Royal Philips Electronics N.V. is a Dutch company that was founded in 1891 and has since then become a major player in the electronic equipment industry. The company is headquartered in Amsterdam and employs 119.001 people worldwide, of which 78% are employed outside the Netherlands. Philips has operations in over 100 countries and identifies the Netherlands, the US, Germany, France, Brazil, Japan and China as their main markets. These countries make up 57.8% of total sales and 82.9% of total assets and are standing mainly in competition with Siemens and General Electronics.
From 1990 till last year Philips was in a phase of organizational transformation. Without restructuring the company’s portfolio in a simpler way Philips would have had extremely difficulties during the finance crises in 2008. Today the organization represents predominantly a classical Managing Diversity of Mintzberg’s five configurations which divides the company’s business into three segments: Healthcare, Consumer Lifestyle and Lighting.
In the healthcare sector Philips is leader in areas such as cardiac care, acute care and home healthcare. In 2010 Philips’ healthcare business was able to generate sales amounting to 8.6 billion EUR. The US is the largest healthcare market currently representing almost 50% of the global market. Philips’ consumer and lifestyle business is very broad covering areas such as television, shaving and beauty, multimedia and domestic appliances.
Currently this business unit employs approximately 18.400 people worldwide with registered sales of 8.9 billion EUR last year, of which 59.9% were generated in Western Europe and 40.1% in emerging markets. Philips Lighting spans the entire lighting value chain from lighting sources, electronics and controls to full applications and solutions. The company maintains sales and service organization in over 60 countries and runs manufacturing operations in 15 countries worldwide with sales of 7.6 billion EUR in 2010.5
Table of Contents
1. INTRODUCTION
2. METHODS AND THEORETICAL BACKGROUND
3. APPLICATION OF METHOD
3.1. MAIN DESIGN PARAMETERS AND ORGANIZATIONAL STRUCTURE
3.2. CONTINGENCY FACTORS AND STRATEGIC ENVIRONMENT
3.3. PAST ORGANIZATIONAL RESTRUCTURING AND FUTURE VISIONS
4. DISCUSSION
5. CONCLUSION
Research Objectives and Core Themes
The primary objective of this research paper is to analyze the organizational structure of Royal Philips Electronics N.V. by applying Mintzberg’s theory of organizational configurations. The study investigates how the company manages its diversified business units, balances internal design parameters with strategic environment factors, and addresses historical restructuring efforts to maintain global competitiveness.
- Application of Mintzberg’s five configurations to a modern multinational corporation.
- Evaluation of divisionalized organizational structures and performance control systems.
- Impact of the strategic environment and contingency factors on corporate evolution.
- Assessment of organizational transformation strategies and the "One Philips" vision.
- Analysis of corporate governance bodies, including the Board of Management and Supervisory Board.
Excerpt from the Publication
3.1. Main Design Parameters and Organizational Structure
Apart of the Board of Management, the Group Management Committee and the Supervisory Board are the most important bodies and represent the “headquarter” at Royal Philips Electronics. The executive management (strategic apex) of Philips is entrusted to its Board of Management under the chairmanship of the President and consists of at least three members. All current six members of the Board of Management have collective powers to allocate its financial resources and to appoint the division managers. They share responsibility for the management of the company, the deployment of its strategy, and the achievement of its objectives and results without dictating the strategy of its divisions, called performance control system.
The task of the Group Management Committee, the highest consultative body within Philips, is to ensure that business practices are shared across Philips and to implement policies, which are common for all divisions. The support staff, how it is called by Mintzberg, consists of the members of the Board of Management, Chairmen of division and certain key officers. Members other than members of the Board of Management are appointed by the Supervisory Board.
The Supervisory Board oversees the policies of the strategic apex and the general course of the company and its affiliates. Further, it serves as an advisor to the executive management. As stated in the Introduction Philips is nowadays grouped in three sectors, namely Healthcare, Consumer Lifestyle and Lighting. The sizes of the divisions are large because each division has a high degree of diversified product. These business units (BUs) are considered coherent because they are united in different combinations by customer segments, channels, key processes and capabilities as well as technology platforms. Thus Philips seeks to exploit opportunities to leverage capabilities and synergies across BUs by trying to install a related product form within the transition.
Summary of Chapters
1. INTRODUCTION: Provides an overview of Philips’ history, its three main business segments (Healthcare, Consumer Lifestyle, and Lighting), and its market position in the electronics industry.
2. METHODS AND THEORETICAL BACKGROUND: Outlines the research approach, including the use of annual reports, company documents, and Mintzberg’s theoretical framework on organizational configurations.
3. APPLICATION OF METHOD: Examines Philips' specific design parameters, internal management structures, and the impact of contingency factors on the firm’s strategy.
4. DISCUSSION: Evaluates how well Philips fits the "divisionalized" organizational model and discusses the trade-offs between centralized control and divisional autonomy.
5. CONCLUSION: Synthesizes the company's strengths and weaknesses, noting how its structural transformation supports its mission to remain a global leader through innovation.
Keywords
Royal Philips Electronics, Organizational Structure, Mintzberg, Divisionalized Organization, Healthcare, Consumer Lifestyle, Lighting, Strategic Apex, Corporate Strategy, Performance Control System, Management Diversity, Globalization, Business Units, Corporate Governance, Innovation.
Frequently Asked Questions
What is the primary focus of this research paper?
The paper examines the organizational structure of Royal Philips Electronics N.V. to determine how it functions as a large, diversified global corporation.
Which theoretical framework is applied in the study?
The author applies Henry Mintzberg’s theory of organizational configurations, specifically focusing on the "divisionalized" form and the concept of Managing Diversity.
What is the core objective of the analysis?
The goal is to analyze how Philips manages its various business segments and how its internal design parameters have evolved to meet competitive challenges.
What research methodology was employed?
The study relies on a qualitative review of Philips' annual reports, internal corporate documentation, secondary research from online business journals, and established organizational theory literature.
Which segments form the core of Philips' current business?
The company is structured into three main sectors: Healthcare, Consumer Lifestyle, and Lighting.
What are the primary keywords associated with this paper?
Key terms include organizational structure, Mintzberg, divisionalization, corporate strategy, performance control, and business innovation.
How does the author evaluate the "middle line" autonomy at Philips?
The author discusses that while division managers have autonomy, they are also members of the Board of Management, which creates a specific control dynamic between corporate headquarters and the business units.
How did historical restructuring shape the current company?
Philips moved from a highly localized, country-oriented structure to a matrix organization in the 1970s, and finally to a global product-division structure in 1997 to achieve the "One Philips" strategy.
- Citation du texte
- Hans-Dieter Steguweit (Auteur), 2011, Managing Organizations and Supply Chains by Philips, Munich, GRIN Verlag, https://www.grin.com/document/300535
