QUESTION 1 EXPLAIN WHY THE ISSUES FACING ELECTROLUX WERE STRATEGIC.

TRYTO FIND EXAMPLES OF ALL OF THE ITEMS CITED IN THAT SECTION.

Businesses are set with so many objectives. Some of these objectives relate to profitability, productive efficiency, growth, technological dynamism, stability, self-reliance, survival, competitive strength, customer service, financial solvency, product quality, diversification, employee satisfaction and welfare, and so on. A companys strategy consists of the combination of competitive moves and business approaches that managers employ to please customers compete successfully and achieve organizational objectives. Strategy they say is the overall plan for developing resources to establish of gain competitive advantages over competitors or a favorable plan in an organization. According to Johnson G. , Scholes K. , Whittington R in their book, Exploring Corporate Strategy; 8th edition, strategy is defined as the direction and scope of an organization over the long-term, which achieves advantage in a changing environment through its configuration of resources and competences with the aim of fulfilling stakeholder expectations.

In the Electrolux case study, the strategic issues facing the organization were; Long term direction of the organization Scope of the organization activities Gaining advantage over its competitors Strategic fit with the business environment The organizations resources and competence Long term direction of the organization This must be seen into the future of the organization. The goal was to accelerate thedevelopment of Electrolux as a market driven company based on greater understandingof customer needs. This issues facing the organization was strategic in nature as shownin the 2005 annual report of Electrolux Scope of the organization activities As stated in the 2005 annual report of Electrolux, the scope was captured under thegoals stated by Hans Straberg. These are: Continuing to cut costs and drive out complexity in all aspects of operations Increasing the rate of product renewal based on consumer insight Increasing our investment in marketing, and building the Electrolux brand as theglobal leader in our industry.It was strategic because Electrolux had a choice of concentrating in one area or shouldhave many outlets i.e. going globally. Electrolux was operating in an industry with strong global competition and the option of changing the business model for units that could beconsidered as non-core operations or in areas where profitability is low.

Gaining advantage over its competitors Another issue facing Electrolux was gaining advantage over its competitors. Thusmaintaining competitive production costs is a prerequisite for survival in the market,and there is the need to relocate production from high cost to low cost countries. For the attainment of gaining competitive advantage Electrolux put in place the following; The provision of quality price through globalization has offered quality product atlow prices. Relocating to low cost countries thus moving from the US market to Mexico. Buying components Shifting of competitors focus to product development marketin g a n d b r a n d building. Strategic fit with the business environment This was also an issue facing Electrolux. They needed strategic positioning in other tofashion out its environment through market niche in a particular segment. From the casestudy, Hans Straberg in reviewing the business operations indicated that the groupreported higher profitability in 2006 in both North America and Europe and will lunch anumber of important new products.To this end, strategic decisions are normally about trying to achieve some advantage for the organization. The issue facing Electrolux was that, it was losing the advantages in the fast growing economies and this compelled them to prioriti s e b u i l d i n g o f t h e Electrolux brand both globally and across all product categories.The achievement of advantage may be in different ways and interpreted differently. For o r g a n i z a t i o n s t o t a k e a d v a n t a g e o f c o m p l e t i o n , i t h a s t o i m p r o v e i t s c o s t p o s i t i o n strategically through better coordination at the global level. Example is when Electroluxlaunched a project designed to drastically reduce the number of suppliers. The organizations resources and competence is also an important feature of strategy. The resource-based view of strategy is about exploiting the strategic capabilities of thefirm in terms of its resources and competencies to provide competitive advantage. Byresources, we mean financial, human and the organizations resources which are moreimportant in the implementation of strategic decisions. For example, at Electrolux, a great deal of time and effort were put in place to make production and logistics moreimportant as captured in their 2005 annual report. Also, Electrolux in their attempt toe x p l o i t t h e s t r a t e g i c c a p a b i l i t i e s o f t h e s t a f f , f o r e x a m p l e , e s t a b l i s h e d t a l e n t management processes and tools to ensure group

