Aly Chadbourne
Andrew Diozzi
Gabriella
Solimando
James Barrett
Katie Canavan
Agenda
 Company Overview
 Company Organization
 International Management Strategy
 International Management Issues
 Policies
 Metrics Report
 Summary
Company Overview
•Founded in 1891 in Eindhoven, Netherlands
•Headquarters: Amsterdam, Netherlands
•Current markets in which Phillips serves:
•Consumer electronics
•Domestic appliances
•Lighting
•Medical systems & technology
Company Overview Continued
 165,000 employees
 Revenues of €25.42 Billion, which translates to $34.08B
 Main Competitors: GE, Sony, and Panasonic
 President and CEO: Frans van Houten
 Executive VP and CFO: Ron Wirahadiraksa
Company Organization Diagram
Phillips
Netherlands
Headquarters
CEO
Frans van Houten
Corporate Executives & Board Members
Australia
Brazil
Canada
China
Hong Kong
France
India
Israel
Mexico
Pakistan
Poland
UK
USA
International Management Strategy
 International Management Strategy
 Theory
and Process
 Management Importance
 Philips’ Strategy
 Multi-Domestic
 Differentiation
 Niche
Strategy
International Management Organizational Chart
Areas of Strategic Management
15%
35%
10%
25%
15%
Functional
Diversity
Leadership
Teams
Economic
Managerial Organizational Chart: China
Regional President
of China
Finance
Manager (2)
Sales Manager
(5)
Accounting
Manager (2)
Human
Resource
Manager (5)
Production
Manager (12)
Corporate
Strategy
Manager (2)
International Managers:
Positions and Compensation
Title / Position
Average Annual
Salary Per Person
Total Annual
Salary
Total Benefits
Cost
Total
Compensation
Regional
President
$200,000
$200,000 x 1 =
$200,000
$35,000 x 1 =
$35,000
$235,000 x 1 =
$235,00
Finance
Manager
$100,000
$100,000 x 2 =
$200,000
$22,000 x 2 =
$44,000
$122,000 x 2 =
$244,000
Sales Manager
$100,000
$100,000 x 5 =
$500,000
$22,000 x 5 =
$110,000
$122,000 x 5 =
$610,000
Accounting
Manager
$110,000
$110,000 x 2 =
$220,000
$25,000 x 2 =
$50,000
$135,000 x 2 =
$270,000
Human
Resource
Manager
Production
Manager
$95,000
$95,000 x 5 =
$475,000
$20,000 x 5 =
$100,000
$115,000 x 5 =
$575,000
$90,000
$90,000 x 12 =
$1,080,000
$18,000 x 12 =
$216,000
$108,000 x 12 =
$1,296,000
$100,000
$100,000 x 2 =
$200,000
$22,000 x 2 =
$44,000
$122,000 x 2 =
$244,000
Corporate
Strategy
Manager
International Management Issues
 Government Issues
 Cultural Issues
Power Distance
 Individualism
 Masculinity
 Uncertainty Avoidance
 Long Term Orientation

 Economic Issues
 Competition
Key Cultural Differences
Cultural Factor
Religion
Education
Economics
Politics
Family
Class Structure
Languages
History
Natural Resources &
Geography
United States
China
Protestant – 51.3%
Daoist, Buddhist – Primary
Roman Catholic – 23.9%
Christian 3% - 4%
Other – 24.8%
Muslim 1% - 2 %
Total of 16 years of schooling (primary education)
Total of 12 years of schooling (primary/tertiary
Literacy Rate 99%
education)
GDP -- 5.5% education expenditures
Literacy Rate 92.2%
Education expenditures – N/A
Largest and most technologically powerful economy in Market oriented and plays a major global role. In 2010
the world with a per capita GDP of $47,000.
China became the world’s largest exporter.
Market oriented economy – private individuals/firms GDP – 10.09 trillion
make most of the decisions and the federal and state
governments buy needed services predominantly in
the private marketplace.
Constitution-based federal republic; strong
Communist State
democratic tradition
Family oriented with regard to immediate family
Very family oriented -- expected to provide for your
members
family.
2.06 children born/woman
1.54 children born/woman
3 class system: upper, middle, and lower
5 classes: peasant class, working class, a capitalist
class, and a class of cadre, and quasi cadre
English is the official language – 82.1% of population Standard Chinese or Mandarin
Spanish – 10.7%
For centuries China stood as a leading civilization,
Britain’s American colonies broke away from the
mother country in 1776. The colonies were recognized outpacing the rest of the world in the arts and
as the United States of American in 1783.
sciences.
