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Philips was founded by Gerard Philips and his father in 1892 in Eindhoven, Holland .
Then, they recruited Anton Philips (Herards brother), an excellent salesman and manager,
and soon after they became the third largest light-bulb producer in Europe. However from
its beginning on it always took care for his workers. As an example in Eindhoven it built
company houses, bolstered education, and paid its employees so well that other local
employers complained. When larger electrical product companies were trying to diversify
Philips only focused on one product, light-bulbs which enabled the company to create
significant innovations.
They scraped old plants and after advances were made they used new machines or
factories. They also became a leader in industrial research, creating physics and chemistry
labs to address production problems as well as more abstract scientific ones. After
developing the tungsten metal filament bulb, which was a great commercial success,
Philips had the financial strength to compete against its giants rivals. Because of Hollands
small size Philips was soon forced to expand to other countries for having enough volume
to mass produce. So it started building sales organizations in the United States, Canada,
and France. All other functions remained highly centralized in Eindhoven. Philips created
also local joint ventures to gain more market acceptance.
After entering into an agreement with General Electrics in 1919, giving each company the
use of the others patents, Philips began evolving to a decentralized sales organization. It
founded independent marketing companies in 14 countries in Europe, China, Brazil and
Australia and also broadened its product line significantly. However the great depression
which brought trade barriers and high tariffs with it, forced Philips to build local
production facilities to protect its foreign sales of these products. Philips had a shared but
competitive leadership by commercial and technical functions. It also believed that a
strong research was vital to its survival.
In the 1930s, because of the impending war, Philips transferred its overseas assets to
British Philips and to the North American Philips Corporation and also moved most of its
vital research laboratories to Redhill on Surrey, England and its top management to the
United States. Consequently the individual country organizations became more
independent during the war. The post war organization was than build on the strengths of
the national organizations (NOs) because the increased self-sufficiency during the war had
allowed most to become adept at responding to country-specific market conditions. As the
