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A STRATEGIC ANALYSIS OF
KONINKLIJKE PHILIPS N.V.
GROUP 3 TEAM 3
This presentation will endeavour to scrutinize the international consumer appliance brand
Philips’ major strategic issues through the use of internal and external analyses:
1. An internal analysis of resources & capabilities and VRIO framework
2. An external analysis with PESTEL and SWOT analysis relating to a wider business
environment
3. a summary of the internal and external analysis with recommendations for Philips’ to
remain competitive for long-term survival
(Philips 2013)
INTRODUCTION TO INTERNAL ANALYSIS OF
PHILIPS
Resources & Capabilities:
• 80 500 Employees
• 35 Manufacturing sites
• Business System
• 148 Design Awards
• 11.7 Bn USD Brand value
VRIO:
• Sustained Competitive
Advantage
• Unused Competitive
Advantage
Major Strategic Issue: Shift in strategy from domestic appliances to
healthcare – take advantage of financial resource competitive
advantage?
A DECENTRALISED STRUCTURE WITH
STRONG LOCAL SUBSIDIARIES
• Adapting to market conditions - competing with local competitors
• “Innovation and you”
• Sustained Competitive Advantage
How does the decentralised structure link with Phillips selling of their domestic
appliances arm?
• Moving into the healthcare sector
• The effect of Covid-19
SWOT ANALYSIS
Strengths:
• Financial resources
• Strong local subsidiaries
• Market leadership and customer loyalty
Weaknesses:
• Not patented thoroughly in some areas
• Highly competitive market
Opportunities:
• Covid presenting a market opportunity in health care (linked to sale of domestic appliance area to
focus on this)
• Growing presence in emerging markets like India and China
Threats:
• Outsourcing to Samsung (one of their biggest competitors)
• Highly competitive business environment (made worse by temporary or easily imitable CA’S)
INTRODUCTION TO EXTERNAL ANALYSIS OF
PHILIPS
• Analysis of Philips’ macroeconomic environment
• Frameworks to conduct analysis: PESTLE and SWOT
• Major strategic issues identified:
1. Changing consumer trends
2. US-China trade war
CHANGING CONSUMER TRENDS
PESTLE
1. Technological
Connected appliances ecosystem: creates innovation opportunity by building exclusive features to
the products.
2. Environmental
Sustainable development: less resource consumption e.g. electricity, water and gas.
3. Social & Economies
Consumption Upgrade: higher consumer purchasing power especially in the Asia Pacific and the
Middle East and Africa. (Briefing 2018)
SWOT
Opportunity:
1.Connected appliance ecosystem trend creates innovation opportunity for Philips
2.High consumer purchase power in the Asia Pacific and the Middle East and Africa, chance to
increase sale volume in those markets by leverage its product range across various price segments.
Threats:
1.Heavy competition from the Chinese competitors Haier Group and Midea Group
2.High awareness on healthy living, more brands are transformed to address this trend leads to Philips’
strategic focus risk dilution.
