Analysis of Corporate Strategy of AB Electrolux Essay

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Corporate Strategy Electrolux

Electrolux is a company that was established in the year 1919. The company has significantly grown and presently retails products to over 150 markets. In particular, Electrolux designs plenty of products, which include vacuum cleaners, washing machines, dryers, dishwashers and several others. In accordance to Electrolux (2013), the company did experience a decline in its profits, generated in the recent number of years. However, the company has picked back up on its returns. Electrolux ought to make certain that it has an efficacious strategic plan in order to have a competitive edge over other companies.

Use Barney's VRIO framework to analyze the competencies of Electrolux. Discuss whether AB Electrolux can compete with local Chinese consumer manufacturers

VRIO framework is a tool that was developed by Barney, J. B in the year 1999, which can be employed to analyze and examine the internal resources and competencies of a firm to determine whether they can be a source of sustained competitive advantage (Jurevicius, 2013). In particular, this framework considers aspects. These include whether the resource is valuable, rare to obtain, costly for other parties to imitate and lastly whether a company is organized to seize the value of the resource or not. If all of these four requirements are met, the resource is considered to generate sustained competitive advantage for the organization (Jurevicius, 2013). The VRIO analysis will assist in the determination if Electrolux has a strong suit in the areas in which the company has its flaws.

Electrolux's VRIO Capability

Excellent employee and leadership development

Valuable?

Rare?

Costly to Imitate?

Is a company organized to exploit it?

Yes

Yes

Yes

Yes

Result: Sustained Competitive Advantage

The capacity of Electrolux to manage its people and personnel in an effective manner is not only a source of differentiation, but also a cost advantage for the company. Different from other corporations, which are reliant on trust and payment in employee management, Electrolux employs different programmes to manage its employees and also develop them as leaders. This capability allows the company to make the right decisions on carefully selecting its leaders to lead and manage the company in the forthcoming periods. It also shows them how to exchange ideas and make the most of their competencies. As a result, Electrolux is very successful in its leadership development aspect. In addition to being valuable, it is also a rare know-how for the reason that not so many employ these three different levels of leadership programs in such an extensive and comprehensive manner. Is it costly to imitate? It is costly to imitate, at best, in the institution of all three programs and making them effective. Is Electrolux organized to capture value from this capability? Without doubt, the company has educated and attained competent HR managers who know how to develop these programs (Jurevicius, 2013).

AB Electrolux can compete with local Chinese consumer manufacturers. Initially, Electrolux failed to succeed, owing to failed strategies. However, by introducing itself as a premium brand within the market, the company, without a doubt, will become more competitive. This is owing to the fact that in the near future, the consumer market for home appliances in the Asian continent is expected to double or even triple. In the contemporary, Electrolux has poured plenty of capital and investment on Research and Development to attain innovations within the market. This will enable the company to compete with Chinese firms within the market. Having a distinct target market in which the company focuses on will enable it to attain its market share in the rise (Electrolux, 2013).

Identify whether Electrolux operates in a fragmented or a consolidated industry. How would its competitive strategy differ in each?

Industry structures differ, and dissimilar structures have different inferences for the strength of and force in rivalry. On one hand, a fragmented industry is made up of a huge number of small sized or medium-sized companies, and none of them all are in a position to determine the prevailing price of the industry (Hill et al., 2013). On the other hand, a consolidated industry is one that is dominated by a very minimal number of big companies, such as in an oligopoly market, or in intense instance, by one corporation, and these corporations more often than not are in a position to determine the prevailing price of the industry (Hill et al., 2013). Electrolux operates in a consolidated industry. However, the competitive strategy of the company would vary in each of the industries.

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As for the fragmented industry, taking into account that there are several companies, the competitive strategy would be to differentiate its products from the rival companies in order to stand out. On the other hand, in a consolidated industry, the competitive strategy is to employ the cost leadership strategy in order to set the economical price within the market (Hill et al., 2013).

Identify Porter's four generic strategies. Discuss which of these would work best for Electrolux

Porter's generic strategies is a structure employed to outline four different strategic options that an organization can undertake, if it wishes to attain a sustainable competitive advantage. These four strategies include: cost leadership strategy, focus strategy, differentiation strategy and the integrated cost leadership-differentiation strategy (Porter, 1985). To start with, the cost leadership strategy encompasses the organization purposing to be the producer or distributor in the industry with the lowest cost. In essence, with regard to this strategy, the organization endeavors to decrease the cost for all elements of production, ranging from material sources to labor costs. In order to attain cost leadership, an organization will typically require large-scale manufacture in order to profit from economies of scale. This implies that a company will have to attract a comprehensive part of the market (Porter, 1985). Therefore, this is a broad scope strategy. Secondly, differentiation strategy encompasses the manner in which companies attempt to have product ranges that stand out and are appealing to the consumers. Having a differentiation strategy, the company creates different features for its products or services in comparison to those of rival companies and also attracts consumers comprising product quality and customer support. This strategy is a broad scope strategy, owing to the fact that the company endeavors that its business differentiation strategy, will attract an extensive and wide-ranging area of the market (Porter, 1985).

With regard to the focus strategy, the company lays emphasis on a certain consumer base, line of product, consumer, geographical region and niche within the market. The main conception with implementing this strategy is for the company to provide product or services to a restricted group of consumers who are better, compared to rival companies who provide products and services to a wider range of consumers. This strategy is effective for small companies that are aggressive in their operations. Specially, firms that hold the capability or assets to take part in a countrywide marketing endeavor will profit from this focus strategy. In addition, focus can also be centered on cost strategy or even differentiation. It encompasses directing the differentiation and/or cost leadership on a limited scope. The notion is for the company to be noticeable within a particular market division (Griffin, 2015). Lastly, there is the integrated cost leadership-differentiation strategy. Corporations that incorporate strategies instead of depending on a solitary generic strategy are capable of adapting swiftly and understanding novel technologies. The products manufactured under the "Integrated Cost Leadership-Differentiation Strategy" are less unique in comparison with costs and differentiators that are not lower in contrast to the leader of costs. However, it is imperative to note that they bring together the benefits of both methods (Griffin, 2015).

The strategy that would work best for Electrolux as a company in order to attain sustained competitive advantage is the focus strategy. As stated by Ernst & Young (2013), the most substantial global shift in terms of demography is the numbers of the middle class in Asia. Statistics indicate that in 15 years' time, this number will have grown to more than 3 billion people across the globe compared to the moment. The focus strategy will be very suitable for Electrolux for the reason that it focuses on fast emerging global middle and upper middle class markets in China. In addition, the company has a target market of consumer groups who select or have a preference for superior products. One other reason why the focus strategy would be most suitable for Electrolux is that the company has a distinct consumer lifestyle choice. This encompasses the consumers who are eco-friendly, have a preference for premium brand quality and also multi-functionality (Electrolux, 2013).

What is the corporate culture of Electrolux? Discuss two distinct attributes of culture within the organization

The corporate culture of Electrolux is one that is innovative. One of the distinct attribute of culture within Electrolux as an organization is diversity. Electrolux's corporate culture is generated through individuals who come from diverse backgrounds, and provide a structure for developing pioneering.....

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