Vestel Company – Turkey

School of Business, Algonquin College of Applied Arts & Technology

Communication/Technologies – COM100 010

Fatima Khan -
Jiahao Luo - 040906758
Nela Mahesh –
Saif Gammoh - 041014244
Sakshi Luthra -
Tanisha Hibbert – 041043862

Submitted to: Kaleigh Beauvais

November 26, 2021
TABLE OF CONTENT

Introduction (Saif)
Strategic Planning (Saif)
Swot Analysis (Saif + Tanisha)
Situation Snapshot
Business Consideration (Saif)
Enviromental Consideration
Cultural Consideration
Hofsede’s Organizational Dimensions
Economic Outlook (FATIMA)
Key Messages (JIAHAO)
Benefits of investment and expected return (FATIMA)
References
Introduction:
The Vestel Group, which operates in the domains of lighting, mobile technology, durable
consumer products, marketing, and distribution, is made up of 24 firms (Vestel, 2018)
Vestel, which was founded in 1984, accounts for more than 90% of Turkey's total
television exports and more than 30% of its durable consumer white goods exports
(Vestel, 2018). Vestel is responsible for 90% of total TV exports and 30% of white
goods exports in Turkey (Vestel, 2018).

Strategic Planning:
Vestel's major goal is to successfully expand by investing in new business areas within
its existing business lines as well as high-potential regions. Vestel intends to build
market diversity, improve customer and product variety, and so extend its market share,
grow with brands, and gain market diversity by investing more in creative goods in order
to achieve this core plan (Vestel 2020).
Vestel sells to over 155 countries. Vestel's primary export market is Europe, and the
company plans to expand its export network to other continents as well as Europe,
using either an organic or inorganic development strategy. It wants to boost sales in the
Asian, African, and Middle Eastern regions, as well as begin sales in North America
(Vestel, 2020).
Vestel seeks to grow its consumer electronics business by increasing sales and
profitability in the mid and upper segment. With the outsourcing strategy, Vestel
alsoseeks to grow the number of "A+ class" business partners in the white goods
Industry (Vestel, 2020)

Mission and Vision

“Proud to be recognized as a world-renowned technology giant and a market leader in

Turkey, we make it our mission to excel in every sector that we enter. Continuously

investing in research and development, we strive to build on our success, making the

highest quality solutions” (Vestel, 2018, Para. 1).

“To stay on course and become the most powerful production and technology group in

the world, we know that we must achieve sustainable development, and that we can

only do so by focusing our efforts on the creation of leading-edge consumer products”

(Vestel, 2018, Para. 2).

SWOT Analysis:

Strengths: The company's brand is well-known in Turkey and other European nations;

they therefore benefit from customer loyalty. Vestel has made significant investments in

research & development and is expanding its product range with advanced products

that meet the needs of its target market clients. It has a positive public image and is

Turkey's top producer of durable consumer goods and technology, therefore affording

them competitive advantage. The company can respond dynamically to customer

requests due to its innovative product offerings.

Weaknesses: Limited flexibility in prices as there are numerous competitors’

dependency on favorable relationship with suppliers, as disruptions can affec t sales.

Opportunities: Globalization will afford more export opportunities. Most of the

manufacturing is done in Turkey, therefore the company benefits from the low-cost labor

force in the country. Increased reliance on e commerce and advancement in technology

will assist with marketing and sales of products Opportunity to penetrate Canadian

market by exploring a Foreign Direct Investment strategy.

Threats: Reduced profit margins due to higher costs and lower sales prices of products

shipped from the Far East to the continent of North America. Political and economic

instability in Turkey can result in market loss. There is the potential of losing profit

margins because of fluctuations in the exchange rate. There is strong global competition
in this sector. As a result of limited brand awareness in the North American continent, it

may take time and added resources to penetrate the market and gain new customers or

brand loyalty.

Situation Snapshot

Vestel is a Turkish manufacturer of household and professional appliances made up of

18 companies specializing in electronics, major appliances, and information technology.

Vestel's headquarters and manufacturing factory is in Manisa. (Vestel, 2018).

Vestel was Europe's largest television manufacturer in 2006, with over 8 million units

sold, accounting for a quarter of the European market. The firm also entered the

smartphone market in 2014. Their televisions are sold under a variety of licensed brand

names, including Toshiba, Hitachi, Polaroid, JVC, Panasonic, Bush, Alba, and a number

of own-brand labels (Vestel, 2008). Their main competitors include DanVex, Duronic,

Racold and Arcelik. (Reuters Editorial, n.d.).

