Electrolux is the world's largest manufacturer of household appliances. In the early 2000s, it employed 85,000 people worldwide and sold 55 million products per year in 150 countries. Due to limited growth in Western Europe and North America of 2-3% annually, Electrolux expanded into Asia, Eastern Europe, and Latin America where demand was estimated to grow 20% annually. The company pursued different expansion strategies in different regions, including acquisitions, joint ventures, and new factories. However, rapid expansion led to duplication and inefficiencies in Electrolux's global production system.
Marketing Excellence Case Study - ElectroluxAakash Goyal
This is a presentation on the basis of a case study against a Internship Program of Management by IIM Lucknow.
Here we have to thoroughly study about the company read about it and explain the case study by telling like a story "The Managers of the Futures will be Storytellers"
Marketing Excellence Case Study - ElectroluxAakash Goyal
This is a presentation on the basis of a case study against a Internship Program of Management by IIM Lucknow.
Here we have to thoroughly study about the company read about it and explain the case study by telling like a story "The Managers of the Futures will be Storytellers"
Evaluate why needing to have a competitive advantage is so highly re.pdfakilastationarymdu
Evaluate why needing to have a competitive advantage is so highly recommended in the field of
strategic management. Using an example of a specific organization, what might that organization
do (or have they done) if they need to change or find a
Solution
WHY HAVING COMPETITIVE ADVANTAGE IS HIGHLY CRITICAL?
A firm\'s success is measured by the attractiveness of the industry in which it operates and
measures the economics of a firm\'s business focusing primarily its ability to generate excess
returns on capital and links the business strategy with fundamental finance and capital markets,
for a longer period of time. A Firm is said to have a competitive advantage over its competitors ,
when maintaining that surpass the average in its industry. This advantage is primarily derived
from the characteristics of the product / service that makes it superior to competitive products /
service. It is only because of the competitive advantage which allows the firm to earn excess
returns for its shareholders. Without a competitive advantage, a firm has limited economic
reason to exsist and would not be able to survive for long time.
EXAMPLE : When electrical goods company Havells acquired Sylvania in 2007, all that it was
looking for was growth and a strong global presence. Instead, trigerred by the global financial
crisis the company had to face with major. The situation threatened to pull Havells down, and it
had to come up with a smart turnaround strategy. This case study looks at how Havells pulled it
off.
Havells India Ltd is a Rs 7,248-crore company. The journey hasn\'t always been smooth, but the
roughest patch was easily the 2007 acquisition of German lighting and fixtures maker SLI
Lighting, owner of the Sylvania brand(then the world\'s fourth-largest lighting company and 1.5
times bigger thanHavells..
Havells had a track record of five successful acquisitions, and high growth in itsIndian
operations. In 1983, it bought the loss-making Delhi-based Towers and Transformers Ltd and
turned it around in a year. In March 2007, Havells bought Sylvania. And then the global
financial crisis struck.
As the meltdown rocked European markets, Sylvania\'s sales fell, leading to net losses of Euro
16.3 million in 2008/09 and Euro 26.1 million in 2009/10. From Euro 515 million in 2007/08,
revenues dropped to Euro 438.4 million in two years.
In September 2008, Sylvania\'s bankers, led by Barclays Capital, hit the panic button as the
company breached its financial ratio. Sylvania\'s acquisition was funded by debt - a Euro 120-
million loan based on operating cash flows and an Euro 80-million loan taken out by a Havells
subsidiary. Havells repaid 180 million by raising money from the sale of a stake to Warburg
Pincus.
Sylvania\'s poor performance began to affect consolidated numbers. Havells\'s top management
drew up an 18-month restructuring plan. In the first phase, the aim was to improve profitability
by cutting manpower costs and closing factories. The second pha.
Highlights of the first quarter of 2017
Net sales amounted to SEK 28,883m (28,114).
Organic sales declined by 3%, while currency translation had a positive impact of 6% on net sales.
Operating income increased to SEK 1,536m (1,268), corresponding to a margin of 5.3% (4.5).
Improved results across all business areas.
Continued good profitability for Major Appliances EMEA, Major Appliances North America, Major Appliances Asia/Pacific and Professional Products.
Operating income for Major Appliances Latin America and Home Care & SDA recovered.
