NATIONAL ECONOMICS UNIVERSITY

BTEC HND IN BUSINESS AND MANAGEMENT

Assignment Answer Sheet

UNIT 7: BUSINESS STRATEGY

Strategy Formation and Planning
Elextrolux Group

TABLE OF CONTENTS
TABLE OF CONTENTS.........................................................2
INTRODUCTION.................................................................3
STUDY CONTENTS..............................................................4
PART 1...........................................................................................4
1. Strategy...................................................................................4
2. Stakeholders analysis............................................................10
PART 2.........................................................................................12
1. Insight into the Electrolux environmental factors.................12
2. Assessing for current situation and positioning Electrolux
Company...................................................................................25
PART 3.........................................................................................29
1.The current external environment in Vietnam........................29
2.A strategic plan for Electrolux................................................31
CONCLUSION...................................................................32
REFERENCES...................................................................33

INTRODUCTION
Electrolux is a global leader in household appliances and appliances for
professional use, selling more than 40 million products to customers in more than 150
markets every year. The company focuses on innovations that are thoughtfully
designed, based on extensive comsumer insight, to meet the real needs of consumers
and professionals.
Electrolux products include refrigerators, dishwashers, washing machines, vacuum
cleaners and cookers sold under esteemed brands.
Axel Wenner-Gren, the founding
father of Electrolux, established the
principles by which the company still
thrives. His dream to improve quality
of life has had fundamental impact on
homes around the world. Todays
Electrolux, 90 years later, is a global
leader in household appliances and
appliances for professional use.
Thinking of you expresses the Electrolux offering: To maintain continuous focus
on the consumer, whether its a question of product development, design, production,
marketing, logistics or service.
In this report, we will discuss about the in-depth analysis of the Electroluxs
environment and the detailed strategy of the whole operation in the company.

STUDY CONTENTS
PART 1
The context of Electrolux business strategy and the significance of stakeholder
analysis.
1. Strategy
1.1 The concept of strategy
Johnson and Scholes defined strategy as: "Strategy is the direction and scope of an
organisation over the long-term: which achieves advantage for the organisation
through its configuration of resources within a
challenging environment, to meet the needs of
markets and to fulfil stakeholder expectations"
(G.

Johnson

&

K.

Scholes,

Exploring

Corporate Strategy: Text & Cases, 1998).

Strategies exist at several levels in any
organisation,

ranging

from

the

whole

organization through to individuals working in

it. Primarily, corporate strategy is concerned
with the overall purpose and scope of the business to meet stakeholder expectations.
This is a crucial level since it is heavily influenced by investors in the business and
acts to guide strategic decision-making throughout the business. Corporate strategy is
often stated explicitly in a mission statement. Secondly, business unit strategy is
concerned more with how a business competes successfully in a particular market. It
concerns strategic decisions about choice of products, meeting needs of customers,
gaining advantage over competitors, exploiting or creating new opportunities etc. And
finally, operational strategy is concerned with how each part of the business is
organised to deliver the corporate and business-unit level strategic direction.
Operational strategy therefore focuses on issues of resources, processes, people, etc.
Strategy is therefore sum up of three important elements: vision, mission and
objective analysis.
In practice, a thorough strategic management process has several steps, shown in
the flow process below:

Figure 1: Strategy formulation process.

In this case, Electrolux defines obviously a vision, a mission and an overall
objective for its own company.
1.2 Insight into Electroluxs strategy
a. Electroluxs vision
To succeed in the long term, businesses need a vision of how they will change and
improve in the future. The vision of the business gives it energy. It helps motivate
employees. It helps set the direction of corporate and marketing strategy.
An effective business vision requires the six following components to achieve
success, that are providing future direction, expressing a consumer benefit, realistic,
motivating employees, fully communicated and consistently followed and measured.
Primarily, in the mid - 2000s, Electrolux focuses on issuing the future direction for
the best workforce an significant internal factor - in the organization. The Electrolux
People Vision is to have an innovative culture with diverse, outstanding employees
that drive changes and go beyond in delivering
on the Groups strategy and performance
objectives. The Electrolux culture features
diversity and innovation. Development of
innovative products is a vital part of it.
Diversity is a prerequisite for the companys
ability to compete in a global market.
Personnel with diverse backgrounds create greater understanding of consumer needs
in different countries. Electrolux has a number of tools that contribute to realization of
the People Vision, including the Talent Management program, succession planning,
the internal Open Labor Market, the web-based Employee Attitude Survey, and
leadership development programs at all levels of management.
The next target that Electrolux direct to is a fully technological life of a large
number of potential customers. Electrolux's vision is of a thoughtful home. A home
where everything is designed with intelligence and understanding. Where everything
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works beautifully, simply and intuitively. Where people's lives are easy and relaxed.
The company is trying to satisfy its customers needs in the best way, expressing the
consumer benefit hospitality.
Currently, Electrolux is implementing to innovate its products for kitchens to a
higher level of gadget technology. And cooking with lasers is the present Electrolux
vision of the future. Designer Ludovic Peperstraete has come up with his Cooking in
the Future design, which suggests that 90 years from now well be zapping our
Sunday roast instead of using boring oil or gas or convection ovens. Ludovic wants
to combine three lasers to create the necessary heat to cook the food after informing
the appliance how you want the food cooked. The lasers will then instantly produce
the necessary energy to create your culinary delight. The design even has a specially
designed ventilation system so that our appartment doesnt end up smelling of grub.
So that is the tough thing Electrolux have to create in the next 90 years.
In overall, the Electrolux Company has been setting up clear visions that fully
comprise of six necessary components, give it the best outlook in the future. The
visions do not only concentrate on the internal factor employees but also the
external factor customers that give it success. Especially, its vision of product
innovation will create a core competency for the company in a competitive
environment.
b. Electroluxs mission
Mintzberg defines a mission as follows: A mission describes the organisations
basic function in society, in terms of the products and services it produces for its
customers.
A mission statement is a statement that defines the essence or purpose of a
company what it stands for i.e. what major products or services the firm has
intention to offer customers; what the basic beliefs, values, aspiration, and ethical
priorities of the firm are or whether the company take responsibility to social,
community, and environmental concerns, etc. The mission statement also gives
readers a window on the reason for being of the company and was initially designed
as a means by which potential shareholders and investors could understand the
purpose of the company that they were considering investing in.
The mission statement ensures some transparency for investors and employees
alike so they can have some confidence as to any potential use of their resources be
they capital investment or labour. A mission statement is also designed to ensure that
all stakeholders are clear on the overarching purpose of the company so everyone can
6

