Philips Strategy and Structure
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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