Download - Philips Vs Matsushita Scm
A New Century, a New Round
Scott Campbell - Christina Connolly - Maureen Stafford
MBAM 619.11
March 30, 2009
versus
Foundation
• Founded in 1892 by Gerard Philips in Eindhoven, Holland
• Tradition of caring for its workers• Innovation as a core strength
– One product focus on light-bulbs (initially) + Gerard’s technological prowess enable significant innovations
• Strong research vital to company’s survival
• Philips built its success on a worldwide portfolio of responsive national organizations
Foundation
• Founded in 1918 by Konosuke Matsushita in Osaka, Japan
• “Seven Spirits of Matushita” and cultural and spiritual training are key
• First Japanese company to adopt the divisional structure– “One-product-one-division”– Internal competition fostered among
divisions
• Matsushita built its success on its centralized, highly efficient operations in Japan
Tangible and Intangible Assets
Physical Assets: new labs
Regulators: Common Market erodes trade barriers
External Assets
Financial Assets
Suppliers
Customers
Employees: competitive/loyal
Owners
Brand Capital, Relationship Capital, Knowledge Capital
Individual Capital, Team Capital
Human Capital: strong experts
Intellectual Capital
Society
Competitors: Sony, Matsushita, General Electric
Organizational Fiscal
Responsibility Boundaries
Market Boundaries
Society Boundaries
Intangible Assets
Supply Chain Boundaries
Organizational Boundaries
Tangible Assets
Tangible and Intangible Assets
Physical Assets External
Assets
Financial Assets
Customers
Employees
Owners: Matsushita’s legacy
•Brand Capital *Relationship Capital: Hitachi, Sharp, Phillips,
Mitsubishi, dist partners *Knowledge Capital: efficiency,
low cost, VHS development
*Individual Capital: Unique positions *Team Capital: Unique product divisions
Human Capital: Unique positions with each division
Intellectual Capital: Mastering of low-cost, fast production with
premium VHS standards
Society: Japan, Southeast Asia, Central and South America, Canada, United States, Wales
Competitors: Phillips, Sony, JVS, Hitachi, Sharp, Mitsubishi
Organizational Fiscal
Responsibility Boundaries:
Division’s ability to
generate, 60% earnings to
headquarters
Market Boundaries: Production
capacity, quality of product, new technological innovations
Society Boundaries: fluctuation of
the Yen
Intangible Assets
Supply Chain Boundaries:
Output capacity,
distribution partners, budgetary limitations
Organizational Boundaries:
Division limitations, 40% profit/ division
Tangible Assets
McKinsey 7-S Framework
Structure
Systems
Style
Staff
Skills
Strategy
Shared Values
Structure: National Organizations (NOs) had informal power over Product Divisions (PDs). NOs consisted of two managers: technical and commercial, with some having a 3rd, financial manger
Systems: NOs allowed for customer specialization, this proved later to be a problem with NOs having so much informal power.
Style: Strict accountability when company was unprofitable, drastic employee/manager cuts were made on a regular basis
Staff: Originally training was important. Friendly competition turned into a loss of control with NOs
Skills: Product innovation, thrived on simplicity of product line
Strategy: Trying to stay afloat, drastic cuts were made over time, many systems/procedures were also adjusted
Shared Values: Began as employee friendly/driven comp. Later with problems, lost that focus.
McKinsey 7-S Framework
Structure
Systems
Style
Staff
Skills
Strategy
Shared Values
Structure: Each product was made into its own unique division, to function independently and promote internal competition
Systems: Competitive Divisions, MCA, METC, and MECA allowed Matsushita to develop innovative production and development systems in an efficient manner
Style: 60% profit to headquarters and 40% back to the division provided an extremely profitable organization, while insuring its own future success
Staff: Staff was unique in each division, and could expect lifetime employment
Skills: Efficient, low-cost production
Strategy: Achieve worldwide presence, whether by the Matsushita image, or producing for competitors
ARC to Align with Strategy
Goals:
Objectives:
Tasks:
Rewards:
StrategyWork Culture
Infrastructure
Results
Values, Beliefs & Assumptions
Organizational Practices
Behaviors
Values, Beliefs & Assumptions
Organizational Practices
Behaviors
Values, Beliefs & Assumptions
Organizational Practices
Strategy
Results
Strategy
Results
Strategy Culture
Results
StrategyStrategyStrategyStrategy CultureCulture
Attempts at Reorganization
Goals/Objectives:
Actions Taken:
Gerard Philips1892
Van Reimsdijk & Rodenburg 1970s
Results
One-product focusUse new factories and machines for
production efficiencies
Transferring assets& labs overseas,
reliance on national
organization (NO)
Employee focusedTradition for caring
Built emp. houses, promoted edu.,
paid employees well, Allowed NOs ability
to make Autonomous
decisions
Gerard Philips1892
Work Culture
Yellow Booklet: est.Responsibilities btwn
NOs and PDs
International ProductCenters (IPC) were built to increase the flow of goods
among NOs. Sizing down dual comm & tech mangers
to one
Shift power awayfrom Nos toward
PDs
Implementation was slow.
