Juan Marcos Lecuona Philips Vs.

Matsushita

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Both companies are, well renowned, international entities that have focused on the electronics, technology and devices markets; to name some. Each were founded by individuals who had different way of doing things, who evidently had different organizational culture. This issue proved, over the years, to have huge impact on the long time life period of each company. Each worked hard to do business under the structured they had inherited, and when world wide economy suffered changes that required strategic planning and adjusting each one of this two companies went through very different roads. Philips, a dutch company, quickly became a leader in industrial research among a wide range of industries. Soon, it was evident for them that, the best way to strategically address the growth they were experienced was by creating sales organizations around the world which eventually lead them to establish, what they called, national organizations and product divisions. The national organizations responded to specific market conditions while their product divisions (PD's) were designed to address several of the company divisions but from their headquarters at Eindhoven. Over time this decision created a mayor problem because the NO's and the PD's were seen as individuals and had problems communicating among themselves as well as quickly responding to mayor market changes. This issue lead them to loose position internationally and financially they were struggling to maintain healthy numbers. CEO's came and went, and with each Phillips faced waves of restructure that, in my opinion, instead of really braking through positively; just damaged them more. Over time the PD's disappeared only to give birth to IPC's (International Production Centres). Still the same problem remained. Philips tried closing plants, changing CEO's, they also tried changing its core products, they even announced focusing on new core technologies, but none of them help. Finally on 2001 Gerard Kleisterlee recognized that they organization was fragmented and that that issue prevent them from having financial success. He also announced that the best hope they had, as a company, was to outsource; in order to survive, most of its basic manufacturing process and become a technology developer. Matsushita, a Japanese company, had a humble beginning; but 14 years after being founded it announced its plans to become a mayor company. They did so by announcing a 250-year corporate plan broken into 25-year sections. At the beginning Matsushita's focused domestically. When they were ready to move on, they announced a big change by becoming the first Japanese company to adopt divisional structure. They gave each division clearly defined profit responsibility for its products. Soon the company adopted the one-product-onedivision system. Each division payed 60% of its earning to the headquarters while they operated with the 40% earnings left. If a top manager didn't prove progress on a two year period he will be replaced for one who actually did report growth. In 1951 the company was ready to go out internationally. The television industry gave them the opportunity to expand globally. Then the VCR's in the '80's help them to gain presence. The company's headquarters were still responsible for a lot of things. International subsidiaries reported

directly to Matsushita Electric Trading Company. Top managers were japanese and japanese representatives from the headquarters at Japan frequently visited the subsidiaries to make sure they were healthy, if they don't they'll call in help directly from Japan. Over time high positions among the subsidiaries world wide were given to locals, still, each local had to report directly to a headquarter representative. They did experience financial problems but they proved to be effective enough to respond correctly to this situation. They performed an entire restructure process that prevent them from experiencing huge losses. I believe that being focused not only to your core business but also to where the market is moving, alongside with a strategic plan and taking into consideration that being focused sometime requires outsourcing and giving away other activities are vital not only for survival but for success as well.