How Philips Are Doing Now?
July 3, 2010 1 Comment
Philips started with the simple production of a light pulp and concentrated its effort on that single product to have the advantage of product specialization. Global market was a good opportunity when Holland market became too small for Philips production. Philips established production centers around the world and research and developments centers around different locations to support its expansion strategy (Bartlett, Ghoshal, & Beamish, 2008). Philips innovation produced competitive products like the color TV, stereo TV and the first TV with teletext. Philips realized that some of the products are not profitable in the existing operational setting and chose to outsource them. Most of Philips competitors moved their electronic production facilities to low-cost production sites like East Asia and south America. However, Philips licensed its innovations to other producers which made it less competitive like its decision to abandon the VHS technology. I would recommend that Philips continue downsizing its operations and re-engineer its profitable production sites but close or sell the struggling one. Philips should concentrate its budget and effort on research and development to come up with new challenging products that can be produced in the low-cost manufacturing sites in East Asia and south America.
Bartlett, C., Ghoshal, S., & Beamish, P. (2008). Transnational management: Text, cases, and readings in cross-border management (5 ed.). Boston: McGraw-Hill/Irwin.