Case Analysis-Arcelik Grows in Advanced and Emerging Economies
1. Arcelik is a member of the Turkish Koc Group which accounted for 9% of Turkey’s GDP and 12-16% of Turkish private sector R&D investments. So as a member, it can use resources from Koc, like receiving financial backing, sharing employee/management training programs/management best practices and synergies in purchasing to cost down. 2. Arcelik has younger labor force and lower hourly wages than other countries. 3. As offshoring of production became popular in the 1990s, Arcelik acquired lots help from some international leading manufactories, also it licensed technology from these companies to achieve and maintain market leadership at home. (b)
Arcelik can leverage the resources of Koc, the labor force in Turkey, relatively lower production cost, economy of scale in Turkey, and patents to transfer these merits to international operations.
Customers in Western Europe mostly have brand-loyalty in white goods and Arcelik’ products suffered from a negative country of image. In addition, white goods industry is very competitive in Western Europe. Therefore, Arcelik adopted the acquisition to strengthen its market position, set up offices in France, Germany and the UK, and introduce a new brand ”Beko” into Western Europe.
I think that Arcelik faces some key challenges in emerging economies, such as leading retail chains hold considerable bargaining power, local brands are more powerful, local governments set tariff barriers to protect their local industries, brand recognition is low among these economies and fierce competition from other international brands like Samsung or LG. I will suggest Arcelik leverage its resources to enter new markets. Firstly, to provide customers with reasonably price but high quality white goods by utilizing its strong R&D and younger, cheaper labor power. Secondly, to use acquired firms operations as foundation for its growth in that region or...
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