Leadership in Health Technology

Section A: Compulsory question 50 marks

“This transaction concludes our major divestments,” Philips Chief Executive Frans van Houten said.

“From now on, our focus is on extending our leadership in health technology.”

Philips said last year it intended to sell the division, whose coffee machines, air purifiers and vacuum cleaners generated 2.2 billion euros in sales last year, as it was no longer part of its core business.

Philips shares were up 1.7% at 1105 GMT, leading Amsterdam’s blue-chip AEX index, as it said the deal would lead to net cash proceeds of 3 billion euros in the third quarter.

The company also expects to receive around 700 million euros in the coming years, as Hillhouse will license the Philips brand name for 15 years under the deal.

Philips described the buyer, Hillhouse Capital, as an investment firm that will continue to innovate. The transaction will be closed in the third quarter pending regulatory approval, it added.

Website of Hillhouse Capital: https://www.hillhousecap.com/about/ Current corporate strategy of Philips

Philips is concentrating on healthcare after spinning off its lighting and consumer electronics divisions in recent years. Philips CEO said the proceeds would be used for a mix of dividends, share buybacks and possible acquisitions but planned no new takeovers.

You may read the websites of both companies and search for additional information as a reference.

1. Evaluate the diversification strategy of Hillhouse and predict the results. Is there any violation of the vision, mission and values of Hillhouse? (25 marks)

2. Explain the rationale and evaluate the current corporate strategy of Philips. Is there any violation of the vision, mission and values of Philips? (25 marks)

Section B: Answer any two questions (25 marks each)

1. Read the quotations below:

“Unethical behaviour significantly increases the cost of doing business” – Frank Sonnenberg

“If ethics are poor at the top, that behaviour is copied down through the organization” – Robert Noyce

Give real-world examples to illustrate the above two quotations and discuss the drivers of unethical strategies and business behaviour. (25 marks)

2. Assume you are the senior executive of a Chinese high-tech AI and electric automobile company, recommend an entry and international strategy for the company, and explain why. (25marks)

3. Assume you are the senior executive of a smartphone company. It would help the business performance if you strengthened its competitive position by conducting the internal analysis and recommend a suitable vertical integration strategy. What would that strategy be? Explain the reasons. (25 marks)

4. After Hillhouse acquired Philip’s appliances business, advise the business strategy for Hillhouse and how to execute it. (25 Marks)

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