As the social and demographic trends continue to evolve so do the opportunities afforded to Electrolux. The most significant demographic shift globally is the growing middle class in Asia, which includes families with incomes between US$6,000 and US$30,000. It is estimated that by 2030 there will be 3 billion more people in the global middle class than there were in 2013.(Ernst & Young, 2013)
Correlated with rising incomes worldwide, homeownership has also increased at a substantial rate giving rise to increased demand for consumer durables such as refrigerators, washing machines, and dishwashers. (Electrolux, 2013)
Ernst & Young (2013) Hitting the sweet spot. (Attached pdf)
Questions:
Use Barney’s VRIO framework to analyze the competencies of Electrolux.
Discuss whether AB Electrolux can compete with local Chinese consumer manufacturers.
Discuss the three leading perspectives on strategy, and how this strategy tripod influences Electrolux.
Identify Porter’s four generic strategies. Discuss which of these would work best for Electrolux.
What is the corporate culture of Electrolux? Discuss two distinct attributes of culture within the organization.
Answer preview
Application Porter’s generic strategies are significant for a business to analyze and identify its competitive advantages. The four generic strategies by Michael Porter include cost leadership, differentiation, cost focus, and differentiation focus strategies. The cost leadership strategies seek to reduce the cost of delivering goods to consumers to maximize profit. Electrolux uses this strategy in what the company defines as the operational excellence that focuses on minimizing costs and producing quality products. Cost focus strategy focuses on setting the lowest price for goods after understanding the market dynamics. Electrolux achieves low costs by focusing on innovation and making the products resource-efficient (Electrolux, 2014). The differentiation focus is about creating unique products that will lead to strong brand loyalty and minimize competition. The innovation also leads to new products that differentiate
