Professional Documents
Culture Documents
Strategic Management
Project Report
Hilalsu Aydın
2017502105
Alperen Şimşek
2016502093
Can Doymaz
2016502021
Bora Apak
2017502084
Table of Contents
About the Company.............................................................................................................................3
Company History.................................................................................................................................4
Mission....................................................................................................................................................4
Vision.......................................................................................................................................................5
Strategic Decision Making................................................................................................................7
Growth Strategies...............................................................................................................................7
Horizontal Integration.......................................................................................................................... 7
Vertical Integration................................................................................................................................ 7
Environmental Effort.........................................................................................................................7
Firm and Consumer............................................................................................................................8
Ethics........................................................................................................................................................9
Financial Summary..........................................................................................................................10
Industry Analysis..............................................................................................................................11
Porter’s Approach: The Five Forces................................................................................................ 12
SWOT Analysis....................................................................................................................................... 12
PEST Analysis......................................................................................................................................... 14
Competitive Analysis........................................................................................................................15
Miles And Snow’s Strategy................................................................................................................. 16
Drucker’s Entrepreneurial Strategies............................................................................................ 16
Porter’s Generic Competitive Strategies....................................................................................... 16
Conclusion...........................................................................................................................................17
References...........................................................................................................................................17
About the Company
Arcelik is a sustainable and innovative household appliances company based in Turkey that
has 12 sub-brands, 28 production facilities, and more than 40K employees. Arcelik values
transparency, sustainability, and innovation to create a lifestyle for its customers who are all
around the globe. The company has more than 40 product lines within their 12 brands, but
the major product lines the company have are refrigerators, freezers, ovens, dishwashers,
washing machines, televisions, and air conditioners.
Arcelik works with a large number of intermediaries which are in the type of multi-branded
stores, specialty stores, online and other distribution channels. Since all the products of the
company are readily available and the company operates all around the world, its customer
portfolio improves constantly. With its attitude towards technology and future, Arcelik will
keep its position in the market and will be recognized more each day as its slogan says:
‘Respecting the World, Respected Worldwide’.
Company History
The history of Arçelik goes back to the beginning of the 1950's. In that era
Refrigerators weren’t common. To make a dream come true Lütfi Doruk and Vehbi Koç
founded Arçelik. At first their intention was to build any metallic product. But the founders
had a goal to achieve. That goal was to make everyone have household appliances. At that
time these items were considered novelty items and only rich people could afford them. After
the first manufacturing factory near Sütlüce, the first product they manufactured was a stove.
Then they manufactured Turkey's first washing machine in 1959 and first refrigerator in
1960. After that the owners thought that refrigerators shouldn’t be items that only rich people
afford so they lowered the price by half. It caused shortages around the country, so they built
a new refrigerator factory in Eskişehir in 1975. The firm extended its product line by opening
a vacuum cleaner facility in İzmir in 1979, and a dishwasher plant in Ankara in 1993.
The year 1999 was marked by growth and reform. Arçelik established Ardem to
produce kitchen appliances and merged Türk Elektrik Endüstrisi A. and Atlm ve Gelişim
Pazarlama A. into a single legal organization. Arçelik took over the marketing and sales of
Beko goods that were formerly marketed and sold by Beko Ticaret in 2001. The firm was
able to handle manufacturing and sales/marketing operations more centrally and boost
efficiency thanks to the new organizational model. On February 27, 2009, the merger
proposal between Arçelik A. and Grundig Elektronik A. was announced.
The company's most recent objective is to "become one of the top ten most preferred
worldwide brands in its area by 2010." [14] In addition to the current Arçelik, Beko, and Altus
trademarks, names such as Grundig, Elektra Bregenz, Blomberg, Arctic, Leisure, Flavel, and
Troila have been combined to achieve this aim. Arçelik's goal is to revitalize itself and the
industry by becoming a trusted lifestyle solutions supplier for the digital home.
Mission
“We seek to satisfy every customer we serve in every country where we operate, grow
through offering products and services at world-class quality and standards, and we strive to
become a beacon of reliability, continuity and respectability for all stakeholders.”
We Grow: We are the global thinkers who shape the market with innovation. We always aim
to execute perfection.
