One
of the most significant factors concerning the modern corporate world is that organizations
have to constantly adapt to their markets and market conditions in order to
survive. This means that there is need for these organizations to ensure that
they undertake changes to their cultures as well as structures in order to
ensure that they are not only able to remain competitive, but also make their
management more efficient to enhance their profits. A consequence is that those
companies that have essentially had long histories have also seen considerable
advancements when it comes to the manner through which they handle their
operations. For multinational corporations, it is often essential to ensure that
they adapt to the prevailing market situations in those countries within which
they have operations. This is especially the case considering that these organizations
tend to adopt strategies that they deem necessary for the achievement of their
missions, which often involves crafting a relationship between the parent
company and their subsidiaries in other countries. In this paper, there will be
an analysis of the strategies adopted by Philips, on one hand, and Matsushita,
on the other. These are companies that have been in operation for a long time
and have managed to achieve a considerable chunk of the global market. The
various strategies that they have adopted in order to achieve success will be
critically analyzed in order to find out the manner through which both Philips
and Matsushita were able to organize themselves in a way that ensured their
continued relevance and dominance in the global market.
Philips
is one of the largest corporations in the world that is especially known by
consumers for its electronic products. It is a company that has been in
operation for over a century and has since the beginning combined innovation
and aggressive marketing in order to achieve considerable growth in the market.
One of the reasons behind Philips’ becoming a leading consumer Electronics
Company following the post-war era is that it was able to anticipate the
conflicts that would hit its native Netherlands and planned ahead for such
eventuality. It diversified its operations in such a way that some of them were
moved to the UK and others to North America in order to ensure that there would
be little disruption to its operations. In addition, it adopted a strategy
where it gave most of its subsidiaries in other countries considerable
operational freedoms that encouraged them to undertake responsibility for their
own operations (Bartlett et al., 2013). The result was that Philips
was able to adapt to the market needs of the various countries within which it
had operations to such an extent that it was able to advance its own mission
without interfering in the daily running of its subsidiaries. The adaptability
from Philips because of its fairly lose management style ensured that it was
able to become a leader in the consumer electronics market while at the same
time maintaining considerable profitability. The achievement of this objective
enabled Philips to advance its operations in such a way that it achieved
efficiency and also provided its subsidiaries with the independence that they
needed to enhance innovation. The innovative products that came about as a
result were essential for the enhancement of its aggressive marketing strategy
which ensured that the company significantly increased its sales. The result
was that they made Philips a recognized brand among consumers during the
post-war era.
One
of the most important competencies that Philips was able to build was the
establishment of fairly independent operations in various countries. The
independence of these operations ensured that there was the development of
considerable diversity when it came to the products that the company produced as
well as the marketing strategies that were adopted in the countries within
which it had operations. A consequence was that Philips was able to take
advantage of the different market conditions to ensure that it diversified its
products in such a way that was attractive to consumers in its different
markets. In addition, because of the considerable diversity of operations,
where the subsidiaries were not encumbered by a centralized form of management,
Philips was able to survive many incidents that could have brought about the
collapse of many corporations. Its diversity of operations was highly
successful especially during the war period when the company faced a lot of
risk from the bombings from both the Allies and Nazis in Europe (Bartlett et al., 2013). The company not only
survived these incidents, but it was also able to consolidate itself in the
postwar period in such a way that it recovered from the destruction that had
taken place in Europe. Another competency that Philips developed involved
innovation, because the process was decentralized to such an extent that its
subsidiaries, or national organizations, were able to undertake their own
product development to suit their various markets rather than relying
completely on the Philips’ management at the central office in the Netherlands
to preside over development. The achievement of this goal ensured that Philips
attained faster development than their more centralized rivals to such an
extent that the various divisions were able to come up with unique innovations
which added considerably to the Philips brand. The latter made it possible for
the managers at the various national branches to attain the competence needed
to undertake productive ventures on behalf of the company.
While
Philips was able to achieve a great number of its objectives through its
decentralized management system, the latter would also prove to be among its
most significant incompetencies. This is especially the case considering that
the entire decentralized system made it difficult for the top management of the
company to make swift decisions when it mattered the most. Changes in strategy
for the entire company would take a long time to bring about because there was
a failure in the process of making sure that it became more competitive. While
its more centralized rivals were able to undergo the changes they needed to
remain competitive, Philips, because of the considerable power that it had
handed over to its national organizations, was not able to do the same. The
case of its American subsidiary is an important example because despite years
of attempts by the parent company to gain more control over its operations,
this subsidiary often resisted these attempts to such an extent that it
bordered on defiance (Bartlett et al., 2013). The lack of a uniform
management strategy for the company ensured that there was considerable
disorganization in such a way that left the company open to considerable
competition from its rivals. Unlike its contemporaries in Japan which had a
centralized system of management that ensured uniform management, Philips was
encumbered by a large number of divisions and national organizations which made
it difficult to undertake action in its own interests. The lack of a
comprehensive global strategy as well as resistance from national organizations
created a situation where Philips was not able to undertake actions that would
have ensured its continued profitability, and this made it possible for its
rivals in the market to advance themselves to achieve dominance. The attempts
by its various heads to ensure that they remedied the situation sometimes ended
up making it worse for the company because Philips had allowed itself to be
left behind for too long.
