PHILIPS ANALYSIS

Strategic Management
Group 6
Andrash | Zuhdi | Rama | Sania
 Business Overview
Royal Philips of the Netherlands is a diversied technology company,
focused on improving peoples lives through meaningful innova?on in the areas
of Healthcare, Consumer Lifestyle and Ligh?ng. The company is a leader in cardiac
care, acute care and home healthcare, energy ecient ligh?ng solu?ons and new
ligh?ng applica?ons, as well as male shaving and grooming and oral healthcare.

Franois Adrianus "Frans" van Houten is the successor to

Gerard Kleisterlee, as Chief Execu?ve Ocer of the Dutch
company of Royal Philips Electronics, taking over the
posi?on on 1 April 2011.
Business Overview
 2012 2014
1.Top 50 Best Global Green Brand by Interbrand
2.Best Improvement in Pa?ent Safety 2012 Philips 1. Prac?ce Greenhealth Champion for Change - Philips
iDose. The Irish Medical and Surgical Trade received the 2014 Champion for Change Award for
Associa?on acknowledged in crea?ng a solu?on that delivering resource-ecient healthcare solu?ons to
drama?cally reduces radia?on Philips' eorts in CT our clients and assis?ng them in improving their
scanning procedures without compromising image environmental performance.
quality.
3.VBDO Responsible Supply Chain Management 2. Energy Star Partner of the year -
Award - Philips received the VBDO Responsible 3. CDP - Philips has been recognized as a world leader
Supply Chain award for the fh year in a row.
for corporate ac?on on climate change. For the 3rd

year in a row, (CDLI).
2013
1.Crystal Prize - Philips received the Crystal Award 4. Dow Jones Sustainability Index (DJSI) - Philips is
(De Kristalprijs), Global 100 Most Sustainable named the industry leader in the Industrial
Corpora?ons in the World Philips has been ranked Conglomerates category with a score of 91 out of
number 7 on the annual list of Global 100 Most 100 points. In addi?on we have also received a Best
Sustainable Corpora?ons in the World by Corporate
in Class score in all three dimensions Economic,
Knights up 6 places from 2012.
Environmental and Social.
 Threats from Chinese companies

CURRENT
CHALLENGES

Limited Stock Availability in The Limited Product Line

Company
 PHILIPS
VISION AND MISSION EXTERNAL
AUDIT
 VISION:
At Philips, we strive to make the world healthier and
more sustainable through innova<on.

MISSION:
Improve the quality of peoples lives through
technology-enabled meaningful innova<ons as co-
creator and strategic partner for the Philips businesses
and complementary open innova<on ecosystem
par<cipants.

 The Flaws

Not clear enough on how they will achieve

their target
There is no descrip?on of the costumers
No brief or general explana?on of what type
of products they are selling
PHILIPS GENERAL
PORTFOLIO EXTERNAL
AUDIT
Sales and Sales Growth

Philips annual report 2016

 Sales Report Defined
Healthcare product segment contributed for about 10.912.000 in
sales, which is around 51% of the whole sales in 2015. For the sales
growth this product segment has increased by 19% in 2015

Consumer lifestyle has contributed in sales for about 5.347.000
euros, which is 22% of the whole sales. For the sales growth itself it
has increased from the year 2014 to 2015 by 13%

Ligh?ng products contributed 7.411.000 euros. Which is about 30%
of the whole sales. For the sales growth for this product segment it
has increased from 2014 to 2015 by 8%.
Net Income
Total net income afer
taxes in 2015 is about
659.000 euro
Healthcare has a 51%
contribu?on which is
about 336.000 euros
Consumer lifestyle
contributed about 22%
which is about 144.000
euros.
Ligh?ng has a sales
contribu?on of about
30% the net prot from
this segment product is
about 197.700 euros

Philips annual report 2016

PHILIPS INTERNAL
AUDIT EXTERNAL
AUDIT
Value Chain Analysis
Internal Factor Evaluation (IFE) Matrix
PHILIPS VRIO ANALYSIS
PHILIPS EXTERNAL
AUDIT EXTERNAL
AUDIT
 PHILIPS PESTEL ANALYSIS

