Philllips Yin

versus Matsushita(

Yiin-Kuen (Michael) Fuh Kevin Hill Alan Wu February 9, 2006

)

Case Summary

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Philips

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Built light bulb business into multinational organization Strong R&D labs Decentralized power; National Organizations Ill-equipped to keep up with changing marketplace Painful series of reorganizations: 7 CEOs from 1970 –today Built small appliance business into a major appliance manufacturer and outsource manufacturer Centralized operations; one-product-one-division approach Purchased MCA; domestic cash cow struggled Attempting to respond better to consumer needs overseas

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Matsushita (Panasonic brand)

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Porter’Diamond s

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Firm Strategy, Structure, and Rivalry  Competitive nature at beginning –business/engineering  Divide and Conquer (Decentralized Operations)  Overseas businesses distinct with high degree of autonomy  Restructured to single management –slow to adapt Demand Conditions  Positioned well to meet localized demand (i.e. differentiated TV sets)  Failed to adapt to standards (i.e. VCR) Factor Conditions  Strong innovators and research labs  NOs had a lot of authority but caused fragmentation in the company Related and Supporting Industries  Developed partnership with GE to share intellectual property and segmented market  As time went on, did poorly in gaining strategic partnerships

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Porter’Diamond s

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Firm Strategy, Structure, and Rivalry  Centralized culture, global operations  Viewed overseas businesses as channels and extensions of centralized control center  Basic R&D was centralized, but R&D units competed to encourage innovation Demand Conditions  Quicker to adapt to changing marketplace (VCR)  Controlled their non-critical operations Factor Conditions  Adaptive (copycat)  Scalable and versatile (ton of products esp. postwar era) Related and Supporting Industries  They dropped their own format and adopted industry standard, and catered to OEMs such as GE, RCA,...