(Global company profile 2018)
(Statista 2020)
(Datagraphics 2020)
US-CHINA TRADE WAR
• US-China trade War identified by Economic and Political factors in the
PESTLE framework
• Initially caused Philips detrimental impacts; higher costs of raw materials
• However, by Philips adapting its production line they were able to exploit this
factor
• Consequently, Philips have experienced record sales in China; its largest
market
SUMMARY
Key strategic issues for Philips:
1. Refocusing strategy; linked to competitive advantage of decentralised structure
2. Outsourcing
3. Changing consumer trends
4. US-China Trade War
Recommendations to remain competitive:
1. Increase focus upon healthcare sector given ongoing global pandemic
2. Increase efforts in the growing Asia Pacific market
3. Implement innovative approaches to connected appliance ecosystems and their pricing
strategy to withstand competition from Chinese competition
REFERENCES
Asgari, N., (2020). Philips Plans To Sell Or Spin Off Domestic Appliances Business [online]. Ft.com. [Accessed 28 November 2020]. Available at:
https://www.ft.com/content/92a3a992-41a6-11ea-bdb5-169ba7be433d
BBC, (2020). A Quick Guide To The US-China Trade War [online]. BBC News. [Accessed 28 November 2020].Available at:
https://www.bbc.co.uk/news/business-45899310
Briefing (2018). Key Trends Impacting Global Major Appliances Industry [online]. Euromonitor International. [Accessed 27 November 2020]. Available at:
https://www-portal-euromonitor-com.sheffield.idm.oclc.org/portal/analysis/tab
Buchholz, K (2020). The Rise of the Asian Middle Class [online]. Statista. [Accessed 27 November 2020]. Available at:
https://www.statista.com/chart/8402/asian-middle-class-on-the-rise/
Datagraphics (2020). Brand Shares of Consumer Appliances % share (LBN) – Retail Volume – 2020 [online]. Euromonitor International. [Accessed 27
November 2020]. Available at: https://www-portal-euromonitor-com.sheffield.idm.oclc.org/portal/analysis/tab
Dutch News, (2018). Philips Ready To Act If US China Trade War Impacts On Business - Dutchnews.Nl [online]. DutchNews.nl. [Accessed 28 November
2020]. Available at: https://www.dutchnews.nl/news/2018/10/philips-ready-to-act-if-us-china-trade-war-impacts-on-business/
Euromonitor International, 2020. Consumer Appliances [online]. Euromonitor.com. [Accessed 29 November 2020]. Available at:
https://www.euromonitor.com/consumer-appliances-industry
Financial Times, (2020). Truce In The US-China Trade War Is Only Partial [online]. Ft.com. [Accessed 28 November 2020]. Available at:
https://www.ft.com/content/6a68ef56-37aa-11ea-a6d3-9a26f8c3cba4
Global company profile (2018). Koninklijke Philips NV in Consumer Appliances (World) [online]. Euromonitor international. [Accessed 27 November 2020].
Available at: https://www-portal-euromonitor-com.sheffield.idm.oclc.org/portal/Analysis/Tab
Philips, (2013). Inside The Philips Brand [online]. Philips.com. . [Accessed 29 November 2020]. Available at: https://www.philips.com/a-
w/about/news/archive/standard/news/backgrounders/2013/Inside-the-Philips-Brand.html
Philips., (2019). Philips Annual Report 2019 [online]. Philips Results. [Accessed 29 November 2020]. Available at:
https://www.results.philips.com/publications/ar19
Philips, (2020b). Watch The Video Of Sean Carney For SXSW On Designing Healthcare To Enable Patient Empowerment [online]. Philips.com. [Accessed
29 November 2020]. Available at: https://www.philips.com/a-w/about/news/archive/standard/news/articles/2020/20200610-watch-the-video-of-sean-carney-
for-sxsw-on-designing-healthcare-to-enable-patient-empowerment.html
Philips., (2020a) Our Strategic Focus - Our Strategy - Company - About | Philips [online]. Philips.com. [Accessed 29 November 2020]. Available at:
https://www.philips.com/a-w/about/company/our-strategy/our-strategic-focus.html
Provan, S., (2019). Philips Blames Trade War As It Warns On Profit [online]. Ft.com. [Accessed 28 November 2020]. Available at:
https://www.ft.com/content/ac26c264-eb2f-11e9-a240-3b065ef5fc55
Reuters Staff, (2018). Philips Sees Negative Effects From U.S.-China Trade War: CEO [online]. uk.reuters.com. [Accessed 28 November 2020]. Available at:
https://uk.reuters.com/article/us-philips-results-china/philips-sees-negative-effects-from-u-s-china-trade-war-ceo-idUSKBN1HU0UT
The Business Times, (2019). Philips Rejigs Plants In China To Counter Fallout From Trade War [online]. The Business Times. [Accessed 28 November
2020]. Available at: https://www.businesstimes.com.sg/government-economy/philips-rejigs-plants-in-china-to-counter-fallout-from-trade-war
Vermeer, J., (2019). Philips Sees US-China Trade War Affect Profit [online]. Bits-chips.nl. [Accessed 28 November 2020]. Available at: https://bits-
chips.nl/artikel/philips-sees-us-china-trade-war-affect-
profit/#:~:text=Philips%20is%20feeling%20the%20consequences,4.5%20percent%20lower%20than%20expected
REFERENCES

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Group 3 team 3 mgt231 1

  • 1. A STRATEGIC ANALYSIS OF KONINKLIJKE PHILIPS N.V. GROUP 3 TEAM 3 This presentation will endeavour to scrutinize the international consumer appliance brand Philips’ major strategic issues through the use of internal and external analyses: 1. An internal analysis of resources & capabilities and VRIO framework 2. An external analysis with PESTEL and SWOT analysis relating to a wider business environment 3. a summary of the internal and external analysis with recommendations for Philips’ to remain competitive for long-term survival (Philips 2013)
  • 2. INTRODUCTION TO INTERNAL ANALYSIS OF PHILIPS Resources & Capabilities: • 80 500 Employees • 35 Manufacturing sites • Business System • 148 Design Awards • 11.7 Bn USD Brand value VRIO: • Sustained Competitive Advantage • Unused Competitive Advantage Major Strategic Issue: Shift in strategy from domestic appliances to healthcare – take advantage of financial resource competitive advantage?