We Lead: Arçelik encourages high performance and responsibility. We believe that creating
impact for shared success, and this success comes with great leadership.
Values
Customer-Focus: It is our primary responsibility to provide value to our consumers and to
always meet their expectations. It is our responsibility to stand behind our products after they
have been sold and to assist our consumers when necessary.
Being the best: Our major purpose is to keep our public image by being the best in quality,
service, supplier and dealer connections, and investment choices given to shareholders. Our
guiding principles are to take charge of our areas of business and to set the pace in the
marketplace.
For the people: Our employees are the foundation for the excellence of our products and
services. Attracting and retaining the best employees and a qualified workforce, maximizing
their talents, strengths, and creativity, increasing their efficiency, providing them with
development opportunities, and cultivating a working environment that supports cooperation
and solidarity are the methods by which our Group has grown its success over generations.
Strengthening the economy: All economic, environmental, and social contributions that will
promote happiness in the countries where we do business receive our full support.
Vision
Arçelik Company declares its vision with the statement of “Our vision is to rejuvenate
ourselves and our industry to become a trusted lifestyle solutions provider to the digital
household.”
Arçelik has many different brands under it. All of these brands appeal to different
segments and have different visions. For this reason, Arçelik Company holds wide and
various visions. The common vision of these brands is to offer a better future.
Science-Based Targets
Arçelik targets to reduce GHG emissions were approved by the Science Based
Targets initiative.
Having been in line with the Paris Agreement’s goal of keeping global temperature
rise “well-below 2°C” for Scope 1 and 2 emissions, these place Arçelik among the 700+
companies throughout the world. Arçelik has committed to reducing our absolute Scope 1
and 2 GHG emissions by 30% and our absolute Scope 3 emissions from the consumption of
Arçelik's sold products by 15% by 2030 from a 2018 base year. To be able to fulfill Arçelik's
objectives and maintain our position as a leader, Arçelik will continue to invest in energy
efficiency, green electricity purchases and renewable energy systems.
Sustainability
Within the framework of Arçelik's sustainability plan, Arçelik attends to the future, the
environment, and the needs of people and Arçelik's business. Arçelik aims to move beyond
our current habits and behavior models, as well as the way Arçelik thinks now, and anything
that is currently considered impossible. Today, Arçelik designs, builds, and lives the future.
Arçelik creates technologies that will make the world a better place for the future.
Digital Transformation
Growth Strategies
Horizontal Integration
Market Development: Market development is a growth strategy for current products that
finds and creates new market segments. Non-buying clients in presently targeted categories
are the focus of a development plan. It also aims to attract new clients from different
demographics. Arçelik acquiring leading household appliance company Dawlance from
Pakistan is an example of this strategy.
Vertical Integration
Backward Integration: Backward integration involves buying part of the supply chain that
occurs prior to the Arçelik’s manufacturing process. Since Arçelik acquires other domestic
appliances companies and markets them as sub-brands, it can be said that Arçelik
implements a backward integration and involves the acquired company to all of their supply
chain processes.
Environmental Effort
It is important for companies to be sensitive to the environment. Because this duty is not only
a legal obligation, but also a conscientious responsibility towards society and the world. In
addition, more and more customers are starting to prefer sustainable and environmentally
friendly products. For this reason, Arçelik works to increase and accelerate the production of
sustainable, environmentally friendly, and easy-to-recycle products.
● Arçelik complies with the environmental laws and regulations in the regions where it
operates at the maximum level.
● While Arçelik complies with the laws and regulations in the regions where it does
business, it supports the development of these regulations in cooperation with the
government and public institutions.
● Arçelik follows global problems, scientific studies, and technological developments in
order to keep itself up to date in terms of environmental management.
● Arçelik continues its efforts and takes the necessary actions in order to improve its
products in terms of environmental friendliness and sustainability.
● The company continues its activities to combat the global climate crisis, reduce its
carbon footprint and produce solutions.
● With the support of the most up-to-date scientific studies available, reducing water
consumption, resource consumption and chemical consumption is one of the
company's policies.
● Arçelik tries to increase and spread the use of renewable energy sources. It also
continues its efforts to increase energy efficiency.
● Attaching great importance to recycling, Arçelik works to prevent waste generation as
much as possible and to recycle and reuse existing waste as a resource.
