Homework for strategic management Electrolux case Yang,Chen Explain why the issues facing Electrolux were strategic. The strategies of the company is to achieve organizational goals, The goals of the company focus on the profitability, productivity, growth, technological zing, stability, independence, survival, competitiveness, customer service, ability to pay, product quality, diversification, employee satisfaction and well-being and so on. Electrolux case study focus on about Long-term strategic direction, Scope, Business environment , Advantage over its competitors , Meeting strategic fit with the business environment and Resource availability and competence of the company following strategic issues of the organization: Long-term strategic direction The long-term goal was to speed up market-oriented company based on understanding the customers needs. And some other long-term issues those Electrolux has taken as strategic: Increasing the productivity, procurement, and logistics efficiency; Continuous product and employee development; strengthening the brands of Electrolux; Building a strong global brand Scope Scopes of Electrolux captured from the annual report 2005 are: Continue to cut cost and kick out market complexity in all aspects of operations and increases the product renewal based on consumer insight. Increasing investments in marketing and building the Electrolux brand as a world leader in electronic industry. It was strategic, because Electrolux had a choice between concentrating on one area, or many outlets all over the world. Electrolux was active in a sector with strong global competition and sustainability. Business Environment Globalizing products and related services all over the world and there will be more concentration on product development, brand-building, marketing etc. Market polarization make changes in consume, strengthening global competition and growth. Thus increasing the demand for both basic and higher-price products. And consolidating retailers with more big retail chains and fewer traditional dealers. That helps Electrolux with wide geographical coverage, high purchase volume and to keep prices low. Advantage over its competitors Another aim for Electrolux was gaining advantages over its competitors. So maintaining competitive production costs is a prerequisite for survival in the market. For the achievement of obtaining competitive advantages Electrolux introduced the following: Providing quality price by globalization has offered high quality product at affordable prices; Shift to low-wage countries to move from the US market after Mexico; Low cost Purchase; Shifting competitors

focus on product development marketing and brand building; Established talent management to develop future active leadership, international career opportunities and a result oriented corporate culture to build up good human resources. Meeting strategic fit with the business environment Strategic fit was also a strong issue for Electrolux. They are trying to set a strategic positioning differing from its environment through niche market in a particular segment. For this purpose, strategic decisions usually are trying to achieve any advantage for the organization. The problem for Electrolux was that it was losing the advantage in the fast-growing economies and this forced them to prioritize building the Electrolux brand globally, as well as in all product categories. The advantage can be achieved in different ways and differently interpreted. Organizations use conclusion it must be strategically improve its cost position through better coordination at the global level. For example, Electrolux designed a project to drastically reduce the number of suppliers.

Resource availability and competence of the company By resources, we mean financial, human and the organizations resources, which are more important in the implementation of strategic decisions. Electrolux is attempting to bring out the strategic capabilities of the staff. For example, they established talent management processes and tools to ensure group access to competence in the future. Strategies need to be considered are not only the existing resourcebase of the organization which is suited to the environmental opportunities but also in terms of resources those can be obtained and controlled to develop a strategy for the future.

Electroluxs consideration about values and expectations of competitors An organization's strategy will be affected by the values and expectations of those parties who have power in and around the organization. The beliefs and values of these players have a more or less direct impact on the organization. These players (actors, groups and individuals) provide directions to the company to sharpen the strategy in following manner: Accelerating the development as a market-driven company; Greater understanding of customer needs and providing low cost and high quality products to create customer delight; Creating efficient purchasing and supply-chain management that ensures high quality services than competitors; Developing leadership skills among employees to keep the company ahead of their competitors These strategies assist to improve total operation, quality, customer satisfaction and profitability. Identify the main factors about the strategic situation of Electrolux.

Electrolux is the second largest home appliances company after U.S giant Whirlpool. It has structured the environment in such a way so that they can hold their impressive growth and development. They even restructured the operation in different points where needed. From that case study I understand that they are carrying on operations with some important factors ,such as the environment, strategic capabilities and expectations of stakeholders Environmental factors The environment of an organization stands on a framework of Political, Economic, Social, Technological and Legal factors. Accurate management of these factors helps a firm in attaining the preferred success. These factors will furnish the environment to identify the threats in advance would have to be addressed, and also opportunities acted on. This environmental study must be carried on even if the organization is doing well or not. Companies use risk management techniques on its business environment, which will help the organization to identify potential future risks and opportunities. Strategic capabilities There is no single method or universal metric for measuring or noting strategic capability. It comprises a number of distinguishable components. Here for measuring strategic capabilities of Electrolux we are taking Strength and Weakness into account. Strength Some strengths those Electrolux is possessing are very significant for its long term future growth and prosperity -The company is focusing more on sustainability issues; It has the ability of increasing its operating profit margin with low suppliers and production costs; It has results-oriented corporate culture, development of human resources and a strong environmental commitment; Electrolux has a good relationship with its suppliers; Electrolux runs on market driven strategy that helps to increase sales. Weaknesses Electrolux is a pretty successful company. Although it was campaigning with very good strengths, it has some points of weakness :Its traditional distribution system was lag behind in pace comparing to big distribution chains. Electrolux purchased 59 other companies including some big companies and those companies were in high cost countries; Electrolux were dealing with many suppliers which were increasing costs; It was very costly for them to develop a project to reduce suppliers

Expectations of stakeholders Electrolux is pretty successful in fulfilling all stakeholders expectations such as better understanding of the customers needs and playing role by considering their expectations; Increasing wide range of product renewal based on consumer insight; Improving and maintaining quality as a part of competition with main competitors, increasing profitability to fulfill shareholders expectations and so on

Think about strategic choices for the company in relation to the issues that it value. Strategic decisions are concerning the option for the strategy in relation to the direction in which to perform the operation. Thus, this can be seen that from the following five dimensions: Business level strategy,Corporate level strategy International strategy; Entrepreneurship and Methods

Business level strategy These strategic plans are: Continuing to cut cost and kicking out market complexity in all aspects of operations; Increasing the product renewal based on consumer insight ;Increasing investment in marketing and building the Electrolux brand as the global leader in domestic and professional appliances industry. Corporate level strategy Corporate level strategy is concerned with the scope or breadth of an organization. These include diversification decisions about the products portfolio and the spread of markets. Also concerned with the relationship between different parts of the business and how the corporation adds value to these various parts. For following issues Electrolux followed corporate level strategy: Larger restructuring practice at different parts of the business for adding value; The relocation of high-cost countries to low-cost countries.

International strategy International strategy is a form of diversification into new geographical markets. This strategy focuses the right path of entering to a foreign market by exporting, licensing, direct investment or acquisition. From the case study we get clear ideas that Electrolux sold most of their products outside Sweden. In 90s it was 75% of total sales. Entrepreneurship In another word Entrepreneurship is Innovation. Every organization passes the march of entrepreneurship especially at the beginning of the operations. Electroluxs CEO emphasizes the acceleration of market orientation of the company through following innovations: Increases the product renewal based on consumer insight; Increasing investment in marketing and building the Electrolux brand as the global leader in the industry. Methods Methods are the fashions of pursuing any new strategy. According to the case study, Electrolux were engaged with some newly promote strategies in its operations. A series of important new innovations lunched both in North America and Europe and development of new distribution channels for the products of Professional food service and Laundry equipment.