Philips Versus Matsushita

Philips versus Matsushita: The Competitive Battle Continues

Case write-up

Philips – from light-bulb manufacturer to the leader in consumer electronics

Philips started to build its strength on technological competences, although focusing only on one product – a light-bulb. The company was continuously investing in R&D as well as efficient production technology. As Dutch market was to small for a mass production, it started the first export activities in 1899. Soon it turn out that presence on other markets requires local sales units or even joint ventures. The first three decades of the 20th century gave Philips opportunity to build relatively strong local presence by decentralized sales organizations and in some cases even local production facilities. In parallel strong research enabled company to broaden its product offer by vacuum tubes, radios and X-ray tubes.

The II World War period gave additional independence to local organizations: just before the war the company moved the top management to the United States and the researchers to England. Moreover, as most of plants in Europe were destroyed, Philips decided to rebuild its production capacity basing on national organizations (NOs). In this way they got means to be much more self-sufficient and eventually became a company responding to specific local needs and economic conditions. It allowed Philips to strengthen key national markets positions.

R&D function formally remained centralized, although increasing independence of NOs influenced also product units located in England. In the late 1960s Philips was no longer able to act as a one multi-national company to bring new technologies to the market, react to the recent trends and take strategic decisions on worldwide, not only national level. There were several examples of these incompetencies, impacting seriously the business: NO in the US forced VHS videocassette standard licensed from Matsushita instead of more advanced own V2000 format...