Philips Case Study – SWOT and PESTLE Analysis

Philips Case Study – Brand Repositioning SWOT Analysis

When students come across case study writing based on a gadget product brand like Philips then they need to focus on two things. The two things are easy usage of technology and strong brand image.

Philips SWOT and PESTLE Analysis - Marketing Assignment & Essay Help

As per the SWOT Analysis Writing of Philips we can conclude that its strength lies in being a reliable product brand for consumers whereas the weakness lies in avoiding innovative methods to attract customers in the past. Its opportunity lies in encouraging more publicity through TV commercials and it faces threat from rivals with limited product ranges.

As per the PESTLE Analysis of Philips we can say that it is trying to satisfy developed nations whose political establishments allowed them to do business. It is trying to gain back market ruling in these developed economies through aggressive publicity into their social set up. It is a legally renowned corporate that also adheres to environment friendly products.

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Philips Brand Repositioning Case Study and Analysis Report

Here is the Copmplete Case Study for Philips Brand repositioning and Philips Business Analysis.

Introduction

Koninklijke Philips Electronics NV (commonly known as Phillips) is one of the most celebrated names in household because of its focused attempt on elevating people lives through timely innovations. As a market leader in healthcare, well-being, lifestyle and lighting, Phillips implements its cutting-edge technology and practical designs to solve consumer-centric problems to live up to the brand’s promise that is ‘sense and simplicity’. This case study investigates how this famous Dutch company has transformed itself into a modern organization in order to maintain healthy competition in the market. The aim of conducting this study is to examine the strategies that have helped the company remain at the forefront of electronic innovation for several years.

Company Details

Philips is a leading healthcare technology company, focused on elevating people’s standards of living. With continuous attempt to innovate something useful, this company has gained the recognition of market leader in medical imaging, patient monitoring and health diagnosis, consumer well-being and healthcare. The primary aim of this company is to find the perfect solution to the problems that people have been facing for long. It is recognized for its diverse products range from radios to electric razors from cancer screening systems to television sets. One of the prestigious moments for this company was getting featured on the Forbes’ list of ‘The World’s Biggest Public Companies’ (#388 rank) in 2000 ("Forbes Welcome", 2017).

Philips Brand Repositioning Details

Industry Served

Conglomerates

Foundation year

1891

Founders

Frederik Philips and Gerard Philips (father-son duo)

Corporate Headquarters

Amsterdam, Netherlands

Employees

105,656

Sales

$26.89 Billion

Areas served

100 countries

Divisions

Philips consumer lifestyle, Philips healthcare, Philips lighting

CEO

Francois Van Houten

Website

http://www.philips.com/global/

Philips Brand Repositioning - Mission, Vision, Values

Mission:

Being a world leader in healthcare and well-being, Philips strives to improve the standards of living through technology-enabled meaningful innovations and offer healthier and modernized options to the world. (Nieuwenhuizen, 2013)

Vision:

Philips envisions the world as a healthier and more sustainable place for people. In order to do so, it intends to introduce people-centric innovations at intervals. ("Vision & mission - About Philips Research - Research | Philips", 2017)

Values:

Philips is known for being a diversified company. This diversity helps the company to address the challenges in a unique way and satisfy the consumer’s needs perfectly. This company remains connected with the people at every aspect of their life. This world renowned organization has assembled a team of experts from different backgrounds to provide problem-centric solutions to its consumers. With the customer support, this corporation strives to achieve a premium return on equity.

Philips Brand : Company Time-line

Inception years (1891 – 1914):

Philips started its journey from 1891 when father and son duo Frederik Philips and Gerard Philips decided to purchase an empty factory building in Eindhoven. They started producing carbon-filament lamps in the factory. They quickly became the largest producer of lamps in Europe. In 1982, they began selling other electro technical products along with their USP product (carbon-filament lamps) (Heerding, 1986, p 56). In the year of 1985, a few changes were brought into the company. Frederik’s younger son Anton joined the company. Anton’s arrival brought many positive changes in the company. The company has expanded and declared itself as a limited company with publicly traded shared registered under the Amsterdam Stock Exchange market. In 1914, Philips established a research laboratory where physical and chemical phenomenon were studied ("Our heritage - Company - About | Philips", 2017).

