Innovation and Philips Essay

1) Philips became the leading consumer electronics company in the world in the post war era by having a strong Research & Development effort, their independent National Organizations, and the strong communication between these National Organizations. Philips continued this tradition with fourteen product divisions responsible for development, production and global distribution which was another contributing factor to Philips’ success is the National Organizations.

Philips distinctive competence they built were the National Organizations which had a great advantage in being able to sense and respond to differences in their local countries, and eventually product development became a function of local market conditions. They also had transferred its overseas assets into trusts in Great Britain and the U. S and they moved the bulk of their research staffs to England, and their top managers to the United States.

There distinctive in competencies were that Philips was no longer able to make decisions ad a single company to bring new product technology’s to the market, but had to have each National Organization take care of their own problems. Management lost the ability to manage the whole company as one. They tried to set up Product Divisions, but those failed also. 2) Matsushita succeeded in displacing Philips as the N0 1 in consumer electronics with a unified global strategy, increased volumes enabled Matsushita to drive costs lower, prices lower, and eventually they overtook Philips based on the strength of their manufacturing operations.

Matsushita distinctive competencies were that they stayed in control of the company’s subsidiaries and by having a unified global strategy that allowed them to drive down coast and strengthen their manufacturing operations. There distinctive in competencies were that they did not expand innovation and they were unable to develop innovative overseas companies. 3) Both Philips and Matsushita changed their companies some things for the better and some things for the worst. Philips changed its international company’s culture, but it seems that Philips is finally turning around getting back to its core beliefs in research and manufacturing.

This will be hard though with all the cost cutting they needed to do while they tried to get there and they need to gain the trust in there research in development that they used to have.. Their manufacturing is still improving, but they need to promote innovation to expand the company to where it was. Matsushita is never going to rebound there invocation is horrible and they were slow to react to the recession in Japan. They lost their edge in manufacturing to other low- cost competitors and they will not gain that advantage back because many companies lost faith in Matsushita and how they do business. ) I thing that Philips and Matsushita need to do the same things to improve their companies. Both companies need to clean up their manufacturing operations by improving innovation, outsource products that you can to low cost countries, go back to having a strong Research and Development effort, and improve communication throughout the whole company. If they do this there should be in increase in revenue over time. They will lose money upfront, but it will be worth it in the end.