Comparing and Contrasting Similar Companies: Philips and Matsushita
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From their early beginnings in the late 1800s and early 1900s, N.V. Philips and Matsushita Electric respectively became two of the largest consumer electronics companies in the world using very different corporate structures and philosophies. Due to the events of World War II, Philips employed a multinational strategy with strong, local units driving innovation, which is historically an uncommon strategy in the consumer electronics industry. On the other hand, Matsushita followed the traditional electronics industry and Japanese philosophy of global standardization, maintaining central control and surveillance over operations abroad to have a lower cost structure and quick response to market demands.
While the two strategies are very…show more content… The final two glaring weaknesses of this corporate structure were:
1. Even though the multinational organization proved effective as the NOs could respond to local needs through customized products, it caused Philips to have higher economies of scale than their competitors (most notably Matsushita) since very few of their products were standardized. They could not go into mass production and spread the production costs over tens of millions of units of any product because most products were specialized for the individual countries. This led to inefficient factories that were being closed or downsized by management during their continuous re-organizational efforts.
2. Because there was no cooperation between the NOs and the PDs, the company as a whole could not take advantage of their history of innovative products. They did not move production to lower-cost Asian countries as fast as their competitors, so their costs stayed higher and production took longer. And since they could not coordinate cooperation between the NOs and the PDs, they let several innovations, which would have been worth billions of dollars to the company, get captured and taken to mass market by their more efficient and reactionary Japanese competitors (most notable