Turkey’s profile

Turkey is officially known as the Republic of Turkey and is a Eurasian country that

spreads over western Asia's Anatolian peninsula and Thrace (Rumelia) in southeastern

Europe's Balkan region. Turkey also shares its boundaries with eight other countries

(Karadeniz technical university, 2020). The main language for the country is Turkish,

spoken by 90% of the population (Languages, n.d.).

Turkey is a democratic, secular, unitary, constitutional republic that was established in

1923. Turkey has grown more integrated with the West while maintaining strong

relations with the Eastern world (Karadeniz technical university, 2020).

Turkey’s Culture

Turkey's culture is quite diverse, with a mixture of elements from the Oguz Turkic and

Anatolian, Ottoman, and Western culture and customs, which began with the Ottoman

Empire's Westernization and continues today (Karadeniz technical university, 2020).

Turkey became increasingly secular and Western-oriented under Atatürk and his

followers, which also saw the separation of Islam from the state. Nonetheless, Islam has

had a significant impact on the relations between the sexes and family life. The extent of

this effect varies according to the country's developed and developing regions, urban

and rural populations, and social classes (Cultural life, n.d.).

Turkish males are gradually adopting European male attire styles. In rural areas and

among the poorer city people, the famed Turkish baggy trousers are still extremely

widespread. Traditional clothing is still worn by most village women in Turkey, who

cover their heads and mouths with a large scarf. Although the scarf is frequently worn

with Western attire, this tradition has been reintroduced among more devout urban

women (Cultural life, n.d.).

The main religion of the country is Islam, which entails many duties. Both men and

women must maintain a condition of ritual purity, pray five times a day, fast once a year

during Ramadan, and try to visit Mecca at least once in their lives. Islam also has a

significant influence on male-female relationships, as there is a strong social

segregation of the sexes, which has a dramatic impact on the structure of social

connections (Cultural life, n.d.).

Canada’s Culture
Canadian culture is a blend of American, French and British influences, with French and

English sharing official language statuses (The performing Arts, n.d.). Canada has a

strong Christian background with majority of Christians being Catholic. There is no

recognized exclusion as it relates to gender, while biases exist, gender equality is

somewhat evident. Canada is also one of the wealthiest countries in the world and

welcomes inclusive global commerce. Canada enjoys a rich farming and agricultural

heritage, and it does well in performing arts and literature. Canada is a low context

culture, with verbal communication considered as opposed to non-verbal expressions

(Canada - Language, culture, customs and etiquette. n.d.).

Differences between cultures

Despite Turkey embracing westernized customs, there are profound differences

between the two cultures. Firstly, there are variations in the religious practices. Islam is

the main religion practiced in turkey, while Christianity is largely embraced in Canada.

Turkey’s religion is also quite influential in their daily customs and largely impacts and

shapes their lifestyle. Inequality in gender relations is also evident in Turkey, while the

gender gap is being consciously reduced in Canada. There are also differences in the

main language spoken in each country. While western attire is adopted in Turkey, their

traditional garments and head coverings are still widely worn.

Business Consideration
Canada's renewable resource and consumption systems are typically regarded as
among the most efficient and long-term in the world. Quick, trustworthy, dependable,
and efficient business operations are highly valued in Canada. In terms of household
appliances, electronics, EV charging, battery solutions, and so on, Canada is a thriving
economy. Because Canada is recognized for being an immigrant-friendly country,
Canadians and immigrants alike are looking for convenience in household appliances,
technology, and time-saving measures (Mordor Intelligence, 2021).
The market in Canada is still in its early phases of growth, with no dominating
enterprises or monopolies, according to competitor research. The bulk of products and
services are made in Asian nations and then rebranded and shipped to Canada due to
economies of scale. Whirlpool, Bosch, Samsung, KitchenAid, Miele, General Electric,
and SMBs are among the big players still vying for market dominance.
Vestel is now active in 24 countries but has yet to capture the North American market,
so Canada may be a good spot to start expanding and acquiring market share. Apart
from GE, none of the main players have a home appliance manufacturing facility in
Canada. Vestel now offers two options: Build a manufacturing facility or export like the
competition. Exporting is a better option than constructing a manufacturing facility in
Canada since it necessitates a significant amount of cash, licenses, and legal
compliance. Turkey is a formidable competitor in Asia because of the following factors:
geographic advantage, the "Canada-Turkey Joint Economic and Trade Committee
(JETCO)," and a strong connection with Canada (Government Of Canada, 2021).

