PHILIPSsense and simplicity

Shannon DorseyBrian PateraLeslie RoyerHope Sutton

Brandi Wisenbaker

History 1892: Philips & Co established 1912: Incorporated 1914: 1st research lab established Multiple reorganizations Marketing changes

“Let’s make things better.”“Sense and simplicity.”

2007: Vision 2010

Mission "Improve the quality of people’s lives

through timely introduction of meaningful innovations."

Vision and Values “In a world where complexity

increasingly touches every aspect of our daily lives, we will lead in bringing sense and simplicity to people.”

Delight Customers Deliver Great Results Develop People Depend on Each Other

Sectors Healthcare Lighting Consumer Lifestyle

Goals Group EBITA: 10-11% in 2010

Healthcare EBITA: 15-17%Lighting EBITA: 12-14%Consumer Lifestyle: 8-10%

6% Sales growth for period 2008-2010 Return on invested capital: 12-13% in

2010

1st Quarter 2010 Financials Group EBITA: 9.8%

Healthcare : 10.7%Lighting : 14.0%Consumer Lifestyle: 9.2%

Sales growth: 12% increase ROIC

Financial RatiosYear 2005 2006 2007 2008 2009 Industry

RatioCurrent 1.44 1.64 1.85 1.35 1.48 1.80

Quick 1.18 1.32 1.52 0.96 1.12 1.40

D/A 0.50 0.40 0.40 0.51 0.52 -

D/E 0.27 0.17 0.16 0.27 0.29 0.50Total Asset Turnover 0.75 0.69 0.74 0.83 0.76 0.80Net Profit

Margin 15.30% 4.60% 25.30% -0.50% 2.40% -4.60%Return on

Equity 17.30% 3.90% 23.20% -0.50% 2.80% -10.00%Return on

Assets 8.50% 2.30% 13.80% -0.30% 1.30% -33.60%

Internal Stakeholders• Employees• Board members• Stockholders

External Stakeholders Customers Suppliers Creditors Government Communities General Public

Most Important Stakeholders Customers Employees Stockholders

Strategies Corporate Level

Unrelated Diversification Business Level

Differentiation Functional Level

R&D, Marketing

Five Forces Analysis Low Threat of Entry

because of economies of scale, high start-up costs

Increased Rivalry because of consolidated industry, high exit barriers, declining demand, and high fixed costs.

Five Competitive Forces Increased Threat of Substitutes

because many competing brands offer similar products and no switching costs

Low Power of Buyers because there is a large number of buyers

Low Power of Suppliers because there are many supplier firms and the supplied input is not highly differentiated

Macroeconomic Forces Global Technological Demographic Social Political & Legal Macroeconomic

Competitive Advantage Innovation* Customer Responsiveness* Efficiency Quality

Core Competences Humanities, design Life sciences Physics & Chemistry Electronics Informatics & mathematics Technology, engineering

Corporate Governance Two Tier System

- Supervisory Board- Board of Management

Group Management Committee- Highest consultative body within

Philips

Ethics General Business Principles Code of Ethics

Act honestly & ethicallyAvoid conflicts of interestComply with applicable govt laws, rules,

regulations

Any Questions?