Income for the period increased to SEK 1,083m (875), and earnings per share was SEK 3.77 (3.04).
Evaluate why needing to have a competitive advantage is so highly re.pdfakilastationarymdu
Evaluate why needing to have a competitive advantage is so highly recommended in the field of
strategic management. Using an example of a specific organization, what might that organization
do (or have they done) if they need to change or find a
Solution
WHY HAVING COMPETITIVE ADVANTAGE IS HIGHLY CRITICAL?
A firm\'s success is measured by the attractiveness of the industry in which it operates and
measures the economics of a firm\'s business focusing primarily its ability to generate excess
returns on capital and links the business strategy with fundamental finance and capital markets,
for a longer period of time. A Firm is said to have a competitive advantage over its competitors ,
when maintaining that surpass the average in its industry. This advantage is primarily derived
from the characteristics of the product / service that makes it superior to competitive products /
service. It is only because of the competitive advantage which allows the firm to earn excess
returns for its shareholders. Without a competitive advantage, a firm has limited economic
reason to exsist and would not be able to survive for long time.
EXAMPLE : When electrical goods company Havells acquired Sylvania in 2007, all that it was
looking for was growth and a strong global presence. Instead, trigerred by the global financial
crisis the company had to face with major. The situation threatened to pull Havells down, and it
had to come up with a smart turnaround strategy. This case study looks at how Havells pulled it
off.
Havells India Ltd is a Rs 7,248-crore company. The journey hasn\'t always been smooth, but the
roughest patch was easily the 2007 acquisition of German lighting and fixtures maker SLI
Lighting, owner of the Sylvania brand(then the world\'s fourth-largest lighting company and 1.5
times bigger thanHavells..
Havells had a track record of five successful acquisitions, and high growth in itsIndian
operations. In 1983, it bought the loss-making Delhi-based Towers and Transformers Ltd and
turned it around in a year. In March 2007, Havells bought Sylvania. And then the global
financial crisis struck.
As the meltdown rocked European markets, Sylvania\'s sales fell, leading to net losses of Euro
16.3 million in 2008/09 and Euro 26.1 million in 2009/10. From Euro 515 million in 2007/08,
revenues dropped to Euro 438.4 million in two years.
In September 2008, Sylvania\'s bankers, led by Barclays Capital, hit the panic button as the
company breached its financial ratio. Sylvania\'s acquisition was funded by debt - a Euro 120-
million loan based on operating cash flows and an Euro 80-million loan taken out by a Havells
subsidiary. Havells repaid 180 million by raising money from the sale of a stake to Warburg
Pincus.
Sylvania\'s poor performance began to affect consolidated numbers. Havells\'s top management
drew up an 18-month restructuring plan. In the first phase, the aim was to improve profitability
by cutting manpower costs and closing factories. The second pha.
Highlights of the first quarter of 2017
Net sales amounted to SEK 28,883m (28,114).
Organic sales declined by 3%, while currency translation had a positive impact of 6% on net sales.
Operating income increased to SEK 1,536m (1,268), corresponding to a margin of 5.3% (4.5).
Improved results across all business areas.
Continued good profitability for Major Appliances EMEA, Major Appliances North America, Major Appliances Asia/Pacific and Professional Products.
Operating income for Major Appliances Latin America and Home Care & SDA recovered.
Income for the period increased to SEK 1,083m (875), and earnings per share was SEK 3.77 (3.04).
Strategic business proposal eent - green brick project - arunesh chand mank...Consultonmic
Strategic Project to Set up One of the largest Fly Ash Bricks Industrial Area in the world. All the the technical & financials are on actual FY- 2014-15 .
All rights reserved to Arunesh Chand Mankotia
2. CASE SUMMARY
Electrolux, a Swedish company is the world’s
largest manufacturer of household appliances.
More than 85% of its sales was from outside
Sweden. Over 50% in Western Europe & 30% in
North America.
In early 2001, company employed approx.. 85000
people worldwide, had 150 factories, 300
warehouses located in 60 countries & sold about
55 million products per year in 150 countries.
Demand for household appliances in Western
Europe & North America was limited- 2% to 3%
annually.
Electrolux undertook expansion strategies in Asia,
Eastern Europe & Latin America. It was estimated
that demand would grow at 20% annually in these
countries.
