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Electrolux Cleans Up Essay Sample

Electrolux Cleans Up Pages
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1.Chief Executive Hans Straberg had no choice but to do something radical he begin shutting down plants in Western Europe and the United States and shifting work to the lower cost locales in Asia and Eastern Europe. He is breaking down barriers between departments and forcing his engineers, designers and marketers to work together to come up with new products. To speed the transition, he recruited executives from companies with strong track records in innovation, including Proctor and Gamble and Pepsi Cola (Ivancevich). Instead of using focus group or surveys, they reconstructed their mode of thinking to be Groupthink, here where ideas could flourish and be bright and innovative (Ivancevich). I believe he changed things up because they just were not working the old way. The different departments had no idea of what the consumer was wanting or needed. 2.The advantage of working together gives the different department an earlier chance to see if the product will be successful. When you have the designers and the people on hand that is going to manufacture the product working as a team. You began to know the missing pieces to the puzzle.

The new way saves time and money by avoiding the technical glitches that crop up as a new design moves from the drafting table to the factory floor (Ivancevich). If something needs to be adjusted it can be done before it leaves the floor. As a prototype you can see all the small errors and make accommodation for them. With the input from the staff being readily available for criticism and praise has proven to work out great for everyone. To support the innovation drive, Straberg has bumped up spending on R&D from .8% to 1.2% and aiming for 2% eventually. He is looking for products that consumers will pay a premium for with drop dead gorgeous looks and clever features that ordinary people can understand without having to pore through a thick users’ manual (Ivancevich). 3.Electrolux isn’t the only appliance maker on an innovation kick. In 1999, Whirlpool Corp. launched a new program that allows all of its 68,000employees to contribute designs ideas, yielding a flood of new products. But few have pulled off the range of hot new offerings that Electrolux has. The new approach yielded strong results (Ivancevich).

After dropping for two straight years, annual sales rose 8 percent to 16.5 billion in 2005. Operating income jumped 42% in the fourth quarter, compared with the year before it rose 2 % to 881 million, for the year as a whole. Product launches have almost doubled in quantity. The number running at outsized unit sales is now running at 50 percent of all introductions. Though the recent economic downturn has dampened sales for most companies in this and other retail product areas, Electrolux still maintains a 5 percent market share of the profitable household appliance market in North America in 2008 (Ivancevich). They were losing on their customer base on a lot of products and the CEO had to make difficult choices regarding how to make the organization work again for success. For this purpose he chose the path of increased effective communication and the reliance on group work and team work that has been considered instrumental in bringing about a phenomenal positive success to many organizations now. His team has found the formula that gives the consumers what they want for the price they need, and this has worked.

References:

Ivancevich, John M.,Konopaske,Robert and Michael T. Matterson. Organizational Behavior and Management 9th ed. NewYork,N.Y.: McGraw-Hill, Irwin, 2011.

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