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Dealing with the world markets Learning From: Philips Presented by: Nishchay Dhingra(BBA/4554/10) Saksham Taneja(BBA/4555/10)

COMPANY AT A GLANCE
Name : Industry: FOUNDED ON: FOUNDED BY: Koninklijke Philips Electronics (commonly known as Philips) Electronics 15th MAY 1891 GERAD PHILIPS and his father FREDRIK

EMPLOYEES:

1,22,000 employees

MAIN DIVISION: Philips Consumer life style, Philips Health Care, Philips Lighting

Gerard Philips (FOUNDER OF PHILIPS)

History
The Philips Company was founded in 1891 by Gerard Philips and his father Frederik as a family business. Frederik Philips, being a banker in Zaltbommel , financed the purchase and setup of a modest, empty factory building in Eindhoven, where Philips started the production of carbon-filament lamps and other electro-technical products in 1892. In 1895,the Philipses brought in Anton , Gerard's younger brother by sixteen years. Anton started work as a sales representative; soon, however, he began to contribute many important business ideas. After Anton's arrival, the family business began to expand rapidly, resulting in the foundation in 1907 of the N.V. Philips Metaalgloeilampfabriek in Eindhoven, followed in 1912 by the foundation of the N.V. Philips' Gloeilampenfabrieken. After Gerard and Anton Philips changed their family business by founding the Philips Incorporation, they laid the base of the later electronics multinational.

In the 1920s, the company started to manufacture other products,

such as vacuum tubes. In 1939 they introduced their electric razor , the Phili shave(marketed in the USA using the Norelco brand name). The "Chapel" is a radio with built-in loudspeaker, which was designed during the early 1930s.

Royal Philips Electronics of the Netherlands is a diversified Health and Wellbeing company, focused on improving peoples lives through meaningful innovations. As a world leader in healthcare, lifestyle and lighting, Philips integrates technologies and design into people-centric solutions, based on fundamental customer insights and the brand promise of sense and simplicity.

With sales of EUR 22.6 billion in 2011, the company is a market leader in cardiac care, acute care and home healthcare, energy efficient lighting solutions and new lighting applications, as well as lifestyle products for

personal well-being and pleasure with strong leadership positions in male


shaving and grooming, portable entertainment and oral healthcare.

Australia
Brazil Canada

Operates in the following countries

Hong Kong

France
India United states Israel China United Kingdom Poland Pakistan Gerece Mexico

Philips dealing with the world markets

Philips benefited from the Netherlands neutrality in World War I by capturing many new markets. In 1924 Philips, together with the American manufacturer General Electric Company and Osram GmbH (now a wholly owned subsidiary of German manufacturer Siemens AG) , formed the Phoebus cartel in order to divide up the light-bulb market worldwide and to set the standard life of a light bulb at 1,000 hours. Critics claimed that the cartel stifled innovation and competition in lighting for several decades. By 1919 Philips had expanded into the production of radio tubes. In 1927 it introduced a simple, affordable radio, and by 1933 it was the worlds

largest radio manufacturer.

In the 1930s Philips shifted much of its production outside the Netherlands to avoid the import controls that many countries established during the Great Depression. Just before

the outbreak of World War II, Philips moved its headquarters to Curacao, keeping the
company out of German control. After 1945 Philips expanded its product range. It launched the Philips record label in 1951, acquired Mercury Records in 1960, and continued to invest in record labels such as Deutsche Gramophone, Decca, and Motown through its PolyGram subsidiary (sold in 1998).The company did better with a range of minicomputers in the 1970s but missed out on the personal computer revolution.

In 1986 Philips launched a personal computer with a proprietary operating system, years
after other manufacturers had accepted Microsoft Corporations MS-DOS as the market standard. In 1992 Philips exited the computer hardware business, though it remained an important supplier of components to the industry.

In 1963 Philips launched a small battery-powered audio tape recorder that used
a cassette instead of a loose spool. Philips fared less well with its video technology. Although it demonstrated the worlds first videocassette recorder (VCR) in 1971, the

company was slower to market than the Japanese, who launched Betamax in 1975
and VHS in 1976.

Meanwhile, Philips had developed a new technology to play back video, using a
laser to read information from a disc. Introduced in 1978, Laser Disc technology never caught on, but it did lead to another major success: the compact disc (CD).

In 1991 Philips launched CD-I, a multimedia player aimed at the living room. More expensive than electronic game consoles and lacking the capabilities of personal computers, the CD-I player never caught on. In 1992 the digital compact cassette was introduced as a digital successor to the audio cassette. It faced competition from Sonys Mini Disc, but neither format lived up to commercial expectations. By the early 21st century, Philips was also a leading producer of portable defibrillation units, ultrasound systems, and computed tomography (CT) scanners. Philips has manufacturing and marketing subsidiaries throughout the world.

The downfall of Philips's consumer business - especially TV - began in late

1990s. The reasons were beyond the control of the management. The entry
of Korean companies such as Samsung and LG started eating into the market share of older players such as Onida, Videocon and Philips. Philips decided to stick to its usual strategy: relying on technology rather than strengthening distribution and marketing. It didn't want to compete with the Koreans on pricing, and thought the superior technology of its products, be it picture or sound quality, would stand out. "We took a conscious decision not to cut prices," says Kris Ramachandran, former CEO of Philips Electronics India.

THE PROBLEM The company`s brand image has declined over the years, and has very little

recall value among youth


THE CAUSE Despite its technological strengths, the company failed to market its products well, which hurt its brand perception THE CHALLENGE

The company rolled out multiple strategies to overcome its problem, but they
failed in a market dominated by fleet-footed Korean companies

In no time, the strategy flopped. The slow-moving Philips couldn't sustain its top

position and its market share fell to some 3.5 per cent by 1999. After losing its
relevance in the consumer business, Philips did take some steps to address the situation.

In early 2000, it roped in PwC to revamp its consumer products portfolio, set up new processes and overhaul the supply chain. After this, it launched a new range of CRT TVs under the brand name EyeQ. "The idea was to Indianise products to suit local tastes," says Rajeev Karwal, who headed Philips's consumer electronics division in 1999. The new sets had 300 channels, as opposed to 60 channels in older ones. High-

end plasma TVs were also introduced.

So from 2001 on, most of Philips's ad campaigns emphasised the advanced

features of its products. Gradually, the company reclaimed some lost


ground. The TV market share went up to eight per cent in 2002.

Although Philips sustained its TV market share at around six per cent in the
following years, it lost the way when it shifted focus from TVs to low margin products such as DVD players, MP3 players and headphones.

When the consumer electronics and appliances market exploded - it went from Rs 20,000 crore in 2005 to Rs 33,000 crore in 2010 - Philips's revenues from the consumer business declined - from nearly Rs 1,091 crore in 2005 to

Rs 659 crore in 2010. The revenue mix got overhauled. From over 42 per
cent of turnover in 2005, the consumer business fell to some 28 per cent in 2010.

According to some senior executives, this was partly because the CRT division was given less importance at a time when the CRT market was growing in India.

While the consumer business hit a brick wall, exponential growth in the lighting
and health care segments kept Philips going. In lighting, the company has historically been the leader, with a market share of more than 30 per cent more than twice that of its nearest competitors, Bajaj Electricals, Havells, Wipro Consumer Care and Lighting, and Surya Roshni.

Whether it's CFL or LED technology, Philips is a pioneer in bringing lighting

solutions to India

Today, Philips gets a big chunk of its revenues from audio video multimedia (AVM), which includes DVDs and home theatre systems. In fact, it leads the DVD market with a share of over 24 per cent.

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