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Background:
At Philips, we strive to make the world healthier and more sustainable through
innovation. Their goal is to improve the lives of 3 billion people a year by 2025. We
will be the best place to work for people who share their passion. Together we will
deliver superior value for their customers and shareholders.
Royal Philips Electronics is eighth on Fortunes list of global top 30 electronics
corporations. The company is active in about 100 businesses, varying from consumer
electronics to domestic appliances, and from security systems to semiconductors.
Philips is among the worlds top three producers in many of its businesses, including
lighting, monitors, shavers, and color picture tubes for TVs and monitors. Translated
into figures, the company produces over 1.5 billion incandescent lamps every year,
and some 30 million picture tubes; and each day, the factories turn out a total of 50
million integrated circuits. PolyGram, a 75 percent subsidiary, is the worlds largest
music corporation.
Worldwide, Philips:
_ employs about 265 000 people;
_ has some 240 production sites in over 40 countries and sales and service outlets in
150
countries;
_ has research laboratories, located in six countries and staffed by some 3000
scientists, and
is responsible for some 10 000 inventions;
_ has a global network of some 400 designers spread over 25 locations;
_ has shares listed on 16 stock exchanges in nine countries.

Company history and achievements

The foundations for what was to become one of the worlds biggest electronics
companies were laid in 1891 when Gerard Philips established a company in
Eindhoven, the Netherlands, to manufacture incandescent lamps and other electrical
products. The company initially concentrated on making carbon-filament lamps and
by the turn of the century was one of the largest producers in Europe. Developments
in new lighting technologies fueled a steady program of expansion, and, in 1914, it
established a research laboratory to study physical and chemical phenomena, so as to
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further stimulate product innovation. Marketing companies had already been

established in the US and France before the First World War, and in Belgium in 1919,
and the 1920s saw an explosion in their number. It was at this time that Philips began
to protect its innovations with patents, for areas taking

In X-ray radiation and radio reception. This marked the beginning of the
diversification of its product range. Having introduced a medical X-ray tube in 1918,
Philips then became involved in the first experiments in television in 1925. It began
producing radios in 1927 and had sold one million by 1932. One year later, it
produced its 100 millionth radio valve, and also started production of medical X-ray
equipment in the United States. Philips first electric shaver was launched in 1939, at
which time the company employed 45 000 people worldwide and had sales of 152
million guilders. Science and technology underwent tremendous development in the
1940s and 1950s, with Philips Research inventing the rotary heads which led to the
development of the Philishave electric shaver, and laying down the basis for later
ground-breaking work on transistors and integrated circuits. In the 1960s, this resulted
in important discoveries such as CCDs (chargecoupled devices) and LOCOS (local
oxidation of silicon).

Philips also made major contributions in the development of the recording,

transmission and reproduction of television pictures, its research work leading to the
development of the Plumbicon TV camera tube and improved phosphors for better
picture quality. The 1990s were a decade of major change for Philips. The Centurion
program was introduced to return the company to a healthy footing, businesses were
sold, activities stopped and cutbacks made in employment. Today, the company is
still actively reorientating itself to face the demands of the twenty-first century. In line
with Philips theme Lets make things better the emphasis is firmly placed on
providing the products that people really want to buy, on establishing the basis for
substantial long-term profits, and on maximizing shareholder value.

Vision & Strategy

The Philips investment proposition
Vision and Mission
At Philips, we strive to make the world healthier and more sustainable through
innovation. Their goal is to improve the lives of 3 billion people a year by 2025. We
will be the best place to work for people who share Their passion. Together we will
deliver superior value for Their customers and shareholders.

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Their strategy
In 2011 we embarked upon Their multi-year Accelerate! jTheirney of change and
performance improvement. Designed to transform Philips into a truly agile and
entrepreneurial company, Accelerate! is all about delivering meaningful innovation to
Their customers in local markets and doing so in a fast and efficient way.

We take a systematic approach to value creation. To ensure that success is repeatable,

i.e. that we create value for Their stakeholders time and time again and deliver on
Their mission and vision, we have adopted the Philips Business System.
Managing the company
Royal Philips Electronics is managed by the board of management, which also looks
after the general direction and long-term strategy of the Philips group as a whole. The
supervisory board monitors the general course of business of the Philips group,
advises the board of management and supervises its policies.
Philips quality journey to world class level
The quality journey is regarded by Philips as a race without a finish line. As
businesses grow and mature new benchmarks appear and new targets are set. Nearly
all Philips organizations are ISO 9000 certified, which lays the foundation for
continuous improvement or Lets make things better, all the time. The Philips
Quality Award (PQA-90) was the next challenge after ISO 9000, with its focus on
process management. Those units that achieved the desired PQA-90 level and thus
obtained the PQA-90 Award defined the next steps towards world class performance.

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As customers needs do not stop evolving over time, massive investment in R&D
must be made by a firm like Philips. In highly internationalized organizations,
geographic expansion is often accompanied by a qualitative dimension. In fact,
Philips considers that manufacturing abroad must be supported by technological
development early on. By Philips, this qualitative dimension is materialized by its
research centres. In the early ages, these centres were working quite autonomously
without discovery of sufficient innovations in line with the corporate strategy. This
lack of innovative effectiveness was due to the following issues:
Inadequate transfer in research results,
Duplication of activities,
Fragmentation of dispersed research laboratories,
Excessive orientation towards technology for technologys sake,
Insufficient guidance.

In the nineties, Philips understood that one of the most important factors in innovation
success was to coordinate learning and other change-related activities across
international boundaries within the whole firm. In order to structure and rationalize
the production of knowledge, the company decided to distribute research activities to
specific centres, according to its competencies. For instance, the research centres of
Aachen and Hamburg have been merged and the resulting centre is responsible for
investigating in light generation and man-machine interface. Another example is the
Chinese labs which are dedicated to research in the wireless communication
technologies.
Based on this, the nine research centres of Philips spread over the globe have turned
over time into Centres of Excellence, which are in possession of strong (technical,
market and managerial) competencies and which are able to link research among each
other and to coordinate it with Business Units strategic targets. Even though it seems
to cut a little bit in the exploratory potential of the research centres (only 30% are
dedicated to basic market research), this change seems particularly convenient
because it concentrates skills and competencies in one location, which is a sound asset
to really move forward in R&D.

