This strategic business report provides an analysis of Vestel Elektronik Sanayi Ve Ticaret A.Ş., a Turkish electronics and home appliances manufacturer. The report outlines Vestel's mission, vision, and strategic goals of sustainable growth. It describes Vestel's operations expansion through mergers and acquisitions in Europe. The report also analyzes Vestel's resources, core competencies in product diversification and logistics, and competitive advantages from economies of scale. Finally, it performs a S.W.O.T. analysis that identifies Vestel's management team, production facilities, brand recognition, and barriers to entry as key strengths.

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STRATEGIC BUSINESS REPORT ANALYSIS OF
- Vestel Elektronik Sanayi Ve Ticaret A.Ş.-
Management Strategy 2
Project Supervisor: Prof. Dr. P. Augsdörfer
Presented by: Emmanuel K. Amako
Hatice Gürkaş
Date of submission: 26.11.2014

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TABLE OF CONTENTS
1 General Overwiew of Vestel.............................................................4
1.1 Mission and Vision ........................................................................... 4
2 Vestels Strategy...................................................................................4
2.1 Vestel’s Strategic Goal...................................................................... 4
2.2 Growth Strategy in the Main Fields of Operations .............................. 5
3 Operations Expansion .......................................................................5
3.1 MERGERS AND ACQUSITION..................................................... 6
4 Industry Environment.......................................................................6
4.1 Nature of Competition...................................................................... 6
5 Current Assets ....................................................................................7
5.1 Resources.......................................................................................... 7
5.1.1 Tangible Assets ...................................................................................................7
5.1.2 Intangible Assets.................................................................................................9
5.2 Vestel's core competencies and competitive advantages................... 9
6 Strength and Weakness (S.W.O.T Analysis) ..............................10
6.1 - Strengths -................................................................................... 10
6.2 - Weakness –................................................................................... 11
6.3 - Opportunities -........................................................................... 11
6.4 - Threats -..................................................................................... 11
1 General Overwiew of Vestel.............................................................4
1.1 Mission and Vision ........................................................................... 4
2 Vestels Strategy...................................................................................4
2.1 Vestel’s Strategic Goal...................................................................... 4
2.2 Growth Strategy in the Main Fields of Operations .............................. 5
3 OPERATIONS EXPANSION .........Error! Bookmark not defined.

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4 Industry Environment.......................................................................6
4.1 Nature of Competition...................................................................... 6
5 Current Assets ....................................................................................7
5.1 Resources.......................................................................................... 7
5.1.1 Tangible Assets ...................................................................................................7
5.1.2 Intangible Assets.................................................................................................9
5.2 Vestel's core competencies and competitive advantages................... 9
6 Strength and Weakness (S.W.O.T Analysis) ..............................10
6.1 - Strengths -................................................................................... 10
6.2 - Weakness –................................................................................... 11
6.3 - Opportunities -........................................................................... 11
6.4 - Threats -..................................................................................... 11

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1 General Overwiew of Vestel
Vestel is a Turkish home and professional appliances manufacturing company consisting of
18 companies specialised in electronics, major appliances and information technology.
Vestel's headquarters and production plant are located in Manisa, while the company's
parent conglomerate is the Istanbul based Zorlu Holding.
Vestel, together with its subsidiary brands has a significant share in the European market of
consumer electronics and home appliances, in particular TV sets. As of 2006, Vestel was the
largest TV producer in Europe with more than 8 million units sold, accounting for a quarter of
the European market. Vestel also has a subsidiary brand Vestfrost, which is popular in
the Nordic countries.1
1.1 Mission and Vision
As the technology giant of Turkey in durable consumer goods sector, we carry out our
activities with a mission of making the “highest quality” accessible to our customers and
being a leader in the sector we operate in.
We aim at being the most powerful production and technology group of the world in our
sector and achieving a sustainable and controlled development by focusing on producing
high quality consumer products.
We continuously invest on research and development to strengthen our outstanding position
in the market. In this regard, we will carry our current determination to the future.
Europe is still the main target market for us. For this reason, we aim at keeping on monitoring
the new trends in the said market to meet the same and to add new products to our already
existing portfolio.2
2 Vestels Strategy
2.1 Vestel’s Strategic Goal
Vestel’s strategic vision is to create value for shareholders and investors by increasing
revenues and profitability through sustainable growth. In line with this vision,Vestel is focused
on its major fields of operations and also targets to grow by investing in new business lines
which offer significant market potential. As a technology brand that develops ideas which
make life easier and produce “friendly” solutions for the world, Vestel undertakes the
following with an approach that is focused on progress, development and growth :
1. keeps track of the rising trends in the sector;
2. listens to consumers, as well as its employees and dealers;
3. differentiates itself from the competition
1 Vestels Annual Report - 2011
2 Vestels Annual Report - 2011

