PHILIPS HEALTHCARE

Porter’s Value Chain Model

Logistics

All the inbound and outbound logistics are outsourced to UPS.

On-site warehousing

Direct supply from manufacturing units.

Overview of Manufacturing

Manufacturing Plants

Strategic Acquisitions

Transnational Production Systems

Transnational Vertical Integration

A very high percentage of components and products is now purchased, rather than manufactured in-house.

Marketing Mix - Product

Imaging Systems Patient Monitoring

Informatics, Solutions & Services Customer Services

Marketing Mix - Product

35%

6%32%

27%

Total Sales as of 2014

Imaging Systems Informatics, Solutions & Services

Patient Monitoring Solutions Customer Services

Marketing Mix - Price

Pricing in terms of B2B.

• Who is the buyer?

• Competitors?

• Negotiation!

Different pricing strategy between different product lines.

• Important factors

• Technology and Innovation

Marketing Mix - Place

Marketing Mix - Promotion

Traditional

Medical Congresses

Conferences

Exhibitions of non-profit organisations for better health such as HIMSS

Digital

LEADERSHIP AND MANAGEMENT

“I want to enable our managers, local market teams and business units to take charge and to do what is best for Philips. A timely decision may be right or wrong; a decision that comes too late is always wrong. By allowing our market teams to resource to win, we can continue making successful investments. Innovation will remain a cornerstone of our strategy. Investing in innovation is part of investing in growth. But we must base our bets on a very profound understanding of local markets and customers.”

-Frans van Houten, President and CEO Royal Philips

McKinsey 7-S Framework

Shared Values

Structure

Style

Strategy

Skills

Staffs

System

Organisational Structure –Executive Committee

CEOFrans van Houten

Chief Strategy & Innovation OfficerJim Andrew

Chief Legal OfficerMarnix van Ginneken

Chief Human Resource OfficerDenise Haylor

Chief Market LeaderRonald de Jong

Chief Executive Officer Greater ChinaPatrick Kung

Chief Executive Officer Philips Consumer LifestylePieter Nota

Chief Executive Officer Philips LightingEric Rondolat

Chief Financial OfficerRon Wirahadiraksa

Chief Executive Officer Asean & PacificDamien Cummings

Chief Domestic AppliancesAndrea Ragneti

Human Resource

66

68

70

72

74

76

78

80

2009 2010 2011 2012 2013 2014

Employee Engagement Index

Employee engagement is the key to Philips competitive advantage

Human Resource - Training

Philips implement• online training course

for employees for General Business Principles

• e-learning where managers are invited to host dialogue sessions with their teams

Human Resource –Global Talent Acquisition Strategy

• Philips employee referral

• Internal Hire

• Proactively source by recruiter

• Digital career channel

• Philips careers website

Human Resource –Philips University• For Managers

• They implement one Central Management System to raise the quality of standardisation and simplification for managers of all levels.

• For Leaders

• In Leadership, academy delivers a simplified and comprehensive system of leadership initiatives to create a long term leadership pipeline at all levels and cross all parts.

Technology - Innovation

1st biphasic AED

1st US airline save

1st AED for children and infants

1st AED designed specifically for home

1st and only over the counter AED

1st AED to implement a ‘Quick Shock’ algorithm. Our AEDs are typically able to deliver a shock in less than 8 seconds after CPR.

Technology - Innovation

Philips builds relationships to improve innovation efficiency with

• Academic partners

• Industrial partners

around the world and they share the related financial exposure.

Open Innovation

• “Inside-out” innovation

o Make Philips’s skills and resources available to the outside world.

• “Outside-in” innovation

o Partnerships with organizations and governments (i.e. Salesforce.com)

R&Ds Around The World

Focus on research imaging product (i.e. X-ray)

Focus on research home healthcare products (i.e. sleep therapy systems) and early detection of disease (i.e. cardiology)

Focus on research clinical sites, provide clinical decision support and medical ultrasound

Research Centres

Aachen, Germany

Molecular Imaging Systems

Personal Health Solutions

X-Ray Imaging Systems

Hamburg, Germany

Diagnostic imaging systems

Image-guided intervention and

therapy

Medical image processing

Eindhoven, Netherlands

Diagnostic imaging

Patient care

Home healthcare

Shanghai, China

Chronic disease management

Imaging system solutions

Home healthcare for the Chinese market

Bangalore, India

Cardiology

Perinatal care

Women’s health

Cambridge, UK

Home healthcare for the UK market

Briarcliff, NY, USA

Controls, Communication, &

Healthcare Informatics

Clinical Informatics, Interventional, &

Translational Solutions

Ultrasound, Photonics, and Bioinformatics

Financial Management

3rd Party Payments

3rd Party Receivables

Inter-company transfers

Liquidity Management

Procurement

Perform and Transfer

Competitive networks or supplier ‘Ecosystems’

Policies and Procedures

Supplier Sustainability & Environment