Electrolux - Case Study.pdf - ElectroluxXAMPLE By the...

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Electrolux XAMPLE By the mid- 2000s Sweden’s Electrolux was the world’s largest producer of domestic and professional appliances for the kitchen, cleaning and outdoor use. Its products included cookers, vacuum cleaners, washing machines, fridges, lawn mowers, chain saws and also tools for the construction and stone indus- tries. It employed over 80,000 people in more than 100 countries. Its annual sales in 2002 were 133bn Swedish Krona (about a15bn) and profits about 5.5bn Krona ( a 600m). The company’s impres - sive growth and development started under the leadership of Alex Wenner- Gren in 1920s’ Sweden. The early growth was built around an expertise in industrial design creating the leading products in refrigeration and vacuum cleaning. By the mid- 1930s the company had also established production outside Sweden in Germany, UK, France, USA and Australia. The post-Second World War period saw a major growth in demand for domestic appliances and Electrolux expanded its range into washing machines and dishwashers. In 1967 Hans Werth n took over as president and embarked on a series of acquisitions that restructured the industry in Europe: 59 acquisitions were made in the 1970s alone followed by major acquisitions of Zanussi (Italy), White Consolidated Products (USA) and the Ganges Group (industrial products) in the 1980s. As a result by 1990 75 per cent of Electrolux’s sales were outside Sweden and this increased in the 1990s as Leif Johansson expanded into Eastern Europe, Asia and South America. He also disposed of many of the ‘unrelated’ industrial activities. A major restructur - ing in the late 1990s created the shape of the group for the 2000s with about 85 per cent of sales in consumer durables and 15 per cent in related prod- ucts for professional users (such as refrigeration and laundry equipment). Such a large company clearly had many strategic challenges and the newly appointed Chief Executive (Hans Str berg) reflected on some of these in the mid-2000s, as follows. Mission ‘The Electrolux mission is to be the world le ader in profitably marketing innovative product and service solutions to real problems, thereby making the per- sonal and professional lives of our customers easier and more enjoyable. This we will achieve through a commitment to: l driving performance throughout the entire organization; l innovation and marketing to products and brands; l superior talent management; l the Electrolux way of doing things.’ Cost and performance ‘My philosophy is very clear: Before a business can g row, it needs to have its costs under control. It must be cost- efficient and profitable, and it must create value. Costs that do not add value must be contained, reduced and even

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