00:00It started in the 1960s when the Japanese began flooding the markets with cheap electronics that undercut Philips' prices.
00:07The situation didn't improve until the 1970s either.
00:11In fact, things got worse because this was also the time when oil prices spiked.
00:16As a result of these external pressures, the company had to lay off tens of thousands of employees and close
00:22multiple factories.
00:24Things did eventually turn around a couple of decades later.
00:26But by this point, Philips had lost its status as a pioneer and innovator, and it had become little more
00:33than a simple producer of consumer electronics.
00:35So here's the question.
00:37How exactly did Philips reinvent itself after losing its innovative edge?
00:42Well, after carefully analyzing their position in the market, the company realized that although it was difficult for them to
00:48compete against cheap electronics coming from Asia,
00:51they could compete very well in the premium electronics space.
00:54So in the late 1980s, the company decided to get rid of its low-margin products and focus exclusively on
01:01high-margin products instead.
01:03This proved to be a successful move, as the company's net income went from around $1 billion to over $3
01:10billion within just a few years.
01:13But their success didn't last forever, as competition in the premium electronics industry soon became cutthroat.
01:19Companies like Sony and Panasonic began undercutting Philips prices, forcing them to once again reinvent themselves.