Work Culture Work Culture
InfrastructureNOs had individual pwr, managed by tech, commercial & finance heads, even though product divisions (PD) were
formally responsible
Ability to respond to country-specific mkt conditions
Closed less efficient plants, introduced IPC, cut management to one person
Power struggle continued btwn Nos & PDs
Attempts at Reorganization
Goals/Objectives:
Actions Taken:
Gerard Philips1892
Van der Klugt1987
Results
Reduce financial problems
Shut many European plants down, sold/acquired
businesses
Continue to shift pwr to PDs
Gave PDs formal product mang.
Responsibilities, NOs resp. for
local profits
Wisse Dekker1982
Work Culture
Beating the Japanese competition.
Est. 4 core businesses.
Closed significant amount of plants.Reduced R&D
spending
Shaking up “lifetime employment” myth
by cutting jobs
Thousands of jobs were slashed &
shifted management from HQ
Work Culture Work Culture
InfrastructureReduced Management board, giving
final decisions to PDs
Sales still declined, profits were stagnant
Structured business around 4 core bus. & away from 14 PDs
Unanticipated losses came with class-action suit & ½ management replaced
Attempts at Reorganization
Goals/Objectives:
Actions Taken:
Gerard Philips1892
Cor Boonstra1996
Infrastructure Drive to be more standardized
Turn around the bankrupt company,
expand software, services & multimedia
Cut more jobs, committed managers
to financial goals
Accountability for losses
Moral is low
Jan Timmer1990
Work Culture
More structure, simpler manufacturing
& marketing org.
Sold 1/3 of the businesses, shift
production to low-wage countries,
replaced PDs with 7 div & 100 bus units, increased mkt efforts
Employees shifted to other locations
Na
Work Culture Work Culture
ResultsR&D personnel cuts left company with few
who understood technology, thus no innovation
Moved HQ to Amsterdam
Performance improved, reaching 24% return on net assets
Attempts at Reorganization
Goals/Objectives:
Actions Taken:
Gerard Philips1892
Results
Increase sales, outsource activities
where they can’t add value
Closed European plants
Na
Trying to shift to core
competencies of technology developer
& global marketer
Gerard Kleisterlee2001
Work CultureWork Culture
Infrastructure Eliminating more overhead/costly production plants
Shareholder pressures rise, reported losses
Attempts at Reorganization
Goals/Objectives:
Actions Taken:
Gerard Philips1892
Toshihoko Yamashita 1982
Results
Konosuke Matsushita (KM)1918
Work CultureWork Culture Work Culture
Infrastructure
To build a successful company through fairness and giving back to the world around them
Divisional structure led to a competitive environment
Opening of “National Shops,” Various attempts at product line extension, Outsourced production, Licensing agreements, METC, Worldwide production
Productive environment with lifetime employment
One-product, one-division
Successful development of efficient, superior VHS production and good relationships
Operation Localization: personnel, technology, material and capital
Increased number of local nationals in key positions, local division given choice over products sold, quantities, prices, and features
Allow local division to have more control over their operations
To “help overseas companies develop the innovative capability and entrepreneurial initiatives”
Operation Localization
Overseas productions remained too dependent on the central organization
Attempts at Reorganization
Goals/Objectives:
Actions Taken:
Gerard Philips1892
Yoichi Morishita1993
Results
Akio Tanii1986
Work CultureWork Culture Work Culture
Infrastructure
Relocated major regional headquarters functions to North America, Europe, and Southeast Asia
Brought foreign subsidiaries under control of METC, then put METC under parent companyPurchase of MCA
Make each division contribute to initiative and innovation
Fully integrate domestic and overseas operations
More local operational control
$17.5 billion in liquid financial assets until the bubble burst in 1992
Make the environment less expensive and more adaptable
“Simple, small, speedy and strategic”
Sold 80% of MCIShifted production to offshore companies
Cut headquarter staff and decentralized responsibility Moved 6000 staff to operating positions- great resistance to the radical changes
Streamlined, decentralized operations
The driving down of prices and increased competition meant that Matsushita struggled
Attempts at Reorganization
Goals/Objectives:
Actions Taken:
Kunio Nakamura2000
Infrastructure
Work CultureWork Culture
Results
Raise profitability to 5% of sales“Super manufacturer of products”“Meet customer needs through systems and services”
Flatten the hierarchy and empower employees
All key headquarter functions that related to international operations were transferred to overseas regional offices
Integrated one-product divisions into multi-product production centersMarketing centers for Panasonic brands and National branded products
Empowered employees at multi-product centers
Earnings estimates had to be adjusted downward and there with Matsushita looking like a good buyout opportunity
Resources
Resources
Tangible Assets
Financial Resources
Physical Resources
Technological Reputation Human
Intangible Assets
-innovations produced successful financial strength
-new plants & equipment
-International presence
-Experts for innovations & new product development
-positive morale when company valued employees with benefits and training
-Adapt to market needs
Resources
Resources
Tangible Assets
