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V I E W F R O M P R A C T I C EIs “glocalization” still the golden way for Electrolux? Is theremore to be done?Svend Hollensen1 | Erik Møller21Department of Entrepreneurship andRelationship Management, University ofSouthern Denmark2Abena International A/SCorrespondenceSvend Hollensen, Department ofEntrepreneurship and RelationshipManagement, University of SouthernDenmark, Alsion 2, DK – 6400 Sønderborg.Email: [email protected] is the company in the worldwide household appliances industry with the widestgeographic reach. But Electrolux manages to cope with regionalization in a clear and effectiveway, based on its dedication to deep local consumer insight. Electrolux is balancing betweenglobalization and localization in the different key functions, searching to take the best fromthe two. We conclude that Electrolux has chosen a true glocalization strategy. But there stillremain some tough future challenges for Electrolux in terms of coping with slow and blurredinternal reporting lines.1 | INTRODUCTIONThe main aim of this article is to explain and discuss the main driversof the “glocalization” strategy for one of the of the world’s leadingproducers of appliances for households: Electrolux1 (further description of the company can be found later in the article). Though thestarting point for this article’s glocalization theme is the traditionalmarketing mix standardization/adaptation discussion, one of the maincontributions of this research is the more extended view of the multinational corporation (MNC) by integrating the whole value chain, andnot only the marketing activities.Within the field of international business and international marketing, the debate over the extent of standardization (centralization) or localization (decentralization) has occupied a significant part of past research.Developed by the sociologist Robertson (1992, 1994), glocalization is a theoretical concept that combines the two words globalization and localization. Glocalization refers to the interface between aglobal and a local marketing strategy by combining dynamics of cultural homogenization and heterogenization. Whereas globalization, inand of itself, stresses the omnipresence of corporate or cultural processes worldwide, glocalization stresses particularism of a global idea,product, or service. Glocalization is not merely another take on nichemarketing, now global. Rather, glocalization also adds accuracy to thepresent globalization approach among scholars and practitioners.Despite this debate, geography matters in international businessbecause location is specifically linked to understanding behavior ofpeople in specific regions due to different climate, culture, law, politics, and trade (Berill, 2015).Berill (2015) classifies a company as global if it has sales subsidiaries in all of the six regions: Europe, Africa, North America, SouthAmerica, and Oceania. In this regard, Electrolux can be classified as atruly global company. But a formal definition is not enough for beinga truly global or glocal company. The development of a global mindset is necessary, this global mind-set results from being open todiverse cultural perspectives and being aware of strategic optionsafter considering the nuances at both the global and local level(Chandwani, Agrawal, & Kedia, 2016).Globalization strengthens the consciousness of the world that pervades both the local and the global. This opposes the argument thatglobalization is a fully homogeneous process. On the contrary, whileglobalization gears toward some degree of cultural homogenization, glocalization simultaneously permits people to identify more strongly withtheir local culture. Glocalization emphasizes that relocating a theme,product, or service elsewhere has a higher chance of success when it isaccommodated to the local culture in which it is introduced.This glocalization strategy strives to achieve the slogan, “Thinkglobally but act locally,” through dynamic interdependence betweenheadquarters and subsidiaries. Organizations following such a strategy coordinate their efforts, ensuring local flexibility while exploitingthe benefits of global integration and efficiencies, as well as ensuringworldwide diffusion of innovation.Principally, the value chain function should be carried out wherethere is the highest competence (and the most cost-effectiveness),and this is not necessarily at the headquarters.The two extremes in global marketing, globalization and localization, can be combined into the glocalization framework, as shown in1The case study is the sole responsibility of the two authors and does not necessarily represent the current strategy of Electrolux.DOI: 10.1002/tie.21923 Thunderbird Int. Bus. Rev. 2018;60:463–476. wileyonlinelibrary.com/journal/tie © 2017 Wiley Periodicals, Inc.463 Figure 1. The glocal strategy approach recognizes that there has tobe a balance and overlap between the standardization and the adaptation. This focus of balance between globalization and localization iscrucial in the development of a company’s glocal marketing strategy(Svensson, 2001, 2002).1.1 | A value chain perspectiveMost of the literature