be focused on the same goals and objectives. When someone reads a mission
statement in a business plan they are looking to get a feel for the range of activities
that the company will focus on, in other words its core purpose and what it stands for.
Mission statements can and do vary in length, content, format, and specificity.
Because a mission statement is often the most visible and public part of the strategic
management process, it is important that it should includes all of these nine essential
characteristics.

Figure 3: Nine important elements of a mission statement. (D. Fred, Strategic

management: Concepts & Cases, Chapter 2: The business vision and mission, 11th
edition, 2007)
In the case of Electrolux, the companys mission is to be the world leader in
profitably marketing innovative product and service solutions to real problems,
thereby making the personal and professional lives of our customers easier and more
enjoyable. This Electrolux will achieve through a commitment to driving performance
throughout the entire organization, innovation and marketing to products and
brands, superior talent management and the Electrolux way of doing things.
It can be observed that the Electroluxs mission mainly comprise of two elements:
philosophy and self-concept. The basic belief to become the world pioneer in
innovating practical values for the company products is a prior strategy. It rely on
aspirations and ethical idea of Electrolux that is making the personal life of its
customers and consumers easier and enjoyable.
c. Electroluxs objective
Objectives are widely defined as minor targets that an organization must achieve to
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make its strategy succeed. Strategic objectives are, in general, externally focused and
fall into eight major classifications: Market standing; Innovation; Human resources;
Financial; Physical resources; Productivity; Social responsibility and Profit
requirements - achievement of measurable financial well being and growth.
Objectives can be set at two levels: corporate level and functional level. Both
corporate and functional objectives need to conform to the commonly used SMART
criteria. It is summarised by five essential factors: specific, measurable, achievable,
relevant and time bound.
In this case, Electrolux has set its objectives on the direction that continues to work
intensively on improving profitability. On the basis of a competitive production
system, among others, strong investments in new products for the high-price segments
and a strong Electrolux brand will enable the Group to achieve the long-term goal of
an operating margin of 6%. Electrolux is an innovative, consumer-oriented company
in which all product development grows out of insight into consumer needs.
Thinking of you is the basic theme of all operations, from initial contact with a
consumer to installation and service of sold products. Planning of marketing
campaigns is integrated at an early phase of product development, and all activities
are coordinated for maximum impact. This creates a uniform, powerful image of
Electrolux across all product categories and markets. The Electrolux product offering
is improved continuously through identification of rapid growth segments, product
categories, regions and sales channels. In the interest of creating long-term
competitiveness, Electrolux is implementing a comprehensive program for savings in
production and purchasing, which involves relocating production to and increasing
purchases from low-cost countries. In accordance with the established strategy,
Electrolux has implemented extensive changes within floor-care operations as well as
operations in Latin America, Australia, Southeast Asia and Professional Products. A
more efficient marketing organization has been established in Europe. Improved
product offering in the US has enabled an estimated market share of about 5% in the
profitable premium segment. Electrolux strategy is the tool for achieving the longterm goal of an operating margin of 6%. Electrolux is, therefore, focusing first and
foremost on continuing to reduce production costs, partly through relocating
production to low-cost countries; improving operating income in Europe through a
better product mix and lower costs and strengthening the position in the premium
segment in North America.
d. Electrolux core competencies create competitive advantages
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Core competencies are those capabilities

that are critical to a business achieving
competitive advantage. Senior management
cannot focus on all activities of a business
and the competencies required to undertake
them. So the goal is for management to focus
attention on competencies that really affect
competitive advantage. It is suggested that
there are three factors help identify core
competencies in any business and that can be
providing potential access to a wide variety
of markets, making a significant contribution to the perceived customer benefits of the
end product and creating difficulties for competitors to imitate.
Particularly, Electrolux uses its own capacity to combine local products with
globalization of product development and manufacturing. Therefore, it can satisfy any
customers in different market areas simultaneously reducing the production cost to
push up companys profitability. Moreover, Electrolux has a number of skilled
employees with highly experienced in designing and marketing for the household
applicances. Last but not least, the company utilizes its strong financial resources to
acquiring firms in a vulnerable financial position and lead them back into black
figures using a straight forward approach. Not only does this strategy reinforce the
company image in the global markets but it also mobilizes and takes advantages of
other significant resources as well as expands the current market shares.
All of those core competencies of Electrolux has built a strong competive
advantage against other companies, to be the world largest manufacturer of high
quality white goods mainly in Europe and North America and to be a friendly
company knowing the customers different needs in many countries.