The US remains the world’s most powerful nation
Living standards have improved and the room for
state. Since the end of World War II, the economy has personal choice has expanded, although political
achieved relatively steady growth, low unemployment controls remain tight.
and inflation, and rapid advances in technology.
3rd largest country with a total area of 9,826,675 sq km 4th largest country with a total area of 9,596,961 sq km
Coal, copper, lead, molybdenum, phosphates, rare
Cole, iron ore, petroleum, natural gas, mercury, tin
earth elements, mercury, nickel, silver, petroleum
People Philips Needs to Succeed
 Need a lot of new managers and chief officers in our
China divisions



Head of East Asia sector
Head of China division
Head of various cities
 Sub


managers for hr, legal, financial, operations, etc
Need new hires for all of the China divisions
Need initial employees to come in and train from the US and
other countries
People Philips Needs to Succeed
Sales
Managers
New Hires
Client Services
Training Methods
 In order to train our employee we will use current
employees and training agencies
 Training our Chinese employees in most effective
way is crucial

Especially in the healthcare industry
 HeartStart
Training
 Transition Strategies
Training Methods
 Teambuilding really important
 Courses
 Television satellites
 Coaching
 Situational Training (Role Playing)
 Exams
Manager Development Process
Promote sense, simplicity, and
sustainability in the healthcare,
lifestyle, and lighting industries
through research and development
and innovation
Invest a lot in research and
development and slowly start to
expand its healthcare, lifestyle, and
lighting segments in China through
our analysis of the r and d. Need to
constantly evaluate and review our
strategies
Need to have multiple managers
and chief officers who work
together to select proper trainers
and employees who will continue to
help the company grow and expand
The healthcare, lifestyle, and
lighting segments will succeed in
China
After employees and managers
have been properly trained, they
will use their new found skills to
promote innovation and
sustainability and expand all of
Philips segments into China
International Management Metric Report
• Four main focuses on how we plan to expand our
income.
• Business Results/Outcomes
• Cost
• Management Retention
• Employee Relationship/Capacity
Business Results & Overall Outcomes
 Evaluate our company’s profits, losses and return on
investments.
 Regularly check our bottom-line performance
 Six Sigma
 Quality control system
 Lean manufacturing
 Production defects
Higher sales and limit discrepancies
Cost
 In order to increase our profits we must find a way to lower
costs all together
 Invest a lot of time and money on finding people that
contain the managerial assets that our company requires
 Beijing has considerable lower costs than Netherlands
Production/manufacturing
 Labor

Management Retention
 Management is an important asset
 Consistent progression for improvement
 We are seeking for people who have the communication
skills and who are knowledgeable on the Chinese market
 Our managers are expected to be able to provide
information to us, as well as be able to connect Phillips to
our customer base in China
 Increasing trends in sales
Employee Capacity
 Want to expand our employee capacity along with
increase our employee relationship

After we ensure employee happiness we plan to expand our employee
capacity, which in turn correlates to our company’s growth in China
 It is crucial being in a collectivist country we need to
adopt their way of developing a relationship internally


GuanXi
Happy Employee means a satisfied customer experience
Success
 We measure our success through our bottom-line
(Profits & Losses)
 Expansion is very important to us; therefore, we plan
to develop our employee capacity


Expect that we will have a 40% increase with our Chinese
employees
10 % increase in our profits
Summary
• China has the worlds largest Population
• Available workforce
• Old and Complex Chinese Culture
• Worlds largest exporter
Summary
 Invest in Research and Development
 Segment expansion to China
 Healthcare, Lifestyle, and lighting
Thank you for listening!
 Questions?
Company Description:
“Royal Philips Electronics of the Netherlands is a diversified Health and Well-being company,
focused on improving people’s lives through timely innovations. As a world leader
in healthcare, lifestyle and lighting, Philips integrates technologies and design into people-centric
solutions, based on fundamental customer insights and the brand promise of sense and
simplicity.” i
Phillips was founded back in 1891 in Eindhoven, Netherlands as a company that manufactured
light bulbs. Present day, Phillips in #1 in the world in terms of light bulb manufacturing and
distribution worldwide. This however was just the stepping stone for Phillips as for the past
century they have created many products ranging from x-ray tubes, radios, televisions, to modern
day MRI (magnetic resonance imagery) machines. Today they are considered to be one of the
leaders in consumer electronics and medical technology throughout the world.
Phillips currently operates in 60 countries with just over 165,000 employees worldwide. Its
current world headquarters is located in Amsterdam, Netherlands. Although Phillips is
considered a world leader in innovation they do have quite a few competitors such as LG,
General Electric (GE), Sony, Panasonic, and Fujitsu Limited to name a few. Phillips products
can be found in almost every establishment or retail provider throughout the world in terms of
retailers selling Phillips brand products to establishments using Phillips brand products to keep
their business running.
