Philips and Matsushita

Both Philips and Matsushita have been struggling to develop new capabilities in order to sustain and grow in the constant changing electronics market, especially with the emergence of rapid innovation from Korea and China. Bartlett and Beamish (2008) argues that the historical organisation design, which the company established during the internationalisation, has became the major barrier for the company in building new capabilities. Their organisation structure, embedded culture and the relationship arrangement between head office and subsidiaries are still strongly influenced the organisation today.

Philips and Matsushita find it difficult to manage the balance between product departments and geographical units. For four decades Phillips strives to improve their ability in coordinating and integrating the NO in order to increase efficiency, achieve economy of scale and faster adaptation of new technology. Due to Phillips decentralised structure, NOs developed strong independency which limits the company control over NO. Each NO has their own goals, shared value and culture, which could be different than those of the company. Thus, it can affect how company decisions are being implemented in the NO.

Trough adopting different strategies Matsushita has been trying to establish local capabilities, improve their innovative capabilities and step out from their “imitation” image. However, the centralised coordination strategy hinders Matsushita to be more innovative and adaptive to the market. Because the resource and capabilities centred and the local subsidiaries established as only implementation arms, they have limited initiatives and ability for local responsiveness (Bartlett and Beamish, 2008). This centralised structure also un...

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...ronic market, Philips and Matsushita should be able to establish organisational learning capabilities across nations. They also need to take advantage of their firm-specific embedded resources and implement it optimally.

Works Cited

Bartlett, C. A., Ghoshal, S., & Birkinshaw, J. M. (1995). Transnational management. McGraw-Hill/Irwin.

Bartlett, C. A. (2001). Philips versus Matsushita: A new century, a new round. Harvard Business School.

Daft, R. L. (2009). Organization theory and design. Cengage learning.

Porter, M. E. (Ed.). (1986). Competition in global industries. Harvard Business Press.

Suarez-Villa, L., & Han, P. H. (1990). The rise of Korea's electronics industry: Technological change, growth, and territorial distribution. Economic Geography, 273-292.

Luo, Y. (2001). Dynamic capabilities in international expansion. Journal of World Business, 35(4), 355-378.