This student casework brings an analysis of these two companies which have established each a different form of organization. The actual CEO, Francs van Hooted for Philips and Azurite Thugs for Panasonic, at both companies were taking their own way to success by different strategic initiatives. The first part of this student casework deals about the competences that Philips had built after the Second World War and the challenges they have met during this period. Then, the second part is focus on Its rival, Panasonic, which Is now the most serious competitor against them.
A correlation follows this part In order to understand the evolution between both companies. Finally, personal reflections propose some recommendations about the true of these two firms. A long construction of Philips’ Organization Francs Van Hooted Is the tenth Phillips CEO since the postwar era which Is quite a lot for a big company. Indeed, Philips had managed Its firm with an Important number of visions during this period. For instance, at the end of the Second World War, the original structure of Philips was characterized by a corporate-level structure with a strong geographic/product matrix.
Frits Philips, the CEO during this period, decided to divide market by market and product by product In order to find the best efficiency. A top management was established with an Important link between headquarter In Indolent and the subsidiaries across the globe. The main advantage of this kind of organization is to have a clear direction of all the units present in your catalog. According to Oscar Gunman, matrix structures have a positive impact for five things: resource coordination, specialization, breadth of skill, communication, and flexibility.
Moreover, the strategy of a matrix structure was appropriate to the politic and economic situation during this period. Indeed, the period of globalization which reaction of a European common market without economic borders between some countries. According to the book Global Strategic Management, an important number of companies started to focus on a global strategy with the development of subsidiaries on the countries across the borders. (Lassoers, 2003) Nevertheless, things are rarely permanent and sometimes the best solution is to change your structure in order to avoid a failure.
In 1971, the organization of the company had been change with a new CEO, Hen Van Remedies, who decided to replace the matrix organization. Indeed in the “yellow booklet”, a book created for this ewe vision of the company, Van Remedies outlined the disadvantages of the matrix organization and proposed to rebalanced the managerial relationships between product division (PDP) and national organization (Nose). In his own word it was to “tilting the matrix towards the PDP” by decreasing the range of product available on their catalog.
For him the main disadvantages of the matrix organization were an important cost to manage this approach and some potential conflict between the different parts of the matrix. Philips focused on mains products to realize scale and increase the product flows across the national organizations. His two successors had continued this vision with the implementation of some international production centers in the main market (North America, Western Europe and Asia) in order to manage efficiently the new organization.
This strategy is relevant in order to invest highly in a specific domain but could be dangerous in case of external intervention like a modification of the political or economic context. In 1986, the new CEO Cornelia Van deer Slug decided to do a radical restructuring of the firm according to the specific period. Indeed, Philips was faced poor financial reference due to the competition against Japanese companies. In this period, a lack of competitive product and a high manufacturing cost were present.
According to him, the best solution to stay competitive was to be focus on the four core global divisions rather than the former 14 PDP. It is interesting to note the role of product- line manager which had been increased in order to have the most competitive market. Innovation with Research and Development (R) was also use by Van deer Slug to reach potential successful markets. A global strategy was been established to define specific business areas. Finally, Van deer Slug decided to build the firm with multi-market production facilities by closing some subsidiaries and fire an important number of employees.
This action had some negative effects, the most important are probably to lose a specific corporate culture and to decline the motivation of the employee who are less confident about their career. In 1994, Jan Tinnier started as CEO. He continued the cost-cutting during three years due to a period of large uncertainty for the technological sector. In 1994, a new growth strategy was established for the top managers with a global plan of product’s expansion. Software, services and multimedia had become an important target during this period. Operation centurion” was created in order to find partnership with other international companies like Hewlett-Packard and to invest a huge amount of money in these technologies. This strategy is relevant to develop new technology thanks to the abilities of your partner but in the same time it can be a problem to have your own innovations in order to reach the maximum stakes of the market. Of the structure which was described as “a plate of spaghetti” into “a neat row of asparagus”. This restructuring means a simplification of the organization and a better marketing approach of the business.
A new strategy was elaborated by a clear target of Philips’ future decisions. This refocusing let to be concentrate on your best abilities like Van deer Slug did in 1986 but requires a long process of reorganization, during a while the firm is inefficient. In 2001, with the new CEO Gerard Clerestories, this process was achieved. He decided to move quickly the organization of the company by the decision to outsource some production of TV’s, CD players, and components. This fact was appropriated to stay competitive against the Asian impasses which have a different approach of the business.
Clerestories tried to create a firm that generates values in a more predictable way, this objective was to be able to manage a portfolio less volatile and create a new lifestyle company with a strong corporate value. According to Bartlett, one fact was still present for each CEO in order to keep a logic and viable global strategy. Indeed,”Philips built its success on a worldwide portfolio of responsive national organizations” (Bartlett, 2009). A relevant example to show this fact is the official website of the firm which proposes many languages in order to attract the maximum number of customer.