1. FOUNDATIONS OF BUSINESS STRATEGY
Final Project
Name: Georgios Michail Karmpoulonis
Date: April 9th 2013

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Introduction
The following project is about Philips Electronics. The project starts with the
profile of Philips, its vision and strategy. An analysis of the industry’s competitive
and economic situation follows and in the end there are suggestions as to how
Philips can improve its strategic and competitive position, resulting in higher
revenues.
Philips Electronics Profile
Philips Electronics N.V. (Royal Philips Electronics, commonly known as Philips)
is a Dutch multinational electronics company headquartered in Amsterdam. It
was founded in Eindhoven in 1891 by Gerard Philips and his father Frederik. It is
one of the largest electronics companies in the world and employs around
122,000 people across more than 60 countries.
Philips is organized into three main divisions: Philips Consumer
Lifestyle (formerly Philips Consumer Electronics and Philips Domestic
Appliances and Personal Care), Philips Healthcare (formerly Philips Medical
Systems) and Philips Lighting. As of 2012 Philips was the largest manufacturer of
lighting in the world measured by applicable revenues. In 2013, the company
sold the bulk of its remaining consumer electronics operations to Funai Electric
Co.
Philips has a primary listing on the Euronext Amsterdam stock exchange and is a
constituent of the AEX index. It has a secondary listing on the New York Stock
Exchange. (Source: http://en.wikipedia.org/wiki/Philips)
Vision
Philips’ Vision is summed up in these marketing phrases: “Improving people’s
lives through meaningful innovation”, “Simply making a difference to people’s
lives” and “Sense and Simplicity”.
These phrases are spot on and well thought. This way they connect their
products and endeavors in general, to bettering the lives of people through their
innovations which is a most effective marketing and branding strategy. They

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encase their vision in the following paragraph: “At Philips, we strive to make the
world healthier and more sustainable through innovation. Our goal is to improve
the lives of 3 billion people a year by 2025. We will be the best place to work for
people who share our passion. Together we will deliver superior value for our
customers and shareholders.”(Source: www.philips.com)
So their success is inextricably combined with the well-being of billions of
people’s.
Philips Electronics is a diversified Health and Well-being company, focused on
improving people’s lives through timely innovations. As a world leader in
healthcare, lifestyle and lighting, Philips integrates technologies and design into
people-centric solutions, based on fundamental customer insights and the brand
promise of “sense and simplicity”.
To the average person Philips is known for its electric devices and gadgets (e.g.:
CD players, TVs, DVD players, etc
Philips is a global leader across its healthcare, lighting and lifestyle portfolio:
 They are the world’s largest home healthcare company, being number one in:
Monitoring systems, Automated External Defibrillators, Cardiac Ultrasound, and
Cardiovascular X-ray.
 They are number one in lamps in Europe, Latin America and Asia Pacific and
number two in North America; in Automotive lighting, they are leading in
Europe, Latin America, Japan and Asia Pacific.
 They are number one in the electric shavers and male grooming category
globally.
 Philips is one of the leading flat-TV brands globally.
Healthcare
Philips simplifies healthcare by focusing on the people in the care cycle –
patients and care providers. Through combining human insights and clinical
expertise, Philips aim to improve patient outcomes while lowering the burden on
the healthcare system. Advanced healthcare solutions are a fundamental part of
the portfolio for both healthcare professionals and consumers, to meet the needs
of patients in hospitals and at home. Philips Healthcare employs approximately
34,000 people worldwide.
Lighting
As the world’s leader in Lighting, Philips is driving the switch to energy-efficient
solutions. With worldwide electrical lighting accounting for an estimated 19 per
cent of all electricity consumed, the use of energy-efficient lighting will
significantly reduce energy consumption around the world and thereby cut
harmful CO2 emissions. Philips provides advanced energy-efficient solutions for
all segments -- road lighting, office & industrial, hospitality, and home -- and has
been instrumental in delivering sustainable and environmentally-friendly
lighting technologies and initiatives to the marketplace. Philips is also a leader in
shaping the future with exciting new lighting applications and platforms such as
LED technology, which, besides energy efficiency, provides attractive benefits

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and endless new ‘never-before-possible’ lighting solutions. Philips Lighting
employs approximately 51,000 people worldwide.
Innovation
48,000 registered patents illustrate the innovative nature of the company.
Philips currently holds around 35,000 registered trademarks, 56,000 design
rights and 3,100 domain names.
Philips has adopted an Open Innovation strategy which leverages the joint
innovative power of partnering companies and researchers to bring more
innovations to the market effectively and faster.
In 2007, Philips invested EUR 1.6 billion in Research and Development.
Philips is internationally recognized as a global leader in design, receiving a
variety of international awards each year. For example:
 2009 iF product design competition: 22 design awards in seven categories
 Philips won two Bronze IDEAs: The Philips Kitten Scanner, supporting children
during a CAT examination, and Philips Design’s Breath Counter, a pneumonia
detection device, each received a Bronze Industrial Design Excellence Award.
Sustainability
Sustainability is at the center of Philips’ strategy. Philips is committed to
reducing its environmental footprint in all aspects of its business: in the
products, manufacturing, procurement, as well as in the communities where the
company acts and in the working practices of its employees. All Philips products
go through an EcoDesign process, identifying environmental impact in terms of
energy efficiency, hazardous substances, take-back and recycling, weight and
lifetime reliability. Philips’ processes on Green Product sales are verified
annually by an independent third party and published in the Sustainability
Annual Report.
Philips aims to combat global healthcare challenges by focusing on delivering
better quality healthcare at lower costs, also in the emerging markets, such as
China and India.
Philips also takes a leading position in educational programs, showing its
stakeholders that energy efficient solutions are simple, easy and actionable and
make economic sense for national and local governments, businesses, schools
and individuals.

