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Ellen Moore Case
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International and Cross-cultural
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management
12/30/2009
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Deepika Raj (172/45)
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2
Contents
1. Case Background
………………………………………………………………... 3
a. Internationalization motives
………………………………………. 6
b. Global strategy
………………………………………………………….... 7
c. Analysis of Reorganization
attempts…………………………….. 9
e. SWOT
…………………………………………………………………
……... 14
In the 1950’s and 60’s Matsushita grew into a multinational company with
plants all around the world. The VCR propelled Matsushita into leadership
of the consumer electronics industry in the1980’. By then its overseas
companies were either wholly owned single product plants or companies
with abroad product line for local markets. At this time Matsushita had
over 700 expatriate Japanese on foreign assignment for 4-8 years. Tight
central control was possible because these expatriates had strong
network connections in Japan.
Philips
Major Issues
A major problematic area for Philips has been the struggle to balance the
respective roles and power of the National Organizations (NOs) and the
Product Divisions (PDs). While on paper the organizational structure was
a geographic/product matrix one, the NOs enjoyed the real power,
resulting in an ever existing conflict in terms of power and responsibilities.
NO’s control of assets gave it more influence on the top management. The
PDs as a result found it difficult to get their voices heard. The lack of
clarity with respect to the two meant that Philips was unable to function
efficiently, and thus has been unable to build either into a capability.
b. VHS and Beta already had established market share and ample pre-
recorded video libraries
Its late entry meant it was incompatible with machines and its unreliability
seemingly left it destined to fail.
The closure of the least efficient plants has also been undertaken by a
number of CEO’s, meaning the loss of a large number of jobs on many
occasions. In this sense it is clear that failed to build manpower into a
capability.
Minor issues
During the 1960s, creation of common market eroded trade barriers, and
diluted the rationale for maintaining independent country level
subsidiaries
Matsushita
Major Issues
Historically, the high level of centralisation and the tall structure have
hindered Matsushita’s innovation attempts. The presidents in recent years
have tried to make innovation a capability of Matsushita. The hierarchy
has been flattened, and restructuring has finally taken place. After the
collapse of the Japanese economy left Matsushita with excess capacity
and evaporating profits, restructuring was certainly necessary, but took
many years until anything was done to correct the situation. This shows
that Matsushita was also slow to manage the changes in the external
environment.
Minor Issues
3.Analysis
Matsus
Philips hita
One of the main reasons attributable to Philips success initially, was its
one product focus strategy. While other electronics companies were keen
to diversify into other products, Philips concentrated producing light bulbs
and inventing new technologies for this product. It was, thus, able to build
a competitive advantage based on technology, and subsequently, became
a market leader in this field. To avoid market saturation, Philips soon
expanded into global territories like Japan, Australia, China, etc.
Matsushi
ta
Philips
Later, it began to realise that the foreign subsidiaries were too dependent
on the centre for strategic decisions and technological development and
they themselves acted as only implementation arms. So, it began to
Philips
Matsushita:
d. ARC Analysis
Philips:
• Architecture
The organizational structure at Philips was decentralized, with major
decisions divided between the PDs and the NOs
• Routines
• It was a company policy to renew plant machinery by
regularly scrapping pld plants and using new machines
• Culture
Culture comprised of shared but competitive leadership between the
technical and commercial functions. In some places, it was a triad
management style concluded by the finance function, and this style
trickled down to front line teams. Decentralization of decision making was
a way to respond to country specific market conditions (difference in
consumer preferences and economic conditions, etc) better. Shared
values were disjointed from founder’s ideals. As company saw more
problems, the employee centric company no longer took precedence.
Matsushita:
• Architecture
The organization structure of Matsushita: highly centralized and strictly
hierarchical.
36 product
METC divisions
Finance &
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• METC and the product divisions used to set detailed sales and profit
targets for their overseas subsidiaries but local managers were
given autonomy on how to achieve those targets.
• Once a new product was established, it was spun off into its own
operation to create an independent product centre so as to maintain
the ‘hungry spirit’.
Culture:
The organization had become too centralized as all the major decisions
were taken in the headquarters and the foreign subsidiaries played no
major role in strategic decisions or product innovation. Many a times,
excessive control created dissatisfaction in foreign subsidiaries and led to
turnover of talent. It also led to over-dependence of subsidiaries on the
centre and thus, lack of technological innovation.
Philips:
Matsushita:
Philips
Philips’ pursuit to become a global leader has failed, but it still possesses
capabilities that its competitors do not. Its ability to innovate and develop
technology is what made it successful in the first place, and it must
exploit these capacities further. Sustained investments in R&D and
marketing may be the only way to beat the low cost Japanese competitors
The essential need is that Philips should not give up on its value
proposition of being a ‘technology developer and global marketer’, which
might happen by outsourcing majority of production of its basic products
and services. If this happens, it will be close to impossible for Philips to
make a comeback and compete with rivals offering the technology at
more economical rates
Philips also needs to find the correct structure to suit its operations and its
strategy. It needs to find a structure that is compatible with its strategy as
opposed to changing one and trying to make the other fit to it.
Matsushita
Matsushita attempted to implement a change programme they perhaps
should have considered other factors before deciding on how to embark
on a change programme. If they had used a more bottom up approach,
employees may have been able to warn the management of potential
problems that may be in store.
Whilst the logo of the company has been consistent since the1930s the
way in which Philips has advertised and communicated to the outside
world has varied. In September 2004, Philips launched its “sense and
simplicity” brand promise, which marked a new way forward for the
company. “Sense and simplicity” reflects Philips’ commitment to be a
market-driven company that provides products and services that fulfil the
promise of being “designed around you, easy to experience and
advanced”. In 2008, the total estimated value of Philips brand increased
by 8% to USD 8.3 billion and was ranked the 43rd most valuable brand in
Inter-brands 2008 ranking of best global brands.
Matsushita
that links risk management activities with business plans for responding
to important risks and with other business management initiatives.