1. Shannon Dorsey Brian Patera Leslie Royer Hope Sutton Brandi Wisenbaker

2. 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

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

4. 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

5. Sectors  Healthcare  Lighting  Consumer Lifestyle

6. Goals  Group EBITA: 10-11% in 2010 Healthcare EBITA: 15-17% Lighting EBITA: 12-14% Consumer Lifestyle: 8-10%  6% Sales growth for period 2008-2010  Return on invested capital: 12-13% in 2010

7. 1 st Quarter 2010 Financials  Group EBITA: 9.8% Healthcare : 10.7% Lighting : 14.0% Consumer Lifestyle: 9.2%  Sales growth: 12% increase  ROIC

8. Financial Ratios Year20052006200720082009Industry Ratio Current 1.441.641.851.351.481.80 Quick 1.181.321.520.961.121.40 D/A 0.500.40 0.510.52- D/E 0.270.170.160.270.290.50 Total Asset Turnover 0.750.690.740.830.760.80 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%

9. Internal Stakeholders Employees Board members Stockholders

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

11. Most Important Stakeholders  Customers  Employees  Stockholders

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

13. 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.

14. 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

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

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

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

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

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

20. Any Questions?