Philips’ key capabilities
After the Second World War, Philips has become the leading consumer electronics company. There are several key capabilities that contribute to this success, including the capabilities of local subsidiaries, the shared leadership within management and the strong and consistent research.
Firstly, Philips’ main capability is the decentralised structure with strong local subsdiaries, which is the National Organisations (NOs). Philips established NO after the war to replace the destroyed industrial plant in Netherlands. During this period, electronics was seen as luxury good and trade barrier between nations was high. The decentralised structure supports Philips in competing effectively with local competitors and enables them to adapt with the diverse local market. Each NO had the their strength and resources to sense and perform adaptive marketing as well as develop their product to respond the local differences. It is reflected in its television product. The first color TV is created in Canada, while the first stereo TV is created in Australia and the teletext TV is created in UK (Bartlett, C. A., 2001). The strong independence of these local subsidiaries also reinforced by the communication barriers during that period (Bartlett, C. A., Ghoshal, S., & Birkinshaw, J. M., 1995). The decentralised structure gives high degree of independence in each international unit, including decision-making autonomy (Daft, R. L., 2009). In the case of Philips, NOs as local subsidiaries had more power over the Product Departements (PD), as Philips gave NOs financial autonomy as well as liberty to set their own target. Thus, the NOs ability of autonomous marketing and product development function had become Philips m...
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...&D capability was not supported by their ability to efficiently produce and market the innovation. Since the R&D is separated from production and sales, it was not market-oriented enough. The limitation of sharing local market knowledge also leads Philips to its inability sell the excellent innovation that R&D has developed. Seeing this as opportunity, Japanese companies able to combine Philips invention with their mass-market production ability and successfully became the leader in the market.
Works Cited
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Bartlett, C. A. (2001). Philips versus Matsushita: A new century, a new round. Harvard Business School.
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Ultimately, each of these corporations within the consumer electronics industry have come a long way. They have survived in a business society that has readily evolved and moved towards a whole new era of technology. It is still imperative that corporations do business internationally on a global scale in order to better meet the need of consumers within their industry. However, the ways of doing this have altered with a number of strategic possibilities. Phillips and Matsushita each incorporated a different strategy from one another, with each seeing its profits and downfalls. As the economy and industry have evolved, so must Phillips and Matsushita in order to maintain a stance of being a power player within the consumer electronics industry.
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Nonaka, I., & Takeuchi, H. 1995. The knowledge-creating company: How Japanese companies create the dynamics of innovation . New York: Oxford University Press
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Noda, Tomo. “Sharp Corporation: Technology Strategy.” Harvard Business School Boston: Harvard Business School Publishing, 1993. Print.