access to competence in the future.Strategies then need to be considered not only in terms of the extent to which the existing resource base of the organization is suited to the environmental opportunitiesbut also in terms of the extent to which resources can be obtained and controlled todevelop a strategy for the future. Values and expectations of powerful actors in and around the organization are akey to the characteristics of strategy .The strategy of an organization will be affected not only by environmental forces andresource availability, but also by the values and expectations of those who have power in and around the organization. In some respects, strategy can be thought of as areflection of the attitudes and beliefs of those who have the most influence on the organization. Whether a company is more concerned with consolidation and where theboundaries are drawn for a companys activities, may say much about the values andattitudes of those who influence strategy. i.e. the stakeholders of the organization. Thebeliefs and values of these stakeholders will have a more or less direct influence on theorganization. From the case study, one realizes that all CEOs who came pursued it int e r m s o f e x p a n s i o n . O t h e r s d i d i t i n t e r m s o f m e r g i n g a n d a c q u i s i t i o n s l i k e H a n s Werthen when he took over in 1967 as the president of Electrolux.These actors, groups and individuals drive the fundamental issues that sharpen thedirection of the business. From the case study again, the stakeholders were demandingbasic products as a result of changing consumer preference, growth of global retailchains and greater global competition leading to polarization of the market. The keystakeholders of Electrolux are Customers, Suppliers, Employees and Shareholders.With respect to the customers, their preference to low cost product and high qualityp r o d u c t w e r e a d d r e s s e d . T h a t o f s u p p l i e r s h a s a l s o b e e n c a p t u r e d w e l l a s t h e coordination with suppliers signifying a supply intimacy relationship. This was well rooted through the more efficient purchasing and more efficient product and logistics.This generated into a good supply chain management and quality services.Under employees, this was well resolved through the opportu nities for leadershipdevelopment and international career .This strategy has been effectively implemented inrecent years by everyone in the organization and is paying off. The shareholders aspectwas also well addressed through increase in profit that has enhanced their operations. Q UESTION 2WHAT LEVELS OF STRATEGY CAN YOU IDENTIFY AT ELECTROLUX? From the case study there are three (3) levels of strategy that could be envisage. Theseare:

 Corporate Strategy levels Business Strategy levels Operational Strategy levels Corporate Strategy levels Corporate level strategy entails the overall game plan for managing a set of business.From the case study the acquisitions and disposals made by Electrolux were done atthe corporate levels which emphasizes that major restructuring exercise undertakenwas with the view of adding value to the different parts of the business. The relocationfrom high cost countries to low cost countries, the lunching of new products , out -sourcing air conditioners in US to China, shutting down of non core operations and theproduct development and branding of Electrolux products were all corporate leveldecisions.Another corporate level decision taken was the accelerated goal to the development of Electrolux as a market driven company based on greater understanding of customer needs and finally, building strong brands . Business Strategy levels The second strategic level adopted by Electrolux was the business strategy level whichis how to strengthen market position and build competitive advantage and also actionsto build competitive capabilities in a particular markets. This has been captured under Electrolux strategies in the case study and the goals stated are: Continuing to cut costs and drive out complexity in all aspects of operations. Thishas been achieved through achieving comparative advantage and introducingmore efficient purchasing and efficient production systems. Increasing the rate of product renewal based on consumer insight. This has beencaptured under intensified product renewal and the investment of at least 2% of sales in product development. Increasing investment in marketing, and building the Electrolux brand as theglobal leader in the industry. This has been captured under starting to build astrong global brand. In Hans Straberg submission, he re-echoed that our goal isfor our investment in brand-building to correspond to at least 2% of sales. Also of greater importance are strategic business units (SBU) which is a distinctexternal market for goods or services that are different from another SBU. Operational Strategy levels