2. Stakeholders analysis
2.1 The concept of stakeholder and the significant role of stakeholder in an
organization
A stakeholder can be defined as: Any individual, group, or institution who has a
vested interest in the natural resources of the project area and/or who potentially will
be affected by project activities and have something to gain or lose if conditions
change or stay the same.
Stakeholders are all those who need to be considered in achieving project goals and
whose
participation and support are crucial to its success. Thereby, in an organization,
stakeholders take into account of two primary roles, following each type of
stakeholders (internal, connected and external), that are performance role and support
role.
Stakeholder analysis identifies all primary and secondary stakeholders who have a
vested interest in the issues with which the project or policy is concerned. The goal of
stakeholder analysis is to develop a strategic view of the human and institutional
landscape, and the relationships between the different stakeholders and the issues they
care about most.
Ultimately, all projects depend on selecting stakeholders with whom they can jointly
work towards goals that will reduce or reverse the threats to companys key
conservation targets.
A stakeholder analysis can help a project or programme identify the interests of all
stakeholders who may affect or be affected by the project; opportunities and
relationships that can be built on during implementation; groups that should be
encouraged to participate in different stages of the project; appropriate strategies and
approaches for stakeholder engagement; and ways to reduce negative impacts on
vulnerable and disadvantaged groups. The full participation of stakeholders in both
project design and implementation of is a key to success. Stakeholder participation
gives people some say over how projects or policies may affect their lives and builds
capacity and enhances responsibility.
2.2 Electroluxs stakeholders and the benefits they contribute for the company
In Electrolux situation, engagement between stakeholders of the company brings a
better business. Accountability to Electrolux stakeholders consumers, customers,
employees, shareholders and others affected by the Groups operations involves
10

sharing insights and addressing concerns. Understanding consumers is the basis for
the Electrolux brand promise Thinking of you. Consumer insight is decisive for
both the business strategy and product development. Comprehensive interviews and
visits to households throughout the world enable the Group to identify global trends
in society and respond to them in the product offering.
Otherwise, strong and long-term relationships with retailers are also central to the
business model. Sustainability related issues are an important part of the dialogue
with customers. Electrolux has long cooperated informally with retailers to promote
environmentally-sound purchasing and enhance awareness. Growing numbers of
customers are stipulating formal commitments to social and environmental
performance standards in their contracts.
Last but not least, the Electrolux staff (employees) for Sustainability Affairs is
responsible for Group dialogue with internal and external stakeholders on
sustainability-related issues. Identification and selection of stakeholders are based
primarily on the bearing of such groups on issues that are central to operations.
Stakeholders include environmental organizations such as the Worldwide Fund for
Nature (WWF) for climate change, Greenpeace for producer responsibility and
Business for Social Responsibility for effective supply-chain management. Electrolux
also maintains a continuous dialogue with representatives from governments and
inter-governmental organizations.

11

PART 2
Electroluxs internal and external elements and apply strategic positioning
techniques to the analysis of Electrolux.
1. Insight into the Electrolux environmental factors
1.1 The external environment
The external organization comprises of all the entities that exist outside its
boundary, but have significant influence on its growth and survival. An organization
has no control over its environment but needs to constantly monitor and adapt to these
external changes, a proactive or reactive response leads to significantly different
outcome.

Figure 2: Elements of external environment.

There are different ways of classifying the types of external environment that
usually just reflect the preferences of different authors, but there are some core types
which are always identified. It can be reflect in two main core analysis: PESTEL
analysis and Porters five forces.
1.1.1 PESTEL analysis
There are many factors in the macro environment that will effect the decisions of
the managers of any organisation. Tax changes, new laws, trade barriers, demographic
change and government policy changes are all examples of macro change. To help
analyse these factors managers can categorise them using the PESTEL model. This
classification distinguishes between political factors, economic factors, social factors,
technological factors, environmental factors and legal factors.
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Primary, political decisions can impact on many vital areas for business such as the
education of the workforce, the health of the nation and the quality of the
infrastructure of the economy such as the road and rail system. Secondly, the basis of
global economy nowadays is controlled by a monetary system which includes interest
rates, taxation charges, exchange rates, inflation, deflation, etc. Thereby, changes in
economic factors can have a major impact on a firms operations, for instance, higher
interest rates may affect investment because it costs more to borrow; inflation may
provoke higher wage demands from employees and raise costs; or higher national
income growth may boost demand for a firm's products. Others than that, changes in
social trends can impact on the demand for a firm's products and the availability and
willingness of individuals to work. Fourthly, new technologies create new products
and new processes. Online shopping, bar coding and computer aided design are all
improvements to the way we do business as a result of better technology. Technology
can reduce costs, improve quality and lead to innovation. These developments can
benefit consumers as well as the organisations providing the products. Next,
environmental factors include the weather and climate changes can impact on many
industries including farming, tourism and insurance. With major climate changes
occurring due to global warming and with greater environmental awareness this
external factor is becoming a significant issue for firms to consider. Generally, most
of the largest companies move towards more environmentally friendly products
green products - and processes is affecting demand patterns and creating business
opportunities. Finally, these are related to the legal environment in which firms
operate. Legal changes can affect a firm's costs and demand. By now, we will going to
analyze deeply to the Electrolux external factors related to the operations of company.
a. Political factors
As in Electrolux scenario, started business in Sweden a developed country in EU,
the company has many opportunities to produce and develop its innovative products
in both domestic market and international markets. Sweden, a neutral country, with a
long-standing development of monetary policy and a consistent politic has created a
convenience business environment for the whole domestic company, in common, and
for the Electrolux Company, in particularly. Simultaneously, in 1900s Sweden
government has strongly invested in science and technology, thereby to 1920s the
early growth of Electrolux was built around an expertise in industrial design creating
the leading products in refrigeration and vacuum clean

ing.

