A Comparative Analysis: On How The Cultural Difference Between Philips (Netherlands)and Matsushita (Japan) Impact their Bottom Line

Background of Philips Philips was built on success on a worldwide responsiveness to national organization Started as a Family business one product line and developed through the ages by R&D During the early stage of the business the company explore other market such as Japan, Australia, Canada, Brazil and build Sales Organizations in United States, Canada and France By 1919 the company started to evolve by having decentralized Sales Organizations with autonomous marketing companies in 14 European Countries and also in china Brazil and Australia

 At the early stages of the business there was competition between Gerard Philips (an Engineer) responsible for production and Anton Philips (Businessman) responsible for sales Through research both business unites where able to match production to sales to ensure business survival The company was faced with post-war challenges that affected Europe, hence to remain competive the company had in place strategy to strengthen National Organizationto respond to country specific conditions National Organizations were responsible for financial, legal and administrative matters The Corporate structure of the company was a mix of geographic/product matrix with power residing on the National Organizations

Financials of Philips for 2000 & 2008 (reported in millions of Dollars)

2000 2008

Sales
Operation profit Pre-tax Net income Total asset Shareholders equity

35,564
2,838 9,597 9,078 35,885 20,238

36,868
770 155 (260) 46,169 22,697

Source: Annual reports; Standards & Poors, Moodys Industrial and International Manual

Background of Mansushita Centralized global competitiveness with highly efficient operations in Japan Established by an individual (Konosuke Mansushita) as a double-ended sockets for modest homes, the company then evolved and expand into a battery-powered Lamps, Electrical irons and Radios The company adapted a 7 spirit of Mansushita to guide its operation they are as follows: Service through industry, Fairness, Harmony & cooperation, Struggle for progress, Courtesy & Humility, Adjustment & assimilation and finally Gratitude First Japanese company to adopt a divisional structure that created small business environment to generate competition- one-product-one division

 Management provide each division with sufficient funds to ensure self-sufficient development, production and marketing capabilities Each division had to pay 60% of earnings to headquarter and the remaining 40% was utilized to finance working capital and fixed assets Basic technology was developed at Central Research Lab but product development and engineering occurred at each product division Given the company fast marketing abilities it was nicked named copycat The company had an internationalization outlook expanding the company overseas

 Financials of Matsushits for 2000 & 2008 (reported in millions of Dollars)

2000 Sales Operating income before depreciation Per-tax 68,862 4,944 2008 90,949 8,424 Not available 4,263

Operating income after depreciation 1,501 2,224

Net income Total assets

Total equity

941 77,233
35,767

2,827 74,648
37,530

Source: Annual reports; Standards & Poors, Moodys Industrial and International Manual

Conclusion Analysis Table

Philips Slower sales growth between 2000-2008 Lower assets value as at 2008 when compared with Matsushita Matsushita Faster sales growth between 2000-2008 Higher asset value as at 2008 when compared with Philips

Negative net income (US$260 million) in 2008 Started as a family business International outlook One product business

Net income grow from 2000 to 2008 Started by an individual International outlook Multiple product business