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Problem Identification:
1) Improvement programs can be clear, correct and focused but, just like
business processes, if they are too slow, they dont deliver results ahead of the
competition.
2) Knowledge can be made accessible through information systems with
directories of experts (Philips Yellow Pages) and databases of best practices.
But information technology, although vital, is merely amenable.

3) The Philips Quality Network creates the conditions under which the Philips
Quality Teams can flourish.
4) The PBE model is the reference for the audit. As a one-day audit does not
allow a Comprehensive audit result on all PBE criteria, the audit focuses on
the enabling factors of PBE (about two-thirds of the audit time is spent on the
enabling factors).
5) PQA or PBE model, balanced scorecards that explore cause-and-effect
relationships, survey tools that facilitate benchmarking, leadership
competencies which include coaching.
6) It is recognized that this is not enough and that world class performance
requires breakthroughs in cross-functional business processes such as product
creation, demand generation and order fulfillment.

7) A Philips Quality Team is a group of people, in any business, at any level,

who join together to improve the way they work by focusing on their process.

8) The network consists of the Corporate Quality Council, the Quality Councils
of the division and business units and the Quality Steering Groups of plants.
They are responsible for driving the change process and monitoring progress.
9) The balanced scorecards specify the business priorities based on a cause and
effect analysis.
10) In Philips is the completion of the PDCA cycle and knowledge management
means to expand applying the lessons learned to sharing the lessons learned
and learning from the lessons others learned.

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SWOT Integrated Pestle Analysis of Philips

Electronics
Political Analysis:
Philips has some 240 production sites in over 40 countries and sales and service
outlets in 150
countries.
It is a political aspect of Philips because it as an issue of cross-border business and as
Philips opens its business in different countries; it gets more and more exposed to the
global political situation in the world.
It is strength for Philips because having access to build production sites in 40 different
countries is not easy due to the global political aspects. Philips could do that because
they have a positive relationship with those countries which shows that they have the
political strength to utilize production sources of 40 countries and a brand name and
value which most of the countries care about. Also, as they have outlets in 150
different countries, it means that they care about the consumers and have direct
interaction and services to most of the consumer base.
It is also an opportunity for Philips because as they have political link with 40
countries and some of them are top economies in the world, they certainly have the
power to expand businesses in more other countries. Though it is already a matured
company with over 100 years experience, setting up businesses in more locations
will certainly boost the companys accounts.
Philips has shares listed on 16 stock exchanges in nine countries.It is strength for
Philips because not many companies have that much access to global finance. As it
has shares in 9 countries, it means that the company has such political connection
with the countries that they can actually sell shares there and their shareholder
demand.
Economic analysis
From the balanced scorecard it is seen that Philips has had more financial growth than
expected. The company has not only earned profit as planned but also as expected. In
2003, it had a profit of 330 euro/min.
It is a strength for the company because they have a high per minute profit that
exceeds 300 euro margin. It is because they have a globalized business and a wide
range of products.
Sales margin of the company is also meeting the company expectations. In 2003, the
company had 2200 euro of sales per minute.
This is another issue about how big the company is and how rich it is in its product
line. Having 2200 euro of sales per minute is not an easy job. Given that, the company

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has spent 100 years in the business but still thrives for innovation and act according to
the consumer demand.
They have also had a growing market share for over 4 years mentioned in the charts
from 1999 to 2003. The rate has continuously grown up.
It is strength for the company because it has a continuously growing market share and
even in the markets where they have strong competitors, they have excelled in those
businesses as well. It also a sign that they are constantly innovating their products
according to consumer choices and has greater acceptance and reliability.
It is also an opportunity because the companys share growth says that as it is still an
increasing rate, the market share has not still matured for the company. Rather, they
still have consumer demand and if they utilize it correctly, they can have more
growths in future.
Social analysis
Philips employs about 265 000 people.
It is strength for the company because this indicates that the company has a very
skilled and big human capital for their production and sales activities. It is also
contributing to a countrys social setting because they are affecting the employment
rate positively of that particular country.
It is also opportunity for the company as there are still rooms for utilizing more
human capital because they have operations in a lot of countries and the trained
workforce in those countries may be a good resource for Philips.
the company has invested in a worldwide brand management program in order to
better understand consumers needs, desires and dreams and incorporates these into
the product creation process; to communicate with consumers in a consistent way; and
to progressively develop a common brand language and culture throughout the
company.
This is a strong point for the company because they have a very positive interaction
with the consumers. They value the people who buy from them and this is why even
after having a big market, the company still invests in brand management to create
more awareness and value. They value the consumers desires and incorporate them
with the production process in order to give the consumers a feeling of belongingness
to the company.
Lets make things better.
It is not just a theme for Philips, it is what they believe in and want to give the
consumers a better lifestyle with their products. All of Philips products are consumer
oriented because they value what the people want and they thrive to give the people a
better and easy of life instead of just focusing on the technology.