Lately Phillips has been making strides towards a more profitably and efficient company.
“Philips has been dumping noncore businesses -- such as its stakes in TSMC, LG Display, and
music giant PolyGram -- while acquiring and forming JVs in its fast-growing businesses:
healthcare, energy-efficient lighting, and lifestyle products. The company's presence in
developing markets generates about one-third of its sales.” ii
Company Highlights:
Name: Royal Phillips Electronics N.V.
Location: Amsterdam, Netherlands
Company Annual Revenue: €25.42 Billion (2010)
Number of Employees: 165,000
Type of Business: Healthcare, Lifestyle, & Lighting
Purpose of the Business: To focus on improving people’s lives through timely innovations.
Company Strategic Plan and Goals:
Phillips has projected for (mid-term 2013), “comparable sales growth of 4-6% assuming real
GDP growth of 3-4% per annum, reported EBITA margins of 10-12% for the group; 15-17% for
Healthcare, 8-10% for Consumer Lifestyle (excluding licenses), and 8-10% for Lightings.
1
Phillips is also projecting a return on invested capital of 12-14%.” iii As a company we strive to
be a competitive market provider within our industry. We want to maintain a significant part of
the market share as well. We intend to improve our company’s international business. We
believe that entering into China will provide great opportunities for our company because of their
large population. We will continue to differentiate our products from competitors and strive to be
the front runner within our industry.
2
CEO
Frans van
Houten
Australia
Brazil
Canada
China
Hong
Kong
France
India
Israel
Mexico
Pakistan
Poland
UK
3
USA
Multinational corporations use strategic management in their global operations which sets the
course for the company’s future to expand internationally. There are certain strategies that are
consistent across markets and others that are specific to a regional situation. Strategic
management is the process of determining an organization’s basic mission and long term
objectives and then implementing a plan of action for reaching these goals. It was once
considered the middle managements responsibility to implement strategies until companies
realized that it is imperative for all levels of management to implement the strategies within that
organization. Today, in most organizations it is the top management’s responsibility for setting
the strategy for the company. Managers that are involved in the strategic plans are the most
informed and effective managers.
It is necessary for multinational corporations to have strategic management in order to monitor
their increasingly diversified operations in a continuously changing international environment.
The need for strategic management is specifically necessary due to the amount of foreign direct
investment that has occurred in the past couple of years. “Statistics reveal that FDI has grown
three times faster than trade and four times faster than world gross domestic product.”iv Because
foreign direct investment is growing at such a rapid pace, is necessary to establish and integrate
diverse operations with a cohesive focus.
There are many benefits of strategic planning and many multinational corporations depend on
strategic planning for success. Strategic planning benefits multinational corporations and allows
for them to organize and monitor their operations and deal with political risk, competition, and
currency instability but it does not guarantee success. Strategic planning, although beneficial to
multinational corporations, does not always result in higher profitability especially when one
strategy is used in many different cultures. Decisions cannot be made with regard to strategic
planning in the home office all factors need to be taken into consideration and in some instances
the “home office” needs to be ignored when implementing strategic planning.
There are four common approaches to formulating and implementing strategy including:
focusing on the economic imperative, addressing the political imperative, emphasizing the
quality imperative, and implementing an administrative coordination strategy. Many large
multinational corporations combine aspects of the economic, political, quality and administrative
approaches when formulating and implementing a strategy.
The economic imperative is a worldwide strategy based on cost leadership, differentiation, and
segmentation. In order to expand profit growth within a company it is necessary for the middle
management to develop their efforts on an international level and to teach those efforts to new
managers as well. “Many of these companies typically sell products for which a large portion of
value is added in the upstream activities for the industry’s value chain. Multinational
corporations that focus on economic imperative have products where most of their value has
been created through research and development, manufacturing and distribution prior to the
product being sold. Many of the industries within this group include products that are essentially
homogeneous and do not need to be altered to fit the needs of the specific country. Global
4
sourcing is another economic imperative which is useful in formulating and implementing
strategy. Global sourcing also allows for manufacturers to reach into the supply chain and
shorten the buying cycle. v
Multinational corporations that use the political imperative approach are country-responsive and
their approach is designed to protect local market niches. Industries within the political
imperative have a significant portion of their value added in the downstream activities in the
value chain. The success of these products and services are dependent on marketing, sales, and
service. These multinational corporations use country-centered or multi-domestic strategies. vi
The quality imperative has two paths: a change in attitudes and a raising of expectation for
service quality and the implementation of management practices that are designed to make
quality improvement an ongoing process. Total quality management is a key aspect of quality
imperative. Total quality management includes cross-training personnel to do the jobs of all
members in their work group, process re-engineering designed to help identify and eliminate
redundant tasks and wasteful effort, and reward systems and reinforce quality performance.
