Problem Identification
* How can Philips achieve a balance between centralization to achieve global integration and decentralization to achieve national responsiveness while maintaining their competitive advantage in the emerging global market conditions?
- Does Philips' business strategy provide for a global competitive advantaged
- Are Philips' core competencies still advantages?
Hypothesis
* Philips needs to simplify its structure through consolidation of product divisions and making business responsible for day-to-day operations. Consolidation can be achieved through the outsourcing or divestiture of non-core/unprofitable divisions, allowing Philips to reduce waste and focus R&D in its most profitable product divisions.
Analysis of Hypothesis
Are Philips' core competencies still advantages?
* No, Philips' historic core competency is crippling in the current global market conditions. During the Great Depression Philips developed a multi-domestic or country centered strategy where national subsidiaries were responsible mainly for the domestic markets in which they operated. There was a lack of global co-ordination and integration of activity among the different countries.
Nederlands: Philips Optical Data Disk
English: Head office of Philips at Amsterdam FranÃ...
Deutsch: Philips Cassetten-Recorder EL 3302 (1963)Technology emerged that demanded larger production runs than was justifiable by most national plants.
* Yes, Philips' competency within research and development is still advantageous in the global market place. However, Philips needs to re-develop the competency after the cutbacks to funding and the divestiture of several key high-tech companies.
What product divisions should Philips focus on?
* Semiconductors and Lighting are Philips two most profitable divisions, focusing on these divisions that are more profitable (As shown in Exhibit 7) and outsourcing the manufacturing of other basic products it frees Philips to focus on Developing new technologies like it did with the tungsten filament bulb in the early years of the company.
Why should Philips outsource manufacturing?
* Outsourcing will allow Philips to focus on R&D and global Marketing. Global Marketing campaigns to increase awareness of Philips brand while deemphasizing...