wo major competitors in the global consumer electronics industry, Philips of the Netherlands and Matsushita of Japan, both have extensive histories that can be traced back more than a century. They have each followed different strategies and have had significant capabilities and downfalls along the way. In general, Philips built its tenured success on a portfolio of responsive national organizations. On the other hand, Matsushita based its global strategy on a centralized and efficient operation through Japan. As they developed and reorganized their international strategies, each company was forced to undertake its strategic posture and restructuring as its competition position fell.
During the 1990s, each company experienced specific difficulties to their market share. Both companies struggled to reestablish themselves in the global consumer electronics world. As the year 2000 came around, new CEOs at both companies came up with even more complicated initiatives and reorganizations.
Outsiders wondered how each company’s internal changes would affect their endless competitive battle in the industry. The case illustrates how global competitiveness depends on the organizational capability, the difficulty of overcoming deeply rooted administrative heritage, and the limitations of both classic multinational and global models.

Study Questions

1. How did Philips become the most successful company in its business during an era when scores of electrical engineering companies were being formed? What impediments and disabilities did Philips' strategic and organizational capabilities bring with them?

Philips made a strong push to developing new technologies starting in the 1950s and 1960s. Upon doing so, the company also wanted to translate these technologies into products while adapting, producing, and selling these products within individual national markets.