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http://business-assignment-plus.blogspot.com/2013/12/case-study-on-electrolux.html

Question 1: Explain why the issues facing Electrolux were strategic.

Try to find examples of all of the items cited in that section.

The company's strategy consists of a combination of competitive movements and business

approaches to compete successfully and to achieve organizational goals. Company’s goals are
concerned to profitability, productivity, growth, technological zing, stability, independence,
survival, competitiveness, customer service, ability to pay, product quality, diversification,
employee satisfaction and well-being and so on. 
It is management’s game plan for growing the business, attracting and pleasing customers,
conducting operations, achieving financial and market performance objective and become
competitive in the market. 

Electrolux case study is concerned about following strategic issues of the organization:

Long-term strategic direction

Scope
Business environment
Advantage over its competitors
Meeting strategic fit with the business
environment
Resource availability and competence of the
company
      Long-term strategic direction
The long term goal was the development of Electrolux, to speed up market-oriented company
based on understanding the customers’ needs. Some other long term issues those Electrolux has
taken as strategic –

Increasing the productivity, procurement, and logistics efficiency

Continuous product and employee development
Strengthening the brands of Electrolux
Building a strong global brand

      Scope
Scopes of Electrolux captured by Hans Straberg from the annual report 2005 are:

 Continue to cut cost and kick out market complexity in all aspects of operations
 Increases the product renewal based on consumer insight

Increasing investments in marketing and building the Electrolux brand as a world leader in
electronic industry. It was strategic, because Electrolux had a choice between concentrating on
one area, or many outlets all over the world. Electrolux was active in a sector with strong global
competition and sustainability.
      Business Environment

 Globalizing products and related services all over the world and there will be more
concentration on product development, brand-building, marketing etc.
 Market polarization make changes in consume, strengthening global competition and
growth. Thus increasing the demand for both basic and higher-price products.
 Consolidating retailers with more big retail chains and fewer traditional dealers. That
helps Electrolux with wide geographical coverage, high purchase volume and to keep
prices low.

      Advantage over its competitors

Another aim for Electrolux was gaining advantages over its competitors. So maintaining
competitive production costs is a prerequisite for survival in the market. For the achievement of
obtaining competitive advantages Electrolux introduced the following:

 Providing quality price by globalization has offered high quality product at affordable
prices.
 Shift to low-wage countries to move from the US market after Mexico.
 Low cost Purchase.
 Shifting competitors focus on product development marketing and brand building
 Established talent management to develop future active leadership, international career
opportunities and a result oriented corporate culture to build up good human resources.

      Meeting strategic fit with the business environment

Strategic fit was also a strong issue for Electrolux. They are trying to set a strategic positioning
differing from its environment through niche market in a particular segment. According to the
review of Hans Straberg, Electrolux is expecting the group to report higher profitability again in
2006 by launching some new products in both North America and Europe.
 For this purpose, strategic decisions usually are trying to achieve any advantage for the
organization. The problem for Electrolux was that it was losing the advantage in the fast-growing
economies and this forced them to prioritize building the Electrolux brand globally, as well as in
all product categories. The advantage can be achieved in different ways and differently
interpreted. Organizations use conclusion it must be strategically improve its cost position
through better coordination at the global level. For example, Electrolux designed a project to
drastically reduce the number of suppliers.

      Resource availability and competence of the company

By resources, we mean financial, human and the organization’s resources which are more
important in the implementation of strategic decisions. Electrolux is attempting to bring out the
strategic capabilities of the staff. For example, they established talent management processes and
tools to ensure group access to competence in the future. Strategies need to be considered are not
only the existing resource–base of the organization which is suited to the environmental
opportunities but also in terms of resources those can be obtained and controlled to develop a
strategy for the future.
      Electrolux’s consideration about values and expectations of competitors
An organization's strategy will be affected by the values and expectations of those parties who
have power in and around the organization. The beliefs and values of these players have a more
or less direct impact on the organization.
These players (actors, groups and individuals) provide directions to the company to sharpen the
strategy in following manner – 

 Accelerating the development as a market-driven company

 Greater understanding of customer needs and providing low – cost and high quality
products to create customer delight
 Creating efficient purchasing and supply-chain management that ensures high quality
services than competitors
 Developing leadership skills among employees to keep the company ahead of their
competitors

These strategies assist to improve total operation, quality, customer satisfaction and profitability.
===================================================
===
 Question 2: What levels of strategy can you identify at Electrolux? 

