Running Head: PHILIPS AND MATSUSHITA 1 PHILIPS AND MATSUSHITA 7 Philips and Matsushita: The Competitive Battle Continues Name Course Instructor Date Philips and Matsushita: The Competitive Battle Continues Introduction This report will analyze competitive battles that have characterized developments of two of the biggest companies in the electronics industry, Philips and Matsushita, over the years. Philips, officially known as the Koninklijke Philips N.V., or Royal Philips, is a Dutch electronics company established in 1891 by Gerard Philips and his father in Eindhoven, Netherlands. The company currently has its headquarters in Amsterdam, Holland. Philips operates globally, with offices in over 60 countries around the world and a workforce estimated to e about 125,000 people (Marion, 2014). Philps has diversified its products to include products in consumer lifestyle, lighting and healthcare. Matsushita Electric Industrial Co., Ltd, which changed its name to Panasonic Corporation, is a Japanese multinational company in the electronics industry, with its headquarters in Osaka, Japan. Konosuke Matsushita established the company in 1918 as a vendor for lamp sockets and eventually began manufacturing bicycle lamps in 1927 (Marion, 2014). The company expanded after the World War II o become one of the most recognized international brand with its products bearing the Panasonic name becoming household brands across the world. The two companies have had historical competitive battles lasting for more than a century. They both employed different strategies, which showed different capabilities and downfalls for the two businesses over the years. Generally, Philips built its success on a foundation of responsive national organizations n contrast to Matsushita, which anchored its operations on a centralized approach with most of the firm’s operations taking place in Japan (Marion, 2014). The companies experienced challenges in the 21st century, affecting their prospects of development and growth globally. Different CEOs of each company took different approaches through the redevelopment and growth of the companies that saw the companies rise and fall on different occasions. While Philips was highly successful in the post WWII era, Matsushita managed to rise to the top in the 1990s. In the 2000s, the companies had different CEOs, who undertook different initiatives to take the companies in different directions as they sought to advance their competition to the next level. The rise and fall of these companies indicates how success of an organization on the global scale depends on its own internal mechanisms and strategies. How Philips became the leading consumer electronics company after World Wars Philips experienced exponential growth in the post war era becoming the leading producer of consumer electronics in the world. One of the factors that propelled Philips to greater success on the global scene is its ability to embrace i.

1. Running Head: PHILIPS AND MATSUSHITA
1
PHILIPS AND MATSUSHITA
7
Philips and Matsushita: The Competitive Battle Continues
Name
Course
Instructor
Date
Philips and Matsushita: The Competitive Battle Continues
Introduction
This report will analyze competitive battles that have
characterized developments of two of the biggest companies in
the electronics industry, Philips and Matsushita, over the years.
Philips, officially known as the Koninklijke Philips N.V., or
Royal Philips, is a Dutch electronics company established in
1891 by Gerard Philips and his father in Eindhoven,
Netherlands. The company currently has its headquarters in
Amsterdam, Holland. Philips operates globally, with offices in
over 60 countries around the world and a workforce estimated to

2. e about 125,000 people (Marion, 2014). Philps has diversified
its products to include products in consumer lifestyle, lighting
and healthcare.
Matsushita Electric Industrial Co., Ltd, which changed its name
to Panasonic Corporation, is a Japanese multinational company
in the electronics industry, with its headquarters in Osaka,
Japan. Konosuke Matsushita established the company in 1918 as
a vendor for lamp sockets and eventually began manufacturing
bicycle lamps in 1927 (Marion, 2014). The company expanded
after the World War II o become one of the most recognized
international brand with its products bearing the Panasonic
name becoming household brands across the world.
The two companies have had historical competitive battles
lasting for more than a century. They both employed different
strategies, which showed different capabilities and downfalls
for the two businesses over the years. Generally, Philips built
its success on a foundation of responsive national organizations
n contrast to Matsushita, which anchored its operations on a
centralized approach with most of the firm’s operations taking
place in Japan (Marion, 2014). The companies experienced
challenges in the 21st century, affecting their prospects of
development and growth globally.
Different CEOs of each company took different approaches
through the redevelopment and growth of the companies that
saw the companies rise and fall on different occasions. While
Philips was highly successful in the post WWII era, Matsushita
managed to rise to the top in the 1990s. In the 2000s, the
companies had different CEOs, who undertook different
initiatives to take the companies in different directions as they
sought to advance their competition to the next level. The rise
and fall of these companies indicates how success of an
organization on the global scale depends on its own internal
mechanisms and strategies.
How Philips became the leading consumer electronics company
after World Wars
Philips experienced exponential growth in the post war era

3. becoming the leading producer of consumer electronics in the
world. One of the factors that propelled Philips to greater
success on the global scene is its ability to embrace innovation.
Philips became highly innovative prior to the World Wars in
both its production process and product development. The
company engaged in extendedness research before the word war
era leading to adoption of new machines to help in the
production process (Marion, 2014). This made the company’s
production process more efficient and sustainable throughout
the World War era. Research also helped the company to
enlarge its product line to incorporate a diverse range of
electronic products including light bulbs, vacuum tubes, x-ray
tubes and radios during the 1930s.
Apart from research and in ovation, Philips’ success was also
founded on the company’s strategy to venture in to the global
market early on in the 1900s. This fact was necessary for the
company’s expansion since the market in Holland was so small
that it could not accommodate all the mass produced products of
the company. The company’s initial globalization strategy was
very centralized with autonomous marketing and decentralized
sales in about 18 countries before the Second World War.
Political and economic events in the 1930s such as the financial
depression and the World War II forced the company to rethink
its strategies. The company decentralized its operations in to a
truly multinational company with local branches of the company
given powers to devise their own strategies to respond to their
local markets. In anticipation of the Second World War, Philips
transferred some of its assets into trusts in foreign countries
including USA and Great Britain (Marion, 2014). This helped
the company to localize its operations in these countries with
national organizations becoming self-sufficient.
After the World War II, Philips continued to exploit its
competencies in localization and research strategies to rise to
become the world’s leading producer of consumer electronics.
After the Second World War, Philips was no longer acting as a
single and unified corporation in Netherlands, but as a highly