Cultural Considerations
National Dimensions:

1. Power Distance:

It describes the relationship between high-powered people and low power people. This also

shows the fact of inequality among people at various levels.

In case of Turkey, the score in terms of power distance is 66. As in Turkey the institutional and

organizational structure is more centralized. Low level workers(employees) rely on their

managers and employers for guidance and rules.

Further they prefer to follow an indirect form of communication where employers do not directly

communicate with their employees.

 2. Individualism:

Individualism refers to the structure where people are more self-oriented. They preferred

themselves and their immediate family to be a priority instead of collectivism. Also, majority of

people do not prefer to work in groups.

Turkey scored 37 in collectivism which means that the Turkish people are more off like working

in groups and prefer more ‘we’ then’ I’. They always invest sufficient time to build healthy

relationships.

3. Masculinity:

Masculinity has two dimensions:

- Masculine (high score) which means that society is highly motivated towards competition

and success.

- Feminine (low score) explains that people are more of like those who prefer values and

quality of life. Under this dimension people care more about each other’s feelings and

values.

Turkey score 45 and follow the feminine style of masculinity.

It means that the Societies in Turkey preferred quality of life among other dimensions. They

favor more in spending time with their family and friends.

4. Uncertainty Avoidance:

The future is always uncertain. The uncertainty avoidance describes the way society deals with

future uncertainties.
Turkey scored extremely high in this that is 85 which means that the Turkish population is not

efficient in avoiding the tensions of uncertainty. they need more laws and rules for this. they also

are more religious to minimize their anxiety.

5. Long term orientation:

This dimension elaborates the relation of past with the present and future.

This dimension has two types of societies:

- Normative societies: There focus is to maintain their norms and traditions and have low

score under this dimension.

- Pragmatic societies: They focus more on preparing themselves according to the

changing environment and focus on modern education ways for this. They have high

scores under this dimension.

Turkey score 46 and it is at middle of both the societies, so it is a mixture of both.

6. Indulgence:

Indulgence refers to the weak control of people on their desires.

Restraint means high control of people upon their desires.

Turkey score 49 in this dimension. ("Turkey," 2017)

Organizational culture:

1. Organizational Effectiveness:

- Mean oriented versus goal oriented:

In the mean oriented people prefer more on avoiding risks of the ways they choose to achieve

the company goals. They focused more on the ways of doing tasks and make less effort in their

work.

In goal oriented, the focus is to achieve goals instead of high risks. People are more motivated

toward goals to be achieved than any other dimension. (Insights, n.d.)

Vestel company has a culture we are the employees and employers are more goal oriented.

(SAVUNMA, 2020)

2. Customer Orientation:

- Internally driven or externally driven:

An internally driven organization focuses more on business ethics and norms than customer

satisfaction.

Whereas in externally driven organizations, customer satisfaction is more significant than any

other dimension. (Insights, n.d.)

Vestel company is more likely to be customer-oriented organization. They focus on satisfying

the needs and wants of customers in every aspect. (SAVUNMA, 2020)

3. Level of Control:

- Easygoing work discipline versus strict work discipline:

Easygoing work discipline- As the name suggested, the working environment is flexible and

lenient.

Strict work environment- It is at reverse too easygoing work environment. The work culture is

more serious and punctual. (Insights, n.d.) .Vestel organization follows the strict working

environment. (SAVUNMA, 2020)

4. Focus:
 - Local versus professional:

In the local context, workers are more linked with their boss and yet identified with that.

In professionalism, the employees are more linked to their professional jobs. (Insights,

n.d.). Vestel company’s employees focus on professional culture. (SAVUNMA, 2020)

5. Approachability:

- Open system versus Close system:

In an open system the people from the world culture are more welcome and in close its term the

opposite to this is followed. (Insights, n.d.)

