Philips-Indal: The Deal from Heaven? (A) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Philips-Indal: The Deal from Heaven? (A)
Philips' new venture integration (NVI) department is aware of the fact that many acquisitions turn into "deals from hell" instead of "deals from heaven." Its post-merger integration specialists have learned that cost synergies are far easier to realize than sales (or growth) synergies. Stimulated by the urge to grow, the NVI department has developed a new methodology called the "sales integration approach" to realize sales (or growth) synergies. It tries to implement this approach during the acquisition integration of Indal, a Spanish lighting company.The main challenge is presented by the shift in acquisition-integration capability following Philips' evolved corporate strategy. While historically Philips had a substantive acquisition program, Philip's new CEO has stressed the need for organic growth and set the stage for a series of medium and small acquisitions. Philips needs to become more customer-centric to increase corporate growth. This has required a focus not just on cost synergies (e.g., economies of scale and increased efficiency), but also on capturing sales (or growth) synergies. Philips-Indal must choose to defend regions in which it has a strong position or target regions where it has a weaker position. Furthermore, Philips' post-merger integration leader must choose an organizational structure for Philips-Indal and convince Indal's executive team to adopt the NVI department's sales integration approach. This case can be used with Lighting Up Philips' Asian Entertainment Activities (B) 9B14M019. Author Koen H. Heimeriks is affiliated with Tilburg University. Author Ruud Greenen is affiliated with Royal Philips.
Swot Analysis of "Philips-Indal: The Deal from Heaven? (A)" written by Koen Heimeriks, Ruud Geenen includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Philips Indal facing as an external strategic factors. Some of the topics covered in Philips-Indal: The Deal from Heaven? (A) case study are - Strategic Management Strategies, and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Philips-Indal: The Deal from Heaven? (A) casestudy better are - – increasing commodity prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, technology disruption, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing government debt because of Covid-19 spendings, digital marketing is dominated by two big players Facebook and Google, wage bills are increasing,
supply chains are disrupted by pandemic , increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Philips-Indal: The Deal from Heaven? (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Philips-Indal: The Deal from Heaven? (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Philips Indal, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Philips Indal operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Philips-Indal: The Deal from Heaven? (A) can be done for the following purposes –
1. Strategic planning using facts provided in Philips-Indal: The Deal from Heaven? (A) case study
2. Improving business portfolio management of Philips Indal
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Philips Indal
Strengths Philips-Indal: The Deal from Heaven? (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Philips Indal in Philips-Indal: The Deal from Heaven? (A) Harvard Business Review case study are -
Learning organization
- Philips Indal is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Philips Indal is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Philips-Indal: The Deal from Heaven? (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Analytics focus
– Philips Indal is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Koen Heimeriks, Ruud Geenen can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Innovation driven organization
– Philips Indal is one of the most innovative firm in sector. Manager in Philips-Indal: The Deal from Heaven? (A) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to lead change in Leadership & Managing People field
– Philips Indal is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Philips Indal in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High switching costs
– The high switching costs that Philips Indal has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Successful track record of launching new products
– Philips Indal has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Philips Indal has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Training and development
– Philips Indal has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Philips-Indal: The Deal from Heaven? (A) Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Diverse revenue streams
– Philips Indal is present in almost all the verticals within the industry. This has provided firm in Philips-Indal: The Deal from Heaven? (A) case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Ability to recruit top talent
– Philips Indal is one of the leading recruiters in the industry. Managers in the Philips-Indal: The Deal from Heaven? (A) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Effective Research and Development (R&D)
– Philips Indal has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Philips-Indal: The Deal from Heaven? (A) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Strong track record of project management
– Philips Indal is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Highly skilled collaborators
– Philips Indal has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Philips-Indal: The Deal from Heaven? (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Philips-Indal: The Deal from Heaven? (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Philips-Indal: The Deal from Heaven? (A) are -
Aligning sales with marketing
– It come across in the case study Philips-Indal: The Deal from Heaven? (A) that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Philips-Indal: The Deal from Heaven? (A) can leverage the sales team experience to cultivate customer relationships as Philips Indal is planning to shift buying processes online.
Skills based hiring
– The stress on hiring functional specialists at Philips Indal has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Philips-Indal: The Deal from Heaven? (A), it seems that the employees of Philips Indal don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Workers concerns about automation
– As automation is fast increasing in the segment, Philips Indal needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Interest costs
– Compare to the competition, Philips Indal has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Low market penetration in new markets
– Outside its home market of Philips Indal, firm in the HBR case study Philips-Indal: The Deal from Heaven? (A) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Philips-Indal: The Deal from Heaven? (A) HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Philips Indal has relatively successful track record of launching new products.
Slow to strategic competitive environment developments
– As Philips-Indal: The Deal from Heaven? (A) HBR case study mentions - Philips Indal takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Need for greater diversity
– Philips Indal has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Philips-Indal: The Deal from Heaven? (A), in the dynamic environment Philips Indal has struggled to respond to the nimble upstart competition. Philips Indal has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Products dominated business model
– Even though Philips Indal has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Philips-Indal: The Deal from Heaven? (A) should strive to include more intangible value offerings along with its core products and services.
Opportunities Philips-Indal: The Deal from Heaven? (A) | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Philips-Indal: The Deal from Heaven? (A) are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Philips Indal can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Philips-Indal: The Deal from Heaven? (A), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Philips Indal is facing challenges because of the dominance of functional experts in the organization. Philips-Indal: The Deal from Heaven? (A) case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Developing new processes and practices
– Philips Indal can develop new processes and procedures in Leadership & Managing People industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Leveraging digital technologies
– Philips Indal can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Philips Indal can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Buying journey improvements
– Philips Indal can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Philips-Indal: The Deal from Heaven? (A) suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Better consumer reach
– The expansion of the 5G network will help Philips Indal to increase its market reach. Philips Indal will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Philips Indal to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Using analytics as competitive advantage
– Philips Indal has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Philips-Indal: The Deal from Heaven? (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Philips Indal to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Philips Indal in the consumer business. Now Philips Indal can target international markets with far fewer capital restrictions requirements than the existing system.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Philips Indal in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Philips Indal can use these opportunities to build new business models that can help the communities that Philips Indal operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Loyalty marketing
– Philips Indal has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Threats Philips-Indal: The Deal from Heaven? (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Philips-Indal: The Deal from Heaven? (A) are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Philips Indal can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Philips-Indal: The Deal from Heaven? (A) .
Shortening product life cycle
– it is one of the major threat that Philips Indal is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High dependence on third party suppliers
– Philips Indal high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Philips-Indal: The Deal from Heaven? (A), Philips Indal may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
Increasing wage structure of Philips Indal
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Philips Indal.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Philips Indal.
Environmental challenges
– Philips Indal needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Philips Indal can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Philips Indal business can come under increasing regulations regarding data privacy, data security, etc.
Consumer confidence and its impact on Philips Indal demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Philips Indal in the Leadership & Managing People industry. The Leadership & Managing People industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Philips Indal will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Weighted SWOT Analysis of Philips-Indal: The Deal from Heaven? (A) Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Philips-Indal: The Deal from Heaven? (A) needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Philips-Indal: The Deal from Heaven? (A) is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Philips-Indal: The Deal from Heaven? (A) is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Philips-Indal: The Deal from Heaven? (A) is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Philips Indal needs to make to build a sustainable competitive advantage.