Quality is determined by meeting customer expectations not only as an external user but also
everything associated with the organization. The quality strategy is formed within the top
management level and is evident throughout the entire organization. “Total quality management
techniques range from traditional inspection and statistical quality control to cutting-edge human
resource management techniques, such as self-managing teams and empowerment.” vii
Multinational corporations incorporate quality as a major aspect of their overall strategy in order
to increase market share and profitability. “A growing number of MNCs are finding that they
must continually revise their strategies and make renewed commitment to the quality imperative
because they are being bested by emerging market forces.” viii Multinational corporations must
always be researching and implementing new strategies and innovations in order to remain
strong competitors within their industry. ix
Administrative coordination is the approach to formulation and implementation where
multinational corporations make strategic decisions with regard to merits of a specific situation
rather than using a predetermined political or economic strategy. “Many large MNCs work to
combine the economic, political, quality, and administrative approaches to strategic planning.” x
The administrative coordination strategy is implemented when a rapid, flexible decision is
needed. Often times aspects of the economic, political, quality, and administrative approaches to
strategic planning are combined in order to create the most effective strategy for multinational
corporations. xi
International Management Strategy for Philips
Philips electronics focuses on a multi-domestic strategy which is a differentiated strategy
emphasizing local adaption. A multi-domestic strategy is used for niche companies to adapt
products to satisfy the high demands of differentiation and ignore economies of scale because
integration is not important. Philips is an example of a multi-domestic strategy specifically with
regard to the medical equipment provided to doctors. As the medical world becomes more
complex, Philips needs to find new innovative ways to simplify their machines they provide to
doctors in order to give doctors quick and accurate results. Because the medical systems of each
5
country vary the products must be adapted and adjusted to the particular medical environment.
“Philips recently sought out opinions from board members, and even asked for participation of
fashion designers, to better understand different strategic methods.” xii With the use of a multidomestic strategy, Philips is able to offer differentiated products. xiii A fully multi-domestic value
chain will have include all functions from research and development to distribution and service
performed entirely at the local level in China. If Philips implements a multi-domestic strategy
they will experience innovation from local R&D, entrepreneurial spirit, products tailored to
individual countries, and high quality due to backward integration. xiv
Philips will also set its sights on export sales and international market development and will
strive to promote international sales. Philips will work closely with other internationally
renowned professional companies who also have the same goal. Philips will sign agreements
with internationally renowned medical institutions to use their products which will secure longer
term sales orders and the company is then able to keep its current sales volume at a steady rate. xv
Strategic Areas of Management
Managers play a key role of success of Philips. It is essential for managers to be involved in the
entire decision making process and strategy implementation in order for a multinational
corporation such as Philips to be successful. “International management is the process of
applying management concepts and techniques in a multinational environment and adapting
management practices to different economic, political, and cultural contexts.” xvi In order to be an
effective manager, managers most have excellent leadership skills and implement the company
strategy throughout all levels of the organization. It is also important for the management team to
be diverse and include managers with various backgrounds and opinions in order to implement
an effective strategy across the board. Viewing coworkers as teammates is also important
because each and every employee needs to have respect for one another in order for Philips to be
a successful and profitable company. Economics are another key factor within strategic
management because managers need to be aware of the economic position of various countries
and in this case China. The most important area of strategic management is functionality because
this is the aspect that provides the products and generates the revenue.
Areas of Strategic Management
10%
15%
25%
35%
15%
Functional
Diversity
Leadership
Teams
Economic
6
Regional President of China: The regional president is the administrator in charge of
management in the China area.
Finance Manager: The finance managers are experts with regard to the funds within the
company.
Sales Manager: The sales managers are in charge of the implementation of sales techniques and
the management of a company’s sales operations.
Accounting Manager: The account managers are in charge of recording and summarizing
money and transactions and interpreting the results.
Human Resource Manager: The human resource managers are in charge of training and hiring
all employees within the company.
Production Manager: The production managers deal with the planning, forecasting, and
marketing of our products at all stages of the product lifecycle.
Corporate Strategy Manager: The corporate strategy managers must develop the company’s
strategy and oversee that all levels of the management team are implementing the strategy.
