Analysis of Philip and Matsushita Case StudyStudent ID: 4068395Jayena Shrestha
Globalization through technological improvements and the decline in trade barriers, has wiped off the notion of self-contained national markets and has driven the world towards a more interdependent highly competitive globalized market. This new cut-throat competitive environment can be compared to a jungle where only the fittest survive. In order to be deemed as a fit business that can generate substantial profits, businesses need to be able to cope with the unpredictable environmental changes through the implementation of relevant strategy which is supported by the right organizational architecture. In other words, the organizational architecture,the strategy and the environment must all be consistent with each other. Inability to do so may cause problems for a firm and eventually lead to dwindling profits. This can be seen in the case of both N.V Philip and Matsushita Electrics, which are Dutch and Japanese multinational organizations respectively; multiple problems associated with organizational architecture of both these multinationals hindered the efficient application of required strategies. In this paper, using the Philips versus Matsushita: The Competitive Battle Continues case study, the author will discuss the different strategies used by the aforementioned multinationals to cope with the two main pressures of internationalization and the different organizational architectures adopted by them. The paper will go on to analyze the relationship between architecture and strategy, how they impact each other, and the organization as a whole.
Internationalization, Pressures and StrategiesFigure 1 : Four Basic Strategies (Hill, Wee, & Udayasankar)Like all companies that internationalize, Philips and Matsushita also faced with two conflicting pressures: pressure to reduce costs and pressure to localize. Initially when Philips decided to expand its market in 1899, it was focusing mainly on the development and production of one product, light bulb. This allowed Philip to exploit its core competency which is constant innovation and allowed it to develop new products such as the tungsten filament light bulb. Therefore, even though light bulb can be categorized as a product that caters to universal need, Philips did not encounter intense competition when it entered into foreign markets .Thus the pressure to reduce cost was relatively low. Also, while there may have been some level of pressures for localization (such as changes in watts and packaging), they were most likely low. Therefore, Philips was initially pushed towards International Strategy (Philip 1). So, even thoughPhilip initially entered its foreign markets (Japan, Australia, Canada and Brazil) through exporting, the reason for doing so was probably not due to very high cost reduction pressures.