Case 4 - Case 4-1 Philips vs Matsushita A New Century a New...

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Case 4-1: Philips vs. Matsushita: A New Century, a New Round Philips built its success on a worldwide portfolio of responsive national organizations Matsushita based its global competitiveness on its centralized, highly efficient operations in Japan Philips background - 1892: Gerard Philip and his father opened a small light-bulb factory in Eindhoven and hired Anton, Gerard’s brother - 1900: Philips was the third largest light-bulb producer in Europe - Philip developed a tradition of caring for workers - incorporated in 1912 Technological Competence and Geographic Expansion - one-product focus and Anton’s technological skills enables company to create significant Innovations - 1899: Anton hired first export manager, and sold products in Japan, Australia, Canada, Brazil, and Russia - 1912: built sales organizations in the U.S., Canada, and France; created joint ventures in many countries - 1919: entered into the Principal Agreement with GE each company could use the other’s patents; divided the world into “three spheres of influence”: GE controlled North America, Philips controlled Holland, and both companies would compete in the rest of the world - Philips began to decentralize sales organizations with autonomous marketing companies in 14 European countries, China, Brazil, and Australia - 1918: began producing electronic vacuum tubes; 8 years later radios; in 1930s X-ray tubes Philips: Organizational Development - shared but competitive leadership by commercial and technical functions - late 1930s: transferred overseas assets to 2 trust: British Philips and North American Philips Corporation; moved most research labs to England and its top management to the U.S. individual country organizations became more independent during the war; Philips decided to built the postwar organizations on the strengths of the national organizations (NO) - independent NOs had a great advantage in being able to sense and respond to the differences - NOs built their own technical capabilities; product development often became a function of local market conditions e.g. Philips of Canada created first colour TV, etc - NOs took major responsibility for financial, legal, and administrative matters, 14 product divisions (PD) were formally responsible for development, production, and global distribution - formal structure: geographic/product mix; real power had the NOs: reported directly to management board; top management made frequent overseas visits to NOs - 1954: board established the International Concern Council to formalize regular meetings with the heads of all major NOs - within the NOs management structure mimicked the joint technical and commercial leadership - cross-functional coordination capability was reflected down through NOs in front-line product teams, product-group-level management teams, and at the senior management committee of NOs’ top commercial, functional, and financial managers - many Philips managers worked abroad in a series of 2- or 3-year posts; elite expatriate
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