Electrolux Case Study
How has Electrolux’s strategy changed over time? How have these changes affected its direct investment activities?
Electrolux started pursuing international businesses in order to amortize costs and diminish cost of production per units. As a consequence, the company decided to pursue a strategy of horizontal integration through the acquisition of Arthur Martin, Therma, Tappan, Husqvarna. The idea behind the horizontal integration was to conquer new markets by already-established brands and create a global standard production in order to reach economies of scale. IT happens throughout the 1960s and 1970s, and Electrolux would re-sell the business not related to their industry, mainly to remain competitive and …show more content…
The question here is whether the acquisition added value to Electrolux or not, and the answer can be simply draw. As Electrolux was present in a different number of countries, the company needed supplies in different parts of the globe. Owning Granges made them able to reach a global scale of production, to exercise more control in the production, to reduce costs in the long run and also to be able to support Electrolux growth. It eliminates the necessity to deal with varieties of suppliers. It is also positive how it reflects in design and tailor made raw materials, which could be directly used to the end-production.
What will be the future global competitive environment in household appliances and how does that fit in with Electrolux strategy?
The global competitive environment for household appliances in the future will possibly be of large conglomerates present in the entire world. Companies will have mass standardized products and could easily compete in costs as well in basic differentiation. Electrolux foresaw the tendency, as it is already integrating different brands, different production processes, larger portfolios and numerous standards. It started since earlier on to standardize its products in a large scale. The larger standardization process that large corporations are pursuing may lead to a commoditization of home appliances, where