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Management

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Philips vs. Matsushita
Two major competitors in the global consumer electronics industry, Philips of the Netherlands and Matsushita of Japan, both have extensive histories that can be traced back more than a century. They have each followed different strategies and have had significant capabilities and downfalls along the way. In general, Philips built its tenured success on a portfolio of responsive national organizations. On the other hand, Matsushita based its global strategy on a centralized and efficient operation through Japan. As they developed and reorganized their international strategies, each company was forced to undertake its strategic posture and restructuring as its competition position fell.
During the 1990s, each company experienced specific difficulties to their market share. Both companies struggled to reestablish themselves in the global consumer electronics world. As the year 2000 came around, new CEOs at both companies came up with even more complicated initiatives and reorganizations.
Philips attempts at Reorganization
Below is a brief description of some of the CEOs and what they tried to accomplish as Philips strived to make a profit. The information gathered was derived from (www.slideshare.net).

Gerard Philips – 1892
Philips objective was to have a one-product focus using new factories and machines for production efficiencies. The goal was to have employees focused and develop a tradition for caring. The actions taken were transferring assets, labs overseas and reliance on national organization (NO). As a result management were having employees homes built, promoted education, paid employees well and allowed NOs ability to make autonomous decisions. The foundation was to allow NOs to have individual power, managed by technical, commercial and finance heads, even though product divisions (PD) were formally responsible. The results were for Philips to have the ability to respond to country – specific market conditions.
Van Reimsdijk & Rodenburg - 1970s
Reimsdijk & Rodenburg objective was to establish responsibilities between NOs and PDs. Reimsdijk & Rodenburg (R&R) goal was to shift power from NOs to PDs. R&R responded by creating International Product Centers (IPC) that was built to increase the flow of goods among NOs, sizing down dual commercial & technical mangers to one. With this action implementation was slow. During this time the infrastructure was to close less efficient plants, introduced IPC, cut management to one person. As a result, power struggle continued between NOs and PDs.
Wisse Dekker – 1982
Dekker objective was to reduce financial problems. The goal was to shift powers to PDs. Shutting down European plants and sell/acquired businesses were the actions taken. These actions gave PDs formal product management responsibilities, NOs responsibility for local profits. Infrastructure reduced management board, giving final decisions to PDs. As a result sales still declined and profits were stagnant.
Van der Klugt – 1987
Klugt objective was beating the Japanese competition. There was talk about shaking up “lifetime employment” by cutting jobs. Klugt’s actions were to establishing 4 core businesses, closed significant amount of plants and reduced R&D spending. At this time it was evident that the culture shifted and thousands of jobs were slashed and he shifted management from headquarters. The infrastructure was to structure business around 4 core businesses and away from 14 PDs. As a result unanticipated losses came with class-action suit and ½ of management was replaced.
Gerard Kleisterlee – 2001
Kleisterlee objective was to increase sales and outsource activities where they can’t add value. To support his objective the action taken was to close European plants. With this action the culture was trying to shift to core competencies of technology developer and global marketer. To go along with this plan the infrastructure was to eliminate more overhead/costly production plants. As a result shareholder pressures rose and there was a report of losses.
Frans van Houten - 2011
CEO and Chairman of the Board of Management since April 2011 and the Executive Committee since July 2011. Van Houten stood strong and firm on the quarter deck setting the tone for his Impossible Future, while all around him a fierce storm was brewing. Since taking over as CEO of Philips, Mr. Van Houten, while lauded in for his vision, had encountered stone faced, near brutal scrutiny by the media and investment analysts due to the fact that the company had lost 1.3 billion euros and the stock dropped almost forty percent under his short watch (the result of inheriting a top-heavy company with complex, slow bureaucratic ways, as well as a slow recover). He weathered the storm with sturdy Dutch composure and grace, but inside he must have felt under tremendous stress and pressure (Capell, K., 2009).
According to Van Houten, the company has, in fact, enjoyed a higher than GDP growth rate of 5% and its growth engines for the future (Healthcare, LED Lighting, and Consumer Living) are surging. He has declared (going out on a limb) that by 2013, based on his Accelerate Change and Performance Program, the company will achieve 4% to 6% accelerated growth (or higher), and a return 12% to 40% EBIDITA (earnings before interest, taxes, depreciation and amortization), (Hargrove, R, 2011).
Matsushita’s attempts to Reorganization
Below is a brief description of the CEOs and what they tried to accomplish as leaders of Matsushita. The information gathered was derived from (www.slideshare.net).
Vision