Growing years (1916 - 1939):

Philips won the Royal Recognition award on its 25th anniversary in 1916. After two years, this company launched a medical X-ray tube in the market. This was the start of Phillips becoming a diversified company. Throughout its 1920s, the company manufactured other types of products. Philips also started producing radios. Within its five years, it successfully sold one million sets and it became one of the largest manufacturers of radios and radio tubes. In 1933, the company shifted its focus on producing medical X-ray equipment in United States. In 1939, they started producing electric razor, the Phillishave. During this period, sales departments of this company were established all over Europe and other countries like Australia, Brazil and China.

Technology Breakthroughs (1943 - 1963):

During 1940s and 1950s, science and technology have undergone tremendous changes (Pack & Westphal, 1986, p 87-128). In this context, Philips’ research department laid the foundation for future groundbreaking work in transistors and integrated circuits. With the help of path-breaking technology, Philips introduced Synchrocyclotron for treating malignant tumors. Similarly, this company brought in many significant technological designs that improved people’s lifestyles. In 1963, this diversified company started manufacturing Compact Audio Cassette.

Continued its legacy (1970 - 1982):

In 1970s, Phillips successfully maintained its legacy of coming up with new and exciting ideas for its consumers. In 1972, Philips initiated the production of world’s first home video cassette recorder, the N1500 in UK. Gradually, they updated the product in order to fulfil consumers’ demands. When the world was pressing the issue of saving energy, Philips Research came up with the new energy-saving lamps. Later, Philips launched Laserdisc for selling movies. In 1982, Philips made a breakthrough in communication. In partnership with Sony, Philips launched Compact Disc.

Landmark innovations (1900 – 2000):

Philips has witnessed significant changes in the decade of 1990s. During this time, the company focused on simplifying its structure and decreasing the number of operating areas. Meanwhile, Philips implemented new, people-centric approach to make the medical systems more user-friendly for doctors and more comfortable for patients ("Our heritage - Company - About | Philips", 2017). Philips again partnered with Sony this time to launch DVD in 1997. With this innovation, Philips gained reorganization in the electronics market for being landmark innovator.  In the same year, it decided to shift its headquarters from Eindhoven to Amsterdam. It also changed its corporate name to Koninklijke. They shifted its base again to Breitner Tower. Later in 2000, Philips acquired a company named Optiva Corporation and continued to introduce path-breaking ideas in the market. It also bought Agilent Technologies’ Healthcare Solutions Group (HSG) for EUR 2 billion.

Maintained its legacy (2001 – present):

In 2004, Philips changed its slogan from ‘Let’s make the easier’ to ‘sense and simplicity’. Later in 2005 and 2006, the company has undergone many business changes. It also has acquired numerous companies during this period. Milestones like the introduction of the 3D scanner, AlluraClarity interventional X-ray system also took place between 2006 and 2012. In the year of 2013, Philips excluded ‘electronics’ from its name and joined collaboration venture with Paradox Engineering. In the same year, it altered its tagline and changed to ‘Innovation and you’. In 2014, this company decided to split into two parts: lighting and healthcare and consumer lifestyle. In the year of 2015, it completed the successful acquisition of Volcano Corporation in the hope of boosting its position in non-invasive surgery and imaging. In 2016, it decided to give absolute focus on its healthcare division, as it is more promising.

Philips India Operations (Centers in India)

Philips began its operations in India in 1930. It established its first office in Kolkata and started manufacturing radios in Kolkata, and later in Pune. In 1996, Philips’ Software Centre was established in Bangalore. In 2008, Philips India stepped into water purifier market. Philips has been recognized as the one most trusted brands in India by Brand Trust Report

Revenue

In past three years, Philips has witnessed a new low in business. Due to its poor brand image, its revenue started to decline over the years. Its net sales started dropping from 2014. The year 2015 was not a good year for this company as well. It witnessed a massive drop in its annual income. But this company has recovered little from the loss in the year of 2016. But it has to go a long way. Here is a comparative study of Philips’ annual income statement of three fiscal years.