Introducing the case study there are three 3 levels of strategy, which could be. These are:
In that case Electrolux have followed 3 different levels of strategies in different segments of the
business operations.
Corporate level strategy
Business level strategy
Operational level strategy

      Corporate level strategy

Corporate strategy level brings the overall game plan for the management of a number of
companies. From the case study he was moving and disposals made by Electrolux were done, on
the corporate level that emphasizes, the larger restructuring exercise performed with added value
for the different parts of the business. The relocation of high cost countries low-income countries
launch of new products, outsourcing air conditioners in the United States, China, shutting down
not to the core business and product development, as well as the branding of Electrolux products,
all decisions were level. A further level the decision accelerated the development of Electrolux
as market destination was oriented company based on better understanding of customer needs
and finally building strong brands.
Following actions ensures that Electrolux have Corporate strategy:

 Larger restructuring exercise at different parts of the business for adding value
 The relocation of high-cost countries to low-cost countries
 Brand Management activities to make Electrolux a global brand

      Business level strategy

Electrolux is following business level strategy to strengthen the market position and to build
competitive advantage. That will ultimately assist to gain the competitive skills in a particular
market. Objectives of Electrolux’s business level strategy are:
  Removing market complexities and cutting cost in all aspects of operations. It can be
achieved through efficient purchasing and production systems.
 Increasing the product renewal based on consumer insight. And that will help to capture
the portion of investment.
 Increasing investments in marketing and brand building that will place Electrolux as a
world leader in the industry.

      Operational level strategy

The third and final level of strategy used by Electrolux is the operational strategy. Electrolux is
dealing the strategy successfully through some following functions:

 Maintaining a more efficient production and logistics systems and also a more efficient
purchasing arrangement.
 The systematic development of brands and staff by the intensified product renewals
which are implemented at the operational level and strategic decisions.
 The strategy is effectively implemented by everyone in the organization to achieve a
common goal.

These 3 strategies are helping Electrolux in its attainment of ultimate objective.

 ===================================================

===

Question 3: Identify the main factors about the strategic position of

Electrolux. List these separately under environment, capability and
expectations. In your opinion which are the most important factors?

Electrolux is the second largest home appliances company after U.S giant Whirlpool. It has
structured the environment in such a way so that they can hold their impressive growth and
development. They even restructured the operation in different points where needed. From that
case study I understand that they are carrying on operations with some important factors -

Environmental factors (The Environment)

Strategic capabilities
Expectations of stakeholders

      Environmental factors

The environment of an organization stands on a framework of Political, Economic, Social,
Technological and Legal factors. Accurate management of these factors helps a firm in attaining
the preferred success. These factors will furnish the environment to identify the threats in
advance would have to be addressed, and also opportunities acted on. This environmental study
must be carried on even if the organization is doing well or not. Companies use risk management
techniques on its business environment, which will help the organization to identify potential
future risks and opportunities.
Political

 Electrolux used the political advantages of World War II. They identified the major
growth in demand for domestic appliance and produced different home appliances such
as washing machines and dish washers.
 Electrolux also established production outside Sweden in Germany, UK, France, USA
and Australia.
 By using political advantages Electrolux also conducted total of 59 acquisitions. Some
major acquisitions are Zanussi (Itally), White Consolidated Products (USA), the
appliance division of Thorn EMI (UK), the outdoor products company Poullan / Weed
Eater (USA) and AEG Hausgerate (Germany). But the biggest acquisition was the
Swedish Granges Group.

