Philips Business Model Will Help You Get More Business

Deesha Bakshi Deesha Bakshi
Apr 4, 2021 7 min read
Philips Business Model Will Help You Get More Business

Headquartered in Amsterdam, Philips is a Dutch multinational company which is one of the largest electronics conglomerates in the whole world. Philips has more than 80,000 employees across 80 countries, the company began its operations with the production of carbon-filament lamps. Today, Philips is dealing in Philips lighting, Philips electronics, customer lifestyle products, and Philips healthcare as well. Know How Philips Case Study will help you get more business.

Company Name Philips
Headquarter Amsterdam
Sector Electronics
Founders Gerard Philips and Frederick Philips
Founded 1891

The aim of Philips is to provide trustworthy and effective electronic products to its customers and provide them with effective solutions for the healthcare sector consumer market and commercial  organizations. The business of Philips started with very low commercial success, but in the 20th century, it started expanding. In the year 1920, the company expanded its product portfolio and launched a radio station and later on in the 1930's participated in commercializing the sterling engine.

Currently, the core operations of Philips are in customer electronics, lighting solutions, and healthcare technology. Being one of the largest healthcare and Electronics Company, Philips has a current market capitalization of 24.1 billion European pounds.

Business Segments of Philips

Philips Health care
Philips Health care

The business of Philips can be classified into three broad segments:

  1. Philips Healthcare: Philips has been lately focusing extensively on the healthcare sector. This segment comprises the sale of healthcare products, technologies, and solutions which include imaging systems, emergency care solutions, diagnostic technology products, patient care, and monitoring products, ultrasound solutions, and a lot more. The segment has further been divided into personal health, diagnosis and treatment, and; connected care and health informatics.
  2. Consumer Lifestyle: Philips has a huge market segment in consumer lifestyle products. It has a huge range to offer which includes men's and women's health and wellness products, personal care, home living, mother and child care redacts, small domestic appliances, etc.
  3. Philips Lighting: This segment comprises electronics that include decorative lighting solutions, home appliances, consumer luminaries’ professional lighting including road and office lighting, Audio products, etc.

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Business Model of Philips

1. Philips Customer Segment

Philips has a very broad spectrum of customers since it deals in various distinct business segments. The target customers for the healthcare business segment are hospitals, primary care units, government medical facilities, clinics, physicians, etc. In the same way, the target customers for consumer and lifestyle segments the target customers are the general consumers in the market.

Talking about the third segment which is the lighting segment the target customers include people who are looking out for energy-saving solutions, public sector and government departments looking out for sustainable lighting networks for roads and public spaces, corporate and commercials like hotels, MNCs’, restaurants; and industries looking out for lighting systems on industrial facilities and sites. The largest target market of Philips is spread across places like Central & Eastern Europe, Asia Pacific, India, Australia, Latin America, Africa, and New Zealand.

2. Value Proposition Of Philips

Philips focuses a lot on providing value to its customers and clients and believes in customer satisfaction. The company is known to have a very strong brand reputation and recognition in many parts of the world. Being a well-known electronics company in the world, people believe that the company provides reliable services and solutions.

Philips provides value to its customers by providing a wide range of products across multiple locations in the consumer market. One of the key factors of providing value is that Philips employees specialists personnel across all the segments of its business to provide support to its customers. Lastly, Philips values its consumers by providing them a network of sales and distribution channels which is spread all across the globe.

3. Distribution Channels Of Philips

Business system of Philips
Business System of Philips

There distribution channel of Philips is diverse –

  • Philips has its online presence and provides all the information to its customers on various products and services through its website .The company has its online stores from where the customers can purchase various products.
  • The company also operates a number of regional websites for the benefit of its
    customers which are in their local language.
  • Philips sells its products through various online and physical retail stores including the market place, online portals, electronic chain stores, departmental stores, etc.
  • The sales and service outlets of Philips are present in more than 100 countries and a large portion of the sales is dependent on the network of retailers, distributors, and sales agents.

4. Philips Relationship with Customers

Largely the sales of Philips consumer-focused products do not require interaction however the retail outlets of the company take a due care to satisfy all the needs of its customers. With respect to the healthcare and lighting segments of the business, the company has a direct sales team that gives tailored services to the clients.

The company has ensured that there are experts present online and offline to address any issues faced by the customers. Also, Philips provides user manuals and troubleshooting guides to its clients through its website. In order to keep the clients and customers up to date, Philips keeps on updating its social media accounts like Facebook, Twitter, YouTube, Google+, etc. with all the business activities.

5. Key Activities Of Philips

The key operations of Philips are into three sectors: electronics, lifestyle & well-being, and healthcare. Right from healthcare informatics, domestic appliances, and lighting solutions, Philips has a very huge operation. Apart from these core functions, Philips is also engaged in innovation, finance, shared business services, human resource, IT, real estate, and research and development sectors.

6. Key Partners Of Philips

The partners of Philips are made during each step of its business i.e. the
process of developing, distributing, and implementing various solutions and products. The various partners include Healthcare partners, Channel partners, Value Added partners, and Technology and Development partners.

7. Philips Key Resources

The most important key resources of Philips are its technologies, intellectual
properties, designs, development facilities, partnerships, sales and marketing channels; and its personnel. During the year 2015, in just one year itself, Philips filed around 1750 patents hence intellectual property is protected with various trademarks and patents and is a very important asset to the company.

8. Philips Cost Structure

Most costs incurred by the Philips company are directly related to the development of its products and solutions, the operation of design and development facilities, management of sales and marketing, maintenance of supply chain, and the retention of partnerships and personnel. The salaries distributed to the huge employee strength all across the globe take a significant part in the fixed costs along with the rent of utilities.

9. Revenue Streams Of Philips

The Company generates its revenues from all the three business segments:  

  • Revenue generated by the Philips healthcare department is by the sales of medical imaging equipment and healthcare equipment.
  • Revenue generated by the consumer lifestyle segment is derived from the sale of electronic products, grooming equipment, computer accessories, audio equipment, etc.
  • Revenue generated from the Philips Lighting segment is derived from lighting solutions that are provided to the government, public sector, private sector, commercial projects, etc.
  • A small portion of revenue is also generated from business services such as IT, finance, and human resource services.

In the year 2018, Philips generated €18.121 billion in revenue from its business segments.

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Who is CEO of Philips?

Frans van Houten

Where is the headquarters of Philips?

Amsterdam, Netherlands

What are the products of Philips?

  • Lighting
  • Automotive
  • Hearing solutions
  • Display solutions
  • Dictation solutions

Is Philips a product based company?


Is Philips Healthcare a good company to work for?

Philips is an excellent organisation to work with where you can learn and grow.

Where are Philips products manufactured?

The company has three manufacturing facilities in India: in Himachal Pradesh, Chennai and Pune.

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