Philips Annual Income Statement (Annual)

Fiscal year (Jan –Dec)

2016

2015

2014

Philips Net Sales or Revenues

27.13 B

26. 92 B

28.44B

Cost of Goods Sold (COGS)

15.39B

15.98B

17.53B

Philips Gross Profit

11.74B

10.94B

10.91B

Research and Development Expense

2.24 B

2.14B

2.17B

Gross Income

10.61B

9.59B

8.59B

Problems Faced - Solutions to Them

As a global company, Philips tends to face various problems during its operations. These issues naturally affect the performance of the company. But this company successfully has overcome those hurdles and proved itself to be market leader in the health and well being sector.

  • Problem 1: Increasing business loss

Royal Philips NV reported a net loss of million in past years. One of the major reasons for this problem was a legal charge imposed on this company. According to the patent law, the company had to pay EUR366 Million to Masimo Corp. A combination of all these problems led the company to noticeable business loss ("Philips swings to loss on problems at U.S. unit", 2017). In order to survive, the company decided to merge its healthcare and consumer electronics divisions into a single company. In addition, it is also determined to separate its lighting business from its core company. Further, they aim to reduce the costs by EUR1.8 Billion by the end of 2016 in order to make up the loss.

  • Problem 2: Quality control problem

The healthcare facility situated in Cleveland, Ohio, USA was flooded by complaints of low quality. Hence, the U.S Food and Drug Administration (FDA) took this facility under its scrutiny. FDA reported that this lighting and healthcare giant poorly handled the complaints and failed to provide solutions to its consumers. It proved to be insufficient to control the quality of products received from their suppliers ("Philips fails to solve quality-control problems - Supply Chain Movement", 2017). In order to control the damage, the company has decided to concentrate on its healthcare departments and re-organize its lighting department to reach to a higher level of profits.

  • Problem 3: Dissatisfied customers

Philips had an order backlog of worth £2 Million. This means increased dissatisfied customers. This company also encountered the problem of cash flow. As a result, it could not pay off its clients ("Culture - Making things better - Philips | Philips case studies and information | Business Case Studies", 2017). To handle the order backlog problem, the company has assembled a team of people from every department involved in delivery process. This team is dedicated to sorting the immediate problem, identify the causes behind it and find perfect solutions to those problems.

  • Problem 4: Running behind the schedule

Philips faced shortage of development time. The production of critical products behind schedule delayed the launch of its final products in the market. In order to deal with this situation, this company has set up a task force that is responsible for resolving this issue. With the help of the task force, Philips has now managed to launch its new product successfully before its schedule.

Process Survey Tool of Philips Brand

Elements that evidently influence the performance of this company are as follows,

  • Business plan
  • Marketing Sales
  • Project campaign
  • Team
  • Ownership
  • Budget
  • Sourcing
  • Finance
  • Technology
  • Product
  • Manufacturing

It is apparent that the factors that determine company’s growth are interconnected with each other. Each segment needs equal and undivided attention from the management.

Strategy of Philips Brand

Being a focused leader in health technology, Philips aims to build upon its rich heritage by touching people’s lives through cutting edge technology and designs. In order to do so, Philips adopted the following business strategies:

Philips searches significant market opportunities to implement innovative ideas in the areas of personal health, diagnosis and treatment and connected care and health informatics. As this company sees the growing need for better health at lower cost, it strives to produce value-based healthcare at reduced cost.

This healthcare and lighting company takes a systematic approach to value creation. They aim to understand the problems and issues faced by people and implement technological innovations to resolve problems. To ensure the success is repeatable, they apply single-layered Philips Business System, rather than multi-layered.