Along

with

that

development, the government has also facilitated firms in open policies. Sweden
13

policies increasingly involve cross-border issues that have international effects. The
need of coherence and cooperation between policy areas to deal with these common
challenges has never been greater than before. Development policy concerns all of
Sweden. The policy for global development and its overall objective - to contribute to
equitable and sustainable global development - remains firm. Therefore, by the mid1930s, the company had also established production outside Sweden in Germany, UK,
France, USA and Australia.
b. Economical factors
To the economical factors, as the economy growth rapidly in 1990s, the economy,
meanwhile, turned in an increasingly healthy performance as the 1990s progressed.
With the fall of the Soviet Union and Eastern European communism in the late 1980s,
trade opportunities expanded greatly. Technological developments brought a wide
range of sophisticated new electronic products. Innovations in telecommunications
and computer networking spawned a vast computer hardware and software industry
and revolutionized the way many industries operate. The economy grew rapidly, and
corporate earnings rose rapidly. Combined with low inflation and low unemployment,
strong profits added substantially to the wealth of many - though not all - companies.
Not except for Electrolux, the growth of global economy and through a series of
acquisitions in EU accompany with the expansion in Eastern Europe, Asia and South
America had pushed the companys revenue upto 75 per cent outside Sweden.
c. Social factors
The main focus of Electrolux Company is understanding consumer needs and
problems related to household and garden work. By increasing their consumer insight,
the company is able to develop even more new products that solve these needs and
problems. Because of that, though if there is a minor change in social behaviour of
customer at work in households, that will lead to the changes in the idea to innovate
its products to satisfy customers.
Others than that, in the modern life, everyone orients to a better global, everything
goes green. Therefore, with Electrolux orientation becoming increasingly global, the
company aspiration is for the imprint it leave to be a positive oneenvironmentally,
socially and ethically. The company approach building a robust and transparent
corporate governance system, companys products improve everyday life, by better
food hygiene, and less waste, ongoing dialogue with stakeholders on key social
issues, safeguarding the rights of employees and health and safety conditions in

14

manufacturing and the supply chain, as well as being transparent and inclusive on the
impacts of companys operations on communities.
d. Technological factors
During the 20th century, when Sweden was transformed in record time from a
backward agrarian country into one of the world's strongest, most advanced industrial
nations, there were thus heavy demands for infrastructure, transportation,
communications and technological development. This background is one explanation
for Sweden's sophisticated infrastructure and high degree of technological maturity
today. One of the many eloquent indications of Sweden's internationally recognized
speed in adopting new technology is that in 1900, Stockholm had more telephones
in absolute numbers than London, Paris or Berlin. Sweden and the Swedish people
have become so famous for their openness to new technology, new trends and patterns
of behavior and consumption that to a growing extent, the country has come to be
used as a test market by major multinational corporations in the development of new
products and services.
Being inherited from the success of technology in Sweden, in 1920s the
compnays impressive growth and development started under the leadership of Alex
Wenner Gren. The early growth was built around an expertise in industrial design
creating the leading products in refrigeration and vacuum cleaning. On that basis,
Electrolux step by step quickly develop to the worlds largest producer of domestic
and professional appliances.
e. Environmental factors
Sweden is a country of vast forests, marvellous archipelagos and clean air. But
there are also severe environmental problems, such as excessively high nutrient levels
in the Baltic Sea, acidification of lakes and land, and continuing exposure to a number
of toxic substances, where the margins between current levels and levels that could
result in adverse health affects are small. Accompany with Sweden environmental
problem is the significant changes in the global climate, especially global warming
phenomenon, that threaten to every creatures living on the planet. It requires any
people, any organizations should have a better behaviour in their activities. Climate
change is a core and highly relevant issue for Electrolux. With their strong focus on
innovation, global presence and broad consumer interface, Electrolux is in a position
to effect positive change. With the biggest environmental impacts occurring during
the product use phase, by far Electrolux greatest potential to reduce CO 2 is to sell
energy-lean products. The companys effort to reduce CO 2 tackles energy efficiency
15

of our products. It also focuses on streamlining operations and stimulating a wider

awareness among consumers and decision-makers on the role of efficient appliances.
Therefore, Electrolux Companys operations need to take an account into the
companys manufacturing procedures and any products that they create.
Generally, external environmental factors take an important position in the
operations of an organization. They drive the whole vision and the main products or
service the company provide to their customers. Therefore, the Electrolux need
consider all those elements to have a best-fit strategy for the company.
f. Legal factors
The most important global trends in legislation affecting the Electrolux Group
involve energy and water efficiency, recycling and restrictions on the use of
potentially hazardous substances. The Electrolux Group has adopted a forwardthinking strategy, and participates in continuous dialog with lawmakers and
authorities to promote market-driven systems that stimulate product development. A
number of regulatory instruments are used to limit energy consumption of appliances,
including the EU and North America. More are expectedboth in labeling and
minimum energy standards.
In general, the PESTEL analysis has a significant impact on the strategy as well as
the operations of the Electrolux organization.
1.1.2 Porters Five Forces
In five forces analysis, here we only assess the competitive rivalry aspect of
Electrolux due to the information provided. Porters model is based on the insight that
a corporate strategy should meet the opportunities and threats in the organizations
external environment. Especially, competitive strategy should base on and
understanding of industry structures and the way they change. Porter has identified
five competitive forces that shape every industry and every market. These forces
determine the intensity of competition and hence the profitability and attractiveness of
an industry. The objective of corporate strategy should be to modify these competitive
forces in a way that improves the position of the organization. Porters model supports
analysis of the driving forces in an industry. Based on the information derived from
the Five Forces Analysis, management can decide how to influence or to exploit
particular characteristics of their industry.

