Global Product strategy of Philips – A case

Royal Philips is the world’s third largest consumer electronics firms, following market leaders Matsushita and Sony. The Philips brands include Philips, Norelco, Marantz and Magnavox. The company was established in 1891 in Eindhoven, in the southern region of the Netherlands, primarily as a manufacturer of incandescent lamps and other electrical products. The company first produced carbon filament lamps and, by the turn of the century, it had become one of the largest producers in Europe. Later, the company diversified into many other areas such as electronics small appliances, lighting semiconductors, medical systems and domestic care products, among others. The company headquarters moved to Amsterdam in the 1980s, but its lighting division continues to occupy the center of Eindhoven.

Around the early 1900s, Philips started to diversify its offerings to radio valves and X-rays equipment, and later to television. Later in the century, Philips developed the electric shaver, and invented the rotary heads, which led to the development of the Philipshave electric shaver. Philips also made major contributions in the development of television pictures, its research work leading to the development of the Plumbicon television camera tube, which offered a better picture quality. It introduced the compact audio cassette in 1963 and produced its first integrated circuits in 1965. In the 1970s, its research in lighting contributed to the developments of the PL and SL energy savings lamps. More recent Philips innovations are the Laser Vision Optical Disc, the Compact Disc, and Optical Telecommunication Systems.

Philips expanded in the 1970s and 1980s, acquiring Magnavox (1974) and Signetics (1975), the television business of GTE Sylvania (1981) and the lamps division of Westinghouse (1983). Currently, Philips operates in more than sixty countries, with more than 186,000 employees, and is market leader in many regions for a number of product categories –for example, lighting, shavers and LCD displays.

In the 1990s Philips carried out a major restructuring program and changed from highly localized production to globalize production; this change translated into a more efficient concentration of manufacturing – from more than 100 manufacturing sites to 36, and to 14 sites for productions; Juarez and Manaus in Latin America; Bruges, Dreux, and Hasselt in Western Europe; and Beijing, Suhzou, Shenzen, and Chungli (all in China) in Asia.

Another important change was the appointment of Gerard Kleisterlee as president of Philips and Chairman of the Board of Management in 2001. Kleisterlee has been seen as a Philips man following a traditional Philips career path that had been embraced by company employees until 1980s. He was trained locally, at the Eindhoven Technical University, in electronic engineering, and he has worked with the company for three decades. According to Martien Groenewegen, former research and development engineer with Philips, Kleisterlee is perceived by present and former employees as taking the company back to its original path to success. In fact, in a recent interview, Kleisterlee mentioned that the company is presently concentrating on its initial core activities with a focus on its key areas of profitability this is a different type of restructuring from earlier attempts, when the company pursued wrong activities. Mr Groenewegen contends that the perception among employees and the industry is that Philips, under Kleisterlee’s leadership, will have a strong product orientation and that it would support an environment in which product innovation will constitute a primary focus of the company. That has been, historically Philips proven path to success.

Philips offers consumers products, such as communications products (cordless phones, mobile phones, fax machines), electronics — Flat TV, Real Flat TV, digital TV, projection TV, professional TV, DVD players and recorders, Super Audio CD, VCRs, satellite receivers, CD recorders /players, home theatre systems, Internet audio players, shelf systems, portable radios, clock radios, PC monitors., multimedia projectors , PC cameras, PC audio, CD rewriteable drives, DVD drives, among others; home and body care products > vacuum cleaners, irons, kitchen appliances shavers oral healthcare products and lighting products. Its professional product include connectivity lighting medical systems such as magnetic resonance imaging, ultrasound equipment, X-rays, semiconductors, and other products, such as security systems, manufacturing technologies, automotive products, broadband net work and so on.