Swot analysis of Philips. Koninklijke Philips N. V. or Philips is a conglomerate Dutch multinational company. Anton Philips and Gerard were the founders of Philips, and they laid the foundation of the company on May 15, 1891. The headquarter of the company is in Amsterdam, Netherland.
Philips’ main products and services are lighting, audiovisual equipment, licensing, intellectual Property management, home appliances, medical equipment, consumer electronics, and many others.
According to an estimate, the annual revenue of Philips in 2020 was 21.025 billion dollars, and it has decreased by 18.4%. Out of which, the net income of the company was 0.898 billion dollars, and it has declined by 51.23%. However, the company has employed over 81,592 employees to manage its worldwide operations.
Today, we’ll discuss the swot analysis of Philips. It’s going to analyze the internal and external factors of the world’s leading conglomerate company. Here’s the swot analysis of Philips as follows;
Strengths of Philips
Philips has established a large database of customers in the consumer electronics category. They always prefer the company’s product whenever they’re going out shopping for home appliances. It’s because of the years of trust that they have in the company’s products.
De-layered Management System
Philips has de-layered its management system by decentralizing the power and removing management layers. It decreases the cost, makes the operation execution much simpler and easier, and improves the overall efficiency of the organization.
Most importantly, the company has integrated its operating system with the market situation; it helps the company to increase its productivity. It allows the company to manufacture the products that the market requires.
Philips has been the market leader for so long. It’s because the company has efficiently distributed the equity among various categories like lighting solutions, healthcare system, acute care, and cardiac care. However, the company’s growth rate is increasing steadily in developing countries.
Research and Development
Philips knows the worth and value of innovation, creativity, and research and development. That’s why the company has established more than 7 research centers in various countries across the world. According to an estimate, the annual research and development budget of the company in 2020 was 2.063 billion dollars, and it has decreased by 5.4%.
According to an estimate, Philips has more than 110 production and manufacturing facilities across the globe. They make sure that the market has enough supply of company’s products.
Philips is operating its business empire in more than 100 countries across the world. it shows the global customer reach and influence of the company in the international market.
According to an estimate by Interbrand, the brand value of Philips in 2021 is 11,671 million dollars, and it ranked at the 53rd position of the Best Global Brand 2020. However, the market capitalization of the company in 2020 was 45.73 billion dollars according to an estimate by Forbes.
Weaknesses of Philips
Many people have complained that the price of Philips’ products is a bit higher than the competitors in the market. They’re offering the same product of the same quality at a lower price. The premium price strategy is pushing away a lot of price-conscious customers.
The home appliances and consumer electronics market has become very competitive in recent years. It comprises both local and international competitors. Therefore, it provides a lot of options to the customers when they go out shopping in the market.
Many customers have filed more than 50 class-action lawsuits against Philips over the years. It resulted in the form of investigation over the CRT division and lit-on digital solution. Along with investigation and litigation costs, it jeopardized the brand image of the company.
Opportunities available to Philips
Many social and environmental activists and government institutions are promoting the usage of green products. In other words, it’s the promotion of Philips’ products. The company should also exploit this green awareness trend to its advantage. It would certainly attract a lot of new environmentally conscious customers.
Philips is expanding its market presence in developing countries like India, China, Pakistan, Bangladesh, and others. Such markets have got a great growth potential and the company’s expansion is indeed the right business decision. The brand should keep moving in the right direction.
The demand for Green Products
The demand of product green products from clean energy companies is increasing. Philips should follow such trends and promote its brand name as being the green and clean energy organization. Such strategies would amplify the outcome.
Threats Philips has to face
The advancement in technology, mass production, and economies of scale is decreasing the prices of tech products. In other words, it’s making the technology cheap. Such low price trends isn’t good for the premium price products of Philips.
As we know that Philip is running its business in over 100 countries across the world. The company has to deal with imports and exports of its products every day. A small fluctuation of price in the exchange rate has a great impact on the sale and profitability of the company.
The regional and international trade regulations of various governments and countries have a significant impact on Philips. Most importantly, the taxes of different countries are also different and they impact a company’s profitability.
A great number of manufacturers copy the logo of Philips and sell their cheap quality products under the brand’s disguise in third world countries. Ordinary people pay premium prices to buy counterfeit products. They blame the company when they don’t get the required quality. Such counterfeit products are jeopardizing the company’s brand name.
Conclusion: Philips Swot Analysis
After a careful study of the swot analysis of Philips, we have concluded that Philips is indeed one of the world’s top conglomerate companies. Counterfeit products, competitors, economic recession, premium prices, and litigations are some of the main challenges. Philips should utilize its resources to expand its business and product portfolio.
Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. Other than that, he’s a fun loving person.