INTERNATIONAL BUSINESS STRATEGY

International Business Strategy

International Business Strategy

Introduction

The strategic implications of liberalization of Philips and Matsushita are typically proactive and reactive. It was at that time as a reseller have greater freedom to move into new product and customer markets there is a need (in some cases guided by normative pressure) to protect and preserve the core of the domestic market from the effects of increased competition (including entry Guided internationalization of the sector). This reflects the fact that, despite nearly two decades of liberalization, Philips and Matsushita are still governed by a set of rules that seek to control the intensity of competition in such a way as to strengthen the rule of acting, while not undermining the public service requirements of a modern communications system.

Section 1

1. Compare and contrast the approaches of top managers at Philips and Matsushita to the strategic challenge of adjusting to the long-term fall in profitability of their home regions' manufacturing operations. Writing as if you were an analyst using module theory to assess the situation in 2001, propose and evaluate a range of options for Kunio Nakamura and Gerard Kleisterlee to renew their organizations for the twenty-first century?

Royal Philips NV and Matsushita (owner of the Panasonic brand among others) are two of the world's biggest electronics multinationals. After successfully building their global empires in the early twentieth century, they have both suffered financially in recent decades. It is therefore interesting to look at why this has happened and what their future prospects are. One of the main reasons for Philips' early success is arguably because of its focus on manufacturing lightbulbs. Other electronics organisations were keen to diversify (Hill), whereas Philips concentrated solely on producing lightbulbs and developing new technology for this product. It was, thus, able to build a competitive advantage based on technology, and subsequently, became a market leader in this field. In addition to its technological development, Philips overseas expansion was also a formidable reason for its growth and success. According to Hill, the small size of Holland Philips to look beyond its borders. It appeared to successfully pursue an international strategy as there was little pressure for local responsiveness with a simple product such as a lightbulb and it was able to benefit from greater economies of scale. The other aspect of its success could be attributed to Philips care for its workers. According to Hill, the company 'built houses, bolstered education, and paid its employees so well that other employers complained' (p.518). This could be argued as building a resource-based advantage. Barney et al (2001) believe that 'sustained competitive advantage derives from the resources and capabilities a firm controls that are valuable, rare, imperfectly imitable and not substitutable' (p.625). This unique care for its workforce arguably fostered a culture that helped create such a competitive advantage. Porter (1980) would argue otherwise as he feels the only way to create a sustainable competitive advantage is through overall cost leadership, diversification or focus. It could be seen that Philips did the latter, ...