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The Philips intranet site is available to guide people in finding the training, tools,
publications, best practices, links to other sites and information to support them in
implementing BEST.
BEST is the framework for excellence in Philips. Philips not only takes care of the
opinions of the consumers, they also interact and motivate the employees to interact
among themselves. The company has a intranet called The Yellow Pages for the
employees to share ideas, information, training tools etc. It is certainly a good way to
increase communication among the employees and a strong sign for the inner
network. The maximum time to closure days of consumer complaints was 10 days in
2003.
It is a strength for the company because the number of days have significantly
decreased in recent years. It means that they take care of the consumer dissatisfactions
and act as soon s possible through interaction and service towards the consumers.
Technological Analysis
Philips is among the worlds top three producers in many of its businesses, including
lighting, monitors, shavers, and color picture tubes for TVs and monitors. Translated
into figures, the company produces over 1.5 billion incandescent lamps every year,
and some 30 million picture tubes; and each day, the factories turn out a total of 50
million integrated circuits. PolyGram, a 75 percent subsidiary, is the worlds largest
music corporation.
The data above clearly states how technologically rich and advanced Philips is.
Obviously, it is a strength for the company that they have such wide range of products
and the company is still one of the leaders in these businesses.
It can also be seen as an opportunity for Philips because with this huge product line,
they have successfully retained the number one spot in the industries for such a long
time. Some of the technologies were invented by them. Now, in the age of innovation,
if they can shade their concerns on innovation, it will surely earn greater returns for
them.
Philips has research laboratories, located in six countries and staffed by some 3000
scientists, and is responsible for some 10 000 inventions.
The statement above clearly shows how concerned Philips is about research and
development. It is a strength for them because they have a huge skilled research team
and in the time of innovation, research and development of the products are more
necessary than invention to have sustainability in the market.
Another strong point of Philips is that they been the starter company or benchmark
company in many industries and products. Some of them are- they made carbonfilament lamps initially and within 100 years was one of the largest producers in
Europe.
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Another strength is the diversification of the products and using patents, especially in
the areas of X-ray and radio reception. They have introduced medical X-ray Tube and
started producing television in 1925. It was so successful in radio technology that they
produced 100 million radio valves within one year. They also had important
discoveries like CCDs and LOCOS.
They also have shown their strength in music industry by owning Polygram,
laservision disc, compact discs etc. These clearly show that Philips has a strong and
diversified product line and has been successful in selling them. It is also an
opportunity for the company because in the new millennium, there are more emphasis
on innovation. With the strong R&D facilities they have and the reliability of the
consumers, the company can be successful in the new era of technology as well.
The strength of Philips global operations is reflected in its (value-base) leadership
position in many of the markets in which it is active.

The list above clearly shows how strong the business and technological position of
Philips is. This is a strength for the business of Philips because they have the highest
rank in most of the industries though there are many competitors. But still, it shows
that Philips has the most sales and reliability all around the world.
It can also be seen as an opportunity for Philips because it also shows the industries
that they are closely lagging behind. If they concentrate on those sectors and with the
resources and researches they have, they can expectedly succeed and lead those
industries too.
Philips has a global network of some 400 designers spread over 25 locations. It is
strength for Philips because it shows how sophisticated Philips is about their product
designs and how they have such wide range of product models and unique
specifications. The global network of designers is certainly an asset for the company.

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It can also be seen as an opportunity because consumers always look for unique and
new products. With the designers they have or by including some more designers
Philips can certainly provide that satisfaction of the consumer base.
Legal Analysis
Nearly all Philips organizations are ISO 9000 certified, which lays the foundation for
continuous improvement or Lets make things better, all the time.
Since ISO is a worldwide legal benchmark for quality control and quality control is a
legal issue all over the world, Philips has certainly acquired the excellence in quality
and it is a strength for them because they work as they say by Lets make things
better.
In the changing political situation in Europe and recently the turmoil that United
Kingdom faced with the European Union, Philips may have to face some barriers and
new regulations for doing business in Europe.
It can be a threat for the global business of Philips because Europe is one of the
largest business hub for Philips and if it faces some unrest in doing business there, it
may certainly have an effect on the profit and sales.
Since company auditing is also a legal issue, Philips has a very compact and effective
way of auditing. It is a strength for them because it opens up scopes for
accountability, responsibility and implementation of plans.
Environmental Analysis
Some countries in the middle-east and other global leaders have taken effective and
comprehensive measures for pollution control and carbon emission.
It can be a threat for Philips because Philips has operations in a lot of industries that
uses chemicals and raw material usage is excessive which may harm the environment.
Philips production and business may shrink in those countries if they do not find an
alternative like recycling.
Philips has some eco friendly products recently as a CSR activity. Philips greenpower light by Philips lighting is one of them.
It can be strength for Philips because in a world of concerns about global warming
and pollution, such initiative may boost the brand value of Philips.
It can also be seen as an opportunity for Philips because a greenpower light is the first
step to eco-friendly production of Philips. With the research team they have, they can
certainly innovate more eco-friendly and recycled products in the future.

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BCG Matrix of Philips Electronics

StarsPolygram is the first star product for Philips is Polygram. Polygram has 75% of the
total subsidiary of Philips and worlds largest music company. So, it earns high
market share for Philips and also has market growth as the music industry is growing.
Incandescent lamp is another star product for the company as more than a billion
lamps are sold each year.
With diversification and patents that they have, medical products can certainly be star
products for Philips. For example, Philips has patent for X-ray tubes which is still
used in medical science.
Cash cowsLighting is a potential source for Philips now. The technology of lights is changing
rapidly and everyone now wants energy efficient lights as the price of energy usage is
increasing. Philips has green power lights which can be an answer to that demand.
Electric shaver is another cash cow for Philips. Being one of the premier producers of
shavers, Philips still has a remarkable position in the industry. But there are more
competitors now and the growth rate is not as it used to be.

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Question MarksCorded/ cordless phones in this generation are less demandable now a days. With
most of the consumers switching to smartphones, corded and cordless phones do not
have the growth or share in the market anymore. Big corporations and offices use
them on desks mostly nowadays.
Picture tubes are also question marked products. The world is switching to led TVs
and Smart TVs. Televisions with picture tubes are bought mostly by lower middle
class or middle class people. So the market share and growth is decreasing. Philips
needs to make sure what to do with this product.
DogsSemiconductors can be dog products for Philips. Because, It is the 9th largest producer
of it where it holds the top positions in most of the industries it operates in.
Semiconductor has some tough and leading competitors and Philips should give up on
this business.
Home appliances are also not doing good for Philips. With competition from
Samsung or LG, Philips is not that much popular for home appliances in the western
world. They are mostly bought in the asian region. With declining popularity, Philips
should quit this business.

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Porters Diamond Model Analysis of Philips Electronics

Demand conditions
The demand condition of Philips Electronics is at a good enough position as can be
seen from their value based leadership position chart, in which they are ruling over
the top position in most of the markets they have businesses in.