Economic
According to the annual report 2005 Electrolux is very economical in its overall operations.
Some instances those ensured the Economic success of Electrolux – 

 Electrolux become globalized and started its production in those countries where cost of
production is low. That helped to achieve economy.
 Electrolux extended 75% of its total sales outside Sweden. That helped them to increase
its turnover and economic growth.

Social
Electrolux has enjoyed the advantage of low cost production by emphasizing more on their
production plant location and cheaper suppliers. But in most important social segment Electrolux
has little weakness in its distribution channels. Electrolux is dependent on its traditional
distribution system. But big retail chains benefits from high purchasing volumes and wide
geographical coverage. This helps the company with – 
  Low cost of serving large retailers
 Gives the opportunity to lowering the price to attract more customers
 Makes it easy to reach customers in every geographical location

In present days more customers are moving from traditional shops to large chain stores, such as
super stores. Electrolux should emphasize on that issue to capitalize the social benefits and
convenience of customers like (LG and SAMSUNG).

// Technology
Electrolux is the largest producer especially for kitchen appliances. It has other wide ranges of
products. Not only from that case, but also from the knowledge of customer satisfaction
Electrolux’s products are well functioned and durable. That ensures advanced technological
specifications of its products. Moreover Electrolux invested heavily on technological
development of products.

Legal
Electrolux is holding its productions and distributions in many countries. They are operating
successfully as they are fulfilling all regulations of those countries.

      Strategic capabilities

Strategic capability is quite simply the capacity of a business to survive, prosper and deliver
future value. It is the process of shaping strategies and putting them into action. It suggests that a
company’s competitiveness depends on how it does what it does. There is no single method or
universal metric for measuring or noting strategic capability. It comprises a number of
distinguishable components. Here for measuring strategic capabilities of Electrolux we are taking
– Strength and Weakness into account.
Strength
Some strengths those Electrolux is possessing are very significant for its long term future growth
and prosperity - 

 The company is focusing more on sustainability issues

 It has the ability of increasing its operating profit margin with low suppliers and
production costs
 It has results-oriented corporate culture, development of human resources and a strong
environmental commitment
 Electrolux has a good relationship with its suppliers
 Electrolux runs on market driven strategy that helps to increase sales.

Weaknesses
Electrolux is a pretty successful company. Although it was campaigning with very good
strengths, it has some points of weakness – 

 Its traditional distribution system were lag behind in pace comparing to big distribution
chains.
 Electrolux purchased 59 other companies including some big companies and those
companies were in high cost countries
 Electrolux were dealing with many suppliers which were increasing costs
 It was very costly for them to develop a project to reduce suppliers
      Expectations of stakeholders
Fulfilling the desires of stakeholders will assist Electrolux to be the market-driven company.
Stakeholders’ expectations will be fulfilled as they are ensuring - 

 Electrolux has a better understanding of the customers’ needs and playing role by
considering their expectations.
 Increasing wide range of product renewal based on consumer insight. (Expectations of
Customers)
 Improving and maintaining quality as a part of competition with main competitors.
(Expectations of Customers)
 Continuation of cost-cutting and expelling complexity in all aspects of operations
especially in supplies. (Expectations of Suppliers)
 Increasing investments in marketing and building the Electrolux brand as a world leader
in domestic and professional appliances industry. (Expectations of Customers)
 Increasing profitability to fulfill shareholders expectations. (Expectations of
Shareholders)
 Developing leadership and international career opportunities to develop company’s
human resource. (Expectations of Employees)

These expectations of stakeholders were as employees, suppliers, customers and shareholders.

Electrolux is pretty successful in fulfilling all stakeholders’ expectations.
      My response to most important factors
The most important factors are - 

 Environmental factors are very crucial, because it helped Electrolux to understand the
framework of its operations. Therefore, a PESTEL analysis will be a guideline in
designing the framework.
 Expectations of stakeholders are very important. Because their expectations from the
organization are put in the vision, mission and values.
 The strategic capabilities of a firm are centered on its resources and competences. Here
resources refer to human, financial and the organizations resources. Electrolux
successfully managed its strategic capabilities by meliorating all resources and thus
Electrolux enjoys some competitive advantages over its competitors.