16

In the traditional economic model, competition among rival firms drives profits to
zero. But competition is not perfect and firms are not unsophisticated passive price
takers. Rather, firms strive for a competitive advantage over their rivals. The intensity
of rivalry among firms varies across industries, and strategic analysts are interested in
these differences. In pursuing an advantage over its rivals, a firm can choose from
several competitive moves, for example, reducing prices, improving productetc.
In the Electrolux situation, in any markets the company doing business there
always have a number of major competitors that distribute same types of products to
the particular markets.

17

Competitive advantage of Electrolux is that Electrolux occupies a market share of

23-24% which is the 3rd largest in North America and is expected to grow at 5%
mainly from upgradation of appliances through new electronics. The market in AsiaPacific, Eastern Africa & Eastern Europe is going to grow by 3.9%. To increase sales
the firm should look at revolutionary ideas in marketing, sales, product development
because the product customers buys shows their personality. Electrolux is trying to
increase global competitiveness through innovative products and speed-to-market. For
this reason Electrolux & Sharp are looking towards product planning, assessment of
products for manufacturing environment friendly frost free refrigerators. A very
different way for increasing market share can be like replacing 15% or 40% of its
product range by a different product range of the same company.
1.2 The internal environment
An organization's internal environment is composed of the elements within the
organization, including current employees, management, and especially corporate
culture, which defines employee behavior. Although some elements affect the
organization as a whole, others affect only the manager. A manager's philosophical or
leadership style directly impacts employees. Traditional managers give explicit
instructions to employees, while progressive managers empower employees to make
many of their own decisions. Changes in philosophy and/or leadership style are under
the control of the manager. Some of the elements that make up the internal
environment can be organizations mission statement, company policies, formal

18

structure, organization culture, organization climate, resources, managerial philosophy

and managerial leadership style.
a. Internal resources
Qualifying human resource and material resources in a manufacturing company as
Electrolux Company is indeed important to create a cost efficient and low complexity
in organizations performance control. It goes along with improving products quality
and innovations to generate a huge profitability for Electrolux.
In this case, in term of material resources, an important factor in the companys
choice of materials is to eliminate and avoid adverse health, safety and environmental
impacts. In order to ensure that the materials going into Electrolux products are
sustainable and sound, the company optimize material use in the manufacturing of our
products for resource efficiency and easy recyclability. The company sets out a
department - Restricted Materials List - defines which chemicals are banned and
restricted in the products. More than that, the companys chemicals management
system outlines how to handle chemicals used in the production of our products. It is a
part of the ISO 14001 certification process. And finally, Electrolux has set the same
legislation in every country such as EU, China, Japan and the US where its branches
are operating. Direct material input consists mainly of steel, plastics and components.
Material utilization in production is continually improving, while hazardous waste
and waste to land-fill are being reduced year to year. All hazardous waste (mainly oils,
solvents and other chemicals) is managed in accordance to local regulations.
Electrolux manufacturing is the final phase in a chain of suppliers.
Not only does the products materials contribute to the exist reason of Electrolux
company but human resources (HR) also be a vital element that directly operate,
control and manage all the activities in the company. At present, the world leader in
appliances position will be responsible by a full range of human resources and support
to the Electrolux organisation, an international matrix organisation with 600
employees in 37 countries with many international reporting lines entailing remote
management of teams. All the employees in the company are expected to coordinate
all aspects with human resources as well as to ensure that all the group human
resources policies and procedures are implemented and adhered to, with the aim of
ensuring the equal treatment of staff across borders. Working in HR within Electrolux
gives great opportunity for personal development. HR manager will provide operative
and strategic HR support to the line managers and staff worldwide ensuring timely

19

and cost effective solutions that enable line managers and employees to improve
individual, team and business performance.
b. Product fortfolio
In basic, a product portfolio is defined as the range of products which is being
offered by the firm to its market targeted. Product portfolio management gives
organizations the ability to drive the utmost value from their product portfolios by
applying portfolio management principles to the product development process to
enable more predictable execution through centralized product planning and financial
transparency throughout product lifecycles. Leveraging product portfolio allows
organizations to improve product decision making and development performance to
achieve higher revenues. Having historical information on the cost and effort to get a
product to market is valuable information that can drive efficiencies and improve time
to market for future products.

