Explain why the issues facing Electrolux were strategic.
Axel Wenner-Gren, the founding father of Electrolux, established the principles by which the company still thrives. His dream to improve quality of life has had fundamental impact on homes around the world. Today’s Electrolux, 90 years later, is a global leader in household appliances and appliances for professional use.
One of the reasons why the issues facing Electrolux were strategic is the long- term direction. The company put an impact on expansion. By the mid 1930s they had established production outside Sweden in Germany, UK, France, USA, and Australia. The strategy was to grow through acquisitions and diversification. There were 59 acquisitions made in 1970s. In the 1990s Leif Johansson expanded into Eastern Europe, Asia and South Africa.
Electrolux strategy is the tool for achieving the long-term goal of an operating margin of 6%. Electrolux is therefore focusing first on continuing to reduce production cost. In the interest of creating long-term competitiveness, Electrolux is implementing a comprehensive program for savings in production and purchasing, which involves relocating production to and increasing purchases from low-cost countries.
The scope of an organisation is its range of products and services Electrolux is providing. It is the larger producer of domestic and professional appliances for the kitchen, cleaning and outdoor use.Electrolux products include refrigerators, dishwashers, washing machines, vacuum cleaners, cookers, chainsaws, lawn mowers, and garden tractors sold under esteemed brands such as Electrolux, AEG-Electrolux, Eureka and Frigidaire.
Competitive advantage plays a very vital role at Electrolux. It is a consumer-oriented company in which all product development grows out of insight into consumer needs. By increasing their customer insight, they are able to develop even more new products that solve the customer needs and problems. The company understands how to make more environment friendly products. For the customer, choosing an appliance with enhanced environmental performance brings long-term savings. For Electrolux, it means there is a competitive advantage in making consumers aware of the correlation
Electrolux’s resource, in a wider sense is everything that an organisation can use to create value for customers including team members, knowledge, capital, material and energy. In a narrower sense resource is that which is used in manufacturing, mainly material and energy. In 2008, Electrolux had sales of SEK 105 billion, 55,000 employees and many factories in the world. Apart from the tangible assets such as human resources and financial recourses they have intangible assets such as patents and copy rights for their products.
The values and expectations of power players in the company such as Chef Executive Hans Straberg would like to intensify their efforts in product development and brand building, based on better insights consumer needs. He is convinced that this is the way to achieve sustainable profitability and growth. Their mission is to be the world leader in profitably marketing innovative product and service solutions
2. Identify the main factors about strategic position of Electrolux. List these separately under environment, capability and expectations. What are the most important factors?
Strategic position is concerned with the impact on strategy of the external environment, an organisation’s strategic capability, and the expectations and influence of stakeholders (Gerry Johnson and Kevan Scholes, 2002).
Environment is complex and changing by diversified environmental variables. Many of those variables will become the sources of competition, as well as give rise to opportunities and other will exert threats on the organization or both. The environment of Electrolux will be examined by PESTLE analysis. The acronym PESTLE stands for: Political, Economic, Sociological, Technological,...
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