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2.2 Growth Strategy in the Main Fields of Operations3
Vestel’s future growth strategy in its main fields of operations, namely consumer electronics,
white goods, digital products and information technologies, consists of four components:
Improving market diversification
Vestel aims to become a more active player in markets outside Europe, its major export
market, where it is one of the leading ODM providers. Vestel evaluates opportunities for new
investments, partnerships and contract manufacturing in these regions in order to facilitate
the Company’s access to these markets and ensure future growth.
Increasing customer and product diversity
Vestel aims to expand its market share by increasing its A brand customer base in the ODM
business as well as by widening its product diversity. To this end, the Company aims to
increase the production of the more profitable larger screen TVs in consumer electronics
whiles meeting all the needs of its A brand customers by widening the product range in white
goods
Brand-centered growth
While Vestel continues to expand its ODM business product diversity, it also aims to grow its
own brand. In the domestic market, Vestel plans to increase its market share with its own
brands by improving its brand image, distribution capabilities and after sales service quality.
The Company also aims to improve its operations and reinforce its market position in the
surronding region, again with its own brand
Gaining market share in new areas of use
One of Vestel’s strategic priorities is to grow in products with similar technology to those
which it manufactures, but which have different areas of use. Entering into new product lines
besides TVs in the consumer electronics, digital products and IT sectors, Vestel aims to gain
significant market share in these areas by capitalizing on its technological know-how,
economies of scale and purchasing power. In the coming period, Vestel aims to focus more
on institutional sales given the demand potential for these products
3 Operations Expansion
Vestel is able to reach different consumer groups in 145 countries through its strong global
marketing and sales network Vestel can boast of 1,160 stores in Turkey , 726 dealers with
Regard signage , 14 outlets , 331 authorized service centres , 15 Central services and an e-
Store (emagaza.vestel.tr, vsoutlet.com.tr) in Turkey .
It trades with International Companies in the UK , The Netherlands ,Germany, France, Spain,
Finland, Romania, Russia and Kazakhstan with 2750 stores and sales points selling Vestel
branded products in Russia,
Commonwealth of Independent States and the Middle East
3 Vestel Annual Report 2013

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3.1 MERGERS AND ACQUSITION
In 2006, Vestel acquired the rights to the Finlux and Luxor trademarks, two well-known
brands in Scandinavia and Northern Europe, and started manufacturing and exporting
under both names. In 2008, Vestfrost, one of the most prestigious white goods brands in
Europe and Russia, was added to the trademark portfolio.4
Following up the Graetz
trademark, which is well-known in Germany, Vestel also signed a licencing agreement for
the Telefunken trademark to produce and sell products in the Spanish, Italian and
Portuguese markets.5
In 2011, Vestel acquired Electra, Servis, New Pol and Atlantic
brands for the sales of white goods products6
4 Industry Environment
4.1 Nature of Competition
Vestel faces various competition in both it’s local and international Markets . In the Turkish
market , not only does it compete with imported electronics and white goods with a world-
renowed brand , but they also compete with local electronics and white goods giants like
Arçelik A.Ş which has over 10 production plants in Turkey and accounts for a 7 per cent
share of the European free-standing appliances market and 5 per cent of the OBM market7
.
Other competitors locally include Bosch GmbH , a German-owned electronic and white
goods company that employs of 7,500 workers in Turkey8
and has posed a strong
competition to Vestel due to its famed brand name .
Indesit Company S.p.A., an Italian domestic appliances manufacturer (washing machines,
dryers, dishwashers, fridges, freezers, cookers, hoods, ovens and hobs)9
and distributor with
an industrial area in Turkey is more than a threat to Vestels electronic manufacturing and
producing prospects not to mention the long list of other competitors it face it it’s foreign
market and International Expansions .
4 http://www.vestel.com/en-en/corporate/vestelgroup.aspx
5 http://www.vestel.com/en-en/corporate/vestelgroup.aspx
6 http://www.vestel.com/en-en/corporate/vestelgroup.aspx
7 http://en.wikipedia.org/wiki/Ar%C3%A7elik
8 http://en.wikipedia.org/wiki/Robert_Bosch_GmbH
9 http://en.wikipedia.org/wiki/Indesit_Company