Poli9cal Economic Social

The company has established Dierent purchasing power, The rise of emerging markets
subsidiaries in over 60 countries. habits, and standard of living in and the need for energy
The global poli?cal conicts, each country. The possibility of eciency. Various accusa?ons
including the Middle East and global recession and the related to labor rights and
other regions. In many European downfall in the consumers recruitment prac?ce problems.
countries now taking dynamic market. Developed countries are
changes in employment law. concern about ethics, respect,
and culture of a company.
Technology Ecological Legal
Compe??ve challenges such as The strong increase in Dierent forces to interna?onal
speed of innova?on, fast- environmental friendly and organiza?ons in each country to
moving market trends and rapid energy ecient solu?ons operate according to law related
technological change, products in the market. Many policies for the protec?on of
shortening product life cycles. countries are also concerned both the customers and the
Increase in advanced healthcare about pollu?on reduc?on. corpora?ons. Unexpected
demand all over the world. changes of foreign exchange.
 PHILIPS 5 FORCES ANALYSIS
LOW
-Large ini?al investment Poten?al
-many well known brands entrants

HIGH:
-Easily interchangeable
-Lots of other brands

Buyers power Compe?tors Subs?tutes

HIGH:
MEDIUM
-Largely consolidated markets
-Necessity product
-High amount of subs?tutes
-Low cost for costumer to
change

LOW:
-Many dierent material and good
Suppliers power
- needs a long rela?onship too trust
supplier

 External Factor Evaluation (EFE) Matrix
Key External Factors Weight Ra9ng Score
OPPORTUNITIES
Push from various government and environmental ac?vists for greener
0.1 3 0.3
products indirectly promo?ng the products of Philips
Increasing demand for sustainable and green ligh?ng products 0.1 4 0.4
Was main supplier of Nokia phone screen 0.02 1 0.02
Has more than 100.000 patents 0.04 2 0.08
Growing presence in emerging markets like India and China 0.07 3 0.21
The healthcare challenges present major opportuni?es 0.1 4 0.4
Rapid growing market in healthcare sector and compu?ng industry 0.12 4 0.48
THREATS
Availability of cheaper technology in local markets 0.06 3 0.18
May not be able to adapt swifly to changes in industry or market
0.03 3 0.09
circumstances
Highly compe??ve business environment 0.08 2 0.16
Stakeholder value can be extremely aected by a failure in delivering the
0.1 2 0.2
Philips strategy
Counterfeit goods of Philips 0.03 1 0.03
Exchange rate uctua?ons 0.05 1 0.05
Environmental and other government regula?ons 0.1 2 0.2
Total 1 2.8
 Competitive Profile Matrix (CPM)

Philips General Electronics Siemen AG

Cri?cal Success Factor Weight Ra?ng Score Ra?ng Score Ra?ng Score
Brand Reputa?on 0.13 2 0.26 3 0.39 1 0.13
Level of Product Integra?on 0.08 4 0.32 3 0.24 1 0.08
Range of Products 0.05 3 0.15 1 0.05 2 0.1
Successful New Introduc?on 0.04 3 0.12 3 0.12 3 0.12
Market Share 0.14 2 0.28 4 0.56 4 0.56
Sales per Employee 0.08 1 0.08 3 0.24 3 0.24
Low Cost Structure 0.05 1 0.05 3 0.15 4 0.2
Variety od Distribu?on Channels 0.07 4 0.28 2 0.14 2 0.14
Customer Orienta?on 0.02 2 0.04 4 0.08 1 0.02
Superior IT Capabili?es 0.11 3 0.33 4 0.44 4 0.44
Strong Online Presence 0.15 3 0.45 3 0.45 4 0.6
Successful Promo?ons 0.08 1 0.08 2 0.16 1 0.08
Total 1 2.44 3.02 2.71
Competitive Analysis
Personal Health, Consumer Healthcare Major Appliances, Consumer
Appliances Electronics
Philips GE Healthcare Whirlpool Corp
Midea Group LTD Siemen Healthcare Samsung Corp
Procter & Gamble Co. Philips LG Corp
Panasonic Corp. Toshiba GE Corp
Sharp Corp. Philips NV
GE Corp