  • 3. A DECENTRALISED STRUCTURE WITH STRONG LOCAL SUBSIDIARIES • Adapting to market conditions - competing with local competitors • “Innovation and you” • Sustained Competitive Advantage How does the decentralised structure link with Phillips selling of their domestic appliances arm? • Moving into the healthcare sector • The effect of Covid-19
  • 4. SWOT ANALYSIS Strengths: • Financial resources • Strong local subsidiaries • Market leadership and customer loyalty Weaknesses: • Not patented thoroughly in some areas • Highly competitive market Opportunities: • Covid presenting a market opportunity in health care (linked to sale of domestic appliance area to focus on this) • Growing presence in emerging markets like India and China Threats: • Outsourcing to Samsung (one of their biggest competitors) • Highly competitive business environment (made worse by temporary or easily imitable CA’S)
  • 5. INTRODUCTION TO EXTERNAL ANALYSIS OF PHILIPS • Analysis of Philips’ macroeconomic environment • Frameworks to conduct analysis: PESTLE and SWOT • Major strategic issues identified: 1. Changing consumer trends 2. US-China trade war
  • 6. CHANGING CONSUMER TRENDS PESTLE 1. Technological Connected appliances ecosystem: creates innovation opportunity by building exclusive features to the products. 2. Environmental Sustainable development: less resource consumption e.g. electricity, water and gas. 3. Social & Economies Consumption Upgrade: higher consumer purchasing power especially in the Asia Pacific and the Middle East and Africa. (Briefing 2018) SWOT Opportunity: 1.Connected appliance ecosystem trend creates innovation opportunity for Philips 2.High consumer purchase power in the Asia Pacific and the Middle East and Africa, chance to increase sale volume in those markets by leverage its product range across various price segments. Threats: 1.Heavy competition from the Chinese competitors Haier Group and Midea Group 2.High awareness on healthy living, more brands are transformed to address this trend leads to Philips’ strategic focus risk dilution. (Global company profile 2018) (Statista 2020) (Datagraphics 2020)
  • 7. US-CHINA TRADE WAR • US-China trade War identified by Economic and Political factors in the PESTLE framework • Initially caused Philips detrimental impacts; higher costs of raw materials • However, by Philips adapting its production line they were able to exploit this factor • Consequently, Philips have experienced record sales in China; its largest market
  • 8. SUMMARY Key strategic issues for Philips: 1. Refocusing strategy; linked to competitive advantage of decentralised structure 2. Outsourcing 3. Changing consumer trends 4. US-China Trade War Recommendations to remain competitive: 1. Increase focus upon healthcare sector given ongoing global pandemic 2. Increase efforts in the growing Asia Pacific market 3. Implement innovative approaches to connected appliance ecosystems and their pricing strategy to withstand competition from Chinese competition