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5 Current Assets
5.1 Resources
Resources in and of themselves confer no value. It is only when resources are put to some
productive use that value follows. This analysis defines resources by two categories: tangible
and intangible. Vestel’s tangible resources include financial, physical, organizational and
human resources. Intangible resources include intellectual and technological resources.
5.1.1 TangibleAssets
5.1.1.1 FinancialResources
A company’s financial resources concern its ability to finance its chosen strategy and
operations.
Three types of financial resources to be considered are Vestel’s financial strength,
profitability and cash balance. Financial strength looks at business risk. From a financial
standpoint the stronger a company is the less risky it is. The current ratio, which compares
total current assets to total current liabilities, is a measurement of a company’s overall risk
and hence its financial strength. Vestel’s most recent quarter (4th
Quarter 2014 ) , Current
Ratio was 0.9610
. The current ratio must be
greater than or equal to 2, which means that the company holds current assets equal to twice
the amount of current liabilities. Vestel doesn’t meet this criterion. Companies that meet this
criterion are typically financially secure and defensive. The Gross Margin ratio is a measure
used to measure a firms overall profitability .
The Gross Margin value measures the percent of revenue left after paying all direct
production expenses. Vestel’s trailing twelve month Gross Margin is 20.22%11
. Vestel
Elektronik Sanayi Ve Ticaret AS's total assets for the quarter that ended in Sep. 2014 was
₺6,952 Mil.12
10 http://quotes.wsj.com/TR/VESTL/financials
11 http://af.reuters.com/finance/quotes/quote?symbol=VESTL.IS&exchange=XXCX
12
http://www.gurufocus.com/term/Total%20Assets/IST:VESTL/Total%2BAssets/Vestel%2BElektronik%2BSanayi%
2BVe%2BTicaret%2BAS

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5.1.1.2 PhysicalResources
Some examples of Physical resources include manufacturing plants e.t.c . Vestel can boast
of a state-of-the art one million square metres Production and Manufacturing plant situated
in Manisa , Turkey regarded as one of the largest largest collocated set of factories in Europe
and also an LCD TV , Refridgerator and Washing machine plant in Alexandrov , Russia
which initiated operations in 2010

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5.1.1.3 HumanResource
Vestel’s human resources include its executive management, board of directors and
employees. Executive management includes Ömer Yüngül(Chief Executive Officer and
General Manager) , Ahmet Nazif ZORLU ( Chairman of the Board of Directors ) with Ali
Akın , Tarı Selen ZORLU MELİK , Hacı Ahmet KILIÇOĞLU , Mehmet Emre ZORLU , Mümin
Cengiz ULTAV all board members13
. . With a labor base of 14,000 workers , Vestel is
dependent upon the services of these individuals and others who are part of the senior
management
5.1.2 IntangibleAssets
5.1.2.1 Technological/IntellectualResources
Vestel’s intellectual property resources are those aspects of its technology, designs and
methodologies, and processes that provide significant advantages of differentiation from
competitors.
5.2 Vestel's core competencies and competitive advantages
Product diversification strategy14
Vestel responds to the differing needs of customers in the EU countries that are its principal
market through its product diversification strategy. Vestel is the world's most flexible
manufacturer of consumer electronic goods today. Viewing an order for 100 units as just as
important as one for 10,000, Vestel is able to tailor its mass production operations according
to the needs of each order.This ability is what enables Vestel today to turn out 3,000 models
of 20 million units a year for 300 different labels on its three main production lines.
Comprehensive logistical services and product flexibility
Vestel regards its proficiency in logistics and distribution as a key element in its ability to deal
with customers' orders for different quantities of a huge range of products. The proximity of
the Company
to all European markets means that its shipping distances are much less than those of its
Asian competitors and this translates into a significant cost advantage.
A network that embraces the globe
Goods manufactured by Vestel reach consumers in Turkey and 103 countries around the
world through more than 1,200 outlets. This great network underlies Vestel's strength in the
areas of design,
production, point distribution, and management of the regulatory framework.
13 http://investing.businessweek.com/research/stocks/people/people.asp?ticker=VESTL:TI
14 http://globaldocuments.morningstar.com/documentlibrary/document/ab9b5f2e68bbce41.msdoc/original

