Case study 8.2
Philips Lighting: screening markets in the Middle East
Q1: Discuss the appropriateness of the screening model used in this case Philips Lighting looks on the one hand at the demand for lighting and on the other hand at the GDP per capita. Earlier cases showed that the demand for lamps and bulbs is a basic need for a country and as soon as a country starts developing this basic need increases. At a later stage of economic development basic lighting needs are covered so the need will decrease again. For the general characteristics, Philips Lighting only looks at the characteristic ‘Economy’: GDP per capita. It divides the Middle East countries in segments with different certain income groups. In this way, Philips indicates the demand for lighting and the attractiveness of this country. We think it is more appropriate to use more than one criterion, this makes the outcome less reliable and makes it easier to compare different countries. Q2: Suggest another screening model that could be relevant for Philips Lighting to use in the Middle East. It is a good thing that Philips Lighting looks at the criterion ‘economy’, because this explains the general demand of lighting. Another criterion where Philips Lighting has to look at is ‘political factors’. Especially for Middle East countries, it is relevant to screen the political stability in a country. This gives a good picture of the risks and so the attractiveness of a country. Another important criterion is ‘restrictions in the export’. These can cause problems if Philips Lighting wants to export its products to a certain country, which can cost a lot of unforeseen time and/or money. It is important to know if the government is willing to import your products, or that it is strictly against it because of ‘protection reasons’. The case displayed that Philips Lighting was also providing their products to the car industry, to hospitals and to offices. This can be another criterion for a country: does...
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