From a life cycle analysis and a transparency product portfolio, the Electrolux
Company understand that its greatest potential to positively impact the environment is
to improve efficiency of products during use. It understand there is a market for
products with high levels of energy efficiency and low environmental impact. More
than that, Electroluxs consumers want appliances that are safe, do not contain
hazardous materials, have low noise levels and are produced under good working
conditions. Well-designed standards transform markets by empowering consumers to
make informed purchases and to manage the customers energy bills. This is why
Electrolux advocates the use of energy labeling. Electrolux measures energy
efficiency improvements of our entire product range in Europe. In order to help
consumers buy our most energy-efficient, climate-friendly appliances, every business
20

sector is raising the profile of their top performing appliances. Therefore Electrolux
has organized products portfolio in a best way to control its inventions efficiency as
well as serve better for the needs and wants of different customers in alternative
market segments.
c. Activities and value chain
Electrolux activities of its value chain consist of many processes accompany with
the support of the 4 main other departments to create a new product.
Primarily, in strategic market plan, the company identified opportunity areas within
the consumer themes, clarified aspiration and draw a strategic road map, detailed a
long-term generation plan. Secondly, Consumer opportunity step is a deep
understanding of consumer needs, wants and desires simultaneously with the early
rough assessment of business opportunities. Next, primary development standardized
technical solutions within innovation themes as well as provide technical solutions to
urgent problem areas. Concept development includes feasible concept addressing the
identified needs, distinct positioning, consume value-based pricing and solid business
case. Fourthly, Electrolux execute their product development step with cost efficient
product specification and design, great manufacturability. Before range management
and phase out, commercial launch preparation and execution is necessarily important
to clear launch window target, effective range roll-out, tailored communication, strong
in-store execution and consistent follow-up. Finally, the company optimal total
product portfolio, ongoing review and improvement of performance accompany with
optimal processes for phase in and phase out.

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To an ancient company like Electrolux, they has enough experience to build up an

optimal process of manufacturing that compatible with the companys resources and
organizational development.
d. Organizational structure
Organizational structure is the formal system of task and reporting relationships
that controls, coordinates, and motivates employees so that they cooperate to achieve
an organization's goals.
After a series of acquisitions in Europe and disposing of many of the unrelated
industrial activities in order to restructure the whole organization, Electrolux
Company is such a complex group which clearly required strutures and process
through which both strategy and operations could be managed. Electrolux operations
are organized in six business sectors that include a total of 25 product lines. There are
four Group staff units. The Group has a decentralized corporate structure in which
overall management of operative activities is largely performed by sector boards.
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Group Management includes the President, the six sector heads, the four Group
staff heads and the head of R&D, Purchasing and Manufacturing within Major
Appliances.

The six sector heads are members of Group Management and have responsibility
for the income statements and balance sheets of their respective sectors. Within Major
Appliances, the business sectors are geographically defined, while the sectors
Professional Products and Floor Care and Small Appliances are global.
The overall management of the sectors is the responsibility of sector boards, which
meet quarterly. The President is the chairman of all sector boards. The sector board
meetings are attended by the President, the management of the respective sectors and
the Chief Financial Officer. The sector boards are responsible for monitoring on-going
operations, establishing strategies, determining sector budgets and making decisions
on major investments.
In the external reporting, the Groups operations are divided into five business
sectors. Operations within Consumer Durables are divided into four geographic
business areas: Europe, North America, Latin America and Asia/Pacific and Rest of
world. Professional Products is the fifth business area.
e. Customer identity
The customer base is the group of customers and/or consumers that a business
serves. In the most situations, a large part of this group is made up of repeat customers
23

with a high ratio of purchase over time. These customers are the main source of
consumer spending. In many cases, the customer base is considered the business's
target market, where customer behaviors are well understood through market research
or past experience. All actions the company takes would be through consideration of
its customer base.
The Electrolux Group has carried out extensive consumer research which describes
the Electrolux brand positioning for different consumer segments. This target
consumer is characterized by a high level of social interaction, large informal
networks, frequent and savvy use of the internet, curiosity and creativity.

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2. Assessing for current situation and positioning Electrolux Company

2.1 SWOT analysis
SWOT analysis is a tool for auditing an organization and its environment. It is the
first stage of planning and helps marketers to focus on key issues. SWOT stands for
strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are
internal factors. Opportunities and threats are external factors.
Below is the tabular describe four element (SWOT) of the Electrolux Company:
Strengths
1. Well established team of directing
managers
2. Experienced in using acquisitions
to innovate and to enter new
markets
3. Fast integration of bought
businesses in Electrolux's value
chain
4. Will to dispose non-profit, noncore businesses (selling off idle
assets)
5. Localized sales forces
6. Subsidiaries as decentralized profit
centers managed by Shareholder
Value Approach
7. Highly automated production
facilities
8. Lean production using outsourcing
for components
9. Dominant player in Nordic
countries
10. Small overhead (low vertical
differentiation leads to operational
empowerment of local
subsidiaries). Strategic aspects
centralized in headquarters
11. Electrolux Forecasting and
Supply System
12. Good relations with union
Opportunities
1. Gaining advantage by being the
first operating in a global scale in
this industry
2. Increasing business efforts in
expanding markets like Latin

Weaknesses
1. Diversifying causes sometimes
financial problems (risky and high
cost)
2. Very high focus on Western Europe
and North America - not yet
concenstrate in the rest of the
world
3. Low integration of production
facilities worldwide (market shifts
towards low-cost, high-quality
products - therefore Electrolux
should move from a multidomestic product strategy to a
more global product strategy which
combines world-wide economies
of scale with products only slightly
adapted to local consumer
behavior)
4. Bad quality service in some
branches.