Matsushita
is one of the most prominent Japanese corporations in the world with some of
its brands being extremely well known to consumers. This company was able to
rise to dominance because of its founder’s idea to ensure that it had a long
term strategy to its business. This long term strategy served as a guiding
presence in the management of the company in such a way that it provided
managers with the guidance and directives that they were to follow when it came
to dealing with a diverse number of situations (Bartlett et al., 2013). In addition, this company
maintained a highly centralized management system which ensured that even in
its subsidiaries outside Japan, there was considerable reliance on headquarters
on the manner through which the management could be handled. There was initially
an active program where all subsidiaries of Matsushita were headed by Japanese
expatriates, who were believed to be better able to ensure that the mission and
vision of the company was implemented effectively (Bartlett and Ghoshal, 2015). The continued centralized
control of its subsidiaries at a time when Philips relied heavily on national organizations
gave Matsushita an edge on the market because the latter was able to adapt swiftly
to market conditions without hindering its continued growth. Furthermore, this
company, because of its centralized management structure and the requirement
that the managers of its various subsidiaries visit headquarters in Japan to
deliver their reports personally ensured that there was constant monitoring of
the situation taking place in all its operations. The initiatives taken by
Matsushita’s management helped this company to successfully displace Philips as
the most dominant company in the market while at the same time enabling it to
swiftly expand into areas that were swiftly developing in the market. Thus,
Matsushita’s centralized system enabled the company to adapt to market
conditions at a faster pace than was possible for Philips’ decentralized
system.
Among
the most significant competencies that were achieved by Matsushita was that it
was able to recognize the areas of potential growth and act swiftly to develop
them. This is especially the case considering that its management recognized
early that it could no longer remain competitive while it focused only in Japan
because of the considerable rise in the number of rivals who brought a lot of
competition within the market (Bartlett, 2009). Therefore, Matsushita’s decision to seek
markets outside its comfort zone can be considered among its key competencies,
because it ensured that there was the advancement of its objectives to reach
new markets while at the same time expands the range of its new products. Furthermore,
this company was able to ensure that despite having subsidiaries in other
countries, they were strictly managed from Japan, and this was to such an
extent that it was able to learn more about market conditions and to adapt its
products accordingly. However, despite the considerable success of its
centralized system and the manner through which it handled its expansion to the
global market, Matsushita also had some incompetencies that it needed to
address. Among these was that its centralized management system proved to be a
deterrent to innovation among its subsidiaries because the latter often looked
to the parent company as a source of new ideas. Matsushita had, for the most
part, become a company that sought to ensure that it maintained absolute
control over its subsidiaries and while this may have worked in the beginning,
it ended up becoming a disadvantage for the company. This is especially the
case considering that most of the innovations made by Matsushita originated in
its development divisions in Japan, while its subsidiaries around the world
only acted as producers of the new products. Moreover, Matsushita’s centralized
system made it difficult for the company to swiftly adjust to local market
conditions especially in situations where countries undertook to protect the
jobs of their people. Therefore, Matsushita was left in a dilemma where it was
forced to undertake reforms in conditions of economic uncertainty.
Both
Philips and Matsushita have undertaken to ensure that they advance their
businesses through the implementation of changes to their management systems.
Philips has sought to make sure that it establishes greater control over its
subsidiaries across the world while at the same time increasing profitability.
This initiative can be considered extremely pertinent, especially considering
that it has taken a long time for the company to bring about the changes that
it needed to thrive in the market. The changes initiated by Philips could have
worked better if there had been less resistance from its various subsidiaries
because the latter had essentially transformed themselves into local organizations
that did not have a strict allegiance to the parent company. This was a result
of the decentralized system that had worked so well in the postwar period but
had become a burden to the company’s global strategy. It was therefore
essential for Philips to work towards a reduction of its non-profitable
holdings while at the same time reestablishing control over a majority of its
global divisions. The impact of the process was that Philips was able to
stabilize its position in the global market while at the same time ensuring
that it increased profitability through selling off, licensing, or outsourcing
those divisions that it found were non-performing. Matsushita, on the other
hand, was focused more on enhancing the position of its subsidiaries and
divisions in such a way that encouraged them to become more innovative. In
addition, it sought to make it possible for its subsidiaries to work
independently so that they could become more productive through adapting
themselves to the markets that they were meant to service. While for the most
part the implementation process was successful, this success was often
overshadowed by periods of economic crisis that significantly reduced their
impact. This is especially the case where the company had instituted
considerable reforms that would have ensured its dominant position in the market
when the Financial Crisis of 2008 overshadowed its achievements. Despite the
setbacks that this company has suffered during the implementation of change to
its strategy, Matsushita has been able to weather the storm, and has remained
relevant in the market. This is signified by its decision to change its name to
Panasonic, after one of its most recognizable brands in the world.