● By controlling air emissions to prevent air pollution, Arçelik also helps maintain
biodiversity by paying the utmost attention to the protection of all species, especially
those at risk of extinction, and the restoration of their habitats.
● Arçelik aims to be a leader and an example in the field of environment in the fields in
which it operates. It aims to raise awareness by sharing its knowledge and works to
leave a clean world to future generations.
● Arçelik is a follower of all these works to ensure that all units, subsidiaries, and
business partners of Arçelik comply.
Ethics
As a global company with a vision of "Respect for the World, Respect for the World",
Arçelik strives to do work and leave traces in all regions where it operates. It also aims to
provide a working environment that treats people equally, provides a fair working
environment and where problems are solved within the framework of the rules. For this
reason, it attaches great importance to ethical values.
First, the basics of the company's business behavior are integrity, honesty, and
superior business ethics. Adopting these values, Arçelik always displays goodwill, mutual
benefit, and fair behavior in all business relations. In addition, the company undertakes from
the beginning to comply with all ethical values and laws in everything they do. Therefore,
Arçelik has its own policies to determine borders of rules and ethical values and ensure that
they are applied correctly. Contents of the policies are as follows:
1)Operation Policy: Define the global ethics committee, its duties, principles, and penalties.
3)Anti Bribery and Corruption Policy: It defines general principles of bribery and
corruption. The policy determines how relationships should be with especially governmental
officials and rules for potential bribery tools such as donation, gifts, meals etc.
4)Gift and Hospitality Policy: This policy defines limits of gifts for employees ranging from
upper to lower stage.
5)Competition Law Policy: The fact that violating competition rules might be destructive for
companies and employees, Arçelik obeys competition of laws and expects that all
employees and business partners to do the same.
6)Donation and Sponsorship Policy: This policy determines limits for donation and
sponsorship and defines principles for them.
7)Anti-Money Laundering Policy: The policy defines the suspicious activities and refers to
principles and rules to avoid anti-money laundering.
8)Data Privacy Policy: Arçelik processes data only lawfully and fairly. By this policy, the
company sets rules for privacy and explains the data process clearly.
9)Global Environmental Policy: This policy explains the responsibilities of the company in
environmental content. The company aims to increase its environmental performance. By
implementing this policy, Arçelik tries to increase its sustainability.
10)Global Human Rights Policy: This policy defines the standards in relation to Human
Rights. All employees, directors, and officers of Arçelik shall comply with this policy. The
policy explains general principles and scope of the policy.
11)Global Anti-Discrimination and Harassment Policy: The purpose and scope of this
policy is to set out principles and rules in order to create work environment without any
discrimination and harassment including sexual harassment.
12)Authorized Service Policy: Arçelik aims to ensure the satisfaction of its customers and
tries to provide them with products and services of universal quality.
Financial Summary
One of the most important parameters that show the performance of a company is the
financial situation of the company. Because this information is a great resource for
understanding the company's power, production and business capacity, growth potential and
determining the strategic decisions and targets to be taken as a result of these. Therefore,
companies and investors attach great importance to the financial summary.
When Arçelik's income statement is evaluated, it can be seen that there has been an
increase in net sales for the last 3 years. Especially in 2019, when the Covid-19 pandemic
started, net sales increased by 6%. In addition, by the end of 2020, a consolidated net sales
revenue of approximately 41 billion TL was reached. In order to evaluate the information
correctly, it is important to consider the global pandemic crisis and the difficulties it causes.
Arçelik managed to increase its net sales in 2019, the year the pandemic started. During this
period, many people stayed away from their jobs or left their jobs due to bans, closures, or
health reasons, and as a result, many consumers experienced economic difficulties and
reduced their spending. Increasing its sales in such a period can be considered an important
success for Arçelik.
Figure 1: Financial Summary of Arçelik
In addition to these, it is seen that Arçelik has consistently displayed a surplus in gross
activity and net profit throughout the pandemic process. Moreover, Arçelik was able to
continue to grow in 2020 and provided a 16 percent increase in the number of employees.
This information is important because, as it is known, many companies have strategically
turned to downsizing and reducing their employees under the conditions of the pandemic. A
16 percent increase in the number of employees in such a process is a positive indicator for
Arçelik.
