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PHILIPS CASE STUDY

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Introduction

Strategic management is being described as a most essential part in business management, where considering business dynamics and environmental factors, make right growth decision (Byström and Lindblad 2020). The purpose of this study is to critically consider environmental factors utilizing SWOT and PESTLE analysis techniques. In this particular report, macro and micro environmental factors associated with Philips have been the mind and based on the research outcome solutions have been provided that can be considered by the company in terms of ensuring long term growth.

About the company

Philips has now become an inspirational name in global market that was established in 1891 (Philips.com 2021). The purpose of this organization is to improve well-being and health of people, through meaningful innovation. Philips aims to provide improvement in 2.5 billion lives within coming 2030. The organization also focuses on investing 400 million for insert communities across the world (Philips.com 2021). Being a technology service providing organization the brand instrument in its consistency in innovation for making the life better. Philips has invested £1.9 billion in research and development projects in 2019. Having 64500 patent rights it has established its image as the most innovative and productive brand in the electronic segment.

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Internal analysis using Swot framework

Strengths

  1. Strong market position is being considered as the important strength of Philips that has helped the brand to gain huge popularity in the market (Lamba and Vig 2018). The organization works in the diversified segments such as customer lifestyle, lighting and healthcare. The organization has developed strong position across the world.
  2. Inorganic growth has helped in generating higher revenue in the market. Philips has developed several acquisitions over the last few years. In between the year 2015 and 2016 several acquisitions have been done by the company that has helped the organization to bring several growth opportunities (Lamba and Vig 2018).
  3. Phillips has successfully invested on developing strong research and development team, where initiating more than 50 Operational Research and Development sectors across Asia, Latin America and North American countries, Philips has developed its strong innovation approach (Byström and Lindblad 2020). In order to address market needs Philips has developed these research and development centers for gaining long-term financial benefit.

Weaknesses

  1. Analyzing major weaknesses of Philips it has been found that due to several legal complaints against the company if it has negatively impacted on the brand image (Brock et al. 2019). Various legal complaints are now in the investigation process, which is bringing benefits for the competitors.
  2. Increasing internal issues are impacting on the organizational growth in Philips. The company has become quite concern regarding ongoing conflicts, which is impacting on the business growth (Lamba and Vig 2018).

Opportunities

  1. Considering current retail environment, it has been found that due to growing opportunity in e commerce business, various growth options have got increased for Philips (Schramade and Schoenmaker 2018). Therefore utilizing this opportunity in the market the company can operate in both the online and offline market which can generate higher profitability.
  2. Considering the current it market it has been found that involvement of Technology in Healthcare segment has also reflected major change in current business behavior. Considering the Global Healthcare, it market it was expected that the market will grow at 6% within 2020 (Lamba and Vig 2018). Analyzing the situation of Philips in Healthcare it market it can be assumed that the current opportunity can contribute in bringing several benefits for the organization.
  3. Philips brought various electronic products for men's grooming. Analyzing the current growing male grooming market it can be stated that the company can successful address emerging demand.

Threats  

  1. Analyzing current rate in the market it has been found that due to increasing competition in the market from Samsung, Sony and LG in electronics segment it has become really challenging for Philips to survive. Due to strong competition in the market the market share has got limited (Mocker and Ross 2019).

Being a global organization, Philips gets huge thread due to increasing labor cost across the European Nation, which is indirectly impacting on the profit generation process. Labor incentives are quite high in European Nation, as its impact company needs to compromise with its profit margin. 

External analysis using Pestle framework

Political environment

Analyzing growth history of Philips it has been found that the company operates in more than 60 countries across the world (Byström and Lindblad 2020). Having a highly diversified portfolio, it is quite necessary for Philips to follow the rules proposed by several governments in different countries. Where specially focusing on the trade war between China and us it has been found that the particular situation has negatively impacted on Profit generation process of Philips.

