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Q.1 Challenges facing Philips and Matsushita companies.

Philips Company was faced with a number of challenges; this is because in 1960 the

creation of European common market introduced trade barriers which resulted to the rationale

for independent country subsidiaries. The number of transistor based type of technologies

demanded a large production runs that most of the Philip Company were unable to justify,

while majority of its competitors were moving production of electronics to new facilities and

environment. Secondly there was the problem of power struggles between the national

organization managers and product development managers (PD), as PD managers were

unable to gain control over a number of manufacturing operations from NO. This led to

organizational difficulty of closing of local plants which had led to slow implementation of

any process (Bartlett, 2009 pp.2). During the years when the company decided to lay off

some of its employees they were faced with certain problems: they were obliged to

compensate a huge amount of money as a compensation send off which did take a huge part

of their cash flow. Secondly is that the middle management lacked the morale to work

effectively and efficiently as a result the production decline down, this led the company to

ignore the worldwide market. Lastly it became apparent for the company not to be able e to

change around its operations due to economic conditions which included: competition from

rivals, global crisis experience in the industry.

Matsushita was faced with external problems where during its operations it was unable

to find any American company that was willing to collaborate together to internationalize its

products. Despite having its sales increasing rapidly its centralized structures were also

questioned by their different host countries, thus resulting to lower credibility which in turn

made them to lose a substantial market niche (Bartlett, 2009 pp.3). Economically the

company was faced with the problem of the currency rates and the ‘Global tech’ recession,


the Japan currency YEN made it unprofitable to make exports of its products overseas, it was

less valued to the rest of the currencies, while the recession that affected the technology and

electronic market brought down business to some levels affecting the business operations.

Q.2. Localities Philips and Matsushita companies

It matters economically and socially to have both companies to be located in their

mother or parent companies, Philips in Holland and Matsushita in Japan. While both

companies were in the process of expanding their products to foreign countries a number of

problems resulted. Firstly the current currency within the countries makes it uncompetitive

and unprofitable to make any kind of exports, secondly it becomes difficult to satisfy the

needs of foreign customers. Both companies have established that the local markets within

their countries provide untapped resources and opportunities to capitalize on, they also

provide god avenues where research and development of the products can be done. Both

companies find easy to apply a number of strategies to the foreign subsidiary companies for

example a centralised system, distribution channel or licensing of such companies as

subsidiaries (Bartlett, 2009 pp.5).

Q.3 National organizational powers: Philips and Matsushita companies

The reason why Philips national organization management as powers in their system is

that after facing the problem of the war in 1930, the company was fearful and they made

transfers to the parent home. The national organization was formed which could increase self

sufficiency, and was allowed to adept to country specific market conditions. The national

organization was made autonomous and independent so as to take great advantage of any

business opportunity or to get sense and respond to differences. The NO management did


take a huge junk of tasks like finance, legal and administrative matters which made them to

have vital powers. They could also respond directly to management board.

Q.4. Philips value chain in 1980’ and 2000.

The organization had a matrix simplification with a single management at both corporate

and national organizational levels. They were also able to design the various businesses as

either core or non-core. The company made it possible that the research and development

budget be a direct responsibility of the business making the research (Bartlett, 2009 pp.8). In

2000 a plan was done to expand software services to become 40% by betting the Philips

legendary innovation capability in developing core technologies. In later years the focus

became on the customer where the company increased its advertising to 40% to create

awareness and image of their brands. The company also did practice outsourcing services to

get quality and innovative ideas and products.

Q.5 Matsushita change agenda in 1980’ and 1990’

The main focus of the company during the years was changing systems and controls. The

company had expatriate managers and technicians who their vital role was communication

they were expected to transfer product and process technologies, and provide the local market

with information’s. In 1982 operational localisation was made to target to have personnel,

technology, material and capital to be localized, a two week internal merchandizing was

adopted for product planning and exhibition of new line of products. In 1986 a decision of

relocating Head quarters was made this was a shift operational control strategy to viable

specific localities (Bartlett, 2009 pp.11). In 1989 the fall of products made the company to

shift it production to lower cost countries and establish research and development relationship

of their R&D foreign engineers.


Reference list

Bartlett, C., 2009. Philips versus Matsushita: the competiveness battle continues, Harvard

Business school, Vol.9-910-410, pp.1-20.