Threats
1. Other competitors chose to move
from their domestic markets to
operate in a global scale (e.g.
competitors from the USA)
2. Decline in world economy may
25

America and Far East

3. Product innovation can be an
important aspect for global
competitiveness

lead to financial problems

(replacement demand of longlasting consumer goods)

Through all of the information analized above, the Electrolux managers can create
a reasonable strategy though matching the internal factors (Strength and Weakness) to
the relevant external factors (Opportunity and Threat). For instance, the Electrolux
company can use its well established team of directing managers, its fast intergration
of bought in the Electroluxs value chain simultaneously combines with the strength
of small overhead control (S1, S3, S10) in order to gain advantage by being the first
operation in a globalscale in this industry (O1).
Others than that, Electrolux is an organization experienced in using acquisitions to
innovate and to enter new markets (S2) as well as a dominant player in Nordic
countries (S9) with a good relationship with union (S12) to catch up the good
opportunity of increasing business efforts in expanding markets like Latin America
and Far East (O2). By this chance, the company can also minimize its weakness in
highly focusing on Western Europe and North America but not yet concentrate in the
rest of the world (W2). The Electroluxs experiences in acquisitions and merges (S2)
can help the company reduce the thread of other companies choose to move from their
domestic markets to operate in global scale (T1).
The number of best-fit choices does not stop there when there are chances of
product innovation can be an important aspect of global competitiveness (O3).
Electrolux company can hold this opportunity by utilizing its own strengths of high
automated production facilities (S7) and lean product using outsourcing for
components (S8). By that, the company at the same time can decrease its weakness of
Low integration of production facilities worldwide (market shifts towards low-cost,
high-quality products - therefore Electrolux should move from a multi-domestic
product strategy to a more global product strategy which combines world-wide
economies of scale with products only slightly adapted to local consumer behavior)
(W3).
In overview, the Electrolux has to identify and clarify its SWOT in particularly in
order to maximize its advantages simultaneously minimize the drawbacks in the
organizations operations effectively.
2.2 Positioning techniques
26

a. Product-Market Strategy: Direction of growth

Achieving Electrolux goal for profitable growth requires a strengthened position in
the higher price segments, expansion of operations in specific product categories, and
higher sales in growth regions. Although growth in the total market for household
appliances is limited in terms of value, several clear and powerful trends are driving
strong growth in specific product categories, regions and sales channels. Identifying
these trends, will enable Electrolux to improve its product offering and thus create
profitable growth.
To detect obviously which products the Electrolux Company manufactures and the
markets where it sells them to, we use the Ansoffs Matrix. The Ansoffs Growth
matrix is a tool that helps businesses decide their product and market growth strategy.
Ansoffs product-market growth matrix suggests that a business attempts to grow
depend on whether it markets new or existing products in new or existing markets.
The output from the Ansoffs product-market matrix is a number of suggested growth
strategies that set the direction for the business strategy. There are four segments of
the matrix:

Electrolux only focuses on the diversification strategy that includes rapid

expansions in growth regions and developing new product categories.
Primarily, Electrolux will increase sales in growth regions such as Eastern Europe,
Latin America and a large portion of Asia. The Group has a strong presence in these
regions in terms of sales and production. In emerging markets, demand for modern
appliances is showing vigorous growth as disposable income increases and a middle
class with strong purchasing power develops. The Groups local presence in the form
of production facilities and sales companies together with the wide experience of
growth markets generates opportunities for continued expansion. For example, the

27

strong position that Electrolux has achieved for front-loaded washing machines in
Southeast Asia is the basis for expanding operations in terms of kitchen appliances.
Secondly, Electrolux works continuously on identifying product categories with
potential for rapid and profitable growth. The Groups longstanding reputation for a
proactive approach to sustainability contributes to a successful launch of new
products that consume less energy and water. Sales and profitability for products with
the highest energy-efficiency the Green range are closely monitored and show a
more profitable trend than Group products as a whole. In addition, certain product
segments show much higher growth than the corresponding product category in
general. Over the last few years, sales of frost-free freezers and front-loaded washing
machines have increased more than overall growth for freezers and washing
machines.
In overall, Electrolux chooses the diversification strategy to be their priority in
developing the company. However, this leads to the risks and high costs of innovating
new products and penetrating into new markets. Therefore, the company needs take a
consideration into its method of growth to spread out the risks and expanditures.
b. Method of growth
Businesses can grow either organically for example through internal growth where
profits are ploughed back into the business, or through external growth such as
through take-over or merger with another business.
Electrolux's brand includes its namesake, along with Eureka, AEG, Frigidaire,
Kelvinator, Zanussi, Flymo, Weed Eater, and Husqvarna. In 2001, the firm held the
leading market position in North America, Europe, Latin America, and Australia.
Electrolux completed a major restructuring effort in 1999, which left it positioned
with two main business segments: Consumer Durables and Professional Products.
This is a result of a series of acquisitions and merges with other companies. For
instance, in 1919, Lux and Elektromekaniska merge to form Aktiebolaget Elektrolux;
in 1925, the company acquires Arctic, an absorption refrigerator manufacturer; in
1962, ElektroHelios, a Scandinavian market leader in compressor refrigerators and
freezers, is acquired; in 1974, Electrolux purchases United States-based Eureka and
the last in 1984, Zanussi, an Italian household appliance manufacturer, is acquired.
So, in general, executing a series of acquisitions and merges in order to restructure
the whole industry of the organization is the right strategic application of Electrolux.
That proves the capabilities of Electroluxs manager drive the company well in an
competitive environment.
PART 3
28