3. STATEGIES ADOPTED FOR
EXPANSION
Different approaches were adopted for different
countries which included acquisitions of going
concerns, Green-field developments, Joint
Ventures and enhanced marketing.
In Eastern Europe it acquired Lehel, Hungary’s
largest manufacturer of household appliances.
Green-field developments in Russia, Poland &
Czech Republic.
In Asia there was a need to adapt to local
conditions. In India & China Electrolux was
compelled to work through joint ventures.
4. In Southeast Asia, the emphasis was more on
marketing of imported goods from China, rather
than local production.
In Latin America it went for acquisitions. In 1996
it acquired Refripar, the largest producer of
refrigerator products in Brazil.
5. GLOBAL COMPETITORS
General Electric
Whirlpool
Bosch-Siemans of Germany.
These competitors also had similar plans
for expansion in Asia, Eastern Europe &
Latin America.
6. OBJECTIVES OF ELECTROLUX
Short-Term Objective
> To double its sales in Asia, Eastern Europe & Latin
America from $1.35 billion in 1994 to $2.7 billion
in 1997.
> Electrolux to become one of the top 3 suppliers of
household goods in Southeast Asia by 2000.
Long-Term Objective
> Globalize its production and sales base.
7. PROBLEMS FACED BY ELECTROLUX
Serious weaknesses developed in
Electrolux’s global production system.
Although the company expanded rapidly via
acquisitions, but had not rationalized its
production process.
There was often duplication of facilities.
9. INTERNAL ENVIRONMENT
STRENGTHS WEAKNESSES
World’s largest Profit slump exposed
manufacturer of weaknesses in
households appliances Electrolux’s global
with sale of around $14 production system
billion. It expanded rapidly via
Co. employed approx. acquisitions but didn’t
85,000 people rationalized its
worldwide, had 150 production operations.
factories & 300
warehouses in 60
Duplication of facilities
countries. within the region.
Prepared to spend
million $ per year to
increase the presence in
emerging markets
10. EXTERNAL ENVIRONMENT
OPPORTUNITIES THREATS
It can expand in Threat from global
developing as well as competitors - GE,
under developed Whirlpool & Bosh
countries. Siemans.
Approaches such as Competition from
acquisitions, JV & existing dominant
green field players in the
development can be domestic market.
considered for further
capturing the markets.
11. SOLUTION
Michael Treschow, announced the Restructuring
plan that called for the loss of 12,000 jobs and
closure of 25 factories & 50 warehouses.
The restructuring plan lasts for more than 2
years and divestment took place certain areas
(like food & beverages vending machines) to
streamline the operations.
12. Future strategies for expansion: -
New product-line organization in Europe
and US.
Restructuring program to improve under-
performers.
Stricter criteria for investments requests.
14. Ques. What theory or theories,
best explains Electrolux’s FDI
decisions during 1990s:
The market imperfection approach
The strategic behavior approach
The product life cycle approach
The location specific advantages approach?
15. Product Life Cycle Approach
Electrolux's FDI decisions during 1990s can be
best explained with this approach. According to
this Approach firm undertakes FDI at particular
stages in the Life Cycle of a product, they have
pioneered.
Demand for household appliances was mature in
Western Europe & North America.
Growth in these regions were limited to
replacement demand & the growth in population &
unlikely to exceed 2 to 3 percent annually.
To maintain its historic growth co. can’t depend on
these matured markets & have to find new
markets in developing world.
16. Strategic Behavior Approach
This approach says that FDI flows are
reflection of strategic rivalry between the
firms in global market place.
• There were three global competitors – GE,
Whirlpool & Bosch Siemans and they were
following competitive moves.
Also a firm can raise entry barriers and shut
new competitors out of an industry.
• In 1991 Electrolux acquired Lehel, Hungary’s
largest manufacturer of household appliances,
when it entered into Eastern Europe.
17. Market Imperfection Approach
Few FDI decisions were based on this
approach as there were impediments to
exporting.
There were import barriers, which made direct
exporting from Western European and North
American plants uneconomical.
Government tariffs on imported goods,
increase the cost of exporting relative to FDI.
18. Location Specific Advantages Approach
This approach does not hold true as there were
no advantages that Electrolux can exploit from
foreign markets.
This is true especially in case of natural
resources, such as oil & other minerals, which are
specific to certain locations.