Konosuke Matsushita (KM) ‏ - 1918
Matsushita objective was to build a successful company through fairness and giving back to the world around them. Matsushita created a productive environment with lifetime employment. Matsushita decided to open “National Shops,” various attempts at product line extension, outsourced production, licensing agreements, METC (Matsushita Electric Trading Company), worldwide production. With these actions the culture was divisional structure that led to a competitive environment. The infrastructure was “One-product, One-division”. The results were successful development of efficient, superior VHS production and good relationships.
Toshihoko Yamashita – 1982
Yamashita objective was to “help” overseas companies develop the innovative capability and entrepreneurial initiatives”. Yamashita goal was to allow local divisions to have more control over their operations. Yamashita work was to operation localize: personnel, technology, material and capital. With operation localization he increased number of local nationals in key positions, local division given choice over products sold, quantities, prices, and features. “Operation Localization” was the foundation. As a result overseas productions remained too dependent on the central organization.
Akio Tanii – 1986
Tanii objective was to fully integrate domestic and overseas operations. Anticipated culture was to make each division contribute to initiative and innovation. Actions taken brought foreign subsidiaries under control of METC, then put METC under parent company and purchase MCA (Music Corporation of America). Relocated major regional headquarters functions to North America, Europe, and Southeast Asia. More local operational control was the infrastructure. As a result $17.5 billion in liquid financial assets until the bubble burst in 1992.

Yoichi Morishita – 1993
Morishita objective was “Simple, small, speedy and strategic”. The goal was to make the environment less expensive and more adaptable. Actions taken: Sold 80% of MCI and shifted production to offshore companies. The culture shifted to cutting headquarters staff and decentralized responsibility and moved 6000 staff to operating positions- great resistance to the radical changes. Infrastructure was to streamlined and decentralized operations. As a result the driving down of prices and increased competition meant that Matsushita struggled.
Kunio Nakamura – 2000
Nakamura objective was to raise profitability to 5% of sales, “Super manufacturer of products” and “Meet customer needs through systems and services”. The goal was to flatten the hierarchy and empower employees. Actions taken were to integrate one-product divisions into multi-product production centers, market centers for Panasonic brands and National branded products. The culture created change for all key headquarters functions that related to international operations were transferred to overseas regional offices. Infrastructure was to empower employees at multi-product centers. As a result earnings estimates had to be adjusted downward and there with Matsushita looking like a good buyout opportunity.
Fumio Ohtsubo – 2006
Mr. Fumio Ohtsubo has been the President of Panasonic Corporation, a Parent company of Panasonic Electric Works Co., Ltd. and SANYO Electric Co., Ltd. since June 28, 2006. As he took on the role of company president, Ohtsubo stated that his mission would be to add Panasonic’s name to the list of companies that represent global excellence. “Global excellence” had in fact already been a stated goal during the tenure of President Nakamura, and the company’s operating profit ratio of 10% was an indicator of that. President Ohtsubo redefined “global excellence” as including that numerical target and also “making Panasonic into a company supported by stakeholders the world over by maintaining innovation that is unyielding and implementing sound business activities on a global scale.” He clarified this as an effort at making Panasonic into a corporate entity that puts the art of manufacturing at its very core: a company that brings together the strengths of all employees to channel operations into a single sequence of all business activities that go into manufacturing to create products that are good and products that are strong (www.panasonic.net).
Kazuhiro - 2012
Panasonic Corporation will announce on June 27th that Kazuhiro Tsuga will be appointed President of the company once the Ordinary General Meeting of Shareholders and subsequent Board of Directors' and the Board of Auditors' Meetings. As of 27th of June, Mr. Tsuga will take over from former President Fumio Ohtsubo, driving the company towards its goal to become the No. 1 Green Innovation Company in the electronics industry by 2018, the 100th anniversary of its foundation (www.panasonic.net).

