PHILIPS CASE STUDY

Submitted By: Kumar Raj Shivam Gupta Aditya Raman Prashant kathuria Debashree Chakraborty.

INDUSTRY ELECTRONICSFounded Eindhoven, 15 May 1891Founder Gerard Philips

Frederik PhilipsHeadquarters Amsterdam, NetherlandsArea served WorldwideKey people Jeroen van der Veer(Chairman)

Frans van Houten (CEO)Products Home appliances

LightingMedical equipment

Revenue €21.39 billion (2014)Operating income €486 million (2014)Profit €415 million (2014)Total assets €28.35 billion (2014)Total equity €10.86 billion (2014)Number of employees 105,365 (2014)Slogan "Innovation & You"Website www.philips.com/global/

PHILIPSsense and simplicity

DIVISIONS Philips Consumer Electronics Philips Lighting Philips Medical Systems Philips Domestic Appliances and

Personal Care B2B

• Royal Philips Electronics of the Netherlands is a diversified health and well-being company.

• Headquartered ---Netherlands, more than 186,000 employees in more than 60 countries worldwide.

• Market leader---cardiac care, acute care and home healthcare, energy efficient lighting solutions and new lighting applications,

• It is also right up there in lifestyle products for personal well-being and male shaving and grooming as well as portable entertainment and oral healthcare.

Philips Headquarters in Amsterdam, Netherlands

(1910 to 1940s) Philips Metal Filament Lamp Factory Ltd. was

founded  in Eindhoven in 1907. That was followed in 1912 by the foundation of

Philips Lightbulb Factories Ltd.

In 1920s,Philips started to diversify its product range.

In the 1920s, the company started to manufacture other products, such as vacuum tubes. 

In 1939 they introduced their electric razor, the Philishave.

In 1949, the company began selling television sets.

Vacuum Tubes.

1990 TO 2015 In may 1990 when company

posted losses of $2.6 billion,top management launched a major initiative known as”Operation Centurion”.

In 1999,Philips embarked on a worldwide marketing campaign and changed their company’s image to a technology-oriented company rather than a market –oriented one.

In 2001,Philips launched a company wide restructuring program called “Towards One Philips’(TOP) under CEO Gerard Kleisterlee to foster greater co-operation.

The program helped not only in lowering costs but also promoted a spirit of collaboration.

In January 2011 Philips agreed to acquire the assets of Preethi, a leading India-based kitchen appliances company.

In March 2012 Philips announced its intention to sell, or demerge its television manufacturing operations to TPV Technology.

April 2013, Philips announced a collaboration with Paradox Engineering for the realization and implementation of a “pilot project” on network-connected street-lighting management solutions. This project was endorsed by the San Francisco Public Utilities Commission (SFPUC).

PHILIPS STREET LIGHT PROJECT

Philips began operations in India in 1930 with the establishment of Philips Electrical Co. (India) Pvt Ltd in Kolkata .

In 1948, Philips started manufacturing radios in Kolkata. In 1959, a second radio factory was established near Pune.

In 1970 a new consumer electronics factory began operations in Pimpri near Pune; the factory was closed in 2006.

In 1996, the Philips Software Centre was established in Bangalore, later renamed the Philips Innovation Campus.

 In 2008, Philips India entered the water purifier market.

In 2014, Philip's was ranked 12th among India's most trusted brands according to the Brand Trust Report, a study conducted by Trust Research Advisory.

PHILIPS INDIA OPERATIONS

REVENUE

• Globally,Philips derives 34 percent of its revenues from lighting ,in India,the figure is 58 per cent.

• In Health care,the global contribution is 40 per cent.In India it is 18 per cent

• In Consumer lifestyle,the company gets 26 per cent of its overall revenues,in India,it is 24 per cent.

• Totally the Indian unit closed the fiscal ended march 2012 with revenues of Rs 5,579 crore,growing at a clip of about 23 per cent per annum.

PHILIPSGROWTH OVER THE YEARS

1891 1912 1920 1939 1949 1963 1982 2000 2011 2015

ACQUIRED THE ASSETS

OF PREETHI.-INDIA BASED

KITCHEN APPLIANCES

COMPANY

LAUNCHED COMPACT DISC.

.

INTRODUCED THEIR

ELECTRIC LASER.

STARTED MANUFACTURING VACCUUM TUBES.

.

.

PHILIPS WAS

FOUNDED. PHILIPS LIGHTBULB FACTORY COMES INTO EXISTANCE.

PHILIPS BEGAN SELLING TELEVISION SETS.

