Philips

9-910-410

DECEMBER 11, 2009

CHRISTOPHER A. BARTLETT

Philips versus Matsushita: The Competitive Battle Continues

Throughout their long histories, N.V. Philips (Netherlands) and Matsushita Electric (Japan) had followed very different strategies and emerged with very different organizational capabilities. Philips built its success on a worldwide portfolio of responsive national organizations while Matsushita based its global competitiveness on its centralized, highly efficient operations in Japan. During the first decade of the 21st century, however, both companies experienced major challenges to their historic competitive positions and organizational models. Implementing yet another round of strategic initiatives and organizational restructurings, the CEOs at both companies were taking their respective organizations in very different directions. At the end of the decade, observers wondered how the changes would affect their long-running competitive battle.

Philips: Background

In 1892, Gerard Philips and his father opened a small light-bulb factory in Eindhoven, Holland. When their venture almost failed, they recruited Gerard’s brother, Anton, an excellent salesman and manager. By 1900, Philips was the third largest light-bulb producer in Europe.

Technological Competence and Geographic Expansion

While larger electrical products companies were racing to diversify, Philips made only light-bulbs. This one-product focus and Gerard’s technological prowess enabled the company to create significant innovations. Company policy was to scrap old plants and use new machines or factories whenever advances were made in new production technology. Anton wrote down assets rapidly and set aside substantial reserves for replacing outdated equipment. Philips also became a leader in industrial research, creating physics and chemistry labs to address production problems as well as more abstract scientific ones. The labs developed a tungsten metal filament bulb that was a...