Homework

for strategic management

Electrolux case
Yang,Chen

Explain why the issues facing Electrolux were strategic.

The strategies of the company is to achieve organizational goals, The goals
of the company focus on the 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.
Electrolux case study focus on about Long-term strategic direction, Scope,
Business environment , Advantage over its competitors , Meeting strategic fit
with the business environment and Resource availability and competence of
the company following strategic issues of the organization:
Long-term strategic direction
The long-term goal was to speed up market-oriented company based on
understanding the customers needs. And 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 from the annual report 2005 are: Continue to cut
cost and kick out market complexity in all aspects of operations and 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. And 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. 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 organizations 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 resourcebase 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.
Electroluxs 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.

Identify the main factors about the strategic situation of

Electrolux.

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 ,such as the
environment, strategic capabilities and 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.
Strategic capabilities
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 was 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
Electrolux is pretty successful in fulfilling all stakeholders expectations such
as better understanding of the customers needs and playing role by
considering their expectations; Increasing wide range of product renewal
based on consumer insight; Improving and maintaining quality as a part of
competition with main competitors, increasing profitability to fulfill shareholders
expectations and so on

Think about strategic choices for the company in relation to

the issues that it value.
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 and Methods
Business level strategy
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. Electroluxs CEO 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. A series of important new innovations lunched both in North
America and Europe and development of new distribution channels for the
products of Professional food service and Laundry equipment.