INTRODUCED THE COMPACT AUDIO CASSETTE TAPE FOLLOWED BY “RADIO RECORDER” FEW YEARS LATER.

PHILIPS BOUGHT OPTIVA CORPORATION

ACQUIRED VOLCANO CORPORATION

Solutions

Philips embarked an improvement program called BEST (Business Excellent through Speed and Teamwork).

Have several tools and approaches as a part of BEST.

Some of them are:• Philips Business Excellence Model

(PBE)• Process Survey Tools(PST)• Balanced Scorecard (BSC).

Problem

Philips was success since its inception, but its faced poor financial performance during the 1990s due to several reason:

• Fall of market share.• High Manufacturing Costs.• Lack of competitive product price• Growing competition and Rapid

changes in the external environment

Philips Excellence

Model

PROCESS SURVEY TOOL

BALANCED SCORECARD

STRATEGY OF PHILIPS

• In 1970-80 Philips acquired Magnavox, Signetics, Sylvania,&

Westinghouse

• In 1990 Philips carried out major restructuring program &

changed from localized production to global production

• Another important change was the appointment of Gerad

Kleisterlee as President & Chairman of the company

• Philips started to concentrate on its initial core activities

CONTD.

• Philips primary focus was now on product innovation

• To create brand awareness in European market Philips spent $100 million

on advertisement, sponsorship, movie tie-ins, reail promotion worldwide

• Apart from it Philips spent $600 million to buy Aegis Group’s Carat

International to create a consistent brand experience

• Philips also tried direct marketing and internet marketing to reach to its

consumers

CONTD.

• Philips started ‘Borderless Brand Management’ in 2004

• After 2005 Philips started focussing more on consumer with brand

promise of ‘sense and simplicity’

• As a part of TOP initiative, Philips also began a range of new

technology. One such technology is ‘Connected Home’

• At present Philips is planning to put digital at the core of its newly

merged consumer & healthcare business

…cont’d

RETAILEmerging

urbanization ,

population growth and

new demand.

AUTOPhilips offers

best-in-class

lightning solutions in OEM &

OESe.g.

Hyundai

INDUSTRYRequires better illumination for performanceReduces operating cost

HEALTHCARE

Supports hospitals and diagnostic centre medical

equipments providers for

experience of care

AnesthesiaCardiology

Critical careHome respiratory

careRadiology

PERSONAL CARE

Market leader in male grooming

equipmentsPersonal care

product is introduce in Tier 1 & Tier2

cities

TrimmersRazors

Wet & Dry electric shaver

Steam IronHair dryer & straightner

HEALTH CARE & PERSONAL CARE SOLUTIONS

COMPETITOR

Matsushita40%

Sony10%

Hitachi

Thomson

CASE STUDY

Q:1 Use the standardization versus adaptation arguments to support Philips strategies worldwide. What are some of its advantages of its new standardization strategy?

Standardization and international uniformity has many advantages. People can expect the same level of quality of any specific brand anywhere

around the world. Standardization supports positive consumer perceptions of a product .If a

company enjoys strong brand identity and a strong reputation, choosing a standardized approach might work to its benefit.

Positive word-of-mouth means an increase in sales around the globe. It also includes cost reduction that gives economies of scale. Selling large

quantities of the same, non-adapted product and buying components in bulk can reduce the cost-per-unit.

Other advantages related to economies of scale include improved research and development, marketing operational costs, and lower costs of investment.

Standardization is a reasonable strategy at a time where trade barriers are coming down.

Following a standardized approach helps companies aim focus on a uniformed marketing mix specifically focusing on one single product, leaving enough room for quality improvement

Q:2 Offers suggestions to Philips regarding the strategies that it can use to create a unified, resonant global brand?

Q:3 SOME MAY ARGUE THAT PHILIPS IS A PAN-EUROPEAN BRAND THAT IS TRYING TO MAKE INROADS INTO THE US. CRITICALLY

EVALUATE THIS STATEMENT?

Philips make $100 million dollar in advertising ,sponsorships movie tie-ins and retail promotions worldwide to boost brand awareness. Philips embarked its star campaign in an attempt to create a more human, imaginative and seductive brand image. Using dynamic state of the arts product, the Philips campaign was able to reach consumers on a very personal manner, thus gaining their trust, loyalty and brand preference. The campaign resonated very well with its target market, well educated ,independent and carefree consumers.

It has its five years sponsorship of the U.S. soccer Federation. This help Philips to reach its young target and more female consumers. Philips thus has 30 second air spots on ABC and ESPN during soccer broadcasts, as well as presence on the stadium billboards, and logo visibility on all training kits and Philips branded goal cameras are highly visible.