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Philips versus Matsushita: A New Century, a New Round
1 STRATEGIES AND STRUCTURES OF THE TWO FIRMS
Matsushita Electric Industrial of Japan and N.V. Philips of the Netherlands are among the principal consumer electronics companies in the world. Over the years, these two firms pursued different strategies which required different organisational architectures.
Analysing the strategy, vertical and horizontal differentiation of the two firms as well as the integrating mechanisms; it is quite evident that the strategy and organisational architecture of the two firms vary considerably. These differences in strategies and structures are described in following sub-sections.
1.1 Strategies of the two firms and how they differ
For most managers the primary goal is maximising the value of a firm for shareholders. In order to accomplish this, managers must pursue strategies that increase the profitability of the business and its rate of profit growth over time. There are numerous profitability indexes, which are beyond the scope of this study, but because managers of Philips and Matsushita were generally measured by return on sales, this metric is provided as a comparative measure of company performance over time (Figure 1, Annexure A). The impact of strategy, the environment and organisation architecture on profitability will be discussed throughout this case study.
The success which the two firms shared until the late 1980’s (Figure 1, Annexure A) was based on two contrasting strategies – Philips pursued a localisation strategy making use of highly self-sufficient national organisations (NO’s), whereas Matsushita pursued a global stand ...