Philips and the consumer lifestyle

The consolidation is in line with Philips's Dutch headquarters, which has been transforming itself from a sophisticated product-driven organisation into a consumer- and marketing-driven company. The change will be in both new product and organisational development.

"I have restructured our local business operation as well as our working process to be in line with our headquarters' policy to simplify and reduce any duplicated work occurring in our organisation," said Prakorn Makjumroen, who was appointed last year as the first Thai chairman and CEO of Philips Electronics (Thailand) in its 55-year history.

The appointment took effect in July, with Prakorn succeeding the retiring chairman and CEO Jan Eggebeen. He is responsible for overseeing the overall development and business operations of Philips Thailand.

"We previously had two general managers who looked after consumer electronics and small domestic appliances. We have merged them into a single product group -'consumer lifestyle' - combining the sales and marketing teams. The move will help our trade partners as well as consumers to contact and communicate with the company more easily through only one sales and marketing team. We will be able to encourage higher synergy among our sales and marketing staff in the organisation of any promotional campaign, event and product exhibition, and in the conducting of promotional plans," said Prakorn.

He said consumer electronics and small domestic appliances together contributed about 40 per cent of overall domestic sales. The company expects the new consumer-lifestyle product group to have higher growth than other segments.

Philips Electronics' headquarters in the Netherlands previously announced that it would simplify its business structure to create three core business sectors: healthcare, lighting and consumer lifestyle. The company wants to transform itself from vertical integration to customer focus.

Since 1996, Philips has been transformed from high-volume electronics towards a one-Philips strategy (2001 to 2003), to healthcare, lighting and consumer lifestyle (2004 to the present). The move will help the firm create a truly differentiated company amid a highly competitive environment.

Philips Electronics has also set its Vision 2010, with the ambition of significantly increasing shareholder value. The new business vision will be encouraged through improving the earnings before interest and tax amortisation (Ebita) margin of its current businesses to exceed 10 per cent and driving comparable sales growth at a minimum of 6 per cent compound average growth rate for the period 2008 to 2010.

The group wants to promote an efficient balance sheet by the end of 2009 through a combination of value-creating acquisitions and continued return of capital to shareholders.

Philips Electronics recently disclosed its 2007 business performance, which delivered on target in a challenging economic environment. The group's comparable sales increased 5 per cent to ¤26.7 billion (Bt1.2 trillion), reaching the target.

The group's Ebita was also up 49 per cent to 7.7 per cent of sales.

"In Thailand, we reached the sales target for 2007 with double-digit growth despite economic difficulties," said Prakorn.

He added that Philips had currently taken the No-1 market position in Thailand for lighting, electric irons and blenders, and a top-three position for consumer-lifestyle and healthcare products.

He added that the company would reinforce its leadership position for lighting products by offering energy-efficient solutions to consumers.

"For the consumer-lifestyle product group, we will increase the number of our sales promotion staff, who will be at all the points of purchase such as leading department stores and shopping malls, by 20 per cent'' said Prakorn.

Kwanchai Rungfapaisarn

The Nation