Electrolux Acquiring Zanussi

Electrolux Acquiring Zanussi

Electrolux: The Acquisition and Integration of Zanussi

1) How would you describe the key characteristics of Electrolux and Zanussi in 1983, in terms of strategy, organization, capabilities, and performance?

International acquisitions have become an extremely important vehicle for growth for multinational companies. In this case, and because of the particular industry in which Electrolux operated in, the trend of the whole appliance industry was facing a long period of crisis. Although Electrolux was and still is one of the largest manufacturers of white appliances, many other manufacturers were now taking market share away from the Swedish company. For example, Philips and Siemens were now introducing a complete and economic line of brand new appliances. Electrolux's core business was vacuum cleaners and absorption-type refrigerators. Electrolux was and still is the typical Swedish firm, which emphasizes on down to earth management: everyone works and keeps his word and all the information is correct. The firm emphasis on technology and advancement and the middle management is open to advises from the workers.

But at the core of Electrolux business strategy was the aggressive plan to expand through acquisitions. First, Electrolux concentrated on acquiring firms in the Scandinavian Area. Then the company continued focusing in purchasing companies that had assets but were not profitable so that they could turn their business around. After making more than 200 acquisitions in 40 countries, Electrolux was certainly one of the most experienced companies on the global scene as far as acquisition. But another important aspect of Electrolux, which helped them, maintaining leadership was the company's great flexibility concerning new products and especially their attitude towards that company which excelled in some business where Electrolux was weaker. The greatest example of this was when the company purchased Husqvarna, a chain saw manufacturer, and how in little time, through this wise take over, Electrolux found itself as the world leader in chain saw manufacturers.

Electrolux never went looking for acquisition or bankrupt companies; their policy was to keep their eyes open that things will come by themselves. When Electrolux was ready to acquire a company, the financial statements of that company were very important. ...

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...on products, ranging from refrigerators to vacuum cleaners to chain saws, in more than 150 countries.

After 1988, Electrolux acquired more companies, not only for product expansion but also for expansion in emerging markets. Electrolux grew steadily and its sales amount to SEK117 billion in 1999 comparing to 67 billion in 1987. Electrolux signed an agreement with sharp to sell its products in the Japanese market. In 1990 they expanded its presence in the US outdoor product market by acquiring Allegretti & Co. In 1991 they also acquire Lehel, a Hungarian white goods company, and they introduce the low energy line of refrigerators. By this date Leif Johansson is appointed president. 1994 was the 75th birthday for Electrolux. In 1996 they expanded in Brasil by acquiring Refripar and the next year the company announced a major restructuring plan with the purpose of improving its profitability. By 1998, Electrolux got out of the business of sewing machines, agricultural implements, interior decorating equipment, kitchen and bathroom cabinets and heavy-duty laundry equipment. Now, Electrolux core business consists of household appliances, professional appliances and outdoor products.