Vestel corporation has an open system for the employees. (SAVUNMA, 2020)

6. Management Philosophy:

- Employee oriented versus Work oriented:An employee-oriented organization focuses

more on the welfare of their employees add in a work-oriented organization the focus is

on the work to be achieved on time and affectively. (Insights, n.d.) Vestel company

follows the work-oriented management philosophy. (SAVUNMA, 2020)

Economic Outlook

The global pandemic (COVID-19) became part of our lives in the year 2020 and
effected global trade along with creating a health crisis worldwide. The lockdown imposed by
countries across the globe which restricted the flow of people across borders also effected trade
of goods and services which was carried out by the people and disrupted the global economic
activity. Vestel was also impacted by the pandemic as there was a drastic change in the supply
and demand. As Turkey had a current account deficit in 2020, due to the contraction of the
global economy the need for external financing increased as the tourism sector even experienced
losses. Moreover, a CPI inflation rate of 14.6% was recorded at the end of the year 2020.
However, Vestel dealt with the situation by implying an employee-centric approach and ensured
a safe environment for production and employment. It placed protective and preventive measures
in its production facilities to protect its employees and their families and was awarded a TSE
Safe Production award for it. Due to an effective management approach, Vestel continued its
operations smoothly after putting them to a halt for one week at the start of the pandemic. As
people tried to adjust to new normal and redesigned their living spaces, a rise was seen in the
second half of the year 2020, people wanted to replace white goods (large home appliances
which were initially available only in White color) in their houses which led Vestel to
compensate for its losses and recover the losses from domestic and foreign markets. It gained
market share both in the white goods market domestically and in the television market by
continued growth. Vestel does not simply deal in one kind of good it develops and produces
smart products to provide convenience in our daily lives keeping in mind the social responsibility
factor (Vestel, 2021).
Vestel’s shares are publicly traded as “VESTL” on the Borsa Istanbul Stock Exchange market
which is a merger of Istanbul Stock exchange, Istanbul Gold Exchange and Derivatives
Exchange of Turkey (KAP, 2021).

There is an increasing trend of using smart appliances by people to improve their living
standards, in order to fulfill the demands of the target market companies like Vestel and LG
Electronics invest in R&D. LG recently introduced a new washing machine which uses artificial
intelligence for optimal efficiency. Moreover, these companies are continuously investing in
research and development and innovating new user-friendly products (Deshmukh & Kamble,
2020)

- Key Messages

· Vestel has 10 subsidiaries that have been set up in various other parts of the

world, leading to exports to 157 countries.

· In 1993, Vestel was awarded the ISO 9001 quality standard accreditation by the

Turkish Standard Institute, which means they are not only meet the customer’s

requirements, but they also make sure that increasing quality.

· Vestel focuses on creating value for society, impacting the lives of hundreds of

millions of people in 157 countries around the world, and aiming to build a more

livable world.

· Run the company with integrity and establish the right relationship with all

stakeholders and act following the law.

· All Vestel's activities are open and transparent and operate to create value for

the country and society.

 · Vestel believes in their employees and values their training and development,

helping them to reach their full potential by creating a participatory company

culture and environment.

· Vestel s sure their all activities comply with the sustainability strategy.

Benefits of Investment and Expected Returns

A 56% increase in revenues was observed for the 3rd quarter ended (30 September 2021). A
record high revenue was seen at TRY21.76[1] billion.

[1]
TRY21.76 billion = 2,262,604,800 CAD

These reflect an increase in white goods segment by 64% .i.e., TRY 13.14 billion and TV
segment increase by 46%. i.e., TRY8.62 billion. Moreover, it has a Return on Investment of
26.81% whereas an industry average ROI is 22.8. It has a dividend of 7.04 which has a yield of
23.04% whereas an industry average is 8.72%. In addition to this, it has a payout ratio of 42.3%
whereas an industry average is 32.33%. Therefore, considering the overwhelming financial
position of the company despite facing a pandemic, it is feasible to invest in Vestel as it
outperforms other sectors and has a growth factor. Due to these reasons, it gives an exceptionally
higher dividend to its investors (Investing.com, 2021).
Moreover, it invests heavily in research and development and innovation of smart products in
order to bring comfort and ease living. It has many ongoing projects within which they provide
solutions for lighting, white gods, built-in, digital solutions and air-conditioning. First, they
explore the scope of the project and determine its needs. Secondly, specific products are
designed according to the needs of the project. They place products in the most appropriate way
and offer financial solutions for payment of project investment costs. After sales service is also
provided once the project is completed. Furthermore, they are using all the resources of Turkey
in order to acquire the highest level of technological advancement (Vestel, Vestel Project
Partner, 2021).
If a Canadian investor invests in Vestel it would mutually benefit both Canada and Turkey, as
Canada would have the required technology and Vestel would have the expertise in terms of HR.
Moreover, the sector is growing worldwide as people are adopting to the new normal and
replacing their white goods items for an advanced and convenient living environment.
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