Philips vs Matsushita

Matsuhita is an organization with various capabilities, based on its structure, the market environment and even its corporate culture. The company has been established whereby the organizational structure is embedded in its capabilities and competencies. The first obvious example is Matsushita’s highly centralized mode of production which dictates global operations unlike its competitor in the electronics market, a conglomerate, Philips, who has very little centralized mode of coordination. Matsushita’s management style was very traditional, since it was established. It is believed that they chose this form of structure and structure because of the nature of the market the organization serves. Their control system seemed to be a slightly highly formalized. Although competition was encouraged amongst all product divisions, their operations still stayed highly centralized. As Ouchi pointed out, a company that streamlines its business towards the output/market-based system in any economy, there are some characteristics that can only support a very centralized mode of production. In the case of Matsushita, formalization is high. “Employees are rarely given the opportunity to participate in decision making, but they maybe offered a degree of flexibility in respect of how target is achieved” (Ouchi, 1979). The latter can be backed up with Matsushita incentive of allowing employees across divisions but they were not allowed to contribute towards any other significant decisions made within the organization. Matsushita’s highly centralized mode of production dictated global operations but this form of competency was not enough to allow continuous success in its niche market for too long. Just as Philips realized that it needed to adopt some of Matsushita’s practices, the latter also concluded that it needed to take the same direction in changing its organizational structure. In a mass market such as that of consumer electronics, this will mean that production