Philips and Matsushita Essay

1. Which factors account for differences in strategies and structures of Philips and Matsushita? What are their distinctive competencies and incompetencies?2. What are the key organizational ch aloneenges that all(prenominal) company is facing at the stop over of the case? What recommendations would you give to the respective CEOs?1.The two companies, each from various regions of the world, have an extensive history that have caused for different cultures, strategies and structures to be implemented (Bartlett & Beamish, 2010 301). Philips, as an European company with the old boys network originally had a structure that Bartlett and Beamish (2010) classify as the deconcentrate Federation. It was a structure that was based on internal relationships. The National Organizations (NO) that were in place had informal power over their product divisions. However this structure conduct to great distance between the corporate management and its subsidiaries with information and know takege not spreading fluently from one NO to the next. This fragmentation, which Bartlett and Beamish (2010) land as a limitation of this form of structure, increased costs and promotes inefficiency. The learning capacity of the organization was harmed. Philips therefore tried to stay afloat by do drastic cuts, reorganizing and implementing a Matrix structure, a popular phenomenon is the 1980s (Bartlett & Beamish, 2010 300).However this lead to adjustment only in structure and not in culture, fashioning it fail. When this was realized the company began to alter its structure again towards a Transnational Structure (Bartlett & Beamish, 2010) with a more(prenominal) integrated structure and where a vision that appeared to be lost was clearly reinforced, communicated and lived through out(p) the organization. Matsushita had a different heritage which lead them to adopt very different strategic and organizational models.(Bartlett & Beamish, 2010 301) This Japanese company was circumscrib e up with a non-typically Japanese divisional structure which would comply more to Bartlett and Beamishs (2010) Coordinated Federation structure. It had an international mindset to acquire worldwide presence whether this was in the form of own image or by producing products for competitors and did this by providing divisions with development, production and food marketing abilities whilst providing centralized parent technology all throughout the organization.In the 1960s the company was pushed abroad by pressure imposed on them by increasing manufacturing costs and national governments. The expansion led for the company to topical anestheticize more intensely and aimed to move towards a more decentralized structure with less dependency on the center. When the domestic market collapsed end 1980s the company began to contract more on R&D as they lacked behind in technology advances. This was a result of the inability for experience to spread and the inefficiency of the developme nt not being centralized. The company tried to move away from the imitator image they carried and aimed to do this by removing internal competition that was excite by the divisional structure and promoting a customer based innovative culture.Because of their different structures and strategies the companies both experience different (in)competencies. Competencies exist when resources are put to goodly use so that they create a competitive advantage for the business opposed to its competitors (Volberda et al., 2011). Both competencies and incompetencies are portrayed in the table below. From looking at this table one can see that some competencies of one company is the incompetency of the other as a result of the different implemented strategies. Where Philips, that is more centralized, is innovative, Matsushita lacks substructure. However, Matsushita experiences a rich company culture with a clear vision which is exactly what Philips lacks. Philips MatsushitaCompetencies * Innov ative, strong R&D department * Can respond to local differences due to set up of NOs * The delegation of responsibility causes for strategic freedom * Cheap production as a result of economies of scale. * Fast response to market * Rich culture and clear vision integrated throughout company by the implementation of Seven Spirits Incompetencies * Inefficiency in global aspect * unclear responsibilities due to decentralization * Too much informal power granted to NOs * Fragmentation and restructuring leads to unclear vision and values throughout the company * Lack of innovation at the level of the subsidiaries * Too much reliance of the subsidiaries on the domestic country * Centralized parent company lacks understanding and knowledge of market demand and production realities2. Because of their different strategies and competencies, both companies face different challenges. However, both face a phase of restructuring. Philips is currently going towards a Transnational organization wh ere their approach shot of marketing is changing, being different in each country, and where they aim to outsource more. Also, they try to communicate a shared vision. According to Bartlett & Beamish (2010) they should focus on communicating a clear (simple, relevant, and reinforced) continuous and consistent vision. This will allow for managers to look further than their scope of responsibilities and for the company to work more functionally as a whole. Matsushita is experiencing a recent restructuring in which they decentralize further, communicate a new culture of innovation and R&D and try to abate internal competition.Matsushita should be aware of the threat of strategic isolation, where each subsidiary is too focused on their own operations and it is therefore advisory for Matsushita to refocus their executive attention to get the most out of their subsidiary components. Bartlett & Beamish (2010) give various ways to do this by creating channels for attention, seeking out th e hidden gems and give them a platform, measureing returns on executive attention and giving subsidiaries a chance to contribute. An advice to both companies is to properly manage the process of change by by-line the emerging change process starting at changing individual attitudes and mentalities and then the interpersonal relationships and processes before changing the formal structure. Philips experience proves that doing this in reverse order wont work, only this way can the organizational psychology be adapted.ReferencesBartlett, C. A., & Beamish, P. W. (2010). Transnational management. NewYork McGraw-Hill. (Bartlett & Beamish, 2010).Volberda, H. W., Morgan, R.E., Reinmoeller, P., Hitt, M.A., Ireland, R.D., & Hoskisson, R.E. (2011). Strategic Management. Hampshire Cengage Learning EMEA.