Financial Resources
Physical Resources
Technological Reputation Human
Intangible Assets
•VHS format distribution for multiple companies•Efficient, inexpensive processes•Motivate through competition
•Superior VHS format and production•MCA media software
•Multi-national locations•High quality, inexpensive product
•Divisional, competing counterparts•Visionary CEOs
• 60% to headquarters/ 40% to division• Outsourced production•METC•10% ROS from Japan
Value Creation Process
Firm Infrastructure
Human Resource Management
Technology Development
Procurement
Inbound Logistics
Operations Outbound Logistics
Marketing and Sales
MARGIN
-Financial Policy -Legal -Organizational Form
- Accounting - Incentive Systems
-Bulked up efforts in mkt
-Autonomy among NOs
-Employee training
-Worldwide customization, mkt demands
-Outsourced non-value added tasks
-R&D dev. one product focus
-moved bus. to other countries during war
-Alliances w/ other companies
Value Creation Process
Firm Infrastructure
Human Resource Management
Technology Development
Procurement
Inbound Logistics
Operations Outbound Logistics
Marketing and Sales
MARGIN
--Outsourced VHS producer -Organizational Form
--Profit Distribution Policy - Competitive Environment
- Pay less for a superior product
- VHS Format
-Low cost materials
-Divisional, competitive structure-Belief in lifetime employment
-MCA media software-MECA-METC
- Distribution partnerships
- Performing outsourced VHS production
- Superior product- Divisional competition
Architecture
Product Division (PD)
National Organization (NO)
Technology Manager Finance MangerCommercial Manger
Formal Network
Informal Network National
Organization (NO)
Technology Manager Commercial Manager Finance Manger
Product Division (PD)
Architecture
Routines & Culture
• Routines– Allowed NOs and PDs relationship to affect
company’s success, a great deal of turnover and organizational changes in short period of time
• Culture– Shared values were disjointed from founder’s ideals.
As company saw more problems, the employees centric company no longer took precedence
– Morale was low
Routines & Culture
• Matsushita wanted his company to encompass independent product centers
• Once a new product was established, it was spun off into its own operation
• That operation could retain 40% of its profit, with the remaining 60% going to headquarters
• Competitiveness between operations was encouraged
SWOT Analysis
Internal
External
Negative: Asian
competitors out
performing them
Positive: Expanded
geographically to
abaid war
bombings, kept the
company alive
Strengths: Product Innovation
& Development, employee
relationship @ beginning
Weaknesses: Great deal of
turnover, lost foucs of core
competencies
Opportunities: capatialize on
foreign presence
Threats: Shareholder
accountablilty, lack of formal
structure in company
SWOT Analysis
Internal
External
Negative or potential to be negative
Positive
Strengths: Geographical shifting capabilities, Internal competition, Output capabilities
Weaknesses: Canabilism due to competition, lack of resources for new development, outsourcing leads to low recognizability
Opportunities: Exclusively outsourcing, New technological developments, Geographic centralization of operations
Threats: Loss of outsourcing business, innovationof new technology
Sustainable CompetitiveAdvantage through ARC
Resources Competitive AdvantageCapabilities
Strategy
Goals
Objectives
-New labs, good technicians, international presence
- Innovations, product development & efficiencies
- One focus on major product line, allowed for superior performance
-return back to simplicity, few products, increase employee morale, reestablish innovations and efficiencies
Sustainable CompetitiveAdvantage through ARC
Resources:- MECA- METC- MCA-Divisional Competition- Worldwide production and presence
Capabilities:-Advanced new product development-Outsourced producer-Geographical shifting
Strategy: Use internal competition to achieve
innovation and competitive advantage
Goals: Achieve worldwide, superior market share
Objectives: Sustain a profitable technology company
Competitive Advantage: Ability to shift both geographies and resources to achieve the best product with efficient spending
The 21st Century
• By 2001, it becomes evident that Philips’ best chance of survival was to outsource even more of its basic manufacturing and become a technology developer and global marketer
• In 2002, company HQ moved from Eindhoven to Amsterdam– In a sense, the move to Amsterdam can be considered a return to the
company's roots, because Gerard Philips lived in Amsterdam when he came up with the idea of building a light bulb factory and also conducted his first experiments in the field of mass production of light bulbs there
• Philips Lighting, Philips Research, Philips Semiconductors (spun off as NXP in September 2006) and Philips Design, are still based in Eindhoven
• Philips Healthcare is headquartered in both Best, Netherlands (just outside Eindhoven) and Andover, Massachusetts (U.S.)
The 21st Century• In February 2001, the company’s first losses in 30 years
continue to accelerate– CEO Nakamura announces round of emergency measures
designed to cut costs– Goal to move Matsushita beyond its roots as a “super
manufacturer of products” and begin “to meet customer needs through systems and services”
• In May 2003, the company put "Panasonic" as its global brand, and set its global brand slogan as, "Panasonic ideas for life”
• In January 2008, name changed to “Panasonic Corporation”