Philips and Matsushita
In the post World War II era, Philips became the leading consumer electronics company in the world. Philips' success in this postwar era can be attributed to their strong Research & Development efforts, their independent National Organizations and the communication between these National Organizations. However, with the creation of the Common Market in the 1960's, the same National Organizations to which Philips attributed its postwar success soon became the reason why Matsushita displaced Philips as the leading consumer electronics company.Early in Philips history, Gerard and Anton Philips agreed that strong research and development efforts were vital to the Philips success. The importance of research and development is evident in the physics and chemistry lab that developed a tungsten metal filament bulb that was a great commercial success enabling Philips to compete against its giant rivals. In the postwar era, Philips continued this tradition with fourteen product divisions responsible for development, production and global distribution.Another contributing factor to Philips' success is the National Organizations. These postwar organizations were highly self-sufficient and extremely adept at responding to country-spec
However, after adopting the VHS format Matsushita built several manufacturing facilities to meet worldwide demand, increasing production volume 33-fold to 6. If they fell short, the manager of the division would either be placed under stronger controls from headquarters or would be replaced altogether. Lastly, Matsushita linked their divisional structure to a global strategy through the company vision and 250-year plan. Matsushita's "one-product-one-division" structure allowed divisions to operate with autonomy, but all were aligned to achieve the company vision. Sales grew quickly and Matsushita licensed the format to other manufacturers and adopted an OEM policy, locking manufacturers into the VHS format and made the VHS format the industry standard. Philips was not longer able to compete with Matsushita and fell behind due to the very autonomous National Organizations that made them successful in the first place. Furthermore, all top managers had been with Philips for the majority of their careers and many had worked at other National Organizations during foreign tours of duty. Since the National Organizations controlled assets and resources and the Product Divisions were located great distances from the National Organizations, the National Organizations often undercut the formal role of research and development that was the responsibility of the Product Divisions. Despite Philips numerous technological innovations (audiocassette, V2000 video cassette format), the autonomy of the National Organization made it difficult for Philips to bring these products to market on a global scale. Communication ensured that product group directions fit with the national strategies and priorities. As Philips competitors moved production of electronics to low-wage areas (East Asia, Central America, South America), Philips' country-level subsidiaries were not able to run global-scale production runs. Ultimately, the autonomy of the divisions linked together through a global strategy enabled Matsushita to displace Philips as the leading consumer electronics company in the world. Matsushita built a facility in Okanyama, dedicated solely to VCR production when they recognized the mass-market appeal of the videocassette recorder. In the 1980's, Matsushita displaced Philips as the leading consumer electronics company in the world.
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