They produce over 1.5 billion incandescent lamps every year, and around 30 million
picture tubes and their factories turn out a total of 50 million integrated circuits per
day. Also, PolyGram, their 75 percent subsidiary, is the worlds largest music
corporation. These figures show just how vast their demand conditions are since
otherwise such high end productions will not have been possible.

Factor conditions
Philips Electronics have 240 production sites in over 40 countries and sales and
service outlets in 150 countries, research laboratories, located in six countries and
staffed by around 3000 scientists. They also have a global network of around 400
designers spread over 25 locations. This shows that, even if they fall short of
resources in one place, they can immediately have it supplied from another. In worst
case scenarios they can even shift their worse off production sites to the better off
ones if needed. They also employ over 265000 people which shows they have a
massive human resource support throughout the world.

Firm strategy, structure, and rivalry

Philips Electronics has a giant portfolio, and is active in a huge number of businesses.
Their strategy is to move along these markets and strive towards the top through
constant innovation. They have shares listed on 16 stock exchanges in nine countries,
and thus are competing with multiple markets all over the globe. The company is also
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active in about 100 businesses, varying from consumer electronics to domestic

appliances and from security systems to semiconductors, which proves that their
strategy is also to be as diverse as possible within the same field.

As for their structure, Royal Philips Electronics is managed by the board of

management, which also looks after the general direction and long-term strategy of
the Philips group as a whole. The supervisory board monitors the general course of
business of the Philips group, advises the board of management and supervises its
policies. The group management committee, which is the highest consultative
committee, also serves to ensure that business issues and practices are shared across
Philips.

Also, Philips uses the EFQM model for business excellence as the most
comprehensive and suitable one for the entire Philips organization.

Related and supporting industries

Since Philips Electronics is well established over the globe with all the factor
endowments they need, they can cater to their own needs and provide for themselves
in whichever industry or sector needed. Thus their need for related and supporting
industries is quite dormant.

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Alternatives:
Human Resources departments are transforming as the modern business faces
numerous and complex challenges, and exploit opportunities. The transformation of
human resources today is a direct call of the rapid changes within businesses due to
factors such as globalization. In the global competition within the flat and connected
new world, decision making in organizations has become increasingly intricate and
convoluted. The new global world has widened the talent pool for excellent and
marginal workers, and for permanent and fluid workers. An organizations talent can
be a source for a sustained competitive advantage and can affect important
organizational outcomes such as survival, profitability, customer satisfaction level,
and employee performance (Pfeffer, 1994; Prahalad, 1983).

Human resources need to take advantage of technology and data analytics to build a
global human resource information system that collects and stores data from various
sources. The system will help to analyze the data to provide business insights, predict
future needs and develop strategies to fill those needs. Companies with the ability to
foresee and sustainably manage their workforce needs especially for high skills
will gain the decisive competitive advantage (World Economic Forum, 2010a). The
global supply of talent is short of its long-term demand, and the gap is a challenge for
employers everywhere. The shortage between the demand and supply of talent is
likely to continue to increase, notably for highly-skilled workers and for the next
generation of middle and senior leaders. Most emerging nations with large
populations, including Brazil, Russia, India, and China, may not be able to sustain a
net surplus workforce with the right skills for much longer.

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Now, more than ever, organizations need to place greater emphasis on attracting
human capital rather than financial capital. Because capital is broadly available from
investors and lenders, and innovations can be duplicated relatively easily and quickly,
effective human resource management is the best way to differentiate one company
from another. Global staffing and global leadership development are the two
components of global human resources with the greatest potential for powerful
leverage for global firms (Pucik, 1996). Only the multinationals that will be willing to
adapt their human resource practices to the changing global labor market conditions
will be able to attract, develop and retain the right talent, and will likely succeed in the
global competition.
The increasing prevalence of globalization is driven by a number of factors, including
shortage of talent in developed countries, availability of low cost labor and growing
consumers in developing countries, and technological progress. Shortage of Talent in
Developed Countries Despite the current economic downturn and unemployment,
most developed countries, including the United States, Germany and Japan will face
long term talent shortages mainly due to ageing and the retirement of baby boomers.
There are more workers retiring than entering the labor force in these countries. By
2020, for every five retiring workers, only four new workers will join the labor force
in most developed countries. According to one estimate the United States will need to
add 26 million workers to its talent pool by 2030 to sustain the average economic
growth of the two past decades (1988-2008) unless a technological breakthrough
replaces manpower, while Western Europe will need to add 46 million employees
(World Economic Forum, 2010).

The shortage of workers is predicted across most industries, including manufacturing,

construction, transport and communications, trade, hotel and restaurants, financial
services, IT and business services, health care, public administration, and education.
Availability of Low Cost Labor from Emerging Countries The opportunity has never
been greater for multinationals to attract top talent from emerging countries, such as
Brazil, Russia, India, and China, or to outsource work to these countries. Global
population growth differs greatly between developed and developing countries. In the
developed countries, USA, EU, and Japan, the current annual rate of growth is less
than 0.3 per cent, while in the rest of the world the population is increasing almost six
times as fast. According to McKinsey Global Institute, there are approximately 33
million potential professionals in emerging markets and they are growing very
quickly. The stock of suitable, young professional talent in emerging markets is
growing at 5.5 per cent annually, while the number in developed countries is growing
at just 1 per cent annually (McKinsey Global Institute, 2005 - II). The total number of

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university-educated workers in low-wage countries far exceeds the number for higher
wage countries.

