Case Study Competitive Strategy

Analysis of Electrolux competences

For any organization to be competent and successful in its operations, the organization has to be endowed with different types of resources. Some of these resources include tangible and intangible resources, as well as organizational capabilities. With the aid of the VRIO framework several competences can be seen in AB Electrolux. For instance there are various observations that prove the ability of Electrolux’s resources to add value on the organization, enabling it to exploit opportunities, as well as defending itself against threats. Electrolux’s financial resources have enabled it to expand on its products through innovation that has seen the development of new products that are preferred, hence increasing the number of consumers. Examples of innovative products by Electrolux are the steam oven and the absorption refrigerator.

Electrolux has achieved rarity that has led to its competitive advantage (Barney & Hesterly, 2006). It has been able to achieve rarity through its possession of valuable resources that are unique in one way or the other with respect to resources of other competitors. Through the use of unique resources Electrolux has been able to develop new brands and designs that fit consumers’ wants. The development of new brands and designs has greatly been aroused by the growing middle class that has increased the demand for global brands that have innovative designs. The organization is outstanding in its organization and leadership. Electrolux has dedicated employees as well as outstanding leaders that play critical roles in helping the group to achieve its visions and targets. Electrolux’s employees come from diverse backgrounds and they render the correct creativity competencies to the organization, hence developing successful appliances that are relevant to consumers across the world. Electrolux’s resources, its operational excellence, profitability growth, and dedicated and outstanding employees and leaders have enabled it to acquire great competitive advantage. This competitive advantage and other success factors can enable the organization to successfully compete with local Chinese consumer manufacturers.

Electrolux operations

Electrolux operates in a fragmented industry as opposed to a consolidated industry since there no single organization including itself that possess a large market share enough to influence the direction of the industry. In the fragmented industry Electrolux develops its competitive strategies free from manipulation by the strategies of other competitors. In a fragmented industry each firm makes its own decisions, since the decisions cannot affect the strategies and decisions of other firms (Cole, 2007). On the other hand, if Electrolux operated in a consolidated industry its competitive strategy would greatly be affected by the decisions and strategies of other competitive firms.

In a fragmented industry Electrolux is necessitated to develop more competitive strategies to counter the strong competition that arises from more opportunities on the smaller fight for every niche. This would call for the organization to be more innovative, develop more brands and designs that are more appealing to customers, and develop competitive skills and tactics among the leaders. But then, if Electrolux was in the consolidated industry, it would develop a competitive strategy that is in line with the market agreements developed between major players. These agreements regulate the market, and they also divide it into spheres of influence (Cole, 2007). This would mean that Electrolux would be facing relatively low competition requiring the firm to develop a competitive strategy that would not be as complex as that of firms in fragmented industries. Electrolux would also consider merging and acquisition as a competitive strategy if the business was in a consolidated industry as mergers and acquisition are more prevalent in consolidated industries as opposed to fragmented industries.

Porter’s generic strategies that would work best for Electrolux

Among Porter’s generic strategies, Electrolux needs to use differentiation and cost focus strategies so as to achieve its objectives. The company relocated about 60% of manufacturing to china and Mexico because these countries are low-cost countries. This shows that Electrolux focuses on its costs which it aspires to maintain at a low level. It was able to increase its profit margin with regard to operation by initially achieving low production and supplier costs. Profitable growth is a major goal that the company strives to achieve, and this can be achieved through focusing on costs. Cost leadership can also assist the company in growing as it will increase its market share by charging lower prices, but at the same time make reasonable profits due to the reduced costs.

Being a company that has a great deal in innovation, Electrolux can use differentiation strategy to achieve its goals. Electrolux was presumed to be proactive, as well as having the first-mover advantage. This is as a result of its core competence of focusing on the needs of the customers and acknowledging the changing consumer tastes. For instance, Electrolux was able to develop the silence vacuum cleaner after surveying and identifying consumers’ need for silent appliances. To achieve such successful innovations, it calls for differentiation of some aspects in the already existing appliances. Differentiation strategy would therefore be appropriate for Electrolux as the company will be able to develop more appealing products for its customers. Differentiation implies making products different and more attractive than the competitors’ products (Jannesson, Nilsson & Rapp, 2004). To successfully implement differentiation strategy, Electrolux will consider carrying out a good research, developing the research, and moving on to innovation.

Electrolux’s corporate culture

Electrolux’s corporate culture is that of innovativeness. As a successful large manufacturer, the company possesses a clear process for product development. Some of the features of this process are not common, hence marking out the company as mature and sophisticated in design management matters. The company is able to link its values and visions to business strategies within an individual design process model and thus to products that substantiate them. Such kind of models depict how technological and product generations can be created and how the company has moved from the normal production processes to a world of innovativeness.

The attitude and behaviors of both the leaders and the employees are perfect examples of attributes of the corporate culture of the company (Oden, 2009). Electrolux has dedicated employees who come from different backgrounds. These employees play essential roles in creating the culture of innovativeness that is necessary for the company to achieve success as it strives to attain its vision. The company’s leadership model recognizes that the people are the first consideration in the path to success. Electrolux boasts of outstanding leaders as well as dedicated people who are essential for the company to meet its vision and mission. All operations are set on strong values, and in addition the workers are propelled towards improving the lives of the people and contribute to developmental sustainability by a strong desire. Employees also have a passion for motivation, consumer insight, and innovation that leads Electrolux to achieving success.

References

Barney, J. B., & Hesterly, W. S. (2006). Strategic management and competitive advantage: Concepts. Upper Saddle River, NJ: Prentice-Hall [u.a..

Cole, G. A. (2007). Strategic management: Theory and practice. London: Thomson Learning.

Jannesson, E., Nilsson, F., & Rapp, B. (2004). Strategy, control and competitive advantage.

Oden, H. W. (2009). Managing corporate culture, innovation, and intrapreneurship. Westport, Ct: Quorum Books.