International Management Compensation Plan
Title / Position
Regional
President
Finance
Manager
Sales Manager
Accounting
Manager
Human
Resource
Manager
Average Annual
Salary Per Person
$200,000
$100,000
$100,000
$110,000
$95,000
Total Annual
Salary
$200,000 x 1 =
$200,000
$100,000 x 2 =
$200,000
$100,000 x 5 =
$500,000
$110,000 x 2 =
$220,000
$95,000 x 5 =
$475,000
Total Benefits
Cost
$35,000 x 1 =
$35,000
$22,000 x 2 =
$44,000
$22,000 x 5 =
$110,000
$25,000 x 2 =
$50,000
$20,000 x 5 =
$100,000
Total
Compensation
$235,000 x 1 =
$235,00
$122,000 x 2 =
$244,000
$122,000 x 5 =
$610,000
$135,000 x 2 =
$270,000
$115,000 x 5 =
$575,000
Regional
President of
China
Finance Manager
(2)
Sales Manager
(5)
Accounting
Manager (2)
Human Resource
Manager (5)
Production
Manager (12)
Corporate
Strategy
Manager (2)
7
Production
Manager
Corporate
Strategy
Manager
$90,000
$100,000
$90,000 x 12 =
$1,080,000
$100,000 x 2 =
$200,000
$18,000 x 12 =
$216,000
$22,000 x 2 =
$44,000
$108,000 x 12 =
$1,296,000
$122,000 x 2 =
$244,000
At Philips, the CEO, Board of Directors, and Senior Vice Presidents are responsible for the
above international management department plan. The plan is measured by the overall costs
incurred and the efficiency and profitability of the company as well.
8
system that plays a major global role. In 2010 China became the world’s largest exporter.
Economic: China has moved from a closed, centrally planned system to a market-oriented
China is a long term oriented society where persistence and perseverance are normal. xix
to 80% of Chinese businesses are small to medium sized and family owned. With a score of 118,
Chinese are comfortable with ambiguity. The Chinese are adaptable and entrepreneurial and 70%
the Chinese culture. China has a low score for uncertainty avoidance, 30, which shows that the
they will sacrifice their family and other priorities to work. Leisure time is not important within
are a masculine society, success oriented and driven. Success is so important to the Chinese that
prevail over tasks and the company. China scored a 66 for masculinity which illustrates that they
themselves. The employee commitment in the Chinese culture is low and personal relationships
they are a highly collectivist culture where people act in the interests of the group rather than for
people do not strive beyond their rank. For individualism, China scored 20 which indicates that
formal authority and have a great deal of respect for their superiors. In the Chinese culture
they believe that inequalities amongst people are acceptable. Individuals are influenced by
cultural dimensions. With regard to power distance, China has a score of 80 which indicates that
order to fully understand culture within China we must carefully analyze Geert Hofstede’s five
need to take pay close attention to the factor and insure that we abide by all cultural values. In
Cultural: Because Chinese culture is one of the world’s oldest and most complex cultures we
municipal levels must be made six months prior to the expiration date. xviii
must be indicated prior to the expiration of the production license and autonomous regions or
Production licenses are valid for five years and application for renewal of production licenses
indicate the number of the production license on their products or on the packaging and manual.
license are not able to produce anything listing in the Catalogue. Enterprises must clearly
supervision for products within the Catalogue. Enterprises that are not given the production
implements cohesive unified inspection requirement, unified certification mark, and unified
industrial product production licensing supervisory department under the State Council. China
and personal and property safety.” xvii The Catalogue is formulated and published by the
licensing management over key industrial products which concern human health, public safety,
China are much different than the policies in the United States. “China exercises production
Philips have an increased interest in doing business in eastern Asia. Government policies in
Government Regulations: Due to China’s phenomenal economic growth companies such as
Philips will be a successful and profitable company within China.
workforce, and diversity. With extensive research and the acknowledgment of these key factors,
attention to include: government regulations, cultural, economic, legal, political, geographic,
order to be certain that Philips will be profitable in China. Key factors that need to be paid close
operations across cultural boundaries we need to ensure that we research all aspects of China in
international management strategy for China. As it is very difficult to manage business
There are many international management issues that need to be noted when forming the
9
“Reforms began with the phasing out of collectivized agriculture, and expanded to include the
gradual liberalization of prices, fiscal decentralization, increased autonomy for state enterprises,
creation of a diversified banking system, development of stock markets rapid growth of the
private sector, and open to foreign trade and investment.” xx The resulting efficiency gains from
the restructuring of the Chinese economy have led to a significant increase in GDP since 1978.