Currently, India produces as many young engineers as the United States, and China
produces more than twice as many. Russia produces 10 times as many finance and
accounting professionals as Germany. According to the International Organization for
Migration, there were an estimated 214 million international migrants in the world in
2010, and fifty-seven per cent of all migrants live in high-income countries (World
Migration Report, 2010). The number of migrants is likely to grow exponentially in
the coming years. Furthermore, the migration of workers and outsourcing of work
would not be limited to unidirectional flow from emerging countries to developed
countries. Technological Progress Globalization is made possible by the development
of cost effective, yet very powerful technologies, including the Intra- and Internet,
enterprise resource planning system, data warehouse, data mart, and data analytics.
Friedman (2005) defined globalization a whole set of technologies and political
events convergingincluding the fall of the Berlin Wall, the rise of the Internet, the
diffusion of the

Windows operating system, the creation of a global fiber-optic network, and the
creation of interoperable software applications, which made it very easy for people all
over the world to work togetherthat leveled the playing field. It created a global
platform that allowed more people to plug and play, collaborate and compete, share
knowledge and share work, on a scale never seen before. Cloud computing and new
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advances in remote access and support technologies also seem to fuel globalization.
Many service jobs, such as call centers, animation, transcription, and software
development can be carried out remotely. It is estimated that 160 million jobs, or
about 11 per cent of the projected 1.46 billion service jobs worldwide in 2008, could
be carried out remotely, barring any constraints on supply (McKinley Global Institute,
2005 - I). Section 5 discusses a global human resource information system that
collects and stores large volumes of data from various sources, including external and
remote sources. The system is designed so human resource personnel are able to
analyze the data to get business insights, predict future needs and develop strategies to
fill those needs.

The increasing prevalence of globalization is driven by a number of factors, including

shortage of talent in developed countries, availability of low cost labor and growing
consumers in developing countries, and technological progress. Despite the current economic
downturn and unemployment, most developed countries, including United States, Germany
and Japan will face long term talent shortages mainly due to ageing and retirement of baby
boomers. There are more workers retiring than entering the labor force in these countries. By
2020, for every five retiring workers, only four new workers will join the labor force in most
developed countries. The shrinkage of talent will be more than compensated by growing
number of professional talent produced in emerging nations, yet the global supply of talent is
short of its long-term demand, and the gap is a challenge for employers everywhere. The
shortage between the demand and supply of talents is likely to continue to increase, notably
for highly skilled professionals.. HR departments of global companies must assemble data on
factors, such as employees, attrition and hiring, compensation and benefits, ethnic, gender,
cultural, and nationality distributions, and load into data warehouses and data marts. By
applying advanced analytical techniques on the data, human resource professional will get
business insight, predict changes, and make informed decisions at operational and strategic
levels. The human resource professional accesses current and anticipates future skills
shortages through strategic skills planning. Global organizations not only need to a
networked, collaborative and open to culturally diverse workforce, but also consists of high
talent.

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Priorities recommended for Philips to improve

effectiveness & efficiency on its overall operations:
As mentioned earlier, the strength of Philips global operations is reflected in its
(value-base) leadership position. Through this strategy, all their cutting edge skills
and initiatives have been formulated. However, there are some significant issue which
must be corrected as well as improved to let Philips achieve its full potential. These
are described below.

1. Currently Philips should have their primary focus on upgrading its human
resources through having a sound HR policy for itself. Managers and
employees need to share a clear understanding of what is and what is not
acceptable behavior within the company. The key to success is to devote the
time and resources it takes to develop such HR policies and practices strategy
for the business before the situation of extreme need arises. It's an investment
that can pay large dividends in increased productivity and minimized
litigation. And it's an essential component of comprehensive people strategy
for Philips.
2. Philips should offer more customized products. In this age of customization,
the consumers demand customized products for themselves hence many
companies are actually been benefited from this phenomenon. Philips can
make their goods more customized so that they achieve the increase customer
satisfaction through this effort.

3. Philips is still far away from the full potential in term of maintaining its
quality control. Which is harming their way to success. For instance, since
current state of PQA-90 program has not bought enough success as reflected
in the data, the program itself should be monitored more systematically. Along
with utilizing the BEST to its full potential to ensure companys capability
thus securing the brand index.

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Implementation of the priorities for paving the way to glory and

achievement:

Still, The Philips name and shield logo are among the worlds most recognized
trademarks. The quality journey is regarded by Philips as a race without a finish line.
As businesses grow and mature new benchmarks appear and new targets are set. For
such versatile organization, positive as well as productive changes can be done well if
the HR can successfully integrate all the elements of the company as an integral part
of the change.

The HR must take the leading charge in this overall process of change because of
having the greatest potential. Since they have greater capabilities of integrating all the
components, HR should act as a spearhead. To lead the charge in these kind of
change operations, HR should first earn the respect of others by demonstrating
superior quality leadership and other skills as well.

The overall implementation process will take significant amount of time and
resources involved. Therefore, success lies in effective co-ordination of them. The
implementation process along with their various consequences are described as
below.

1.

Significant improvement of the current Human Resource Policies:

Human resource policies are the formal rules and guidelines that businesses put in
place to hire, train, assess, and reward the members of their workforce. These policies,
when organized and disseminated in an easily used form, can serve to preempt many
misunderstandings between employees and employers about their rights and
obligations in the business place

Currently Philips has no significant policy regarding their HR function. The existing
HR policy is too weak to strengthen the companys human resources. Policies serve
several important functions:

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Communicate values and expectations for how things are done at your
organization

Keep the organization in compliance with legislation and provide protection

against employment claims

Document and implement best practices appropriate to the organization

Support consistent treatment of staff, fairness and transparency

Help management to make decisions that are consistent, uniform and

predictable

Protect individuals and the organization from the pressures of expediency

Philips workplace is unique and therefore they may need to develop policies very
specific to the organization and type of work, for which there are no templates or
benchmarks. Typically, Steps in Policy Development for Philips can be like such:

Step 1: Establish need for a policy

Step 2: Develop policy content

Step 3: Draft the policy

Step 4: Write the procedure

Step 5: Review of the policy by key parties

Step 6: Approve the policy

Step 7: Implement the policy

Step 8: Policy review and update

Step 9: Communication of changes to the policy

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Employees should be provided with proper handbooks to have a sound idea for the
companys current changes. These employee handbook describe the organization's
policies and procedures. The handbook may also contain general information about
Philips such as its priorities, the organization chart, the job classifications, whether
positions are covered by a collective agreement and bargaining status for all groups of
employees.
They may have separate handbooks for managers and staff or may have one handbook
that applies to both groups. For the employer, the handbook can form part of the
documentation that your staff were made aware of the organizations rules and
standards and understand the consequences of not complying with the policies. Of
course, this is dependent on your employees having received and understood the
policies contained within the handbook so it is often a good idea to ask employees to
sign a statement confirming this.

