Philips versus Matsushita: The Competitive Battle Continues 1) The major issues in this case are as follows: * Choosing the best organizational design; restructuration/ reorganization of multinational corporations: Philips and Matsushita.
Philips: Problematic relation between product divisions (PD) and national organizations (NO)- responsibility issue, lower speed of reaction; NO had the real power and independency (power struggle issue)
Matshushita- difficulties with too centralized organization * Improving control systems: Lower morale among middle management caused by cutting costs and layoffs policy as well as by standardization (ignoring new worldwide market demands for more segmented products and higher consumers’
…show more content…
If organization has this type of structure there are difficulties with control systems and sooner or later it should evolve into worldwide product or geographic structure. Philips became highly decentralized organization in contrast to Matsushita, which based its global competitiveness on its centralized, highly efficient operations in Japan. * “Yellow Booklet”-,report prepared in 1971 pointed out lack of distinct division of responsibilities between NO and PD which significantly lowered speed of reaction of an enterprise towards changing climate and increasingly complex operations. Following CEOs tried to “tilt the matrix” through giving more responsibilities to PD and changing leadership style. * Too many PDs- 14 * Importance of R&D department was diminished during Klug’s restructuration, which was not good move in my opinion because R&D should present the highest importance for this type of business.
* Highly centralized, strong national culture * Most of the managers even in national organization were assigned to expatriates from Japan, monitoring outputs, lack of autonomy to achieve sales and profits targets
6) Analysis Qualitative:
Strengths: Strong brand name, responsive national organizations
Weaknesses: Among weaknesses I would list: Diversified, volatile portfolio, lack of distinctive division in responsibilities