Philips Versus Matsushita Case

Philips and Matsushita are two giants in the global consumer electronics market. Their international strategies and organizations are very different — while the former pursued a localization strategy, the latter pursued a global standardization strategy; while the former made use of highly self-sufficient national organizations (NOs) for strong local responsiveness, the latter adopted ”one product one division” structure for cost cutting. Nevertheless, both companies encountered their difficulties as global environment changed and have then undergone major restructuring over the years. So what are the recommendations for these companies to survive in the changing environment?
Philips has developed local responsiveness through its decentralized structure of national organizations (NO). This structure has a great advantage in being able to sense and quickly respond to the differences in the local markets. As a result of product development is a function of the local market conditions. Philips had developed 8 major R&D facilities throughout the world that are highly specialized. They have been a success introducing such products as first color TV in its Canadian NO and first stereo TV in Australia. However, these inventions were not shared with the rest of the NOs in Philips because of the lack of communication between NOs and headquarters. For example, Philips’ Beta videocassette format wasn’t shared with other divisions as the strategically valuable invention, as a result North America Philips rejected this invention outright choosing instead to outsource and sell Matsushita’s VHS tapes. In order to prevent these strategic mistakes, the main role of the headquarters should be scanning of business activities across countries and identifying resources and capabilities that might be a source of competitive advantage for other companies in the firm.
In the 1980s, Philips competitive position weakened significantly. Competition from rapid technological change,