GORENJE D.D.

Presented by:
Madiha Shahid
Syed Kashif Ali
Sar faraz
Salahuddin

PROBLEM STATEMENT

Very small market share in an already mature

market is hampering the growth of Gorenje in
the home appliances Industry

HISTORY
Gorenje D.D a medium-size manufacturing firm , producing
kitchen appliance & related products based in Slovenia
Historical connection with Austria, German language and
culture
Slovenia, with its historically close western ties in particular
with Germany let it became a republic with great
concentration in Industrialization
After the dissolution of communist countries in 1991 ,
Slovenia got a formal independence
Now it is a member of United Nations & was recently accepted
for membership in European Union

ABOUT THE COMPANY

Gorenje is a medium sized manufacturing firm producing
Kitchen appliances and related products both under its own
name and as a supplier to private label brands
Core competency of the company is its design and
manufacturing operations
Created an Elite line of highly styled appliances in
cooperation with the famed Pininfarina design studio in Italy
Company has developed modern assembly processes with the
use of robots for dangerous and awkward tasks
Quality is the major source of competitive advantage in
manufacturing(previously using SPC and TQM approach)
Currently Gorenje is implementing a quality system known as
20 Keys Approach

COMPANYS CURRENT STRATEGIC

SITUATION
Managements current strategic orientation is towards
manufacturing of kitchen appliances as its core competency
Currently Gorenje is the 8 th largest appliance manufacturer in
Europe
The new CEO has plans to move to 5 th position
Good deal of emphasis on developing its brand identity
Currently Gorenjes products are recognized for having good
quality and priced in the moderate range

ABOUT THE INDUSTRY

Currently Gorenje is the largest Slovanian manufacturer of
home appliances with continent wide market share of 4%
Market is dominated by small number of key players such as
Electrolux, whirlpool, Bosch, Siemens and Indesit company.
These companies together have more than 50% market share
in Europe
There are some companies arising in the east (China &
Turkey) , whose main competitive advantage is cheap labor
Some European manufacturers have already started moving
their operations to East

SWOT ANALYSIS
(STRENGTHS)
Strong brand name in former Yugoslav countries
Strong commitment to manufacturing excellence
Skilled workforce due to good educations system and tradition
of craftsmanship
Company practices employment security and has experienced
employees

SWOT ANALYSIS
(STRENGTHS)
Largest and prestigious employers, enabling them to receive
experienced applicants
Workers are committed to success of company
Long experience with exporting; generally benefitted from
favorable relationships with key distributors
Service network 3000 contract service centers throughout
the world
New product development time only 12 months

SWOT ANALYSIS
(WEAKNESSES)
Relatively small producer in Europe, ranked roughly 8 th in size
with only about 3% of the European market
Economies of scale are relatively small
Current largest market (western Europe) is relatively mature
with little expansion expected
Brand name suf fers negative ef fect due to association with
Eastern Europe (low quality)

SWOT ANALYSIS
(WEAKNESSES)
Undiversified; any weakness in Kitchen appliance market will
be immediately felt
Significant transportation fee to ship products in other parts
of Europe
Companys own sales managers lack confidence in their own
products and companys image

SWOT ANALYSIS
(OPPORTUNITIES)
Development of related products other than Kitchen
appliances (industrial equipment, kitchen cabinets, etc)
Further development of its own trademark in Europe, as a
quality brand
Eastern Europe potentially large new market (currently 12% of
its sale and growing)
Can improve its own distribution network
Growing through acquisition

SWOT ANALYSIS
(THREATS)
Competition is increasing
Recession in Europe immediate problem for sales
Risk of payment defaults in unstable economies in Eastern
Europe
Energy conservation demands in Europe creates a challenge
to maintain proper design and performance standards
Threats to Gorenjes divergent price system (varying for
dif ferent countries, and brand names)

FIVE FORCES ANALYSIS

(RIVALRY: HIGH)
Substantial competition from 8 major producers in western
Europe
Competition from Eastern Europe and Asia is increasing;
customers already switching from Gorenje
Quality of eastern European producers improving rapidly
New competitors from Turkey and Asia

FIVE FORCES ANALYSIS

(BARGAINING POWER OF CUSTOMERS: HIGH)
Distributors are the only customers, and they are very large,
and getting larger due to consolidation, leading to fewer
buyers with greater ability to dictate prices
Each distributor bargains for best price
Prices further go down when distributors want to sell under
own label
Sales people who negotiate are Soft, which does not help in
bargaining process

FIVE FORCES ANALYSIS

(BARGAINING POWER OF SUPPLIERS:
MODERATE)
Few major suppliers with most in Italy
One supplier for delicate parts involving colors
These big suppliers have greater bargaining power
Reduction in quality when lower price is sometimes
negotiated
Local suppliers also few leading to relatively strong
bargaining power

FIVE FORCES ANALYSIS

(THREATS OF NEW ENTRANTS: MODERATE)
Eastern Europe, Turkey, and China pose a current and growing
threat
Western European companies setting up plants in Eastern
Europe
Greatest threat from China; competency of manufacturing
kitchen appliances is increasing at fast rate
China recently placed around 100,000 units in Italy and UK
under local name and very low prices
Also threat of South Korean companies entering the
marketplace

FIVE FORCES ANALYSIS

(THREATS OF SUBSTITUTES: LOW)
No known substitute for traditional kitchen appliances
Products are only being upgraded by addition of new
electronic technologies, and not being substituted

RECOMMENDATIONS
Home appliance industry is an attractive industry as we have
seen in the result of the five force analysis, so that company
should carry out the following measures in order to enhance
growth.
1) Should develop related products (industrial equipment,
kitchen cabinets, etc)
2) Market share to be increased by advertising the high quality
of products and building brand image with both primary and
secondary customers
3) Improve distribution network
4) Training sales people to improve their negotiation skills
5) Grow through acquisition
6) Strengthening the brand identity