Philips Maps Out a New Direction Case Study Example | Topics and Well Written Essays - 750 words

Philips Maps Out a New Direction - Case Study Example By cutting down to just 3 major divisions, the company's focus is likely to sharpen. Using multiple business units to produce a wide range of products would most likely result of wastage of resources, cost inefficiencies, and lack of a unified direction for the company as a whole. (A&AS, 2002) Cutting down to just 3 units therefore, among other things, aims to reduce operating costs. Divisions which need similar raw materials, man-power and expertise are merged into one unit so that resources can be utilized more efficiently. (A&AS, 2002) This sort of reorganization would also increase brand awareness and recognition, as the products would be better positioned in the minds of the consumers. Producing a wide range of products under one brand name usually creates confusion for the consumers as to what exactly to identify the brand with. By divesting low-margin products, and focusing a narrower and better defined product mix, this confusion would be minimized. (A&AS, 2002) The sort of r estructuring which entails divesting products and cutting down number of work units usually results in laying-off employees. This could result in unemployment, not to mention lower job security for existing employees. As is mentioned in the case, Philips faces problems when it comes to brand recognition, as Philips products are marketed in North America under a variety of names. Also, Philips LCD television technology currently has the No.2 spot in China, however, this success could be short-lived if China pumps.