The current external environment in Vietnam and a strategic plan for Electrolux.
1. The current external environment in Vietnam
a. Political
Government of Vietnam always consistent policy to attract foreign investment
creates conditions for sustainable development of enterprises. The Government has
issued several mechanisms and policies to support foreign investment enterprises,
promoting production and export, thoroughly apply the tax reduction policy, which
prescribes the tax exemption and reduction of land to build factories, run operations,
companys net profit tax is exempted for the first three years foreign companies
investment, exemption for imported materials for five years since starting production.
On the other hand, since 2007 Viet Nam has joined the world trade organization so as
in terms of commitment with WTO, Vietnam cannot apply the policy of protection in
the domestic products by pressuring to the ceiling price and floor price for Foreign
firms investing in Vietnam.
b. Economic
After the economic crisis of 2008, Viet Nam's economy has been reduced but not
falls deeply into recession and tending to increase gradually. Growth domestic product
GDP for six months in 2009 reach 3.9% and the CPI has also grown to nearly 5.58%
(Sacombank leasing, 2009).
Besides, average revenue in five years of retail market in Vietnam is about 37
billion dollars, is not a major market in the region, however, it has 20% growth every
year. Although income per capita is in the low category in the world, but Vietnamese
use more than 70% of their income for consumption purposes. A high number
compared to the same the number is 40% in developed countries (SAGA
Communications, 2009).
That all prove the sign for a potential market where employees are available with
low salary requirement and

consumers are always ready to buy quality and

reasonable price products which providing them values. However to analyse market
more carefully, we should take a look in the social factors, that directly identify the
buying behavior of Vietnamese customers.
c. Social
A sociological study recently showed that the number of Vietnamese consumers
accept spending higher than income is used for expensive product and its quality.
Most customers still refer to when purchasing through the sources of information
from newspapers, advertising and friends. The consumer behavior changed from daily
29

shopping in traditional markets move to purchase large quantities for the entire week
at supermarkets, shopping centers and through the Internet; increase buying value and
use more and more green products, insurance, education ... In addition, Electrolux
needs access to advertise its products information through more and more natural
types of mass media, including broadcasting - television, newspapers and the Internet
to satisfy customers convenience in finding process for products. That is the problem
of technological influences.
d. Technological factors
Technology is today an important facility to connect customers with company, a
device support for the delivery system more efficiency and effectively. Vietnam
although derived slowly in the past but now it is progressing very quickly and are
positioned over many countries in the area. In 2002, Vietnam ranked 74/75 on the IT
level; Indonesia and the Philippines were put away. However, within a year,
Vietnams level of IT rose to 68/102 and beyond two countries above. This work is
based on the criteria: environment, readiness and the use of technology. Further
analysis showed that the change is due to the use of technology in Vietnam, especially
the business sector and government sector.

30

2. A strategic plan for Electrolux

Generally, strategic planning determines where an organization is going over the
next year or more and how it's going to get there. Typically, the process is
organization-wide, or focused on a major function such as a division, department or
other major function. Planning typically includes several major activities or steps in
the process. Different companies often have different names for these major activities.
They might even conduct them in a different order. Strategic planning often includes
use of several key terms. Different organizations might use apply different definitions
for these terms, as well.
For the Electrolux detailed strategic plan in Vietnam market areas, through the
basic analysis about four main external factors in the countries, Electrolux company
can pick out some other ideas added to its SWOT board, such as, its experiences in
acquisition and manufacture products as well as well manage the factory overhead can
help company reduce the cost for products. Therefore it will surely satisfy the
Vietnamese customers buying behaviour and income level.
It will be more successful for Electrolux Vietnam if they define the mission
statement and vision statement in more detailed. Electrolux planners should carefully
come to conclusions about what the organization must do as a result of the major
issues and opportunities facing the organization. These conclusions include what
overall accomplishments the organization should achieve, and the overall methods to
achieve the accomplishments. Goals should be designed and worded as much as
possible to be specific, measurable, acceptable to those working to achieve the goals,
realistic, timely, extending the capabilities of those working to achieve the goals, and
rewarding to them, as well.

31

CONCLUSION
Electrolux is one of the world's leading international appliance companies. We are
a part in the daily life of hundreds of millions of families around the world. Each year,
some 40 million consumers in more than 150 countries choose our products, such as
cookers and cooktops, ovens, fridges and freezers, dishwashers, washing machines,
tumble dryers, room air conditioners and vacuum cleaners. That translates to two
products bought from us every second, every day of the year. Because of the early
growth in the industry, Electrolux has many strengths and advantage to development
in new markets and innovation new products. However, Electrolux is highly
dependent on the success of the integration of the others company. Therefore the
market entry of potential competitors such might threaten the good position of
Electrolux in the foreign markets. Also a change in replacement demand, e.g. caused
by an economic decline, might create problems for Electrolux. Therefore being able to
adjust production to changing demands, not only in size, but also in structure (design,
more price sensitive customers), is essential for Electrolux. Considering the expected
tough competition in a mature market offering a good localized service will be crucial
to maintain market share. The highly experienced marketing employees of both
companies might help to improve service quality in the consumer market. Good long
lasting relationships with suppliers might help to face the increasing power of
suppliers, which is expected in that industry.

32

REFERENCES
BPP Professional Education, 2004. Chapter 1: OBJECTIVES, The role and
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Supporting Foundation Degrees Course Book (1st ed.). pp.4-8; 10-15.
BPP Professional Education, 2004. Chapter 1: OBJECTIVES, Stakeholders.
Mandatory Unit 7 Business Strategy Supporting Foundation Degrees Course Book
(1st ed.). pp.16-18.
BPP Professional Education, 2004. Chapter 2: THE EXTERNAL
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Strategy Supporting Foundation Degrees Course Book (1st ed.). pp.23-33.
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[Assess 01 March 2010]
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