===================================================

===

Question 4: Think about strategic choices for the company in relation

to the issues raised.

Strategic decisions are concerning the option for the strategy in relation to the direction in which
to perform the operation. Thus, this can be seen that from the following five dimensions:
Business level strategy
Corporate level strategy
International strategy
Entrepreneurship
Methods

      Business level strategy

 Typically these involve pricing and differentiation strategies and decisions about how to compete
or collaborate with competitors such as reducing the number of product platform, increasing
productivity, reducing inventory levels and increasing delivery accuracy. Another option which
is implemented by Electrolux is the efficient procurement system, to improve cost position due
to better coordination at the global level and the drastic reduction in the number of suppliers.
This strategy in reflected by Chief Executive Hans Strasberg.
These strategic plans are:

 Continuing to cut cost and kicking out market complexity in all aspects of operations.
 Increasing the product renewal based on consumer insight.
 Increasing investment in marketing and building the Electrolux brand as the global leader
in domestic and professional appliances industry.

      Corporate level strategy

Corporate level strategy is concerned with the scope or breadth of an organization. These include
diversification decisions about the products portfolio and the spread of markets. Also concerned
with the relationship between different parts of the business and how the corporation adds value
to these various parts. For following issues Electrolux followed corporate level strategy –

 Larger restructuring practice at different parts of the business for adding value.
 The relocation of high-cost countries to low-cost countries.
      International strategy
International strategy is a form of diversification into new geographical markets. This strategy
focuses the right path of entering to a foreign market by exporting, licensing, direct investment
or acquisition. From the case study we get clear ideas that Electrolux sold most of their products
outside Sweden. In 90s it was 75% of total sales.

      Entrepreneurship
In another word Entrepreneurship is “Innovation”. Every organization passes the march of
entrepreneurship especially at the beginning of the operations. Electrolux’s CEO Hans Straberg
emphasizes the acceleration of market orientation of the company through following innovations
–

 Increases the product renewal based on consumer insight.

 Increasing investment in marketing and building the Electrolux brand as the global leader
in the industry.

      Methods
Methods are the fashions of pursuing any new strategy. According to the case study, Electrolux
were engaged with some newly promote strategies in its operations. Such as – 

 A series of important new innovations lunched both in North America and Europe.
 Development of new distribution channels for the products of Professional food service
and Laundry equipment.

• An important series of innovations introduced in North America and Europe.

• Developing new classifications for the Food and Laundry Equipment products.
===================================================
===
 
Question 5: What are the main issues about strategy into action that
might determine the success or failure of Electrolux’s strategies?

Strategy into action means whether the strategy is put into action or not. “Strategy
Development” processes of an organization are very important. Electrolux’s strategies are the
blend of Intended and Emergent strategy. Here formal strategic planning decisions are the
Intended and actually pursued decisions are the Emergent. Organizing a company involves
organizational structures, processes, relationships and the interaction between these elements. 

As in the case we can see that Electrolux is “Restructuring” the under-performing section (Air
Conditioners) in USA, which was not profitable because of high cost. And then it was shifted to
china. Also, in the 1930s the company spread its wings by establishing production outside
Sweden in Germany, UK, France, USA and Australia. Another restructure is done in 2000s
where 85% of sales were in consumer durable products and 15% from products of professional
users. 

Electrolux’s strategy in action may take the form of “Resourcing” strategies in separate resource
areas such as people, information, finance and technology in order to support the overall
strategies. Electrolux attempted to develop its human resource with an active leadership
development, international career opportunities and a result-oriented corporate culture.
Managing strategy very often involves “Strategic Change” which is another important area.
That means the implementation of new strategies will have some degree of changes. These
changes are seen in the distribution channel where Electrolux shifted its traditional retail chains
to large distribution chains for the products of Professional food service and Laundry equipment.

All these methodologies, resources, processes, strategic elements are place in the “Practice of
Strategy” at Electrolux.

