PHILIPS ELECTRONICS

Philips Electronics



Philips Electronics

Introduction

Koninklijke Philips Electronics NV (Philips), a Netherlands-based company, has several segments, each of which is responsible for the management of its business worldwide. These segments are healthcare (accounting for 33.8% of consolidated sales in 2010), consumer lifestyle (35.0%), lighting (29.7%) and group management and services (1.5%). Philips posted sales of approximately $33.7 billion and a net loss of approximately $100 million in 2010, and had 119,000 employees. The consumer lifestyle segment consists of the following businesses: TV, audio and video multimedia, shaving and beauty, domestic appliances, peripherals and accessories, health and wellness, and licenses.

In 2010, the consumer lifestyle segment generated revenue of approximately $11.8 billion, including TV revenue of approximately $4.2 billion and audio and video multimedia revenue of approximately $1.5 billion. The segment produced earnings before interest and tax of approximately $790 million (including a loss of $173 million on the TV business), compared with $446 million in 2009 (including a loss of $249 million on the TV business). TV sales revenue decreased by 3.5% in 2010, after decreasing by 33.9% in 2009. Audio and video multimedia sales declined in both 2009 and 2010. The TV business's result in 2010 was affected by price erosion and a delay in negotiating a licensing deal in China. Philips reduced costs in 2010 (TV employee numbers dropped by 24%) and is seeking to manage its TV business to profitability by extending brand licensing partnerships, establishing forward integration and co-location partnerships and introducing new and energy-efficient products.

Sustain Competitive Advantage

Strategic changes are related to organizational transformation, and in today's work environment continuous changes are of significance importance for being a step ahead from the competitors. They affect large-scale, long problematic issues within the organization (Okumus, 2008, 283). Change strategies, in fact the movement in the future state, formed as a rule, based on strategic vision and capabilities. The changes affect areas such as the intended mission and organization, corporate philosophy on how the organization of its growth, quality, innovation and value on people, customer service and use of technology.

The general definition is complemented by clarifying the competitive position and strategic goals for achieving and maintaining competitive advantage and the development of goods / markets. These objectives are supported by corporate policies in areas such as marketing, sales, manufacturing, product development and process, finance and human resources management (Palmerino, 2009, 35). Strategic changes occur in the context of the external competitive, economic and social environment, as well as internal organizational resources, capabilities, culture, structures and systems. Their successful implementation requires careful analysis and understanding of these factors in the formulation and plans (Pietersen, 2009, 32).

There are other strategies, which Philips Electronics can adopt and implement to gain competitive advantage. These strategies comprise of six steps to bring effective change that focus on harmonization of tasks, the reorganization of the roles of employees, responsibilities and relationships to solve specific organizational problems, and goals and objectives which can be clearly identified. The six steps, which the management of Philips Electronics can implement, ...