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Well today we are going to see a perfect example of marketing excellence and how Electrolux has pursued different strategies to become a world leader in houseold appliances1

GOYAL AAKASH SHARAD-130929220 (GAS) - Electrolux was formed in 1919 with the merger of AB LUX & SVENSKA ELECTRON AB

This Swedish multinational company was Formed by a merger of 2 people AB LUX and Svenska Electron AB headquarters in Stockholm, sweden2

Global Leader inHome AppliancesSmall AppliancesProfessional AppliancesRanked worlds 2nd Largest appliance maker in terms of unit sold

From starting by making a vaccumm cleaner the company is ranked 2nd largest in the segment of home appliances.3

Having six business units consisting of four major appliances division, small appliances division and professional products division.65% group sales from New Zealand and Japan Markets characterized by low population growth and high replacement product sales have been targeted.

Its diversity in the field of appliances with 6 business unit, 65% of its group sales comes from New Zealand and Japan, these markets being characterized by low growth population and high replacement product sales shows some kind of strategy to target customer.4

Path to become global leaders?

So how did the become one of the largest in this market? What were the strategical paths laid down by the company to reach at this level?

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INNOVATIVE PRODUCTSPROFITABLE GROWTHDEDICATED EMPLOYEESOPERATIONAL EXCELLENCE

The company has always followed 4 pillar strategy by which they abide and which has highly paid of for the company. We will see each strategy and discuss it in detail.

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MARKETING INNOVATIONPorters Generic Strategy is being implemented of overall cost, differentiation and focus, along with SWOT Analysis.

This Innovation Triangle is the important part of Electrolux combining marketing, design and R&D to ensure faster product development and reach to the market by customer research.

Same product architecture with different design helps in modularized design as per the location.

Strategic emphasis on increasing operational efficiency, Electrolux has restructured its production across divisions globally.

First any technology company survives due to its innovation and markets its products on the basis of this innovation. Porters Generic Strategy was being implemented having 3 points of focus: Overall Cost leadership, Differentiation and focus.This triangle of innovation combining Marketing, R&D and design are based in the basis of this strategy.7

OPERATIONAL EXCELLENCEElectrolux has shifted nearly 65% of its manufacturing from Western Europe and Northern America to low cost region.

Continuous innovation of existing product to penetrate existing markets.

Another strategy from the 4 pillars is operational excellence what can be said to be the porters strategy of overall cost leadership.This strategy emphasis on the means of the increasing profits which was done by shifiting its manufacturing to low cost regions.The graph also indicates the cost cutting pattern of the company and how the company has been successful in cutting varies fixed cost every year8

PROFITABLE GROWTH

MAJOR ACQUISITIONS OF COMPANIES BY ELECTROLUX

Another pillar towards the company future is profitable growth. Electrolux has used porters strategy of differentiation by acquiring many companies around the world doing good in the field of appliances thus increasing its market reach.9

DEDICATED EMPLOYESS

Then we get into the last pillar of the strategy which is the sole of the companies the Employees. No company can run without professional and dedicated employees, those who are knowlegable and most importantly they think about the company. Quote.10

THINKING OF YOU tagline helps build a connection with the customers, theAds reflect the same.

All this is very well summarized by the tagline THINKING OF YOU helping to build connect with the customers and show that the innovation is done keeping in mind the difficulties faced by the consumers11

ANAYSIS OF THE COMPANIES STRATEGY AND THEIR PLANS

the company has all these strategies towards reaching a goal by having a vision. How these strategy very implemented by the company we will see that.12

VISIONELECTROLUXs Vision is to be the best appliance company in the world as measured by customers, employees and Shareholders

To understand the companies strategy the most important thing is to understand companies VISION and what it wants to become. VISIOn13

EVALUATE ELECTROLUXS STRATEGY IN LIGHT OF ITS VISION AND THE GLOBAL TRENDS IN THE HOUSEOLD APPLIANCE INDUSTRY

What we will see is how these startegies helped the company set trends in the house old business 14

Strategy based 4 pillars of innovative products, operational excellence, profitable growth and dedicated employees.

Strategic plans to start production in low cost area to save the production cost increasing profitability.

Tapping of other markets by launching products specifically for that market by modularity in designing increasing efficiency.

Restructuring of the firm and horizontal integration for integrated growth.

4 Pillars, cost savings, launching specific products, horizontal integration.15

WHAT BENEFITS WILL ELECTROLUX RECEIVE FROM THE ACQUISITION OF GE APPLIANCES?

HOW DOES IT FIT IN WITH THE STRATEGIC DIRECTION OF THE GROUP?

WHAT OTHER STRATEGIC OPTIONS CAN ELECTROLUX PURSUE FOR FUTURE GROWTH TO ACHIEVE GREATER GLOBAL DOMINANCE?

These are some questions which will be wandering in the mind of the people related to the moves made by the company.16

Benefits by acquiring General Electric appliance gave Electrolux control over the Kitchen and Laundry products.

In North-America would mean 90% of the sales will be with Electrolux and running its own Logistics and Distribution Network.

48.4% shareholding in Mexican Appliance Company.

This acquisition would give Electrolux more financial strength and more global business around the world.

Considering what benefits the company enjoyed after taking over GE is thatControl over their kitchen and laundary products.90% sales of North America with Electrolux.Increasing more financial strength and increasing global reach17

IF IT FITS WELL WITH ELECTROLUX STRATEGY?

Experiencing growth with acquisitions as done in the past.Increase in the product list and diversity in products.Start of introduction of products into newer markets not well versed by the company.Increase global reach and operational efficiency under the companies banner.Paving a path to the Vision or the Goal the company wants to achieve.Technological advancements in the company.

Yes it does:The company has experienced growth in the past with acquisition.Product list will increase.Introduction in newer markets for the company increasing global reach.

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FUTURE GROWTH TOWARDS GLOBAL DOMINANCETargeting emerging markets like India and other markets with population.Being price conscious as per the country or place selling in.Have a strong market research program so as to know the customers requirement and start working towards those.Market research program on the prices and giving some offers to attract more customers.Improving on marketing channels and create more awareness towards the brand and highlighting the specialty of the product.

Every company should think about the future and maintaining their present.

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SUMMARY

Path to become global leaders.Four Pillars of StrategyAcquisition and MergerFuture Plans

So here we have discussed about Electrolux overall journey to become where it is today.20

DISCLAIMERCreated by Aakash Goyal, MIT Manipal, during a marketing internship by Prof. Sameer Mathur, IIM Lucknow

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