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Vestel designs, manufactures, and point delivers all its products with
customers'demands in mind. In EU markets, where regulatory management has
become so important, Vestel is preferred because of
its ability to provide fully compliant service.
An externally oriented business model
Vestel's business model is straightforward, intelligible, and externally oriented. The bonds
between Vestel and its customers are based on transparency, longterm relationships, and
mutual trust. Vestel
keeps abreast of innovations for its customers and involves its customers in the design stage
so that it can manufacture and deliver at both high volumes and low. This is what we mean
when we say that Vestel is an externally oriented company.
Economies of scale
Consumer electronics is a business in which scale is of the utmost importance because scale
is crucial to keeping costs under control and thus to one's ability to price competitively. With
an annual production capacity of 12 million televisions (which is to be increased to 14 million
in 2005), the Company is the third biggest TV maker in the world. This fact gives Vestel
enormous buying power in the procurement of components, which represent the most
important items of cost in consumer electronics.
Vestel is one of the top three customers of the world's biggest suppliers of components for
use in consumer electronics.
The customs duty advantage
The Customs Union between Turkey and the EU is a natural competitive advantage for
Vestel. The Company's ability to export goods duty-free to EU countries as a result of this
union makes it strong in contending with competition from Asia. Something else that
contributes significantly to Vestel's competitive advantage is the EU antidumping laws.
A strong brand and a strong market position
Vestel is strongly positioned in Europe's television market, of which it commands a 26%
share. Maintaining strong and long term relationships with its principle customers, Vestel
does not compete
directly with their European brands and also enjoys a high degree of brand recognition in
Turkey. The Company believes that this attribute in the national market will create a
significant leverage effect, particularly in the case of its line of major home appliances, which
is still in the midst of its growth phase.
6 Strengthand Weakness (S.W.O.T Analysis)
6.1 - Strengths -
1. A key strength of Vestel is its bold , innovative and strong
Management team.
2. The largest TV facilities Projects carried out in Europe.

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3. Vestel serves as a new and a safe alternative to customer’s unsatisfied
With the services of Vestel's competitors.
4. Vestel has been exporting more than its competitors which give them an edge
in the international market and also improves it brand name in the local market.
5. Political, Economic and financial barriers of entry into the market can also be
Categorized as a strength of Vestel since these barriers makes it difficult for new.
6. Firms to enter the market and hence less competitor’s for Vestel to compete with
6.2 - Weakness –
1. Production of white goods may not be of the best quality as compared to other
electronic goods like the Vestel TV
2. It’s low customer services as compared to it’s competitors
3. The competitive nature of the it’s market
4. The possibility of high interest rates on loans
6.3 - Opportunities -
1. The ever growing Turkish population offers a huge oppurtunity to diverse and enter
other lucrative sectors of the economy
2. Vestel has the tendecy to offers its European customers high quality but low priced
electronics as compared to it's European counterparts
3. New generations of quality products that keeps the customers demand alive
4. Labor costs are lower as compared with their European counterparts
6.4 - Threats -
1. The purchase of white goods are dependent on economic conditions and on
customer's income and this can pose a threat to Vestel
2. Government support in Manufacturing , Sales and Exports are on a low level
3. High direct and indirect taxes
4. Severe competition that happens as a result of playing with the price of a product can
pose a threat to the company