Industry Analysis
Technological advancements have led to the development of smart appliances with futuristic
designs, advanced features, and energy efficiency. Global trends such as consumer power,
global growing middle class, consolidation, sustainability, and globalization affects the
domestic appliances industry and the brands in this industry must be agile and up to date to
adapt the changes quickly and satisfy the needs of customers. Home appliances industry is
segmented by product of major and small smart appliances that should be available for all
segments of customers since the need for those products are unquestionable.
Even though the Covid-19 has disrupted the global supply chain of the major appliances
since their size is a constraint for transportation, the worldwide quarantines have affected the
consumers to upgrade their existing appliances and increased the need of comfort in
personal environments. Consumers will continue to purchase new appliances or upgrade the
existing ones because the products offer ease, comfort, and increased productivity.
Porter's Five Forces is a model that identifies and analyzes five competitive forces that
shape every industry and helps determine an industry's weaknesses and strengths.
1. Threat of New Entrants: A company's power is also affected by the force of new
entrants into its market. The number of new entrants to the domestic appliances
industry is quite low because there are some barriers to entry like product
differentiation is hard, capital requirements and switching costs are high.
2. Rivalry Among Existing Firms: There are many companies in the industry and the
industry is growing. The larger the number of competitors, along with the number of
products they offer, the lesser the power of a company. Therefore, the competition
affects the companies badly in this industry.
3. Threat of Substitute Products: Switching costs are high and consumers do not
replace an existing product frequently. However, buyers may look around for
substitute products for lower prices when they want to replace an existing product or
buy a household appliance. These two factors also affect the bargaining power of
buyers and suppliers.
4. Bargaining Power of Buyers: The purchased product represents a high percentage
of a buyer’s costs, and they may look around for lower price options. Thus,
competitiveness in the industry increases since consumers will compare prices and
qualities of different brands. However, Arçelik has an advantage in this area since it
has 12 sub-brands, so the company can attract more customers with different brand
names.
5. Bargaining Power of Suppliers: The products have high switching costs, and it also
affects the bargaining power of suppliers because when consumers cannot switch
their products frequently sales of the suppliers will decrease.
SWOT Analysis
Strengths:
● They have a strong background for e-commerce and have competitive advantages
as they have long driven e-commerce sales.
● Since they are a global and well-established company, they have a say in the
industries.
● Koç Group and Arçelik have an experienced, broad, and successful management
team.
● They are globally recognized as they manufacture a wide range of products.
● They work with a focus on customer satisfaction.
● When an order is placed, they have a wide service network that can deliver very
quickly and accurately.
● They do important work for the training and development of their employees.
Weaknesses:
● The use of social media channels is not sufficient and effective, so communication
with customers is negatively affected.
● Failure to respond to customers' negative comments and complaints on social media
can create a negative perception.
● Although there is a useful e-commerce site, the SEO improvements and marketing of
this site are not good enough.
● The number of global intermediaries is not enough.
Threats:
● The constantly fluctuating exchange rate may adversely affect production costs and
sales rates.
● Ineffective use of social media can lead to loss of potential customers.
● Competition is high in many markets and competitors are trying to increase their
shares by constantly developing new strategies.
● The constant development of new technologies and the fact that the company may
have difficulty adapting to it.
Opportunities:
● The opportunity to further expand e-commerce activities and gain an advantage over
its competitors.
● Opportunity to both satisfy customers and attract potential customers with correct
campaigns in this period of economic difficulties.
● Globally, the population is increasing, and the number of potential customers is
increasing in parallel.
● Although there are economic problems, Turkey is still in a growth trend and Arçelik is
a Turkey-based company.
● Social media channels can be used more effectively, and advertisements and
campaigns can be organized to reach large masses.
As a result, when Arçelik's SWOT analysis is examined, it seems that the company can
actually take advantage of great opportunities by correcting its weaknesses, because its
strong sides are suitable for this. For example, the company can improve its use of social
media and seize the opportunity to reach large audiences. Because they already have a very
useful and powerful e-commerce system.
PEST Analysis
Political:
Economical:
● With the effect of the pandemic, there are economic problems in the global and local
sense.