4. decentralized organization with its national organizations acting
as autonomous branches responding to different market forces
in their own countries. These strategies contributed to the
success of Philips after the World War Era.
During this period, Philips managed to create its competencies
in research and localization, but also developed various
incompetencies that led to its downfall in the 1960s. One
problem that Philips encountered was lack of experience in
managing a multinational company that Philips has developed in
to during the post war era. The company’s management
experienced challenges in standardizing operations for each of
the localized national organization thus inhibiting further
growth of the company. The company also experienced further
challenges in the US market when the government licensed its
competitor to provide Video cassettes. Another strategy that led
to failure of the company on the international market was
setting up product divisions to balance operation s of the
national organizations (Marion, 2014). With these strategies,
Philips was unable to take advantages of emerging opportunities
in the global market and launch new products that would help
the company enforce its dominance in the market.
How Matsushita replaced Philips on the Global market
During the Pre-war era, Matsushita experienced growth in
Japan, opening up several branches locally in different parts of
the country. During this time, the company was gradually
specializing in production of various consumer electronics such
as radios, battery-powered lamps and electric irons. The
company had taken over the Japanese market before the war era
with over 25,000 retail outlets in the domestic market. This
local expansion gave the company direct access to consumer
reaction and different market trends in the industry, creating a
basis for expansion in to the global market after the World
Wars.
In the post War era, the company adopted a global strategy by
shifting its manufacturing to low wage countries while maintain
high value production in Japan. The company remained largely

5. centralized with most production, strategizing and decision
making taking place at its headquarters in Japan, despite
opening processing plants in the USA and Europe.
With a unified approach on the global market, Matsushita was
able to create an effective network of managers who built strong
relationships with each other and share amongst themselves
various strategies of improving the company. General Managers
of different subsidiary branches of the company around the
globe travelled very often to the company’s headquarters in
Osaka, Japan for directions and continued to communicate via
faxes and emails on a daily basis. This strategy enabled the
company to increase its sales volumes thereby reducing costs
and prices of its products and eventually taking over the market
from Philips. The company was able to build competencies in
terms of managing its subsidiaries, and building a string
workforce around the world that was very efficient in marketing
its products (Marion, 2014).
During this time, however, Matsushita also experienced various
challenges in its strategy, thus threatening its position in the
global market. The company built many incompetencies that
inhibited growth and further expansion. Among the problems,
the company faced include, stifling creativity of foreign
branches of the company and lack of innovation. Foreign
subsidiaries of the company relied on strategies and directions
from the headquarters in Japan and thereby not being responsive
to differences in market conditions. The company also failed to
produce innovative products during the post war era, thereby
limiting any chances of expansion.
Changes the companies have made of late
The decline if the companies in the 1990s called fo0r a change
in strategy in order to reorganize operations and restore the
companies’ pride and position in the market. Both companies
realized that their strateg8es were less successful hence the
need for change. New CEO of both companies endeavored to
take their organizations in different directions in order to
realize their objectives. Philips opted to close down less

6. productive branches in Europe, reduced their costs by reducing
their workforce and outsourcing some of its operations. The
company also tried to change its organizational culture in order
to re-establish itself on the market. These new strategies were
not without challenges. The company’s National Organizations
had grown to become powerful branches on their own, making it
difficult for the management to change operations of localized
branches. Changing the organizational culture for such a global
company can be a difficult task for any CEO. While the steps
the company has taken to reorganize itself are god for the
company’s future, such strategies have led to the company
losing some of its competencies that it built over the years.
Philips is likely to get back to its position in the future despite
experiencing challenges in the short term (Marion, 2014).
On the other hand, Matsushita was trying to decentralize and
give more power to foreign subsidiaries. Local managers were
given the powers to choose the type of products to sell in their
markets, while the company also opened up several regional
headquarters in Europe, America and Asia. With these strategy,
the company began realizing profits I the early 2000s, an
indication that the company is on the right track. It will be very
difficult for Matsushita to take up its position in the market
unless it begins to embrace innovation (Marion, 2014).
Strategic recommendations for both companies
Both companies are in the same industry and deal in the same
type of products. My recommendations for the two companies
are therefore similar and can apply to any other company trying
to expand on the global scene. Both companies need to invest in
development of new products. Innovation is the best strategy for
companies to maintain their global appeal. The other
recommendation is to localize sales at either local or regional
level. This will bring the company closer to consumers and
make it easier to respond to changes in consumer tastes. The
companies also need to prioritize their decisions and strategies
in order to prevent misuse of funds on projects that may not
lead to fruition (Marion, 2014).

7. References
Marion, M. F. (2014). International trade policy and European
industry: The case of the
electronics business. Cham: Springer.
.