Establishing a Transnational Organization

1. Phillips ability to bring its innovative products to the market started to fail and in the 1960’s, Phillips has to watch his Japanese competitors capture most of that market. It seems as though they suffered from being too ingrained in its ways to change was also a big challenge. They also failed on the 3-year plan they had put in place to be successful. Because of this, they became a prisoner of their own success. They also face problems with layoffs, due to the fact that they were so family oriented. Phillips must learn how to strengthen its headquarters and take power away from their subsidiaries. Their matrix organization was way too large. The barriers that exist would be for both companies would need to become transnational, but from different ideas.
2. An administrative structure is a company’s history and its embedded management culture. According to Stopford and Wells, possible heritages of a firm with a matrix structure typically manage their international operations through an international division at the early stages of foreign expansion. The companies that expanded their sales abroad without significantly increasing their foreign product diversity typically adopt an matrix structure. Companies resort to a global mix when both foreign sales and foreign product diversity are high. So I think it would benefit them to follow Stopford and Wells model.
3. China has a booming market, and the European market is not as easy to break into. Chinese are not trained for product and imposes tariffs on imports. China has a lot of room for growth, it also has to deal with counterfeit problems, which makes it even more expensive. The European market is very developed and a long term project won’t last.
4. Some risks arise from the simultaneous presence of both collaborative and competitive aspects in the relationships. Other risks may arise from the higher levels of strategic and organizational complexity involved in managing cooperative relationships outside the company’s own boundaries. Collabortive ventures might be used by one or both partners to develop a competitive edge over the other.