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ELECTROLUX:

1. Refer to section 1.2.1 and explain why the issues facing Electrolux were strategic. Try to find examples of all of the items citied in that section.

ANS:

In the Electrolux case study, the strategic issues facing the organization were; Long term direction of the organizationThe goal was to accelerate the development of Electrolux as a market driven company based on greater understanding of customer needs. Scope of the organization activitiesAs stated in the 2005 annual report of Electrolux, the scope was captured under the goals stated by Hans Straberg. These are: Continuing to cut costs and drive out complexity in all aspects of operations Increasing the rate of product renewal based on consumer insight

Gaining advantage over its competitorsFor the attainment of gaining competitive advantage Electrolux put in place the following; The provision of quality price through globalization has offered quality product at low prices. Relocating to low cost countries thus moving from the US market to Mexico.

Strategic fit with the business environmentThe issue facing Electrolux was that, it was losing the advantages in the fast growing economies. The organizations resources and competence is also an important feature of strategy. Strategies needed to be considered not only in terms of the extent to which the existing resource base of the organization is suited to the environmental opportunities but also in terms of the extent to which resources can be obtained and controlled to develop a strategy for the future.

2 .What levels of strategy can you identify at Electrolux ?

ANS: From the case study there are three (3) levels of strategy

Corporate Strategy levels-

The acquisitions and disposals made by Electrolux were done at the corporate levels which emphasizes that major restructuring exercise undertaken was with the view of adding value to the different parts of the business.

Business Strategy levels This has been captured under Electrolux strategies in the case study and the goals stated are: Continuing to cut costs and drive out complexity in all aspects of operations.. Increasing investment in marketing, and building the Electrolux brand as the global leader in the industry.

Operational Strategy levels This operational level strategy has been undertaken under a more efficient production and logistics systems and also a more efficient purchasing arrangement.. For instance, this was depicted or seen in the last paragraph of the 2005 report where the strategy was effectively implemented by everyone in the organization.

3 .IDENTIFY THE MAIN FACTORS ABOUT THE STRATEGIC POSITION OF ELECTROLUX. LIST THESE SEPARATELY UNDER ENVIRONMENT, CAPABILITY AND EXPECTATIONS. IN YOUR OPINION WHICH ARE THE MOST IMPORTANT FACTORS?

ANS:

The strategic position of Electrolux is concerned with identifying the impact of the external environment, the strategic capability and the expectations of stakeholders on the organizations strategy. . There are four key factors determining this and its explanation is given below:

The environmentThe external environment seeks to emphasize the fact that every organization exist within the context of a complex political, economic, social, technological, environmental and legal world. PoliticalPolitically, Electrolux took advantage of the Second World War and produced domestic appliances such as washing machines and dish washers since there was a great growth in the demand for these appliances. SocialSocially, the industry had become polarized as a result of changing consumer preference hence the growth of global retail chains and greater global competition. . Economical -according to the 2005 annual report, there were three critical important aspects of Electroluxs market that strategy had to address.

TechnologyElectrolux also invested in product development as they opened state of the art production unit for serving the entire North American market.

LegalLegally, all internal and external regulations were met since it would not be possible to operate in a country whose regulations are not been adhered to. Strategic CapabilitiesIn considering the strategic capabilities, we look at the strengths and weaknesses of the organizations, Strength -The strength of Electrolux was well rooted in result oriented corporate culture, development of its human resource and a strong environmental commitment. WeaknessesAfter a successful performance following its entry into the industry, Electrolux found itself embarking on a crusade of acquisitions in Europe. In total, 59 companies were acquired in 1967. Expectations -the goals was to accelerate development of Electrolux as a marketdriven company based on the greater understanding of customers needs through; Continuing cutting costs and drive out complexity in all aspects of operations. Increasing the rate of product renewal based on consumer insight.

Opinion on the Factors The most important factors are; Stakeholders Expectations this is because the influence of stakeholders expectations on an organization encapsulate the vision, mission and values. Environmental factors are important because it helped Electrolux to understand the framework that it operates within. Thus a pestel framework analysis will be a guide in shaping the industrial dynamics. Strategic Capabilities From the case study the competence level of the personnel was well rooted through a solid talent management process and an international career opportunity given to them to meet the needs of the organization.

4 .THINK ABOUT THE STRATEGIC CHOICE FOR THE COMPANY IN RELATION TO THE ISSUES RAISED?

Strategic choices involve the option for strategy in terms of the direction in which to operate. Thus, this can be looked at from the following five dimensions namely;

Business Strategy Level A good choice is the efficient purchasing system been implemented in order to improve cost positioning mainly through better coordination at the global level and the drastic reduction of numbers of suppliers These strategic plans are: Continuing to cut costs and drive out complexity in all aspects of operations Increasing the rate of product renewal based on consumer insight

Corporate Strategy Level This deals with moving production to low-cost countries. Its important to continue relocating production from high-cost to low cost countries..

5 .WHAT ARE THE MAIN ISSUES ABOUT STRATEGY INTO ACTION THAT MIGHT DETERMINE THE SUCCESS OR FAILURE OF ELECTROLUXS STRATEGIES? The strategies that Electrolux actually pursued were combination of intended and the emergent.. At Electrolux, they saw that the company was restructured to manage the under-performers.. Also, in the 1930s, the company spread its wings by establishing production outside Sweden. This was done to create the leading products in refrigeration and vacuum cleaning. A major restructuring was undertaken by Electrolux in the late 1990s which created the shape of the organization in the early 2000s. This saw the organization making 85% of its sales in the consumer durables and 15% in the professional products. This clearly shows that in pursuing some of its strategies, there might be the need for structuring the organization to support successful performance.

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