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0:00
I'm Shahid Zaki and I was
the ex-CEO of Philips Pakistan,
and I am now a visiting
professor at IBA.
I teach corporate strategy
and this case study
is on innovation in
lighting and how Philips
manages the strategy.
0:26
I will present a
case in such a way
that those who belong to
an academic environment,
they can view the case
and the solution slides
will come afterwards.
Now, this will enable them
to challenge the
student and they
might come up with better ways
to solve the case, so that's it.
I will also, in this case,
present what happened in
the future because we are
talking about Philips.
So, this will be
very interesting
and I have covered that as well.
1:03
It was back in 1895,
a long time ago,
Gerald Philips, an
engineer by profession,
decided to set up
his own company and he
started producing lamps.
Now sometime later,
there was a shortage of
cash flow and the company
ran into financial problems,
and that's when
his brother Anton,
a banker by profession,
joined the company.
Now, I think that this
was a learning lesson
and that has become
the part of their DNA,
and Philips has always
maintained an emphasis
on healthy cash flows,
which continues to be the
cornerstone of their strategy.
At the same time,
Philips had also
invested judiciously
in innovation and has
always entered the market
at an early stage of
the product lifecycle.
They however have a
tendency to leave
the market when
competitions become stiff,
especially between the late
maturity and decline stages.
So, when the market
gets tapering off,
that's when they
decide to leave.
It's only in one case,
and this case is of a digital
compact cassette (DCC),
and it's very important
to mention here. Philips,
despite being an innovator
of analog cassettes,
decided to continue in
the maturity and decline
stage, and tried to manage
the decline of the market
by introducing digital recording
on a cassette when
their own CD was also
appearing on the horizon,
and by CD, I mean
the compact disk.
They thought it is better
to have a combination
of digital recording on
tape as well as on CD,
and be aware the inventor
of the analog cassette.
