Arcelik Home Appliances: International Expansion Strategy SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Arcelik Home Appliances: International Expansion Strategy
The Turkish home appliances firm Arcelik is revisiting its growth strategy. Options for growth include continuing to promote currently owned brands in international markets, acquiring new brands, expanding OEM or private-label contracts, and/or diversifying into other businesses within Turkey. Details Arcelik's position within various markets and relevant features of the home appliances industry.
Swot Analysis of "Arcelik Home Appliances: International Expansion Strategy" written by Pankaj Ghemawat, Catherine Thomas includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Arcelik Appliances facing as an external strategic factors. Some of the topics covered in Arcelik Home Appliances: International Expansion Strategy case study are - Strategic Management Strategies, Growth strategy and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Arcelik Home Appliances: International Expansion Strategy casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, there is backlash against globalization, wage bills are increasing, increasing energy prices, cloud computing is disrupting traditional business models, supply chains are disrupted by pandemic , increasing transportation and logistics costs,
increasing inequality as vast percentage of new income is going to the top 1%, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of Arcelik Home Appliances: International Expansion Strategy
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Arcelik Home Appliances: International Expansion Strategy case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Arcelik Appliances, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Arcelik Appliances operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Arcelik Home Appliances: International Expansion Strategy can be done for the following purposes –
1. Strategic planning using facts provided in Arcelik Home Appliances: International Expansion Strategy case study
2. Improving business portfolio management of Arcelik Appliances
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Arcelik Appliances
Strengths Arcelik Home Appliances: International Expansion Strategy | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Arcelik Appliances in Arcelik Home Appliances: International Expansion Strategy Harvard Business Review case study are -
Ability to lead change in Strategy & Execution field
– Arcelik Appliances is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Arcelik Appliances in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Strong track record of project management
– Arcelik Appliances is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Learning organization
- Arcelik Appliances is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Arcelik Appliances is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Arcelik Home Appliances: International Expansion Strategy Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Strategy & Execution industry
– Arcelik Home Appliances: International Expansion Strategy firm has clearly differentiated products in the market place. This has enabled Arcelik Appliances to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Arcelik Appliances to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Arcelik Appliances has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Arcelik Home Appliances: International Expansion Strategy - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Low bargaining power of suppliers
– Suppliers of Arcelik Appliances in the sector have low bargaining power. Arcelik Home Appliances: International Expansion Strategy has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Arcelik Appliances to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of Arcelik Appliances
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Arcelik Appliances does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High brand equity
– Arcelik Appliances has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Arcelik Appliances to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Cross disciplinary teams
– Horizontal connected teams at the Arcelik Appliances are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Innovation driven organization
– Arcelik Appliances is one of the most innovative firm in sector. Manager in Arcelik Home Appliances: International Expansion Strategy Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Operational resilience
– The operational resilience strategy in the Arcelik Home Appliances: International Expansion Strategy Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Highly skilled collaborators
– Arcelik Appliances has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Arcelik Home Appliances: International Expansion Strategy HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Arcelik Home Appliances: International Expansion Strategy | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Arcelik Home Appliances: International Expansion Strategy are -
High bargaining power of channel partners
– Because of the regulatory requirements, Pankaj Ghemawat, Catherine Thomas suggests that, Arcelik Appliances is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Slow decision making process
– As mentioned earlier in the report, Arcelik Appliances has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Arcelik Appliances even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Arcelik Home Appliances: International Expansion Strategy, in the dynamic environment Arcelik Appliances has struggled to respond to the nimble upstart competition. Arcelik Appliances has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Capital Spending Reduction
– Even during the low interest decade, Arcelik Appliances has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Interest costs
– Compare to the competition, Arcelik Appliances has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Arcelik Home Appliances: International Expansion Strategy, it seems that the employees of Arcelik Appliances don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Increasing silos among functional specialists
– The organizational structure of Arcelik Appliances is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Arcelik Appliances needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Arcelik Appliances to focus more on services rather than just following the product oriented approach.
Workers concerns about automation
– As automation is fast increasing in the segment, Arcelik Appliances needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Lack of clear differentiation of Arcelik Appliances products
– To increase the profitability and margins on the products, Arcelik Appliances needs to provide more differentiated products than what it is currently offering in the marketplace.
Low market penetration in new markets
– Outside its home market of Arcelik Appliances, firm in the HBR case study Arcelik Home Appliances: International Expansion Strategy needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Skills based hiring
– The stress on hiring functional specialists at Arcelik Appliances has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Opportunities Arcelik Home Appliances: International Expansion Strategy | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Arcelik Home Appliances: International Expansion Strategy are -
Manufacturing automation
– Arcelik Appliances can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Using analytics as competitive advantage
– Arcelik Appliances has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Arcelik Home Appliances: International Expansion Strategy - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Arcelik Appliances to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Arcelik Appliances in the consumer business. Now Arcelik Appliances can target international markets with far fewer capital restrictions requirements than the existing system.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Arcelik Appliances to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Better consumer reach
– The expansion of the 5G network will help Arcelik Appliances to increase its market reach. Arcelik Appliances will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Learning at scale
– Online learning technologies has now opened space for Arcelik Appliances to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Loyalty marketing
– Arcelik Appliances has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Arcelik Appliances can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Developing new processes and practices
– Arcelik Appliances can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Buying journey improvements
– Arcelik Appliances can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Arcelik Home Appliances: International Expansion Strategy suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Creating value in data economy
– The success of analytics program of Arcelik Appliances has opened avenues for new revenue streams for the organization in the industry. This can help Arcelik Appliances to build a more holistic ecosystem as suggested in the Arcelik Home Appliances: International Expansion Strategy case study. Arcelik Appliances can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Arcelik Appliances can use these opportunities to build new business models that can help the communities that Arcelik Appliances operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Arcelik Appliances to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Arcelik Appliances to hire the very best people irrespective of their geographical location.
Threats Arcelik Home Appliances: International Expansion Strategy External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Arcelik Home Appliances: International Expansion Strategy are -
Technology acceleration in Forth Industrial Revolution
– Arcelik Appliances has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Arcelik Appliances needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Arcelik Appliances needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Arcelik Appliances with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Consumer confidence and its impact on Arcelik Appliances demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Arcelik Appliances will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Arcelik Appliances can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Arcelik Home Appliances: International Expansion Strategy .
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Arcelik Appliances can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Stagnating economy with rate increase
– Arcelik Appliances can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Shortening product life cycle
– it is one of the major threat that Arcelik Appliances is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Arcelik Appliances needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Arcelik Appliances can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Increasing wage structure of Arcelik Appliances
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Arcelik Appliances.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Weighted SWOT Analysis of Arcelik Home Appliances: International Expansion Strategy Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Arcelik Home Appliances: International Expansion Strategy needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Arcelik Home Appliances: International Expansion Strategy is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Arcelik Home Appliances: International Expansion Strategy is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Arcelik Home Appliances: International Expansion Strategy is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Arcelik Appliances needs to make to build a sustainable competitive advantage.
