Although strategies Philips and Matsushita are different (the first focuses on the creation national development zones

over the world with independent growth; the latter, instead, based on centralizing development in high-efficiency plants in Japan), both companies triumphed and managed to become major players in the global market. However, as the economic and social conditions were changing, what was once a competitive advantage gradually transformed into a set of problems that undermined their global competitiveness. Curious is that coming from totally approaches, both Philips and Matsushita experienced a series of administrations that struggle with the problems arisen from choosing one or the other strategy as the foundational business model. Philips main capabilities. In the post-war era Phillips is characterized by two distinctive competencies: 1. Robust commitment to technology development which is extremely important for the electronics industry. This allows the organization to retain its leading position thanks to R&D, provide agility, innovation and creativity when it comes to marketing products. R&D in the company has been characterized as applied research units, attached to products through cross-financing derived from its unique ability related to financial planning. 2. Strong market focus due to the prewar creation of National Organizations (NO) in different countries where they have resources and assets. Through NO, the products that were developed in each branch were designed specifically for the local market. Phillips shows a distinctive ability to detect and respond to the needs of each market and consumer preferences better than the competition given its geographical structure-matrix product. Strategic freedom to every NO that turned out to be key to both the development of a competitive advantage and positioning of the company. Philips faces following challenges and restrictions: Business is extremely inefficient from a cost standpoint. Multiple nodes of independent and innovative technology development gives flexibility and time to market by also incurred in very high costs. Duplication of R&D departments and the lack of communication between them have led to high development costs. They just simply lack economies of scale. In consequence Philips margins are lower than their competition. There is a lack of an overall strategy and the structure of a company formed by many independent units difficult generating global strategic moves such as the standardization of products. Furthermore, the historical power structure of NO prevents the change as NO really can undermine restructuring intentions that need to be handle and coordinated by central authority, this undermines the control of the firm.

Matsushitas main capabilities. They based their strategy in low cost and large scale production efficiency, rapid innovation and operational structure to adapt quickly. Doing this by: Efficient cost control. Production processes are characterized by production plants in countries where production costs are low. Matsushita was able to integrate the processes of R&D, production and marketing to achieve a cost structure lower than was utilized to the maximum, this is transferred to branches by Japanese executives and accountants reveal the "real" data to the parent company. An ease of bringing products to market quickly. Its core competence and distinctive is the speed with which an innovation (new product) is brought to market. They are able to "copy" innovations from competition and quickly and put them on the market.

Matsushita faces following challenges and restrictions: Centralized strategy prevented the expansion of sales and marketing. Matsushita had serious shortcomings in identifying the needs of consumers abroad. Moreover branches have slower reaction to the rapid changes in technology demands, lacked the ability to innovate, mainly due to the limitations of independence. Lack of strategic freedom of the subsidiaries generated a lack of proactivity in along offices in the world. This is due in part to administrative control exercised over them over the time; they just are waiting for orders and are not proactive. Relying hardly on Japan made it difficult when the country faced some economic problems or currency appreciation. There is a general overproduction and innovation departments of R&D. Developments teams outside of Japan have not solved this problem.

Conclusions In the past, Philips NO structure met the specific needs of the moment, serving and satisfying different markets. But now the organizational culture or structure is an impediment for change. With new globalization landscape, cost reductions are necessary to be competitive and this might be achieved by moving production to countries with low labor costs. Phillips managers understand this but disempowering NOs proved to be a very complex task since they control the resources and specific R&D. On the other hand, destroying the NOs can effectively destroy the competitive advantage. What Phillips needs is a cultural change, this is a difficult and delicate task that should be planned under a long period of time. All CEOs expected to do this in two years or three years by setting up short term goals which seem more important than the long term plan and while they do this, they antagonize managers who held the real power and thus hindering change. Matsushita advantage is its rapid development and introduction of new products. This was implemented through a strong administrative control by Matsushita Japan. However, if the Yen appreciates, processes were taken to countries with lower labor costs. As usually

these were outsourced was not able to maintain control over the implementation process, in other words just could not control inputs. Unable to control the inputs Matsushita loses its ability to respond quickly to the market. They should keep delivering more power to the subsidiaries to develop entrepreneurial capacity and the development of new ideas and stimulating local talent. Continue moving factories to low cost labor countries, but fostering relationships with the consumers so they can gradually move to some kind of mass customization process.