Benefits of having an employee handbook include:

A comprehensive source for understanding the practices of the organization

Useful for orienting employees
Employees can independently find answers to their questions, supporting
confidentiality
Saves management time spent on clarifying expectations
Helps others quickly understand your workplace practices
Supports communication and accountability
Allows you to tie in the broader context, such as the organizations vision,
objectives and values

A few points of caution:

For the handbook to serve as valid documentation, it must be updated as policies are
updated and changed. For this reason it is often a good idea to designate someone
with this responsibility.

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Often a handbook will be written in a less formal style and include only summaries of
each policy. In order to be able to rely on the handbook for documentation that your
employees were made aware of the organizations policies, it needs to include all the
key points of the policy and reference where staff can access the full versions of the
policies.

Since the policies and procedures and content of the handbook may change from time
to time, include a statement that the employer has the right, in its sole discretion, to
add, amend, or delete any policy or procedure it its handbook.

Boards of Philips can play a variety of roles in HR policy development. It is helpful to

have the board clearly define the role they want to take in policy development,
whether they want to be involved in shaping the content or be involved only at the
approval stage. They may decide that only some fundamental policies require their
review and other policies can be approved and managed by the executive director.
Alternatively, a board may form an HR committee to write policies and procedures.
The board may set a time frame for reviewing HR policies, or they may delegate this
responsibility.
If Philips develops a policy on the development, review and update of organization
policies, the role of the board can be outlined in it.
It will be found that HR practices are - directly or indirectly - linked to all four
outcomes. The use of HR practices is related to improved financial outcomes
(measure: net margin), organizational outcomes (measure: client satisfaction) and HR
outcomes (measure: sickness absence) and marketing outcome through increase in
brand value. The impact of HR practices on HR outcomes and organizational
outcomes proved substantially larger than their impact on financial outcomes.
Furthermore, with respect to HR and organizational outcomes, the hypotheses
concerning the full mediating effect of job satisfaction are confirmed. This is in line
with the view that employee attitudes are an important element in the black box
between HRM and performance.

General consequences: The organizational outcome is measured by focusing on

client satisfaction. Clients will enjoy satisfaction with the treatment they receive. A
good organization must have dedicated workforce to serve their clients. Thus overall
organization will enjoy some fresh blood and energy to go ahead with the help of such
motivated employees.

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Ensuring transfer of knowledge between department workers -- whether they are

departing voluntarily or involuntarily, or due to retirement or other reasons -- is
necessary to ensure continuity and minimal impact on productivity and effectiveness.
A strategy for transferring knowledge is critical. These plans are designed to ensure
that the knowledge of older workers has been captured and will be retained and
transferred to younger workers as baby boomers retire and leave their organizations.
Thus the organization will be a better place for the employees in each & every single
perspectives.

HR consequences: The HR outcome measure considered is absence due to sickness.

Absence due to sickness can be considered a key HR outcome as the decision of
employees to be absent affects the available human resources and is a critical success
factor for the continuation of work processes within the organization. Absenteeism
due to sickness is calculated in percentages, n brief: for every employee, each day
he/she calls in sick is multiplied by the part-time factor and disability factor pertaining
to that day. These days are then summed and divided by the total number of working
days. Maternity leave is excluded. This is calculated for the organization as a whole.

An HR department that efficiently serves the needs of employees has positive, yet
intangible effects. Employees who understand HR is an employee advocate as much
as it is an employer advocate might be inclined to trust HR's presence. HR staff
credibility and top-notch employee services often result in greater job satisfaction and
higher levels of employee engagement. Employee engagement affects performance,
which creates a win-win solution for expanding HR operations if the result is better
job performance and productivity, according to Development Dimensions
International's 2005 monograph titled, "Employee Engagement: The Key to Realizing
Competitive Advantage."
The current level of HR staff expertise is as important to expansion plans as is future
HR expertise required to sustain department operations. Although many HR managers
are generalists by profession, a qualified compensation and benefits specialist might
be better equipped to negotiate group health coverage and select an administrator for
implementing and managing a newly formed retirement savings and investment
program.

Communication is a key element of change management. Even if the goal of HR's

expanded operations is to improve internal customer service, employees must be well
informed about changes to be most receptive to them. A sudden influx of new hires
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absent communication about organizational growth can cause some employees to

worry about job security. While they may notice increased demand for products and
services, changes to the workforce may heighten concerns about where existing
employees fit into the strategic plan. Therefore, a communication plan about business
goals should coincide with an HR manager's plan to expand departmental operations.
An HR department that efficiently serves the needs of employees has positive, yet
intangible effects. Employees who understand HR is an employee advocate as much
as it is an employer advocate might be inclined to trust HR's presence. HR staff
credibility and top-notch employee services often result in greater job satisfaction and
higher levels of employee engagement. Employee engagement affects performance,
which creates a win-win solution for expanding HR operations if the result is better
job performance and productivity, according to Development Dimensions
International's 2005 monograph titled, "Employee Engagement: The Key to Realizing
Competitive Advantage."
Job satisfaction can be measured by one item: I enjoy going to work
(F=6.586, P<0.01) (five-point Liker, never to always). It can be said that,
measuring job satisfaction with a single item is more efficient, is more cost-effective,
contains more face validity, and is better able to measure changes in job satisfaction
Financial consequences: These will add cost for the financial section. To enlarge the
HR function means more employees to be recruited & retained, this will ads not
merely ad some cost, rather investment cost for the company. The success can be
measured like The net margin is defined as the ratio of a firms net profits to its total
revenues. It indicates what share of each euro/dollar earned is translated into profit. It
is stated as a percentage:
Net profit/Total revenues*100=Net margin
HR Policies cost money, which will reflect in the price of the product. Thus, the
prices of Philips should be set the absolute limit to organization's HR policies.

