Lighting up Philips
Lighting up Philips
Schwartz N.D Fortune, 2007, Vol. 155 No. 1, Start page: 31, No of pages: 5
Purpose – To discuss the circumstances that have led to a revival in the fortunes of European electronics company Philips. Design/methodology/approach – Describes the initiatives undertaken by chief executive Gerard Kleisterlee, Fortune’s European Businessman of the Year. Briefly outlines Kleisterlee’s background, noting that this 60-year-old engineer has spent his entire career at Philips. Explains why the chief executive opted to sell off the Dutch conglomerate’s semiconductor business to private equity buyers for more than $10 billion in 2006. Notes that the proceeds have been used to invest in growth in medical devices,consumer electronics and lighting as well as funding a multi-billion-dollar share buyback. States that this has had the effect of releasing the share price from its connection with the semiconductor price index and has helped to shift investor’s attention towards the more stable and predictable businesses in which Philips is engaged. Outlines the way in which the company has repositioned it branding and increased consumer awareness with its “sense and simplicity” slogan. Comments on the challenges of changing corporate culture, observing that employees are now well attuned to cost-cutting initiatives, although growth-oriented exercises remain more difficult. Briefly comments on the forthcoming challenges of making further acquisitions, improving profit margins and increasing sales beyond the 30 billion Euro mark. Originality/value – Concludes that Kleisterlee’s aim is to leave behind a company with a successful path of steady, profitable growth.
Keywords: Brand management, Business development, Corporate strategy,Philips