This company strives to achieve more in near future. This innovation centric organization sets out to create lasting value for their customers and stakeholders and shareholders. It is also determined to address the underperformance issue and expand its global leadership positions gradually in coming years ("Our strategy - Company - About | Philips", 2017).

Different Segments Covered in Market

This company mainly deals in three sectors which are:

  • Consumer Lifestyle
  • Lighting
  • Healthcare

The product portfolio of this company ranges widely from consumer lifestyle products to lighting articles.

Under the consumer lifestyle section, this company is known for selling:

  • Television
  • Transistors
  • Electric shavers
  • MP3 player
  • Electronic toaster
  • DVD players

Under the lighting segment, it has

  • Tube lights
  • Lamps
  • Luminaries
  • Lighting services and solutions

Under the section of healthcare products, it includes:

  • Patient care and clinical informatics
  • Clinical informatics
  • Diagnosis monitoring
  • Imaging systems

Competitors

From its inception years, Philips has been facing tough competition in its areas of operations. But it has successfully evolved and improved its products in last few decades. However, there is always a possibility of upgrade in technology. So Philips needs to supply breakthrough products and offer better services at reasonable costs. Here is a list of competitors of Philips:

Philips Brand Repositioning - Standardization

Pros

Exact level of quality delivered

 

Faster set up time

 

Reduces cost of production

 

Improves global image

 

Increases profit shares

 

Smooth monitoring and communication

 

 

Cons

Lacks uniqueness in the global market

 

Becomes vulnerable

 

Create negative impact on the locals

 

Losses the affectivity of market strategies and plans

Reference List

Forbes Welcome. (2017). Forbes.com. Retrieved 3 February 2017, from http://www.forbes.com/companies/philips/

Nieuwenhuizen, J. (2013). Financial valuation of game-changing R&D projects.

Vision & mission - About Philips Research - Research | Philips. (2017). Philips. Retrieved 3 February 2017, from http://www.philips.com/a-w/research/vision-and-mission.html

Our heritage - Company - About | Philips. (2017). Philips. Retrieved 2 February 2017, from http://www.philips.com/a-w/about/company/our-heritage.html

Heerding, A. (1988). The History of NV Philips' Gloeilampenfabrieken: Volume 2, A Company of Many Parts (Vol. 2). CUP Archive.

Pack, H., & Westphal, L. E. (1986). Industrial strategy and technological change: theory versus reality. Journal of development economics, 22(1), 87-128.

Our heritage - Company - About | Philips. (2017). Philips. Retrieved 2 February 2017, from http://www.philips.com/a-w/about/company/our-heritage.html

Philips swings to loss on problems at U.S. unit. (2017). MarketWatch. Retrieved 3 February 2017, from http://www.marketwatch.com/story/philips-swings-to-loss-on-problems-at-us-unit-2014-10-20

Philips fails to solve quality-contol problems - Supply Chain Movement. (2017). Supply Chain Movement. Retrieved 3 February 2017, from https://www.supplychainmovement.com/philips-fails-to-solve-quality-contol-problems/

Our strategy - Company - About | Philips. (2017). Philips. Retrieved 3 February 2017, from http://www.philips.com/a-w/about/company/our-strategy.html

Culture - Making things better - Philips | Philips case studies and information | Business Case Studies. (2017). Businesscasestudies.co.uk. Retrieved 3 February 2017, from http://businesscasestudies.co.uk/philips/making-things-better/culture.html#axzz4Xbk7cukp

Jain, S. C. (1989). Standardization of international marketing strategy: some research hypotheses. The Journal of Marketing, 70-79.

Vrontis, D., & Thrassou, A. (2007). Adaptation vs. standardization in international marketing–the country-of-origin effect. Innovative marketing, 3(4), 7-20.

Alashban, A. A., Hayes, L. A., Zinkhan, G. M., & Balazs, A. L. (2002). International brand-name standardization/adaptation: Antecedents and consequences. Journal of International Marketing, 10(3), 22-48.

Kumar, S. A., & Suresh, N. (2009). Operations management. New Age International.

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