  • 9. REFERENCES Asgari, N., (2020). Philips Plans To Sell Or Spin Off Domestic Appliances Business [online]. Ft.com. [Accessed 28 November 2020]. Available at: https://www.ft.com/content/92a3a992-41a6-11ea-bdb5-169ba7be433d BBC, (2020). A Quick Guide To The US-China Trade War [online]. BBC News. [Accessed 28 November 2020].Available at: https://www.bbc.co.uk/news/business-45899310 Briefing (2018). Key Trends Impacting Global Major Appliances Industry [online]. Euromonitor International. [Accessed 27 November 2020]. Available at: https://www-portal-euromonitor-com.sheffield.idm.oclc.org/portal/analysis/tab Buchholz, K (2020). The Rise of the Asian Middle Class [online]. Statista. [Accessed 27 November 2020]. Available at: https://www.statista.com/chart/8402/asian-middle-class-on-the-rise/ Datagraphics (2020). Brand Shares of Consumer Appliances % share (LBN) – Retail Volume – 2020 [online]. Euromonitor International. [Accessed 27 November 2020]. Available at: https://www-portal-euromonitor-com.sheffield.idm.oclc.org/portal/analysis/tab Dutch News, (2018). Philips Ready To Act If US China Trade War Impacts On Business - Dutchnews.Nl [online]. DutchNews.nl. [Accessed 28 November 2020]. Available at: https://www.dutchnews.nl/news/2018/10/philips-ready-to-act-if-us-china-trade-war-impacts-on-business/ Euromonitor International, 2020. Consumer Appliances [online]. Euromonitor.com. [Accessed 29 November 2020]. Available at: https://www.euromonitor.com/consumer-appliances-industry Financial Times, (2020). Truce In The US-China Trade War Is Only Partial [online]. Ft.com. [Accessed 28 November 2020]. Available at: https://www.ft.com/content/6a68ef56-37aa-11ea-a6d3-9a26f8c3cba4
  • 10. Global company profile (2018). Koninklijke Philips NV in Consumer Appliances (World) [online]. Euromonitor international. [Accessed 27 November 2020]. Available at: https://www-portal-euromonitor-com.sheffield.idm.oclc.org/portal/Analysis/Tab Philips, (2013). Inside The Philips Brand [online]. Philips.com. . [Accessed 29 November 2020]. Available at: https://www.philips.com/a- w/about/news/archive/standard/news/backgrounders/2013/Inside-the-Philips-Brand.html Philips., (2019). Philips Annual Report 2019 [online]. Philips Results. [Accessed 29 November 2020]. Available at: https://www.results.philips.com/publications/ar19 Philips, (2020b). Watch The Video Of Sean Carney For SXSW On Designing Healthcare To Enable Patient Empowerment [online]. Philips.com. [Accessed 29 November 2020]. Available at: https://www.philips.com/a-w/about/news/archive/standard/news/articles/2020/20200610-watch-the-video-of-sean-carney- for-sxsw-on-designing-healthcare-to-enable-patient-empowerment.html Philips., (2020a) Our Strategic Focus - Our Strategy - Company - About | Philips [online]. Philips.com. [Accessed 29 November 2020]. Available at: https://www.philips.com/a-w/about/company/our-strategy/our-strategic-focus.html Provan, S., (2019). Philips Blames Trade War As It Warns On Profit [online]. Ft.com. [Accessed 28 November 2020]. Available at: https://www.ft.com/content/ac26c264-eb2f-11e9-a240-3b065ef5fc55 Reuters Staff, (2018). Philips Sees Negative Effects From U.S.-China Trade War: CEO [online]. uk.reuters.com. [Accessed 28 November 2020]. Available at: https://uk.reuters.com/article/us-philips-results-china/philips-sees-negative-effects-from-u-s-china-trade-war-ceo-idUSKBN1HU0UT The Business Times, (2019). Philips Rejigs Plants In China To Counter Fallout From Trade War [online]. The Business Times. [Accessed 28 November 2020]. Available at: https://www.businesstimes.com.sg/government-economy/philips-rejigs-plants-in-china-to-counter-fallout-from-trade-war Vermeer, J., (2019). Philips Sees US-China Trade War Affect Profit [online]. Bits-chips.nl. [Accessed 28 November 2020]. Available at: https://bits- chips.nl/artikel/philips-sees-us-china-trade-war-affect- profit/#:~:text=Philips%20is%20feeling%20the%20consequences,4.5%20percent%20lower%20than%20expected REFERENCES