===================================================
===

Thank You
Electrolux Case1. Refer to section 1.1.1 and explain why the issues facing Electrolux were strategic.
Try to find examples of all of the items cited in that section.

There were several strategic issues faced by Electrolux, for instance: Long-term direction of the
company. Their goal was to focus on their customers' needs and not only understanding of those
needs but addressing them through development and innovation to strengthen their market position
as the world's number one choice. Scope of the organization’s activities The company has
expanded its scope of activities by introducing new product lines, which, by the mid-2000s
included cookers, vacuum cleaners, washing machines, fridges, lawn mowers, chain saws and also
tools for the construction and stone industries. Besides, the organization established production
outside its home country in Germany, UK, France, USA and Australia. Electrolux, being present in
thousands of countries around the globe in 2002, was to be the world leader in profitably marketing
innovative products. To be perceived as a leading brand by consumers, the company needed not
only to have large scale production but to be one of the top three suppliers to all main retailers.
Gaining advantage over competition Electrolux is a strong worldwide brand. Their strong talent
base that implies attracting and retaining best talents is one of their competitive weapons. Their
successful operations included being in a strong market position with competitive products and
strong brands. However, in some countries, they had uncompetitive products and/or high
manufacturing costs, Business environment. Nowadays, we live in the globalized world, meaning
that competition is getting more intense. This fact touches all the companies, including Electrolux,
which needs not only to deal with more competition but follow changing consumer trends.
 What levels of strategy can you identify at Electrolux? 
Introducing the case study there are three 3 levels of strategy, which could be. These
are:
In that case Electrolux have followed 3 different levels of strategies in different
segments of the business operations.  
Corporate level strategy

Business level strategy

Operational level strategy

Corporate level strategy

      
Corporate strategy level brings the overall game plan for the management of a number
of companies. From the case study he was moving and disposals made by Electrolux
were done, on the corporate level that emphasizes, the larger restructuring exercise
performed with added value for the different parts of the business. The relocation of
high cost countries low-income countries launch of new products, outsourcing air
conditioners in the United States, China, shutting down not to the core business and
product development, as well as the branding of Electrolux products, all decisions were
level. A further level the decision accelerated the development of Electrolux as market
destination was oriented company based on better understanding of customer needs
and finally building strong brands.
Following actions ensures that Electrolux have Corporate strategy:

 Larger restructuring exercise at different parts of the business for adding value
 The relocation of high-cost countries to low-cost countries
 Brand Management activities to make Electrolux a global brand

Business level strategy

      
Electrolux is following business level strategy to strengthen the market position and to
build competitive advantage. That will ultimately assist to gain the competitive skills in a
particular market. Objectives of Electrolux’s business level strategy are:

 Removing market complexities and cutting cost in all aspects of operations. It

can be achieved through efficient purchasing and production systems.
 Increasing the product renewal based on consumer insight. And that will help
to capture the portion of investment.
 Increasing investments in marketing and brand building that will place
Electrolux as a world leader in the industry.
 Operational level strategy
      
The third and final level of strategy used by Electrolux is the operational
strategy.  Electrolux is dealing the strategy successfully through some following
functions:

 Maintaining a more efficient production and logistics systems and also a more
efficient purchasing arrangement.
 The systematic development of brands and staff by the intensified product
renewals which are implemented at the operational level and strategic decisions.
 The strategy is effectively implemented by everyone in the organization to
achieve a common goal.

These 3 strategies are helping Electrolux in its attainment of ultimate objective.

===================================================
===
      There are three strategy that may explain the strategy levels of Electrolux which are corporate level
strategy, business unit level strategy, and functional level strategy. Followings are the how the strategy
levels used in Electrolux.

