Philips Strategy and Structure

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Emelie Gustafsson Jacek Nagórski Katherine Nunes Johan Sandström Michael Steiner

Internationalization Strategy and Organizational Structure
Corporate
 Strategy
 Philips
 case
  1
 

Questions!
•  What
 were
 Philips
 Interna8onaliza8on
 strategies
 over
  the
 decades
 (especially
 pre-­‐
 and
 post-­‐1960s)?
 
 
 
•  Examine
 it's
 development
 over
 ,me
 
  •  Examine
 the
 Interna,onaliza,on
 strategy
 and
  organiza,onal
 structure
  •  Look
 for
 the
 reasoning
 and
 side-­‐effects
 

  •  What
 organiza,onal
 structure
 do
 you
 think
 would
 fit
  best
 Philips'
 strategy
 and
 product
 por?olio
 today?
  Propose
 one.
 
 
Corporate
 Strategy
 Philips
 case
 

2
 

Today’s Agenda
1.  BACKGROUND
  2.  INTERNATIONALIZATION
 STRATEGY
  3.  ORGANIZATIONAL
 STRUCTURE
  4.  REASONS
 AND
 SIDE
 EFFECTS
  5.  NEW
 ORGANIZATIONAL
 STRUCTURE
 

Corporate
 Strategy
 Philips
 case
 

3
 

1. BACKGROUND
Corporate
 Strategy
 Philips
 case
  4
 

Philips history in short
•  Founded
 1891
 in
 Eindhoven,
 Netherlands
  •  It
 all
 started
 with
 light
 bulbs
  •  Today
 ac8ve
 within
 3
 areas;
 Healthcare,
  Ligh8ng
 and
 Consumer
 lifestyle
 
  •  Moving
 from
 decentralized
 to
 centralized
 

Corporate
 Strategy
 Philips
 case
 

5
 

•  More
 decentralizing,
 par8ally
 due
  to
 impending
 war
  •  Build
 on
 strength
 of
 NO’s
 because
  of
 bombings
 in
 Holland
  •  NO/PD-­‐matrix
 structure
 

•  Closed
 inefficient
 plants,
 around
 38’
  layoffs,
 high
 compensa8on
 by
 law
  •  Focused
 more
 on
 core
 business
  •  PD’s
 more
 decision
 power
  •  Reduced
 mgmt.
 board
  •  R&D
 concentra8on
 

1892-­‐1930
 

1930-­‐1960
 

1960-­‐1982
 

1982-­‐1990
 

1990-­‐2001
 

•  •  •  • 

Founded;
 Eindhoven
  Started
 to
 export
  Broaden
 product
 line
  Decentralizing
 

•  Low-­‐wage
 electronics
  manufacturing
  •  Lot’s
 of
 innova8on
 but
  low
 market
 shares
  •  Yellow
 Booklet;
  disadvantage
 of
 PD/NO-­‐ matrix
  •  Concentra8ng
 products
 

•  100
 factories
 closed,
 68’
  layoffs
  •  Target
 to
 increase
 ROA
 from
  17
 to
 24
 %
  •  Elimina8ng
 the
 PD/NO-­‐matrix
  •  40
 %
 increase
 in
 adver8sing
  •  Performance
 goes
 up!
 
6
 

Corporate
 Strategy
 Philips
 case
 

2. INTERNALIZATION STRATEGY
Corporate
 Strategy
 Philips
 case
  7
 

Evolved from a national to a worldwide business strategy
High
 

Focus
 on
 low
 costs
 

Global
 

Transna8onal
 

Interna8onal
 
Low
 

 

Mul8na8onal
 

Low
 

Corporate
 Strategy
 Philips
 case
  Focus
 on
 local
 adap8on
 

High
 

8
 

Philips moved from Multinational to a Global/Transnational company Management
 Prac8ce
  Adapted
 management
  to
 local
 needs
  Manufacturing
 and
 Marke8ng
 
Differen8a8on
 to
 fit
 local
  foreign
 condi8ons
  Generic,
 undifferen8ated
  products
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