Distinctive Competencies Incompetency
Phillips  A long track record of
innovations at local subsidiaries,
which have developed strong
research capabilities in different
areas
 Self-sufficiency of NOs allowed
them to become adept at
responding to country-specific
market condition
Matsushita  Adaptive operational culture
 Flood of market driven new
products and outlets
 Low cost as a result of global
scale efficiency
 vulnerable to rapidly-changing
Change
 Creation of common market,
eroded trade barriers and made
NOs less important
 Ability to bring products to market
began to falter
 Company fragmentation
presented by the
miscommunication between on
product introduction and research
 Unnecessary overlapping R&D
projects were being conducted
 Phillips was once force to abandon
its superior technical product
 Highly centralize operations
heavily relying on domestic
technical support
 Lack of leading technological edge
and global learning makes it
market conditions and demand in
the future
 Close down least efficient
plants and concerting the best
into International Production
Centers to take advantage of
the economy of scale
 Replace dual leadership by
single management to simplify
company structure
 Identify company’s core
business and sell off the rest
 Cut cost in labor and R&D
 Adopting “operation
localization” to help overseas
company develop the
innovative capability and
entrepreneurial initiative as
Phillips
 Relocate major regional
headquarter from Japan to
other continent to decentralize
operation control nearer to
local market
 Invest in innovative and high-
potential business with its
huge capital reserve
 Move production to low-cost
countries