 

Economic factors

After globalization economic growth across the world has opened significant opportunities for Philips (Schoemaker, Day and Rao 2020). By specifically considering in Indian and Chinese Market has been found that the unemployment rate has increased top demand in these countries where Philips can hire people in minimal range. The world's economy has also got impacted after the exposure of China and US war. China holds population and weekly Chinese economy has reflected negative consumption rate among people which has impacted on sales growth of Philips products

 

Social factors

Over the years various changes in human mind set have impacted on strategic decision making process followed by Philips (Ross, Beath and Mocker 2019). Social sector highly gets influence depending on the economic stability in the country. With increasing purchasing ability among the people, they have become quite fond of energy-efficient innovative electronic solution in the market. Following the current social trend it has been found that customers are currently showing interest towards LED lights rather than conventional bulbs. Currently released has become the market leader for manufacturing LED lights. Therefore changing social requirements are bringing several benefits for Philips in terms of surviving in the market. The company is maintaining continuous effort towards providing benefits more than customers' expectation.

 

Technological factors

Over the last few years, Philips has established its image as the technological advance organization in the Global market. The company has shown its efforts towards ensuring customer satisfaction with innovative solution in the market. The tagline of the company is "Innovation & you" (Van der Eng 2017). In order to cope up with the current technological trends Phillips has taken several initiatives. The brand has introduced innovative digital Silicon photomultiplier detector for increasing sensitivity of the products. Following the current technological environment the company is making continuous effort towards promoting accuracy. Considering the Global operation of Philips it can be stated that with its innovative solutions in the market the company can successfully address customer expectation by utilizing technological features.

 

Legal factors

Depending on political and economic situation in the country the legal framework in several countries get influenced (Schoemaker, Day and Rao 2020). Operational environment of the global organizations like Phillips, highly gets influenced depending on legal framework proposed by several governments. Depending on legal framework for labor management, employee wages structure, customer relationship management acts, competitive regulation related business decision making approaches get influenced.

 

Environmental factors

Climate change has brought drastic impact in the trade environment. It has become important concern for the companies to maintain simple business approach terms of surviving in this situation. From the year 2017 Philips has been maintaining its continuous effort towards promoting sustainable business approach (Paucek, et al. 2020). The company has made commitment towards becoming carbon neutral organization. Within 2020, the company has decided to become 100% renewable energy running organization. Philips has also shown its noticeable initiative towards recycling wastage. Considering the environmental Protection Act across the world it has been found that government in both developed and developing countries have become quite concerned regarding environmental sustainability. Various regulatory frameworks have also been proposed in terms of addressing these challenges. Therefore it can be stated that in current business environment flip can easily cope up with the environmental need across the globe.

Conclusion and Recommendation

Analyzing the above research it can be stated that high competitive threat along with internal conflict are major challenges faced by the organization. In this situation, it will be needed for the organization to focus more on changing its strategic initiatives for addressing emerging challenges in both the external and internal environment. Therefore understanding the situation of the organization it can be recommended that

  1. Product differentiation strategy needs to be adopted by the organization in terms of creating competitive threat on the brands.
  2. Strong investment towards research and development creative will be necessary for understanding changing dynamics in the market.
  3. Positive customer relationship management approach needs to be initiated in order to address changing customer needs.
  4. Marketing strategy needs to be strengthened along with strong focus towards maintaining its commitment emission free products needs to be followed.

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Reference:

Brock, K., den Ouden, E., van der Klauw, K., Podoynitsyna, K. and Langerak, F., 2019. Light the way for smart cities: Lessons from Philips Lighting. Technological Forecasting and Social Change142, pp.194-209.

Byström, C. and Lindblad, A., 2020. Post-acquisition integration: A case study of the acculturation following Philips' acquisition of Carestream HCIS in 2019.

Lamba, S.S. and Vig, S., 2018. Business Development for Philips Solar business in Delhi & West UP. International Journal for Advance Research and Development3(2).

Mocker, M. and Ross, J., 2019. Digital transformation at Royal Philips. In Bridging the Internet of people, data and things: 39th International Conference on Information Systems (ICIS 2018): San Francisco, California, USA, 13-16 December 2018; Vol. 4 (pp. 2695-2711). Curran Associates Inc..

Paucek, I., Appolloni, E., Pennisi, G., Quaini, S., Gianquinto, G. and Orsini, F., 2020. LED Lighting systems for horticulture: Business growth and global distribution. Sustainability12(18), p.7516.

Philips.com 2021. retrieved from: https://www.philips.com/global [Accessed on 4th July, 2021]

Ross, J.W., Beath, C.M. and Mocker, M., 2019. Designed for digital: How to architect your business for sustained success. Mit Press.

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