Philip's Core Businesses example essay topic

Philips and Matsushita, two major consumer electronics companies, each differed in their overall strategies on how to achieve global competitiveness, yet each has experienced major changes and restructurings over the years that have essentially affected their abilities to remain competitive in this industry. In the end, both companies have diverged from the original organizational structures that their founders had based their companies' local existence on, yet some key strategies have remained consistent over the years no matter who was leading the organization. Despite some strategic failures, each new CEO of the two organizations has contributed their unique views to the organization and has pursued actions that they feel were necessary in order for the company to compete globally. Philips, originally founded in the Netherlands, has had key strategies that have guided it since its beginning. First, Gerard Philips, its founder, focused on producing only light bulbs, which at the time was his core business, despite other electronics producers' race to diversify. This is consistent with Van der Klugt's strategy of defining a core business for Philips during his time as CEO, where he decided to sell off their non-core business of domestic appliances to Whirlpool and their medical systems business to GE.

Boon stra, like Van der Klugt, named consumer electronics as Philips' future core competency. All of these strategies that focus on Philips' core competencies have resulted in overall performance improvements by all that have adopted it. On the other hand, CEOs Timmer and Kleisterlee have developed their own diversification strategies for Philips. Timmer had expanded the electronics business to include software, services and multimedia, while Kleisterlee wanted Philips to be a technology developer / global marketer. Both strategies ultimately diverged from Philip's core businesses and tried to define its businesses too broadly, which resulted in miserable failure. Another strategy that was prevalent during Gerard's time was the use of competitive leadership between commercially and technically-oriented people.

Gerard, an engineer, and Anton, a businessman, would compete to see who could produce / sell more. In Philips' later developmental stages, its national organizations (NO's) have followed this strategy of motivation through its technical and commercial management. However, Reimsdijk and Dekker both restructured their management to become single management or management that is not composed of these technical and commercial influences. Both restructures of management failed - Reimsdijk still experienced power struggles after his reorganization and Dekker's sales still declined while profits stagnated. Despite any divergence from any of Philips' original strategies, some strategies were consistent across the terms of CEO's. Gerard's focus on technology and research was kept in most everyone's agenda.

In Philips' developing stages, research remained an independent function and was not controlled by the product divisions (PD's) or national organizations (NO's). Furthermore, under Van der Klugt, the research and development (R&D) department gained more control and became responsible for its own area of research interest. Lastly, many CEO's adopted Gerard Philips's strategy of keeping up-to-date on its equipment and production plants. Reimsdijk, Dekker and Van der Klugt all closed Philips' most inefficient plants, operations and production facilities under their terms. This portion of each of their contribution, despite any other influences and decisions made during their term, was most likely beneficial to Philips' performance then and in the long run.

Japan's Matsushita, like Philips, has had key strategies that have guided it since its beginning. First, Konosuke Matsushita (KM), its founder, developed Matsushita as a centralized organization. This strategy of keeping his business centralized was originally followed through with the development of central research laboratories (CRL's) and product divisions that had the power to overrule sales subsidiaries. However, future CEO's of Matsushita have attempted to decentralize the organization as it became global.

For example, Morishita fired some staff workers in order to decentralize responsibility in the organization. Furthermore, Yamashita implemented "Operation Localization" that was aimed to boost Matsushita's production offshore. Yamashita also wanted the overseas companies to act more like Philips' national organizations (NO's), by giving them more choice over the products that they sell. However, despite this effort and to Yamashita's unhappiness, the overseas companies continued to act merely as implementation arms of the central organization.

Yamashita's successor, Tanii, continued this strategy, which failed, yet again. Tanii had realized worldwide growth for Matsushita, though, probably because of the failure to truly decentralize. Nakamura restructured KM's original product division structure in 2000. Nakamura had taken very radical moves with his "destruction and creation" plan that essentially disbanded the product structure and created two corporate entities - the Panasonic brand consumer electronics and the National branded appliances. This total restructure resulted in the profitable Matsushita becoming considered as a possible takeover target. Clearly, part of Matsushita's past success had lied in its organizational structure.

Philips and Matsushita, though possessing differing strategies, do have the similarity that their most beneficial and profitable strategies have been those that are based on their founders' original plans for their businesses. Christopher A. Bartlett. (2001) Philips versus Matsushita: A New Century, a New Round. Harvard Business School Case, 302-049, 1-20, Harvard Business School (Cases) and Harvard Busin e.