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Industry Analysis
Demographic Trends Socio-Cultural Influences
 No limit-range of ages(1-99) for
electronic products
 Health care equipment usually
targets people of 65+
 Eco friendly public concerns
 Technology invasion in everyday
life
Technological Developments Political-Legal Pressures
 As technology progress: higher
demand for new products
 Innovations cover new lifestyle
needs
 Environmental legislation
 General Trade Rules
 Laws and rules about healthy
competition
 ISOs
Macroeconomic Impacts Global Trade Issues
 revenues bound with economic
state
 some products are considered
“luxury” products
 Very high competition from
Asian companies
 Worldwide shipping
 Global trade laws and rules
 3rd world countries have no
market for such products

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240
101
195
143
0
Value Share Index
Philips vs. Key Competitors
Procter&Gamble
Energizer
LG
Sony
HoMedics Inc

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FIVE FORCES ANALYSIS FOR ELECTRONICS &
HEALTH CARE INDUSTRY
Rivalry-Competitors
 Intense rivalry in an industry with high
volume and low margins (-)
 Wide range of competitors (-)
 Numerous competitor companies (-)
 Asian Market and companies dominate
USA-EU markets (+/-)
Entry
 Medium barriers to enter
electronics industry (0)
 Very high barriers to scale
nationally (-)
 High barriers to expand-grow (-)
Suppliers
 A good number of
suppliers (+)
 Option for very low
cost/quality suppliers
(+/-)
Buyers
 Wide Range of
Buyers (+)
 Mainly USA-
Europe
 Demands buying
power (-)
 Developing
countries have no
market (-)
Substitutes
 Alternative products
regarding health care (-)
 Holistic health products &
methods (-)

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Strategy
Philips’ current marketing plan can be illustrated in the following shape through
their “sense and simplicity” motto.
What will “win” promoters for Philips How to we get Philips promoters Are
we on track? Are we competitive?  End Result.
Philips manages innovation with rigorous discipline to
maximize return of R&D and Marketing investments:
• Early agreement on what to deliver; multidisciplinary teams
• Predict chances of success by consumer validation. Stop earlier.
• Quality function ensures products released to the market meet consumer
expectations.
• Hard gates for key projects are approved by the management team.
• Investments are visible and traceable through Intranet tool: Marketing @
Investor.
Strategic Direction Product Development Commercial Release
Validated Positioning Product Specification Product Validation
3yr Marketing Strategy Global Marketing Plan Local Marketing Plan
Insights
& Value
Proposi
tions
Marketing
Plans
Net
promoters
Organic
Growth
Identification Preparation Implementation Launch

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Suggestions to improve competitive position
Healthcare
 Target growing and aging populations
 Increase in patients managing chronic conditions
 Create demand for new geographic/demographic groups
Consumer Lifestyle
 Consumer focus on health and well-being
 Focus rising middle class in growth geographies
 Back to basics: simple propositions
 Trusted brands combined with locally relevant portfolio
Lighting
 Ongoing urbanization and globalization
 Increasing need for energy-efficient solutions
 Fast-growing global illumination market
 Expanding renovation market
 Rapid adoption of LED-based lighting solutions
Brand Repositioning Suggestion
A vision is a clear picture of what you want to achieve. Philips' vision is to
produce products that always put the customer first. The challenge facing
Philips, therefore, is to better understand what people really need.
Philips' new brand positioning should be about promising customers a more
comfortable and more straightforward relationship with technology and with
Philips.
It believes that somewhere along the way the promise of the Technology
Revolution to make our lives easier, simpler and better is not being delivered. In
many respects the technology industry has made things more complex. Philips
should, therefore, offer a solution.
Research showed that people are asking for greater simplicity in their lives and
in their dealings with technology. They want technology that gets the job done
without drawing attention to it. Most users are put off by the need to read and
understand a complicated manual before they can try out their new purchase.
With this in mind, Philips should continue bringing new and exciting products
into its portfolio, which at the same time are simple to use.
Philips' new position 'sense and simplicity' is based on three essential pillars.

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1. 'Products are designed around you'.
2. 'Products are easy to experience'.
3. 'Products are advanced'.
All its activities must now be driven by insights into how consumers/customers
seek to experience the benefits of technology. Philips is becoming more market
led, driven by the needs of the customer.
Philips should undergo a change process to make sure that products and services
are convenient and easy to experience, in order to remove the hassles often
associated with technology. At the same time, however, products must continue
to deliver the benefits associated with innovation Philips promises.
Conclusion
Philips has always been associated with value for money high-tech products.
However, in the past it would have benefited from having a stronger brand
image. The repositioning I suggest based on 'sense and simplicity' helps the
wider public to better understand Philips as a consumer focused organisation
that is continually providing appropriate simple-to-use solutions for everyday
needs through the application of the latest technology and innovation.

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References
 www.philips.com
 www.wikipedia.org
 www.thetimes.com
 Philips annual report 2012
 I. Systems od Management, Kenneth C. Laudon, Jane P. Laudon 8th edition
 Business Strategy: Greek and International experience, case studies,
Mpenou, 2002
 Concepts in Strategic Management and Policy, Pearon, 12th edition,
Thomas L. Wheelen, J. David hunger.