The third level strategy adopted by Electrolux is the operational strategy. This leveltakes into consideration the provision of a game plan for managing a particular activityin a way that support the overall business and add relevant details to the whole of theoverall business strategy. This operational level strategy has been undertaken under amore efficient production and logistics systems and also a more efficient purchasing arrangement. The systematic development of both brands a n d p e r s o n n e l a s combination of continued focus on cost and i n t e n s i f i e d p r o d u c t r e n e w a l a r e a l s o strategic decisions been implemented at the operational level. The human resourcecapabilities have been attested in the access to competence section of the case study.For instance, this was depicted or seen in the last paragraph of the 2005 report wherethe strategy was effectively implemented by everyone in the organization. Q UESTION 3IDENTIFY THE MAIN FACTORS ABOUT THE STRATEGIC POSITION OFE L E C T R O L U X . L I S T T H E S E S E P A R A T E L Y U N D E R E N V I R O N M E N T , CAPABILITY AND EXPECTATIONS. IN YOUR OPINION WHICH ARE THEMOST IMPORTANT FACTORS? The strategic position of Electrolux is concerned with identifying the impact of theexternal environment, the strategic capability and the expectations of stakeholders onthe organizations strategy.The strategy of Electrolux refers to the organizations overall scope over the long term,which achieves an advantage in a changing environment through its configuration of resources and competence with the aim of fulfilling stakeholder expectation. There arefour key factors determining this and its explanation is given below: The environment The external environment seeks to emphasize the fact that every organizationexist within the context of a complex political, economic, social, technological,environmental and legal world. Organizations will have to map up strategiesdesigned to deal with challenges posed by one or more of these kinds of factorsin other to take advantage of opportunities along the way. This also emphasizesthe need for organizations to scrutinize the environment in order to identify factors about their environment for which threats might have to be addressed inadvance and as well opportunities will be acted on. This will have to be

donee v e n w h e n t h e o r g a n i z a t i o n i s p e r f o r m i n g w e l l , u t i l i z i n g e n t e r p r i s e r i s k management techniques which will assist the organization to identify far inadvance potential future risk and opportunities. Political Politically, Electrolux took advantage of the Second World War and produceddomestic appliances such as washing machines and dish washers since therewas a great growth in the demand for these appliances. Social Socially, the industry had become polarized as a result of changing consumer p r e f e r e n c e h e n c e t h e g r o w t h o f g l o b a l r e t a i l c h a i n s a n d g r e a t e r g l o b a l competition. This led to companies not to only focus on production elementssuch as the location of production plants but also purchasing from cheaper suppliers. Another issue that emerged was on distribution channels in the form of the retail chains. Unfortunately, this was one of the weaknesses of Electrolux.Firms only focused on location of production plant and purchasing were likely tobe outperformed by others who paid attention to this. Customers shifted from buying from traditional shops to big chain shops like the super markets and soon. Economical Economically, according to the 2005 annual report, there were three criticalimportant aspects of Electroluxs market that strategy had to address. The firstamong them was the issue of Globalization. Electrolux operated in a market withstrong global competitions and the strategy adopted by most firms in the industrywas to locate their production plants in countries where production cost was low.They also expanded their markets outside Sweden which contributed to 75% of their sales. Technology Technologically, Electrolux also invested in product development as they openedstate of the art production unit for serving the entire North American market. Legal Legally, all internal and external regulations were met since it would not bepossible to operate in a country whose regulations are not been adhered to. Strategic Capabilities The strategic capabilities of a firm are centered on its resources and competences. Theresources here refer to human, financial, the organizations resources and the ability tomeet the stakeholders expectations. In considering the strategic capabilities, we look atthe strengths and weaknesses of the organizations,