In 2010 China stood as the second-largest economy in the world after the US after passing Japan
in 2001. Although the Chinese economy has greatly improved within the last thirty years, there
are two economic problems China currently faces – inflation and local government debt.xxi
Competition: Philips electronics is categorized in an extremely competitive market. It is
imperative that the international managers are aware that in order to succeed in regions such as
China that we must pay close attention to our competition. Our profits and success within China
will be negatively affected if we are not aware of the various strategies of our competition.
Key Cultural Differences Between the United States and China
Cultural Factor
United States xxii
China xxiii
Protestant – 51.3%
Daoist, Buddhist – Primary
Religion
Roman Catholic – 23.9%
Christian 3% - 4%
Other – 24.8%
Muslim 1% - 2 %
Total of 16 years of schooling
Total of 12 years of schooling
Education
(primary education)
(primary/tertiary education)
Literacy Rate 99%
Literacy Rate 92.2%
GDP -- 5.5% education expenditures Education expenditures – N/A
Largest and most technologically
Market oriented and plays a major
Economics
powerful economy in the world with global role. In 2010 China became
a per capita GDP of $47,000.
the world’s largest exporter.
Market oriented economy – private
GDP – 10.09 trillion
individuals/firms make most of the
decisions and the federal and state
governments buy needed services
predominantly in the private
marketplace.
Constitution-based federal republic; Communist State
Politics
strong democratic tradition
Family oriented with regard to
Very family oriented -- expected to
Family
immediate family members
provide for your family.
2.06 children born/woman
1.54 children born/woman
3 class system: upper, middle, and
5 classes: peasant class, working
Class Structure
lower
class, a capitalist class, and a class of
cadre, and quasi cadre
English is the official language –
Standard Chinese or Mandarin
Languages
82.1% of population
Spanish – 10.7%
10
History
Natural
Resources &
Geography
Britain’s American colonies broke
away from the mother country in
1776. The colonies were recognized
as the United States of American in
1783.
The US remains the world’s most
powerful nation state. Since the end
of World War II, the economy has
achieved relatively steady growth,
low unemployment and inflation,
and rapid advances in technology.
3rd largest country with a total area
of 9,826,675 sq km
Coal, copper, lead, molybdenum,
phosphates, rare earth elements,
mercury, nickel, silver, petroleum
For centuries China stood as a
leading civilization, outpacing the
rest of the world in the arts and
sciences.
Living standards have improved and
the room for personal choice has
expanded, although political controls
remain tight.
4th largest country with a total area
of 9,596,961 sq km
Cole, iron ore, petroleum, natural
gas, mercury, tin
11
Philips should definitely follow these strategies when expanding to China. Much of the Chinese
provide competitive compensation and benefits packages, and finally to select the right people.
appoint competent leaders, to establish an appropriate organization and culture for China, to
retention and engagement in China. The five strategies are: to create a learning organization, to
practical strategies for multinational corporations to embrace if they want to improve employee
difficulties are magnified by the talent shortage.” xxvi. The China Talent Paradox provides five
of the future are difficult tasks in any market. For foreign companies operating in China, the
operating in China, “Recruiting the right people, retaining the best staff and developing leaders
According to Jeffrey A. Joerres who is the chairman and CEO of a multinational corporation
talent shortage, and many companies are struggling to retain their management and employees.
issues with China. Many multinational corporations are struggling in China because there is a
Even though there is a large available workforce in China, there are also some human resources
corporation run smoother and more effectively.
promote teambuilding as much as we can, because we believe overall it helps make the
is very important to the Philips Corporation, and we definitely want to make sure that we
training where they will role play and be interactive with one another. Promoting teambuilding
satellites, through coaching, through exams that they will need to pass, and through situational
Managers will be trained using classroom style lecture courses, live broadcasts from TV
effectively manage and interact with people from different cultures and countries.
and different laws that they abide by, and it is very important that managers learn how to
with their personnel in particular.” xxv. Different cultures have different ethics, different values,
going overseas is “to improve their ability to interact effectively with local people in general and
communication between various countries. Another reason it is necessary to train managers
effectively.” xxiv. This helps to overcome ethnocentrism, and it can help to improve
for training relate to the enterprise at large and its efforts to manage overseas operations more
Training our managers will be crucial to the success of Philips in China. “Organizational reasons
assist with training.
will also hire an agency and use Philips employees from other countries to come into China and
in our early stages of implementation, and more will be more needed the more we expand. We
the various branches. We will need approximately 5,000 new employees for our China division
the East Asia division, and the manager of the China division. We will also have managers for
Officers and managers to manage the various divisions we will have, for example the manager of
they have experience and are very knowledgable of the Philips Corporation. We will need Chief
lot more employees. We would need to bring over a lot of managers from other countries since
In order to expand our healthcare, lifestyle, and lighting segments into China, we would need a
expanding into China would be the available workforce.
expand into China. There are endless opportunities in China, and one of the main benefits of
Because China has the world’s largest population, it would be extremely beneficial for Philips to
12
population is extremely well-educated, and these people could definitely help to benefit Philips
as potential new employees.
