Case Question: The evolution of organization at Philips Philips Electronics NV is one of the worlds oldest multinational corporations. The company started from making lighting products and over time diversified into a range of businesses in many countries. In decades (WWII present), Philips has been through several re-organizations to adapt to the changing global market. Historically (WWII 1970s), Philips was organized on a decentralized basis. Each national organization (ex. Britain, Australia, Brazil, Canada and the U.S, etc) was in essence a self-contained entity on production, marketing, sales and distribution of products in that market. This structure allowed Philips to customize its product offerings, sales, and marketing efforts to the conditions that existed in different national market. During this period, the career track of most senior managers at Philips involved significant postings in various national organizations around the world, and these managers gained considerable autonomy in making decisions for the national markets. After 1970s, facing competitive pressure from its rivals with lower costs such as Sony, Samsung and General Electronics, Philips had to tilt the balance of power in its structure away from national organizations and toward the product divisions on a global basis. Philips had 21 product divisions and it established the International production centers under the direction of each of these divisions. However, the national organization remained responsible for local supply chain, marketing, sales and some local production facilities. Besides, local managers were loyal to national organizations and tended to protect their autonomy. After the mid-1990s, the new CEO Cor Boonstra suggested that significant duplication of manufacturing and marketing efforts across nations impede the competitiveness of Philips. He instituted a radical re-organization. He replaced the 21 product divisions with just seven global business divisions, making them responsible for global R&D, production, and marketing. Divisions also took over some sales responsibilities, particularly dealing with global retail chains such as Walmart, Tesco, and Carrefour. Production was then shifted to low lost locations. The heads of the divisions reported directly to him, while national organizations reported to the divisions. Questions. 1. Since WWII, Philips has been through several major re-organizations. Historically, Philips has focused on the autonomy of decision making in each national market. With the radical re-organization in the mid-1990s, has Philips pursued a new international business strategy? Has Philips adopted a new organization structure to adapt to this strategy? Briefly explain your answer. 2. Historically, Philips has focused on the autonomy of managers in each national market. With the radical re-organization in the mid-1990s, should Philips adopt a new human resource staffing policy? If yes, what staffing policy should Philips adopt? Briefly explain your answer.