ie, whether the organization enjoyscompetitive advantage or not over its competitors. Strength The strength of Electrolux was well rooted in result oriented corporate culture,development of its human resource and a strong environmental commitment.The organization also built very good relationship with its suppliers. Also, in thec o u r s e o f c u t t i n g d o w n c o s t w a s a b l e t o c a p t u r e t h e m a r k e t s h a r e o f t h e traditional dealer to retail chains. Weaknesses After a successful performance following its entry into the industry, Electroluxf o u n d i t s e l f e m b a r k i n g o n a c r u s a d e o f a c q u i s i t i o n s i n E u r o p e . I n t o t a l , 5 9 companies were acquired in 1967. This strategy turned out to be unwise. Thesewere countries in which cost of production was high.Besides producing at a higher cost of production, Electrolux had issues when itcame to purchasing. First, its suppliers were many and therefore a project had tobe developed under which the number was drastically reduced. Expectations On stakeholders expectations, the goals was to accelerate development of Electrolux asa marketdriven company based on the greater understanding of customers needsthrough; Continuing cutting costs and drive out complexity in all aspects of operations. Increasing the rate of product renewal based on consumer insight. Increasing our investment in marketing and building the Electrolux brand as theglobal leader in our industry.These expectations of stakeholders have been identified as e mployees, suppliers,customers and shareholders. From the case study employees expectations have beenwell catered for through international career opportunities, equipping them with talentmanagement skills and tools to enhance efficiency. Under suppli ers, the companye n v i s a g e d a s o l i d s u p p l y i n t i m a c y w h i c h h a s s u s t a i n e d a g o o d r e l a t i o n s h i p w i t h suppliers and a sound supply chain management. This has been captured under moreefficient purchasing system that has been implemented in order to change and improvecost position and reducing the number of suppliers.On the other hand, customer preference which is the reason for their existence hasbeen well catered. Thus knowing your customer is a key to the success that Electroluxhas achieved .Meeting the demands of its customers through quality services and giventhem products at competitive prices that meet their needs.Finally, the shareholders expectations have been well met through the success storyfrom the acquisitions. Opinion on the Factors

The most important factors are; Stakeholders Expectations this is because the influence of stakeholdersexpectations on an organization encapsulate the vision, mission and values. The issue of corporate governance is the guiding principle in s h a p i n g managers in their daily activities in other to attain goals of the organization. Environmental factors are important because it helped El e c t r o l u x t o understand the framework that it operates within. Thus a pestel frameworkanalysis will be a guide in shaping the industrial dynamics. Strategic Capabilities Every organization strives well on the human capitalof the business to survive. From the case study the competence level of thepersonnel was well rooted through a solid talent management process and ani n t e r n a t i o n a l c a r e e r o p p o r t u n i t y g i v e n t o t h e m t o m e e t t h e n e e d s o f t h e organization. Q UESTION 4THINK ABOUT THE STRATEGIC CHOICE FOR THE COMPANY IN RELATIONTO THE ISSUES RAISED Strategic choices involve the option for strategy in terms of the direction in which tooperate. Thus, this can be looked at from the following five dimensions namely; Business Strategy Level Corporate Strategy Level International Strategy Level Entrepreneurship Organizations Business Strategy Level The business strategy level deals more on efficient production and logistics with theview of reducing the number of product platform, increasing prod uctivity, reducinginventory levels and increasing delivery accuracy.Another choice is the efficient purchasing system been implemented in order to improvecost positioning mainly through better coordination at the global level and the drasticreduction of numbers of suppliers. All these are well rooted through the strategic goalsoutline in the strategic plan reported by Hans Straberg. These strategic plans are:

