Philips Porter’s 5 Five Forces Model: Detailed Analysis (2021)


Company Overview:

Philips is a Dutch technology company that was founded in 1891. The company is headquartered in Amsterdam, Netherlands, and is a leading manufacturer of healthcare, consumer lifestyle, and lighting products. Philips employs over 74,000 people across 100 countries. In 2021, Philips had revenues of €19.5 billion and an operating profit of €1.6 billion. The company is organized into three main business segments: Healthcare, Consumer Lifestyle, and Lighting.

 

 

Philips competitive rivalry: 

It’s high because Philips products are often similar to other competitors and the consumer will likely opt to purchase the product at a lower price. Another thing that raises their competition is the fact that they have many small competitors in each market they’ve created which makes it hard for them to compete successfully against other competitors. For these reasons, Philips has a high competitive rivalry but it’s not likely to increase in the future. Top competitors include Samsung, (find here Samsung Porter’s Five ForcesLG, and Panasonic.

 

 

Philips bargaining power of suppliers:

 

It is low because there are many suppliers available and they have no control over them, so if one supplier doesn’t work out, there will always be another one. Another reason it’s low is that Philips purchases products from many suppliers and none of them hold a large amount of power. For these reasons, Philips has a low bargaining power of suppliers and it’s not likely to increase in the future.

 

 

Philips Bargaining power of buyers:

It is high because if one buyer doesn’t like the price of something they offer, there will always be another buyer who is willing to purchase the product at a better price. Another reason it’s high is that Philips doesn’t have many buyers and they don’t hold much power over them, so if one buyer doesn’t like the price on something they offer, there will always be another buyer who is willing to purchase the product due to Philips not having that large of a customer base. For these reasons, Philips has high bargaining power and it’s not likely to increase in the future.

 

 

Philips threats of new entrants:

 

 

It is low because they’ve established themselves as a major player in this market and there is no room for little players to enter the market without making sacrifices that will hurt their business greatly. Another reason some new companies won’t be entering the market is that they have a low amount of money which makes it impossible for new companies to enter the market. For these reasons, Philips has a low threat of new entrants and it’s not likely to increase in the future.

 

 

Philips threat of substitutes:

 

It is high because there are many choices available that compete with Philips products so consumers will choose the substitute over Philips if it’s cheaper or easier to use. Another reason this threat is high is that there are many substitutes that are similar to what Philips offers, making it hard for them to stand out in a positive way compared to others. For these reasons, Philips has a high threat of substitutes and it’s not likely to increase in the future.

 

 

Philips Porter’s 5 forces conclusion:

Philips has a high competitive rivalry, low bargaining power of suppliers and buyers, low threat of new entrants, and high threat of substitutes which puts Philips in a vulnerable position. However, due to their size, no other company can threaten them enough to make them take drastic actions that would put them in a better position. Overall, Philips has a very stable market position and it’s not likely to change in the future.

 

 

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