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Philips versus Matsushita
Case Analysis
Philips and Matsushita have experienced hard challenges to get competitive position in consumer electronic markets. However, two companies approach different way to enter international business interestingly. Since now, we are going to analysis how and why they pursue different directions.
Philips’s organizational structure: multi-domestic strategy
Philips, a Holland company, was successful in small light-bulb industry during the pre-war. Also, it had strength technology competence by focusing on R&D activities like opening labs. The company tried to abroad to extend market size for economies of scale. And Philips chose a localization strategy to overcome strong trade barriers and high tariffs compelling local production.
In the post-war, as individual country became more independent, satisfying specific market conditions was critical to survive global market. It led Philips established geographic/product matr…(생략)
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electronics position. Thus, the company defined and focused on the four core global divisions (components, consumer electronics, telecommunications and data systems and lighting) rather than PDs. And non-core businesses run by joint venture with other companies. Also, Philips tried to make globalizing product development and production by linking each PDs to competitive markets.
In the 1990s, McKinsey figured out that value added per hour in Japanese consumer electronic factories was 68% above that of European plants. Moreover, as Korea and China appeared as rivals, competition became more severe. Philips focused on cost cutting in three years by restructuring many overseas operations and divesting high-tech business. However, the company’s drive for cost-cutting and standardization seemed to ignore new worldwide market demands for more segmented products and higher consumer service.
After that, Philips removed the old PD/NO matrix. Instead, it built simple manufacturing and market
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