13
Philips Business Goals are to promote sense, simplicity, and sustainability in the healthcare,
lifestyle, and lighting industries through research and development and innovation. Philips
wants to invest a lot of its money into research and development, and slowly start to expand its
healthcare, lifestyle, and lighting segments into China. We need to carefully analyze our
research and development so that we can alter our strategies if need be. In order to expand into
China we will need to have multiple managers and chief offices who will work together to select
proper trainers and employees that will continue to help the company grow and expand. We will
train current Philips’ managers in other countries so that they are able to smoothly make the
transition to China and into the Chinese market.
Once the employees and managers have been properly trained, they will then use their new found
skills to promote innovation and sustainability, and to expand all of the Philips segments into
China. Once the management development process is complete, our business goals will be
achieved, and the healthcare, lifestyle, and lighting segments will succeed in China. Philips
hopes to make substantial profits from this expansion into China, and hopefully if we follow our
processes the transition will run smoothly.
14
Promote sense, simplicity, and
sustainability in the healthcare,
lifestyle, and lighting industries
through research and
development and innovation
Invest a lot in research and
development and slowly start to
expand healthcare, lifestyle, and
lighting segments in China
through our analysis of the r and
d. Need to constantly evaluate
and review our strategies
Need to have multiple managers
and chief officers who work
together to select proper trainers
and employees who will continue
to help the company grow and
expand
The healthcare, lifestyle, and
lighting segments will succeed in
China
After employees and managers
have been properly trained, they
will use their new found skills to
promote innovation and
sustainability and expand all of
Philips segments into China
15
In the International Management Metrics Report we will be focusing mainly on measures that
will sustain a profitable future for our company in Beijing, China. We divided the measures into
four individual categories. We, at Phillips, believe that if we can have full control of the Overall
Outcomes/ Business Results, Cost, Management Retention and Employee Capacity it will benefit
our company and ensure that we will have a consistent growth pattern.
Overall Outcomes/Business Results is very important to our company’s international status. In
order for us to keep track of our financial performances we need to evaluate our company’s
profits, losses and return on investments.To make sure there are no price manipulations in our
financial data, we will have a group regularly check our bottom-line performance. Here at
Phillips, we also care a lot about quality performance; therefore, we will hire a quality control
circle that meet on a regular basis to discuss ways of improving the quality of work. Our goal is
to provide our clientele with qualified goods and services, especially while we are abroad. By
keeping record of our bottom-line performances (profits and losses), as well as our quality
performances we will be opening up future markets that our company will be able to prosper in.
Before we enter the foreign market we will have an establish mission statement because we want
to sustain success and steal customers from our competition. The mission statement will show
the economy that our company has goals, and that we take pride in our career development as an
investment in this foreign market. The last business strategy that we will embrace in the Chinese
Market in Six Sigma, which is a quality-control system designed to tackle problems such as
production defects, and lean manufacturing, which aims to remove all processes that do not add
value to our final product. By doing this we will be able to limit any wasteful costs to our
production. Therefore, adding to our company’s income. We plan to hire ten to eighteen experts
from various departments to work on improvement. These experts meet regularly to find ways to
improve our business production. Our goal here is to present the team members with rewards to
give them incentives to do well. This will eventually increase our profits because happy
employee’s results in higher sales and a positive bottom-line.
The next measure that we will be monitoring is Cost. By entering into the Asian market place we
will be investing in a low-priced economy from the start. We plan to increase our profits by
being able to embrace the low-cost labor. However, we have to be careful that we do not take
advantage of the low cost labor fees. Because we are in this foreign market, we are going to
invest in employee training from the start. Are goal is to invest a lot of money into educating our
company to become familiar with our strategy to break through the market of this foreign
culture. We need to record all company costs because it is crucial to know how much money we
are investing, especially in regards to our new store location and manufacturing our goods and
service. Keeping our financial movements visible for us to see the trend of our costs is important
because we will need to adjust our company’s strategy if our costs increase or decrease
substantially.