High Quality

Healthcare
Industry

Low Price High Price

Low Quality
 Regional Competitive Analysis

Koninklijke Philips NV Presence by Region

2015 and Growth Prospects 2015-2020

Dominated by GE
and SIEMENS

Source: Euromonitor Data 2016

 PHILIPS
LONG-TERM GOALS EXTERNAL
AUDIT
 Long-Term Goals

Current Vision Projected New Vision

Strive to make the Leading the world
world healthier and healthier lifestyle and
more sustainable more sustainable
through innova?on. through innova?on.
 Long-Term Goals
Healthy people, Sustainable planet
Increase number of sales in developed countries by 5%
Make rapport for US local company for future
expansion
Create joint venture nor acquire US local company
Increase sales on healthcare product of 10% each year
Create more coopera?on in terms of healthcare
products with hospitals
Improve the lives of 3 billion people by year 2022
Steadily growing the Green Solu?ons porqolio
PHILIPS STRATEGY
EXTERNAL
AUDIT
 SWOT Matrix
SWOT%STRATEGY% Strength(( Weaknesses(
1. Broad%Subsidiaries%and%employees% 1. Big%challenges%in%PC,%and%mobiles%business%
% 2. Strong%of%R&D%portfolio%as%innovation%driven%center% 2. Poor%marketing%techniques%
% 3. Market%leadership%% 3. No%explicit%detailed%plan%
% 4. Budget%constraints%towards%marketing%and%
4. Less%hierarchical%management%structure%
invention%techniques%
% 5. Fast%decision%making% 5. Not%enough%sales%force%
% 6. High%customer%loyalty% 6. Legal%tangles%tarnish%brand%image%
% 7. High%price%in%terms%of%home%appliances%
% % 8. Havent%tested%costumer%needs%
% % SO%Strategies% WO%Strategies%
Opportunities(
% %
1. Push%from%various%government%and%environmental%activists%for% Focusing%the%R&D%in%the%Healthcare,%Green%&%Sustainability% Pursuing%PC%and%mobile%business%or%
greener%products%indirectly%promoting%the%products%of%Philips% products%(O1,O6,S1)% in%other%words,%the%consumer%
electronics%industry%in%India%and%
2. Increasing%demand%for%sustainable%and%green%lighting%products% China%
3. Was%main%supplier%of%Nokia%phone%screen%
4. Has%more%than%100.000%patents%
5. Growing%presence%in%emerging%markets%like%India%and%China%
6. The%healthcare%challenges%present%major%opportunities%
7. Rapid%growing%market%in%healthcare%sector%and%computing%industry%
Threats( ST%Strategies% WT%Strategies%
% %
1. Availability%of%cheaper%technology%in%local%markets% Continuously%Improve%by%making%fast%decision%for% Establishing%strong%sustainable%
2. May%not%be%able%to%adapt%swiftly%to%changes%in%industry%or%market% patenting%and%to%introduce%product%to%the%market%(T2,T5,% relationship%by%the%product%quality%
circumstances% S4,%S5)% trustiness%to%stakeholder%for%long]
3. Highly%competitive%business%environment% term%loyalty.%

4. Stakeholder%value%can%be%extremely%affected%by%a%failure%in%
delivering%the%Philips%strategy%
SPACE Matrix
Internal(Strategic(Position( Rating! External(Strategic(Position( Rating!
Financial(Position(Ratio( ! Environmental(Stability(( !
ROI!(8.04%)! +6! High!technological!changes! :6!
ROE!(12.36%)! +6! Competitive!Pressure! :5!
Working!Capital!Turnover!(7.81%)! +4! Barrier!to!entry!the!market! :2!
TOTAL( +16! Government!regulation!about!the!industry!! :3!
Competitive(Advantage( ! TOTAL( :16!
Market!Share!! :3! Industry(Strength( !
Product!Quality!! :2! Growth!potential!in!Healthtech!Industry! +5!
Customer!Loyalty! :2! Resources!Utilization! +4!
Supplier!&!Distributors!Control!! :1! Productivity,!Capacity,!Utiilzation! +6!
TOTAL( :8! TOTAL( +15!
!

Calculation* * Average*
EP#average## )16/4# )4#
CP#Average# )8/4# )2#
IP#Average# +15/3# +5#
FP#Average# +16/3# +5.33#
X1axis*(CP,*IP)* )2+(+5)=#+3#
Y1Axis*(FP,*EP)* )4+(+5.33)=+1.33#
!
 SPACE Matrix
FS
Conservative Aggressive
+6
+5
+4
+3 Strong nancial is one of
the strength in the
+2 industry, Pursuing major
Compe??ve advantage
+1

CA IS
-6 -5 -4 -3 -2 -1 -1 +1 +2 +3 +4 +5 +6

-2
-3

-4
-5
Defensive Competitive
-6
ES
 BCG Matrix
Rela9ve Market Share Posi9on
High Medium Low
1.0 .50 0.0
High Stars Ques?on Mark
Industry Sales Growth Rate +20 Personal
Health

