Electrolux Case Summary
PG-41 Strategic Management - Session 10
Electrolux Case Summary
Fei YE
As the largest domestic products manufacturer in the world, Electrolux has about 70000 employees all around the world in about 150 countries, making 14 billion euros in sales in 2005. However, an acquisition case from its main competitor, Whirlpool, is challenging the first place of Electrolux, at the time Electrolux has just decided to divest its outdoor division. A huge decrease in sales in the following years is expected. Starting from 1920s, Electrolux has been famous for its expertise in industrial design on products such as vacuum cleaner and refrigeration. The products quickly got popular not only in its home country in Sweden, but in other western countries such as Germany, France, USA and UK, due to the homogeneous culture of these countries. A major growth in demand after World War II contributed a lot to its growth. With a large amount of accumulated cash of the past decades, Electrolux decided to expand quickly through a number of acquisitions for more market share and diversification. In late 20th century, Electrolux discovered new markets in developing countries when the market in western countries was already very mature and was even showing a sign of going down. It also went through a phase of restructuring the segmentations of products as well as abandoned some less important activities. Up until 2006, the company has addressed its new strategies mainly on functional level to correspond to the challenges. To maximize the profit, the production would be outsourced to developing countries with lower labor costs. More efficient logistics has made the globalization more feasible and cost-saving. On the product market level, due to the market polarization, a more distinguishing product segmentation would be applied. While keeping the basic low-price products, Electrolux is launching a series of products with higher prices to satisfy the high-end market. On the other hand, 2% of
Electrolux Case Summary
Fei YE
As the largest domestic products manufacturer in the world, Electrolux has about 70000 employees all around the world in about 150 countries, making 14 billion euros in sales in 2005. However, an acquisition case from its main competitor, Whirlpool, is challenging the first place of Electrolux, at the time Electrolux has just decided to divest its outdoor division. A huge decrease in sales in the following years is expected. Starting from 1920s, Electrolux has been famous for its expertise in industrial design on products such as vacuum cleaner and refrigeration. The products quickly got popular not only in its home country in Sweden, but in other western countries such as Germany, France, USA and UK, due to the homogeneous culture of these countries. A major growth in demand after World War II contributed a lot to its growth. With a large amount of accumulated cash of the past decades, Electrolux decided to expand quickly through a number of acquisitions for more market share and diversification. In late 20th century, Electrolux discovered new markets in developing countries when the market in western countries was already very mature and was even showing a sign of going down. It also went through a phase of restructuring the segmentations of products as well as abandoned some less important activities. Up until 2006, the company has addressed its new strategies mainly on functional level to correspond to the challenges. To maximize the profit, the production would be outsourced to developing countries with lower labor costs. More efficient logistics has made the globalization more feasible and cost-saving. On the product market level, due to the market polarization, a more distinguishing product segmentation would be applied. While keeping the basic low-price products, Electrolux is launching a series of products with higher prices to satisfy the high-end market. On the other hand, 2% of