16
The third main focus that our company is going to manage abroad in China is Management
Retention. Especially being in a foreign country this is a crucial quality that we take very
seriously and strive to have a consistent progression of improving our management process. Here
at Phillips we acknowledge the fact that Management is key to success. Being in Beijing we are
going to invest a lot of time and money on strategically finding people that contain the
managerial assets that our company requires. These people not only have to be knowledgeable
on the Chinese market, but they also need to have a good understanding of how to direct Phillips
to success. We are looking for people who can communicate with our Chinese clientele along
with adding positive feedback to Phillip’s business environment. The most important focus that
our managers are expected to accomplish is being able to provide information to us, as well as
being able to connect Phillips to our customer base. Our advantage for possessing educated
managers will in return provide us with an increasing trend in sales. Being in Beijing, with the
population increasing, we find it critical that we higher younger managers that will provide us
with many years of young talent that we can mold into our business environment.
Our last measure is to possess a stable Employee Capacity. We want to expand our business;
therefore, we need to provide our customers with a good environment that they are comfortable
in. After we ensure employee happiness we plan to expand our employee capacity, which in turn
correlates to our company’s growth in China. By making sure that we acquire employee
satisfaction, we will be directly affecting our customers experience in all Phillips stores. By
providing our customers with a positive experience we will be generating positive profit trends,
which will be a constructive asset to our company’s expansion in China, and eventually to more
foreign markets. Especially in China where they are a collectivist culture, building a relationship
with our employees is critical to become a lucrative multinational corporation in China. We
realize that we need to put forth a lot of time and be patient when building our Guan Xi
internally amongst our employees.
17
company to expand into other similar markets that will give us a profitable future.
we will have an advantage against our competitors as well as have a greater opportunity for our
around a 40% increase from just being in China for the first five years. If we can reach our goals
obtain a 10% increase in profits, as well as have a substantial increase in employees, estimating
our product to as many people as possible and continue are corporation growth. We are hoping to
Being in Beijing where it is overpopulated we want to expand our company so we can present
other trends to our International Management plan in order for us to be successful in China.
Here, at Phillips, we measure our success with the bottom-line; however we have to consider
18
issues>.
Journal. Web. 03 Dec. 2011. <http://65.38.6.103/Read/2501/report-china-struggles-with-people-management"Report: China Struggles with People Management Issues." Reliable Plant Magazine and Lean Manufacturing
Luthans, 525.
Luthans, 524
<https:www.cia.gov/library/publications/the-world-factbook/geos/china.html>.
Central Intelligence Agency, The World Factbook: China, December 2, 2011,
xxiii
<https:www.cia.gov/library/publications/the-world-factbook/geos/us.html>.
Central Intelligence Agency, The World Factbook: United States, December 2, 2011,
xxii
“Guide to Selling in China”
xxi
“Guide to Selling in China”
xx
hofstede.com/china.html>.
"China - Geert Hofstede." Professor Emeritus - Geert Hofstede. Web. 03 Dec. 2011. <http://geertxix
“Guide to Selling in China”
xviii
“Guide to Selling in China”
xvii
Luthans, 4.
xvi
Management-System.html>.
<www.hktdc.com/info.mi.a.bgdscn/en/1X05VV87/1/Guide-To-Selling-In-China/5-1-Production-Licensing"Guide to Selling in China." HKTDC. Web. 02 Dec. 2011.
xv
Marketing, Operations, Statistics, Strategy. Web. 02 Dec. 2011. <http://www.quickmba.com/strategy/global/>.
"Global Strategy." QuickMBA: Accounting, Business Law, Economics, Entrepreneurship, Finance, Management,
xiv
Luthans, 279
xiii
Luthans, 279.
xii
Luthans, 277.
xi
Luthans, 277.
x
Luthans, 276
ix
Luthans, 276.
viii
Luthans, 276.
vii
Luthans, 274.
vi
Luthans,274.
v
McGraw-Hill, 2012. 272. Print.
Luthans, Fred, and Jonathan P. Doh. International Management: Culture, Strategy, and Behavior. New York, NY:
iv
<http://www.philips.com/about/company/missionandvisionvaluesandstrategy/index.page>.
"Philips - Vision and Strategy." Home - Royal Philips. 19 July 2011. Web. 06 Dec. 2011.
iii
1.html>.
from Hoovers. Web. 06 Dec. 2011. <http://www.hoovers.com/company/Royal_Philips_Electronics_NV/crxtyi"Royal Philips Electronics N.V. | Company Profile from Hoover's | 31-40-27-91111." Hoovers | Business Solutions
ii
<http://www.usa.philips.com/about/company/index.page>.
"Philips - Company Profile." Home - Royal Philips. 28 Apr. 2010. Web. 06 Dec. 2011.
i
xxvi
xxv
xxiv
19
STONEHILL COLLEGE
Philips Electronics
International Management Final Paper
Katie Canavan, Jimmy Barrett, Gabriella Solimando, Andrew Diozzi, & Aly Chadbourne
12/8/2011
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