 Continuing to cut costs and drive out complexity in all aspects of operations Increasing the rate of product renewal based on consumer insight Increasing our investment in marketing, and building the Electrolux brand as theglobal leader in our industry. Corporate Strategy Level This deals with moving production to low-cost countries. Its important to continuerelocating production from high-cost to low cost countries. Shutting down plants wherecosts are high and build new ones in countries with competitive costlevels. International Strategy Level From the case study, acquisitions made from the 70s to the 90s that generated 75% of Electrolux sales coming from outside Sweden and the expansion drive together with thedisposal of non-core industrial activities.M a j o r r e s t r u c t u r i n g i n t h e l a t e 9 0 s t o 2 0 0 0 c o n t r i b u t e d t o a b o u t 8 5 % o f s a l e s i n consumer durables and 15% in related products. Entrepreneurship Hans Straberg (CEO) goal to accelerate the development of Electrolux as a marketdriven company based on greater understanding of customer n e e d s t h r o u g h t h e underlying goals; Continuing to cut costs and drive out complexity in all aspects of operations. Increasing the rate of product renewal based on consumer insight. Increasing our investment in marketing and building the Electrolux brand as theglobal leader in our industry Organization These are methods to pursue strategy; this has been captured under looking ahead tothe near future in the case study. The following points are worth noting; Both North America and Europe lunching of a number of important new products. Improvement in professional indoor products Development of new distribution channels for food service equipment. Continuing to cut costs and drive out complexity in all aspects of operations.

Increasing the rate of product renewal based on consumer insight. Increasing our investment in marketing and building the Electrolux brand as theglobal leader in our industry Organization These are methods to pursue strategy; this has been captured under looking ahead tothe near future in the case study. The following points are worth noting; Both North America and Europe lunching of a number of important new products. Improvement in professional indoor products Development of new distribution channels for food service equipment. Q UESTION 5 WHAT ARE THE MAIN ISSUES ABOUT STRATEGY INTO ACTION THAT M I G H T D E T E R M I N E T H E S U C C E S S O R F A I L U R E O F E L E C T R O L U X S STRATEGIES? Strategy in action looks at whether the strategies chosen are actually put into action. Itis important to look at the strategic development processes of Electrolux. The strategiesthat Electrolux actually pursued were combination of intended and the emergent.Formal strategic planning decisions are the intended ones and what is actually pursuedare the emergent including responses to unanticipated opportunities and so on.S t r u c t u r i n g a n o r g a n i z a t i o n t o s u p p o r t s u c c e s s f u l p e r f o r m a n c e ; t h e s e i n v o l v e organizational structures, processes and r elationships and the interaction betweenthese elements. At Electrolux, they saw that the company was restructured to managethe underperformers. Those nonecore business and low profit brands businessmodels were all divested and changed. Also, in the 1930s, the company spread itswings by establishing production outside Sweden. This was done to create the leadingproducts in refrigeration and vacuum cleaning.Strategy in action may take form of resourcing strategies in separate resource areass u c h a s p e o p l e , i n f o r m a t i o n , f i n a n c e a n d t e c h n o l o g y i n o r d e r t o s u p p o r t o v e r a l l strategies. Electrolux took a number of steps in this direction; one f o r m t h i s t o o k w a s t h e construction of the distribution channels for food services distribution. Again Electroluxsought to develop its human resource, ie, the people through an active leadershipdevelopment, international career opportunities, and a result-oriented corporate culture.Another important area is how to manage change; all because implementing newstrategies will certainly involve some degree of change.

The consideration needs to begiven to the different aspects of the organization and their possible impact on strategy.For instance how will employees react to strategy, are they just going to comply or becommitted or resist. This point further raises the issue of the strategy developmentprocess and the issues pertaining to consultation. Due to the changes inherent instrategy at times, that is why emphasis is placed on consultation with all stakeholders.A major restructuring was undertaken by Electrolux in the late 1990s which created theshape of the organization in the early 2000s. This saw the organization making 85% of its sales in the consumer durables and 15% in the professional products. This clearlyshows that in pursuing some of its strategies, there might be the need for structuring theo r g a n i z a t i o n t o s u p p o r t s u c c e s s f u l p e r f o r m a n c e . T h e s t r u c t u r ing might affect thestructures, the processes and relationships . F o r s u c c e s s t o b e a c h i e v e d i n t h e development of new product, consumer concern should be included in the process.