● As interest rates decreased in Turkey, loan utilization and production opportunities
increased.
● Since inflation was high, it became difficult to set prices and make sales.
● Due to the high level of insecurity, it became difficult to make and implement strategic
decisions.
● Due to the increase in population, there is a continuous growth in the market.
● Due to the young and high population, there is a high workforce availability in Turkey.
Sociocultural:
Technological:
When Arçelik's PEST analysis is examined, it is seen that changes occur in the environment
as a result of both the pandemic and economic problems. It is important for the company to
examine these changes in the political, economic, socio-cultural, and technological
environments and to determine the strategies by making the right inferences.
Competitive Analysis
Arçelik A.Ş. is active in more than 100 countries including China and the United
States through its 13 international subsidiaries and over 4,500 branches in Turkey.
The biggest competitors of Arçelik are LG, Whirlpool, Midea, BSH Home Appliances,
and Electrolux because these companies are the most selling household companies around
the World. LG Electronics is a part of LG Corporation and a South Korean company. Its
global sales reached $55.91 billion. It has 4 business units. These business units are home
entertainment, mobile communications, home appliances & air solutions and vehicle
components. LG is the main production vendor for refrigeration and washing machines in
South Asia. Another competitor of Arçelik is Whirlpool. The Whirlpool Corporation is an
American company of home appliances. Whirlpool has $21 billion annual revenue. Whirlpool
has 78.000 employees, and more than 70 R&D centers around the World.
Arçelik is a defender in the domestic market and a prospector in the international market.
Therefore, the strategies that will be implemented by the company varies for different
markets.
When we evaluate Miles & Snow’s Strategies Arçelik has a complex position. Defender
Strategy is the most suitable strategy for Arçelik because Arçelik is the leading company in
the Turkish Market. On the other hand, Arçelik is also an international brand and has many
sub-brands. So, Arçelik uses Prospector Strategy in different markets. Additionally, Arçelik
has different market positions in different countries. Thanks to company culture, Arçelik
indicates a similar strategy in different markets too.
Miles & Snow’s Strategy is for companies that have strong competitive advantages like
quality, superior service, or low price. Arçelik has all of them thanks to its sub-brands. Every
sub-brand has one of these competitive advantages and this condition makes Arçelik the
leader of the Turkish Market. Also, Arçelik is an innovative, risk-taker and aggressively
growth-based company.
As mentioned before, Arçelik is the leading company in the Turkish Market. Even though
Arçelik is an international company, its international strategies show similarities with the
strategies in the Turkish market because of its company culture. For this reason, Arçelik
needs to establish outright market leadership. For this reason, Arçelik creates new solutions
and discovers new products with its worldwide R&D centers. In some cases, they take high
risks because of their aggressive growth approach.
According to Porter’s Generic Competitive Strategies, Arçelik uses different strategies for
different market segments. Thanks to these strategies, Arçelik ensures a competitive
advantage. These Strategies will be examined under three titles such as cost leadership,
differentiation, and focus.
Cost leadership: Arçelik has many sub-brands and some of these sub-brands use a cost
leadership strategy. Arçelik uses price-based competitive strategies on Grundig and Altus.
These sub-brands provide household appliances for the lowest prices.
Focus: Thanks to the diversity of its sub-brands, Arçelik can focus on different strategies
through these sub-brands. Arçelik can focus on household appliances, major appliances,
vacuum cleaners, electronics, kitchen and cooking appliances, refrigeration appliances etc.
Conclusion
Household appliances industry is an inseparable part of modern life. Household
appliances are used in any area of our homes, offices etc. Today, we barely think about
living without household appliances. For this reason, even if this industry changes, it will stay
a part of our lives. Arçelik is the leading household appliances company in Turkey and
Arçelik aims to rise in the world. Arçelik uses its competitive strategies and growth strategies
successfully. Additionally, Arçelik develops itself and stays updated in today’s world thanks
to its R&D centers. In addition, their vision, mission, and historical development shows that
Arçelik has the potential to be the leading household appliances company around the world.
References
https://www.arcelikglobal.com
https://www.arcelik.com.tr
https://www.grundig.com.tr
https://ozguryildirimblog.wordpress.com/2017/06/02/pest-analizi/