Connected Care
Diagnosis &
& Health
Treatment
Medium informa?cs
0
Ligh?ng

Low Cash Cow Dogs

-20

Net Sales ( in Net Sales ( in Rela?ve Industry Growth

Division Net Sales (%) Net Sales (%) Growth Market share
millions of Euro) millions of Euro) Rate
2016
Personal Health 7,099 29.53% 6,751 28.49% 1.04% 1.00 5.0%
Diagnosis & treatment 6,686 27.82% 6,484 27.36% 0.45% 0.942 3.0%
Connected Care& Health Informa?cs 3,158 13.14% 3,022 12.75% 0.38% 0.445 5.0%
Ligh?ng 7,094 29.51% 7,438 31.39% -1.88% 0.999 (-0.9)%
24,037 100.00% 23,695 100.00%
Grand Strategy Matrix
RAPID MARKET GROWTH
Quadrant II Quadrant I
1. Market development 1. Market development
2. Market penetration 2. Market penetration
3. Product development 3. Product development
4. Horizontal integration 4. Forward integration
5. Divestiture 5. Backward integration
6. Liquidation 6. Horizontal integration
7. Concentric diversification

WEAK STRONG
COMPETITIVE COMPETITIVE
POSITION Quadrant III Quadrant IV
Dives?ture
1. by the IPO of Philips Ligh?ng in
Retrenchment 1. Concentric diversification POSITION
2014
2. to fConcentric
ocus in the Ldiversification
igh?ng Sector. 2. Horizontal diversification
Horizontal Integra?on
Horizontal with the main other
diversification Conglomerate diversification
3. 3. Increase the Market penetra?on budget
players in the Ligh?ng Industry
Conglomerate diversification Joint ventures
4. 4. Intensive strategy by the strong present of
5. Liquidation R&D and Innova?on for product development
Expanding alliances from horizontal
integra?on

SLOW MARKET GROWTH

 QSPM Matrix
Strategy.1 Strategy.2

Market.Development.in.the. Market.Development.in.the.
US.by.Horizontal.Integration US.by.Horizontal.Integration
Attractiveness.
Opportunities
Weight Score.(AS) Total.AS Attractiveness.Score.(AS)
Total.AS
1. Push.from.various.government.and.environmental.activists.for.greener.products.indirectly.
promoting.the.products.of.Philips 10% 4 0.4 4 0.4
2. Increasing.demand.for.sustainable.and.green.lighting.products 10% 4 0.4 4 0.4
3. Was.main.supplier.of.Nokia.phone.screen 2%
4. Has.more.than.100.000.patents 4% 3 0.1 2 0.08
5. Growing.presence.in.emerging.markets.like.India.and.China 7% 0.0 4 0.28
6. The.healthcare.challenges.present.major.opportunities 10% 1 0.1 3 0.3
7. Rapid.growing.market.in.healthcare.sector.and.computing.industry 12% 4 0.5 4 0.48
Threats
1. Availability.of.cheaper.technology.in.local.markets 6% 2 0.1 4 0.24
2. May.not.be.able.to.adapt.swiftly.to.changes.in.industry.or.market.circumstances 3% 2 0.1 4 0.12
3. Highly.competitive.business.environment 8% 3 0.2 4 0.32
4. Stakeholder.value.can.be.extremely.affected.by.a.failure.in.delivering.the.Philips.strategy 10% 4 0.4 2 0.2
5. Counterfeit.goods.of.Philips 3% 0.0
6. Exchange.rate.fluctuations 5% 1 0.1 1 0.05
7. Environmental.and.other.government.regulations 10% 2 0.2 2 0.2
TOTAL 100%
 QSPM Matrix
Strength( Weight AS TAS AS TAS
1. Broad1Subsidiaries1and1employees 12% 2 0.24 4 0.48
2. Strong1of1R&D1portfolio1as1innovation1driven1center 10% 2 0.2 4 0.4
3. Market1leadership1 8% 1 0.08 2 0.16
4. Less1hierarchical1management1structure 6% 3 0.18 4 0.24
5. Fast1decision1making 7% 2 0.14 4 0.28
6. High1customer1loyalty 5% 2 0.1 3 0.15
Weaknesses
1. Big1challenges1in1PC,1and1mobiles1business 9% 2 0.18 1 0.09
2. Poor1marketing1techniques 5% 1 0.05 1 0.05
3. No1explicit1detailed1plan 8% 2 0.16 1 0.08
4. Budget1constraints1towards1marketing1and1invention1techniques 6% 1 0.06 3 0.18
5. Not1enough1sales1force 5% 1 0.05 3 0.15
6. Legal1tangles1tarnish1brand1image 6% 4 0.24 3 0.18
7. High1price1in1terms1of1home1appliances 8% 2 0.16 2 0.16
8. Havent1tested1costumer1needs 5% 3 0.15 1 0.05
TOTAL 100% 4.6 5.72

It is beser for Philips to

do Marker Development
by Backward Integra?on