product line
 Strong distribution system,
 high retail presence
 Centralized Japanese structure
- Incompetence’s
 Resistance by employees to structural change
 Weak on innovation
 Excess capacity
 High overhead
 Dependent on center; loss of talent due to perceived overbearing top

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