Corporate Level Strategy

           Corporate level strategy is concerned with the issues that are corporate responsibilities, these
might include identifying the overall goals of the corporation, the types of businesses in which the
corporation should be involved, and the way in which businesses will be integrated and managed. And
defining where in the corporation competition is to be localized. Take the case of insurance; corporations
decide how business units are to be governed, through direct corporate intervention which is also known
as centralization or through more or less autonomous government, called as decentralization also, that
relies on persuasion and rewards.
            The Electrolux management had their decision during the time of 2005, their decision was to
demerge outdoor products division and focus on the company's goal which is the indoor products. So this
new organization was established with better management.

Business Unit Level Strategy

            A strategic business unit may be a division, product line, or other profit center that can be planned
independently from the other business units of the firm.

            As what other corporations do, the Electrolux was established in home country to pursue the
strategy in over the other countries. They move from US to Mexico, for the production of refrigerator. So
they could cut cost with competitive cost levels. And this affected the Electrolux to have a significant price
in the market and give the comprehensive conditions in working.

Functional Level Strategy

            The functional level of the organization is the level of the operating divisions and departments.
The strategic issues at the functional level are related to business processes and the value chain.
Functional level strategies in marketing, finance, operations, human resources, and R&D involve the
development and coordination of resources through which business unit level strategies can be executed
efficiently and effectively.
            Sometimes, Electrolux intensified product renewal through the investment in product development
and launched the new goods at the high rate. It made the efficient global coordination which gives a
number of new global production level.

Trois stratégies peuvent expliquer les niveaux de stratégie d'Electrolux qui sont la stratégie au niveau de
l'entreprise, la stratégie au niveau de l'unité commerciale et la stratégie au niveau fonctionnel. Ce qui
suit est la façon dont les niveaux de stratégie utilisés dans Electrolux.

Stratégie au niveau de l'entreprise

La stratégie au niveau de l'entreprise porte sur les questions qui relèvent des responsabilités de
l'entreprise, celles-ci pouvant inclure l'identification des objectifs généraux de l'entreprise, les types
d'entreprises dans lesquelles elle devrait être impliquée et la manière dont les entreprises seront
intégrées et gérées. Et définir où la concurrence doit être localisée dans l'entreprise. Prenons le cas de
l'assurance; les entreprises décident de la manière dont les unités commerciales doivent être
gouvernées, par le biais d'une intervention directe des entreprises, également connue sous le nom de
centralisation ou par le biais d'un gouvernement plus ou moins autonome, appelé aussi décentralisation,
qui repose sur la persuasion et les récompenses.

La direction d'Electrolux a pris sa décision au cours de l'année 2005, sa décision a été de

démanteler la division des produits d'extérieur et de se concentrer sur l'objectif de l'entreprise qui est
les produits d'intérieur. Cette nouvelle organisation a donc été mise en place avec une meilleure gestion.

Stratégie au niveau de l'unité commerciale

Une unité commerciale stratégique peut être une division, une gamme de produits ou un autre
centre de profit pouvant être planifié indépendamment des autres unités commerciales de l'entreprise.

Comme ce que font les autres sociétés, l'Electrolux a été créé dans le pays d'origine pour
poursuivre la stratégie dans les autres pays. Ils se déplacent des États-Unis au Mexique, pour la
production de réfrigérateurs. Ainsi, ils pourraient réduire les coûts avec des niveaux de coûts
compétitifs. Et cela a affecté l'Electrolux à avoir un prix significatif sur le marché et à donner les
conditions complètes de travail.

Stratégie au niveau fonctionnel

Le niveau fonctionnel de l'organisation est le niveau des divisions et départements opérationnels.

Les enjeux stratégiques au niveau fonctionnel sont liés aux processus métiers et à la chaîne de valeur.
Les stratégies au niveau fonctionnel dans le marketing, les finances, les opérations, les ressources
humaines et la R&D impliquent le développement et la coordination des ressources grâce auxquelles les
stratégies au niveau des unités commerciales peuvent être exécutées de manière efficace et efficiente.

Parfois, Electrolux a intensifié le renouvellement de ses produits en investissant dans le

développement de produits et a lancé les nouveaux produits à un rythme élevé. Il a fait la coordination
mondiale efficace qui donne un certain nombre de nouveaux niveaux de production mondiale.