After the proper estimation over a few periods, success can be found and estimated
well. Thus investment in HR will prove as the most feasible way for Philips now.
Because this highly facilitated organization, should have more focus on their human
resources, not merely on their equipments and facilities.
In this stage, efficiency in cost management should be experienced.
HR managers must be able to show whether expansion is cost-effective. Demonstrate
that HR is a "revenue-impact" department even if HR isn't a revenue-generating
department, says human resources consultant John Sullivan in his January 2012
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advice column on ERE.net titled, "Transform HR into a Revenue-Impact Function to

Increase the Strategic Impact." For example, illustrate the strategic value of HR in
proving that an investment in recruitment activities yields better-qualified workers. A
better-qualified workforce translates into higher revenues, thus showing that HR
operations affect business revenue. Projections on this investment may be possible;
however, an HR manager can't realistically provide certain return on investment
figures until at least one year passes following HR expansion.
Also, in terms of business growth; Organizational strategy, which should include
input from the HR manager, is an essential factor in the timing and extent of HR
expansion. HR best practices typically suggest a 100-to-1 ratio of employees to HR
staff member. Business growth projections should also include possible acquisitions,
mergers and exit strategies, particularly for startup companies. Here again, cost
effectiveness is a factor in the decision to hire versus outsource. Many small
businesses outsource HR activities or join a professional employer organization to cut
costs. However, the downside to those options is employees' direct access to HR

Marketing consequences: Expanding human resources operations within an

organization can result in efficient, high-quality service to the company's internal
customers -- its employees. An HR manager contemplating expansion should consider
a number of factors to determine whether expanding HR operations is a timely goal.
Factors include cost effectiveness, staff expertise, business growth, change
management and employee engagement affect. So that in time, being a better
organization will create massive value over the organization.

Although implementing organizational change is complicated and complex, it does

not have to negatively affect the companys performance. Rather, we can minimize
the disruption to the organization by beginning the planning and communication
process early to build the foundation for a successful implementation.
2. Improving the quality standards continuously to remain as one of the few
best companies:

Some of the greatest innovations of the modern era have been realized by companies
like Philips collaborating together to set standards. This ensures interoperability
between devices and safer, more reliable products. Just looking at how MP3
revolutionized the way we store and enjoy music! Philips IP&S has contributed too
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many breakthrough technological standards. We also keep abreast of the latest

developments, acting as a key contributor to many governing boards and
implementing policies that adhere to standards across a variety of sectors.
In todays society, standards are crucial. Having industry standards ensures
devices can work easily and intelligently together, benefiting both consumers and
manufacturers. Consumers gain devices that are safer, more reliable and easier to
use. Manufacturers that cooperate in creating new standards can reduce
development costs and the risks involved in bringing new technologies to market.
This can result in the growth of new and existing markets, and increased
economies of scale.
However, Philips lack in an effective continuous quality control system where the
company can ensure to retain its superior position.
Successful business today requires a constant stream of innovative products, on a
global scale and in a predictable way. Businesses must be effective in making the
right choices and efficient in using resources. This, in turn, puts pressure on
innovation processes.
Drive growth and create value for their business
Industry Consulting can help Philips improve the processes vital to constant,
predictable innovation, thereby driving growth and creating value for their
business. Through turnkey projects, they can start by analyzing their Innovation
process, followed by an improvement plan with practical steps and
implementation of a new process, including change management. The new
process is then anchored as a basis for continuous improvement.
Partners, suppliers and lean manufacturing
Today, product development requires the involvement of multiple partners. They
should determine whether and how to involve suppliers early in their development
process in order to exploit the knowledge of their suppliers. Regular assessment of
the innovation processes is essential, for example, using industry standards
(CMMI, ISO13485, ISO9001, EFQM/PBE). Philips should introduce new
development approaches in the organization, based upon the latest industry
trends.
IT tools: indispensable to product development
Carefully bridging the gap between the development process requirements and the
growing range of IT tools, such as portfolio & project management systems,
configuration management systems and product lifecycle management (PLM)
systems. Extensive knowledge of business processes will help them select and
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deploy the right tools, in a way that your developers will welcome. Translating
new ideas into innovative products and putting them to the market rapidly is
increasingly important. Not just for a single new product, but also to generate a
stream of new innovative products.
Merging organizations need optimized & aligned processes
Globalization trends mean organizations across the globe must work together
during product development, which means processes must be aligned and
harmonized. We can help you to set-up and guide these change programs in a
systematic way, and bridge cultural and historical gaps through major change
efforts.
Industry Consultings extensive knowledge and experience in systematic
innovation process improvement includes assessment techniques and approaches
for planning and implementing process improvement programs. Proven
approaches and hands-on, seasoned professionals help Philips make the right
innovation process choices and use their resources cost effectively.

General implementation: If Quality control is conducted strictly on products that

are exchanged from one business to another, it is referred to as a continuation of
total quality management; whereas when it is conducted for the end customer, it is
called egonomics. It does not matter which industry it operates in, latest
information technology allows companies to track consumer preferences, and
user-friendly manufacturing machinery allows end-products to satisfy those
preferences.
Superior quality control requires trained professionals at outlets so that the
concept can be implemented. On the other hand, Challenges with higher costs,
return of products and managing the supply chain effectively will be the prime
issue.

Financial implementation:
As the organization give their customers the highest standards, they will see a
boost in profitable revenues, stay connected to their best customers and lower
costs. Winners will be those that know their objectives, understand how much
customization they really need, keep things simple and create a repeatable model
for delighting customers again and again. Engaging customers through superior
quality raises the stakes.
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Marketing implementation: With the proliferation of social media and online

publishing, styles and trends now change faster than ever. Quality superiority will
help Philips gain insights from customized designs and fine-tune products to stay
one step ahead of the competition. With each design choice, customers share realtime shopper preferences that go well beyond what they would say in a focus
group. For example, what they are expected to learn from their customers in one
season will be used to help it deliver the next seasons product line.