Philips Vision
Mission
Improving people’s lives through meaningful innovation.
Vision
At Philips, we strive to make the world healthier and more sustainable through innovation. Our goal is to improve the lives of 3 billion people a year by 2025. We will be the best place to work for people who share our passion. Together we will deliver superior value for our customers and shareholders.
Matsushita Vision
Panasonic aims to be the No.1 Green Innovation Company in the Electronics Industry in 2018, the 100th anniversary of our founding. We will make the ‘environment’ central to all of our business activities and take the lead in promoting the ‘Green Revolution’ which is taking place around the world for the next generation. Specifically, we will work to realize our vision with these two ‘innovations.’

Both philosophies speak to helping the world by making it healthier through meaningful innovation. The philosophies focus on improving people lives. I feel that this approach was a good idea now that improving the environment is a hot topic these days. When consumers can see and hear about the things that Philips and Matsushita are doing to keep their promise of helping the world live healthier lives, I anticipate that this will allow both companies to retain and gain new consumers. In my opinion, I feel that if both companies achieve sustainable competitive advantage over it rivals it would allow the companies to sustain profits that exceed the average for their industry. It’s all about outperforming the competitor even if it’s Philips vs. Matsushita.
It took time for both Philips and Matsushita to build up their international operations; therefore it is not easy to bring together their traditional organizational models with objectives that are in contrast of their extensive heritage (Kunii, I. M., 2002).
Philips’ innovation and entrepreneurship is no match for Matsushita. Philips is very good at adapting central products and strategies to meet local needs. Also, they have been able to use their resources available in the host country to create new products and new businesses.
On the other hand, Matsushita and the Japanese have taught the world the value of pursuing a global strategy with only standard products. They have had tremendous cost advantages in being able to supply the world market from factories at home in Japan. It seems the tendency has been to compete on a country by country basis with all the additional costs associated with breaking up operations.
In my view, both companies need to overcome limitations from their heritage and history. In order to do so, they need to differentiate business functions while at the same time integrate their distinct operating units. Next, they need to make all resources and responsibilities throughout the company to be independent. Lastly, each company needs to base their operations under one corporate philosophy. This can be started by adding to or changing their mission statements.
It is clear that competing solely on the basic of national market responsiveness no longer is going to work. Modern transnational firms succeed by developing all their capabilities at the same time. The famous slogan, “think global, act local” shows the need to accomplish global efficiency with local responsiveness. The company knowledge needs to be transferred across organizational and national borders.

References
Capell, K. (2009). A Brighter Idea From Philips. Businessweek, (4157), 70.
Schattke, R. W., & Vergoossen, R. A. (1996). Barriers to Interpretation -- A Case Study of Philip Electronics NV. Accounting & Business Research (Wolters Kluwer UK), 27(1), 72-84.
Company Spotlight: Matsushita. (2008). MarketWatch: Technology, 7(2), 77-83.
Shead, S. (2012). Philips report first quarter profits. Engineer (Online Edition), 6.
The Web Is Not Enough. (2000). Fortune, 142(1), 248.
Kunii, I. M. (2002). MATSUSHITA'S LONG MARCH. Businessweek, (3776), 46.
Matsushita Unveils New Structure, Strategy. (2003). Electronic News (10616624), 49(51), N.PAG.
Deffree, S. (2008). Matsushita becomes Panasonic, invests $862M in image-sensor fab. Electronic News (10616624), 54(2), 26.
Hargrove, R (2011, December 11). First 100 day report: Frans van Houten, Philips CEO. Masterful Coaching.Retrieved June 24, 2012, from http://masterfulcoaching.com/frans-van-houten/ "Philips versus Matsushita." 123HelpMe.com. 26 Jun 2012 http://www.123HelpMe.com/view.asp?id=166868

Consumer Lifestyle News is a great website for consumer electronics (http://cln-online.org).
Panasonic is a great website for the latest company news and current annual report (www.panasonic.net).
Philips is a great website for the latest company news and current annual report (www.philips.com).
SlideShare is a great website to share presentations, documents and professional videos (www.slideshare.net).

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