Electrolux Case

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Electrolux, page 25-27:

1) Explain why the issues facing Electrolux were strategic?

Long-term direction:
- More domestic and professional appliances
- Shift production to low-cost countries
- Close plants that are inefficient
- Reduce number of supplies, also purchase more from low-cost countries - Build a strong global brand

Scope: - Electrolux focused on its key competences (domestic and professional appliances) - Sold its outdoor division (mowers, chain saws, etc.) - Want to invest 2% of sales in product development to intensify product renewal and systematic development of brands

Advantages over competitors:
- Global, recognized brand

Business environment:
- Globalization (production in low-cost countries, production costs of all major producers will be the same, therefore more concentration on product development, brand-building, marketing) - Market polarization (demand for basic products and higher-price products increases) - Consolidation of retailers (more business with big chains and fewer traditional dealers)

2) Identify the main factors about the strategic situation of Electrolux.

- Globalization
- Market polarization
- Consolidation of retailers
- Cost reduction in order to compete with other big companies (Whirlpool)

3) Think about strategic choices for the company in relation to the issues that it has. - Invest more in research and development
- Use more economies of scale, reduce number of unique products and increase “platforms” for easy adjustments/diversification of existing products - Find new markets (developing world, BRIC-Countries)

Show how the elements of Strategic Management differ in:
b) a large multinational business
In a large multinational firm, the strategy needs to consider aspects and local circumstances of not only one country, but all countries...
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