The case examines the initiatives taken by Indian consumer electronics major Philips India to maintain profitability and market share despite adverse industry and market conditions. It explores the company's efforts to enhance its operational efficiency by restructuring its supply chain and other measures. The case also briefly discusses the concept of supply chain management and the benefits of revamping the SCM practices.
With
revenues of Rs. 16.65 bn for 2001-02, Philips India Ltd.
(PIL) had established itself as a leading manufacturer
of consumer electronics and electrical goods in India. A
subsidiary of the Holland-based Philips NV, PIL has
dominated the Indian consumer electronics and lighting
industry for more than six decades. PIL, with a product
portfolio of audio systems, Color Televisions (CTVs),
loudspeakers, printed circuit boards, various kinds of
lamps, electronic components and electro-medical
apparatus, had acquired considerable popularity and
loyalty among Indian customers.
PIL
was established as Philips Electricals Co. (India) Ltd.
in 1930 by Philips NV as a wholly-owned subsidiary. The
company's name was changed to PIL in September 1956 and
it was converted into a public limited company in
October 1957. After being initially involved only in
trading, PIL set up manufacturing facilities in several
product lines. PIL commenced lamp manufacturing in 1938
in Kolkata and followed it up by establishing a radio
factory in 1948. It set up an electronics components
unit at Loni, near Pune, Maharashtra in 1959. It began
producing electronic measuring equipments at the Kalwa
factory in Maharashtra in 1963. The company subsequently
ventured into telecommunication equipment manufacturing
at a unit in Kolkata.
During
the 1980s, Foreign Exchange Regulation Act (FERA)
regulations1 forced PIL to bring down the
foreign share holding to 40%. Philips NV directed PIL to
change its name to Peico Electronics & Electricals (Peico).
However, Peico was allowed to sell its products under
the `Philips' brand. In May 1982, Peico acquired the
Kolkata-based Electric Light Manufacturing Industries (ELMI)
and made it a 100% subsidiary.
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