Philips and Matsushita

Analyze the strategy followed by Philips and Matsushita. How and why do they differ?
Philips and Matsushita had followed very different strategies. Philips adopted the localization strategy and built its success on a worldwide portfolio of responsive national organizations. On the other hand, Matsushita adopt the strategy of global standardization.
The structure of the organization has been matrix based whereas Matsushita followed a more hierarchical structure. The management is more decentralized at Philips; that is, decisions are taken at the local and country level. On the other hand, Matsushita’s management is more centralized; that is, decisions were taken at the headquarters.
Why was it so difficult for Philips the globalization of its strategy?
Consumer preferences and economic conditions vary in each country; for example, in some countries, rich, furniture-encased TV sets were the norm whereas in other countries, sleek contemporary models dominated the market.
Philips had to deal with different electric and transmission conditions in different countries; for example, television transmission standards were different. Strong national organizations were also responsible for making it extremely difficult for Philips to adopt the globalization of its strategy.
Philips had to make very different products for developing and developed countries primarily because of the different levels of technological sophistication and different income levels.
Even the marketing strategy that was working in developed countries like the U.S. did not work well in developing countries like India. In the U.S., Philips focused on marketing and distribution through giant retail chains like Wal-Mart. “In India, its strategy was to sell its adapted low-end products through 35,000 village stores.”
Who is better positioned to compete in the future?
Philips looks to be better position to compete in the future. In today’s intensely competitive world, the value of localization cannot be ruled out. It is very important to respond to local conditions and local tastes and preferences in order to compete more effectively. Philips has been doing exactly the same. Income levels will vary among different countries. Therefore, it does not make sense to make the same electronic products for developing and developed markets. People in developing markets are less likely to afford the highest quality and sophisticated electronic consumer products.