The
change process for both companies is extremely difficult because it involves a
situation where they essentially have to change their entire organizational
culture. These companies have been using the same form of management system and
strategy for decades and their employees, especially those who have been with
the company for long, have adapted to them. Change is an extremely important
factor for companies because it allows them to make sure that they adapt to the
prevalent market conditions while at the same time enabling them to maintain
and increase their profit margins. However, this process is often one that
meets considerable resistance, as seen in the case of Philips, which had
maintained a system that had allowed it to work so well that it had become
oblivious of the need to constantly change in order to remain relevant in the
market. There was a failure to foresee the need to maintain considerable
control over its subsidiaries so that when the time came to ensure the
implementation of much needed changes, there was considerable reluctance on the
part of subsidiaries to follow the path set by the parent company. The case of
Matsushita is also significant because it promoted the idea of a highly
centralized form of management that left its subsidiaries very little room to
maneuver. A consequence was that when the implementation of changes was
instituted, there was considerable difficulty on the part of the subsidiaries
to adjust on time and the result was that the company’s management had a hard
time changing attitudes that has been long established. The change process in
both companies came about when it had essentially taken too long for the
process to be advanced. This is especially considering that these companies not
only had a long history on the global market, but that their managements did
not see the immediate need to make changes when their systems at the time were
working so well.
Gerald Kleisterlee has undertaken to
restructure Philips in such a way that makes it more competitive in the market.
The actions that he has put in place have ensured that there is the advancement
of means through which the company makes the first steps towards becoming a
more competitive organization in the world (Seebode et al., 2013). However, he has to ensure
that there is the establishment of a clear strategy and mission that can be
made use of in enhancing the status of the company while at the same time
making it possible for its management to swiftly implement changes that are
needed to make it more competitive. In addition, he has to ensure that he
undertakes to increase greater control over its subsidiaries because while the
decentralized system worked well for decades, a more centralized one would be
more convenient when it comes to matters concerning the implementation of
change as well as creating new focuses for the company. Moreover, rather than
outsourcing most of its products, Kleisterlee should undertake to identify
those areas that have the most potential for continued growth and encourage
Philips’ product developers to come up with new innovations that will
significantly enhance the products of this company. In addition, Philips should
also get involved in those business areas that are highly competitive, such as
the mobile phone industry, where there is considerable demand for new products
as well as variety. In this way, Philips will have the capability to remain
relevant in the market not only as a brand, but also because of its products,
since it will have been able to undertake a process where it becomes a center
of innovation.
Ohtsubo
took over Matsushita at a time when the company was undergoing a difficult
process due to the global financial crisis. A consequence was that he ended up
in a situation where despite his best attempts to reform the company, he
encountered a diversity of challenges that were essentially out of his control (Bartlett, 2009). The result was that he was forced to undertake
some extremely difficult decisions in order to ensure that company’s survival. Therefore,
it has become essential for Ohtsubo to make sure that he takes the opportunity
of the various challenges that the company is facing in order to institute the
reforms that it needs to survive. One of these reforms is to ensure that there
is an attempt to significantly reduce the control over day to day activities of
Matsushita’s subsidiaries. This process should not be undertaken lightly
however, because it has to be balanced in such a way that prevents complete
decentralization. The latter could be disastrous for the company because as
seen in the Philips case, it could lead to a failure in the implementation of a
global strategy. It is also essential for Ohtsubo to encourage subsidiaries to
undertake their own innovations rather than relying solely on the parent
company for ideas concerning what to produce. Moreover, a reduction in the
number of Japanese staff and the adoption of local business management
strategies has the potential of going a long way towards the achievement of the
company’s objectives. This is because the subsidiaries will have the ability to
fully adapt to the needs of their respective markets.
In
conclusion, both Matsushita and Philips still have a long way to go before they
are able to achieve the changes necessary for the advancement of their
continued relevance in the highly competitive market. This is because these
companies have long established cultures which have ended up being too
ingrained for them to be easily changed. Moreover, these companies have had to
face significant crisis, as seen in the global financial crisis which was a
direct blow to their business interests because there was a reduction of sales
and a drop in share prices. Therefore, these companies have to adopt new
strategies aimed at aiding them in their attempt to not only remain relevant,
but also help them promote innovation in such a way that ensures that they
reestablish their dominance over the market. By entering new markets and making
significant investments in the development of new and innovative products, it
will be possible to bring about the establishment of proper initiatives aimed
at bringing about the achievement of the missions and visions of these two
companies.
