Shannon Dorsey Brian Patera Leslie Royer Hope Sutton Brandi Wisenbaker

History  1892: Philips & Co established  1912: Incorporated  1914: 1 st research lab established  Multiple reorganizations  Marketing changes “Let’s make things better.” “Sense and simplicity.”  2007: Vision 2010

Mission  "Improve the quality of people’s lives through timely introduction of meaningful innovations."

Vision and Values  “In a world where complexity increasingly touches every aspect of our daily lives, we will lead in bringing sense and simplicity to people.”  Delight Customers  Deliver Great Results  Develop People  Depend on Each Other

Sectors  Healthcare  Lighting  Consumer Lifestyle

Goals  Group EBITA: 10-11% in 2010 Healthcare EBITA: 15-17% Lighting EBITA: 12-14% Consumer Lifestyle: 8-10%  6% Sales growth for period  Return on invested capital: 12-13% in 2010

1 st Quarter 2010 Financials  Group EBITA: 9.8% Healthcare : 10.7% Lighting : 14.0% Consumer Lifestyle: 9.2%  Sales growth: 12% increase  ROIC

Financial Ratios Year Industry Ratio Current Quick D/A D/E Total Asset Turnover Net Profit Margin 15.30%4.60%25.30%-0.50%2.40%-4.60% Return on Equity 17.30%3.90%23.20%-0.50%2.80%-10.00% Return on Assets 8.50%2.30%13.80%-0.30%1.30%-33.60%

Internal Stakeholders Employees Board members Stockholders

External Stakeholders  Customers  Suppliers  Creditors  Government  Communities  General Public

Most Important Stakeholders  Customers  Employees  Stockholders

Strategies  Corporate Level Unrelated Diversification  Business Level Differentiation  Functional Level R&D, Marketing

Five Forces Analysis  Low Threat of Entry because of economies of scale, high start-up costs  Increased Rivalry because of consolidated industry, high exit barriers, declining demand, and high fixed costs.

Five Competitive Forces  Increased Threat of Substitutes because many competing brands offer similar products and no switching costs  Low Power of Buyers because there is a large number of buyers  Low Power of Suppliers because there are many supplier firms and the supplied input is not highly differentiated

Macroeconomic Forces  Global  Technological  Demographic  Social  Political & Legal  Macroeconomic

Competitive Advantage  Innovation*  Customer Responsiveness*  Efficiency  Quality

Core Competences  Humanities, design  Life sciences  Physics & Chemistry  Electronics  Informatics & mathematics  Technology, engineering

Corporate Governance  Two Tier System - Supervisory Board - Board of Management  Group Management Committee - Highest consultative body within Philips

Ethics  General Business Principles  Code of Ethics Act honestly & ethically Avoid conflicts of interest Comply with applicable govt laws, rules, regulations

Any Questions?