HR implementation: as mentioned before, HR should take the leading charge in

this change too. Having the greatest capability to make a successful integration of
the manpower, HR can truly take Philips to the next level regarding product
performance.
Especial, the TQM process should be initiated & implemented by the HR of
philips to have better performance for an extended period of time.
HR is in the midst of a transformation. As management teams get more
comfortable leveraging complex data to drive business decisions and predict
outcomes, Substantial unlocked value in HR by using talent data in the same way.
HR should think expansively about its role in enabling leaders to make better
decisions around how we hire, invest in, motivate, and enable talent.

3. Acquiring greater
customization:

market

share

through

product

The principle reason Philips fall behind to fully recognize its brand potential is
because of lacking in customizing products to more personalized forms, a strategy
which other companies are getting benefitted from. There is a considerable gap
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between the companys efforts to customization with the actual customization quality
standards. As an international giant, Philips can should not fall behind regarding this
perspective. Therefore, it is a dire need for Philips to have focus on customization
from this moment.
An ever increasing number of companies are offering consumers the possibility to
customize their products, exactly as the customer wants. This trend has impacted
every type of consumer good product one can think of from clothing to vehicles, to
home accessories and even mobile phones. Enabling customers to personalize their
goods at the moment of purchase builds feelings of ownership and product loyalty
and gives the company a competitive advantage over those selling similar products.
The question is not why a company would want provide customization and
personalization the benefits of that are already well documented. The real question
is how. How can companies affordably build in to their supply chains the ability to
customize singular products as well as is there ever a way to profitably offer this?

Making Personalization Work

Personalization is not easy. By offering different colors, styles, designs and
engravings, for example, Philips can really empower customers to make their
products feel like their own. All of that is great in theory, but not so easy to deal with
in application.
One of the first steps is designing a front-end for their website that makes it easy for
customers to lend their individual styles to the products, quickly and easily seeing
how their design will look in real life.
With that done, the bigger issues of mass production and fulfillment come to the
forefront. Philips must process each customized order in a timely and efficient fashion
and in a way that doesnt destroy profitability for the sake of personalization. This
means that the personalized aspects of the assembly line need to be set up at the close
of mass production.
The next thing to consider is location. Are all of Philips products manufactured and/or
assembled in the same facility? Or do they manufacture and assemble products by
region? This matters because they will either have to (a) start shipping all of their
mostly finished products to one location for customization; (b) set up a customization
center at each of their assembly/manufacturing sites; or (c) shift their operations to a
single facility approach.
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None of these options are an easy decision. It may come down to evaluating the cost
structure and the expense of shipping products for assembly and fulfilment, before
shipping to customers.
Getting Products in the Hands of Customers
Another important consideration is delivery time these processes need to be set up
in a way that wont excessively delay product delivery. Customers will be as easily
turned off by the wait time as they were turned on by the personalization. Whatever
physical facility approach they choose, Philips need to make sure it is (or they are) in
an area where quick shipping is possible.
The cost of shipping, along with the time it takes to get products out to the customers,
is an important yet often overlooked element of setting up personalization services.
Understanding Demand in Real-Time
Supply and demand has always been of critical importance when it comes to
consumer goods. In the case of personalization, it is even more important. How many
products do they mass produce to default specifications? How many do they leave
prepared for personalization?
These are important questions and the answers can have a direct effect on whether
they are personalizing with profitability, or backtracking on what they can deliver.
Philips need real-time insight into their operations orders, returns, expectations,
market trends, etc. You also need real-time insight into where their products parts
and materials are. If there is an increase in demand, can they get the materials to
manufacture more products? This insight will enable them to have a much clearer idea
of what is needed right away and what can be held back until demand increases.
Without real time information, an offering like personalization becomes much harder
to deliver as promised, without making inventory, logistics operations costs and
fulfillment times increase exponentially.

Preparing for the Future

The future of consumer goods is personalization. We live in a world where customers
are increasingly expecting products and services delivered how they want, when they
want. If youre in the consumer goods business, Philips need to recognize this and get
your supply chain organization aligned to support the trend.
By mapping out all of the critical elements shipping costs, assembly and
customization locations and installing technology that will give Philips a real-time
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overview of their process, Philips will be on their way to ensuring a customized,

personalized reality for the customers.

General implementation: If mass customization is conducted on products that are

exchanged from one business to another, it is referred to as a continuation of total
quality management; whereas when it is conducted for the end customer, it is called
egonomics. It does not matter which industry it operates in, latest information
technology allows companies to track consumer preferences, and user-friendly
manufacturing machinery allows end-products to satisfy those preferences.
Mass customization requires trained sales representatives at outlets so that the concept
can be implemented. On the other hand, Challenges with higher costs, return of
products and managing the supply chain effectively will be the prime issue.

Financial implementation:
As the organization give their customers the design-it-yourself option, they should see
a boost in profitable revenues, stay connected to their best customers and lower costs.
Winners will be those that know their objectives, understand how much customization
they really need, keep things simple and create a repeatable model for delighting
customers again and again. Engaging customers through customization raises the
stakes.

Marketing implementation: With the proliferation of social media and online

publishing, styles and trends now change faster than ever. Customization will help
Philips gain insights from customized designs and fine-tune products to stay one step
ahead of the competition. With each design choice, customers share real-time shopper
preferences that go well beyond what they would say in a focus group. For example,
what they are expected to learn from their customers in one season will be used to
help it deliver the next seasons product line.

HR implementation: as mentioned before, HR should take the leading charge in this

change too. Having the greatest capability to make a successful integration of the
manpower, HR can truly take Philips to the next level regarding product
customization.
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HRM480 Group:K Fall16

HR is in the midst of a transformation. As management teams get more comfortable

leveraging complex data to drive business decisions and predict outcomes, Substantial
unlocked value in HR by using talent data in the same way. HR should think
expansively about its role in enabling leaders to make better decisions around how we
hire, invest in, motivate, and enable talent

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HRM480 Group:K Fall16

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