BRAND RATIONALIZATION FOR PHILIPS LIGHTING Phillips, a multinational conglomerate has been successful with many of the businesses it’s forayed into, and has its share of failures too leading to rationalization of many of its brands and even businesses. The company’s businesses can be categorized into: Healthcare, Consumer Goods and Lighting Solutions. Healthcare Division serves mainly the hospitals markets by providing healthcare equipment, while consumer goods targets all income levels of the market, and lighting solutions catering to business and professional and office lighting and the consumer lighting for the mass consumer market. Lighting Solutions over the years has become a trouble for the running of the company due to its lesser profitability …show more content…
Below is a snapshot of the financial statements of the preceding 3 years of all the divisions. Sales Income from Operations As a % Sales 2011 2012 2013 2011 2012 2013 2011 2012 2013 Healthcare 8852 9983 9575 27 1026 1315 0.3 10.3 13.7 Consumer Lifestyle 3771 4319 4605 109 400 429 2.9 9.3 9.3 Lighting 7638 8442 8413 -408 -66 489 -5.3 -0.8 5.8 In my opinion, Phillips should go for a brand rationalization of its Lighting Division due to the following reasons: • Even though the gross sales of the lighting division are growing, the income from operations was negative in the previous years. • Lighting Division has the least contribution to the overall income of the company in terms of Income as a % of sales, even reaching negative figures. These negative returns will bleed the company of its profits that the other businesses are earning • Changes in regulatory environment, in terms of environmental friendly products has negatively impacted traditional lighting …show more content…
In actual scenario it will help the company enjoy its profits, re invest the saved amount into developing the other businesses, help the lighting division to concentrate on capturing the lighting market as it can take its decisions independently. The company has an option to either get rid of the division by selling it or carve out the lighting division as a separate legal entity so as to not affect the operations and returns of the profitable