Philips Gloeilampenfabrieken NV has firmed up its plans to split asunder its Telecommunications & Data Systems unit, which was formed only four years ago to pursue the chimera of convergence of computers and telecommunications. The plan, foreshadowed here last month (CI No 1,311), is intended to improve operating efficiency, sharpen management effectiveness and enhance profitability in fiercely competitive markets, the company says – the computer side of its business is currently unprofitable. The combination of the businesses failed because it burdened top divisional management with the task of balancing diverse demands for resources and attention from line managers dealing with differently behaving markets and profit potential, slowing decision-making at the divisional level and preventing middle managers from reacting fast to shifting industry trends. Philips Data Systems has been an indifferent performer for so many years now that this could well be the last chance it gets to come good before Philips decides to give it best and seek a buyer for the unit.