regarding glocalization originates from theissue of standardization or adaptation of the marketing mix elementsin international marketing (Svensson, 2002). This study not onlyapplies the traditional marketing approach but tries to include thecompany’s whole value chain. It goes into a discussion about thestandardization (centralization)/adaptation (decentralization) from avalue chain perspective, because this perspective takes a startingpoint in the product and service features that create value for thecustomers.Consequently, this article models the activities of Electrolux as avalue chain, which obtains its product components from its suppliersand generates products and services for its clients (Porter, 1985). Thedepartments or units in upstream activities deliver to the downstreamactivities until the final product reaches the final customer. In theupstream part, competitive advantage is more likely to involveprocess- and cost-oriented mechanisms that facilitate a low-costposition. Success at the downstream part is more dependent on differentiation advantages toward the customers, such as branding,innovation, and customization (Nicovich, Dibrell, & Davis, 2007).Some value chain activities are transversal, interacting with allthe other activities in the value chain. Porter (1985) suggests thateach organization’s value chain is embedded in a larger stream ofactivities that he calls value system.1.2 | Concepts used synonymouslyThere is evidence that centralized decision making is strongly correlated to standardization in multinational corporations (MNCs). A number of papers have reported a positive link between centralizeddecision making and a higher degree of standardization and globalization (Alimiené & Kuvykaité, 2008; Viswanathan & Dickson, 2007).Consequently, in this study, standardization, centralization, and globalization are used synonymously.1.3 | Structure of the articleThe remainder of the article is structured as follows: It begins witha literature review that forms the basis for development of tworesearch questions. Then the methodology section explores themethodological approach adapted for the Electrolux case study.Findings from the Electrolux case are divided into two parts: First,we explain the general context of Electrolux, that is, the internaland external environment, primarily through secondary data. Afterwards, findings regarding the specific research questions are thenpresented and subsequently discussed. Based on this, conclusionsare made, and managerial implications are discussed. Finally, recommendations are made as to key issues that demand further researchin the future.2 | LITERATURE REVIEW/RESEARCHQUESTIONSThe overall purpose of this article is to investigate the drivers of glocalization for a company like Electrolux and to understand and showhow Electrolux has been able to balance the worlds of globalization(centralization) and localization (decentralization) in key parts of thevalue chain within household appliances.This section describes two different streams of literature deemedrelevant to the arguments in this article. After the first review of theliterature on standardization (centralization)/adaptation (localization),which is the basis for Research Question (RQ) 1, there is a discussionof the contributions by authors on multinational management inMNCs, which is the basis for RQ 2. This second theory stream goesinto the centralization of decision making in the relationshipsbetween the headquarters (HQ), regional headquarters (RHQ), andcountry subsidiaries (SUB). Apart from a few studies, such as Solberg(2000), there is very little research done on the combination of thesetwo research streams.FIGURE 1 The overlap of globalization +localization = glocalization. Source: Basedon Hollensen (2017), p. 22 [Color figurecan be viewed at wileyonlinelibrary.com] 464HOLLENSEN AND MØLLER 2.1 | Glocalization strategy on the corporate level inrelation to key competitorsSupporters of standardization view markets as increasingly homogeneous and global in scope and scale and believe that the key for survival and growth is a multinational’s ability to standardize goods andservices. For example, Levitt (1983) argued that standardization andthe creation of a single strategy for the entire global market offerseconomies of scale in production and marketing and, moreover, isconsistent with what he described as the “mobile consumer.” The primary argument of the proponents of standardization therefore restson the assumption of a homogenization of demand worldwide. Thishomogenization of demand expresses itself in a worldwide consumerdemand for high quality and low costs due to the impact of technology. In addition, Levitt argues that firms could take advantage oftechnology by adopting a standardized approach that will result inproducts of high quality and low costs for world markets.On the other hand, proponents of adaptation such as Kashani(1989) argue that there are difficulties in using a standardizedapproach and therefore support market tailoring and adaptation tofit the unique characteristics (e.g., cultural issues) of different international markets. Santos and Williamson (2015) recommend to goeven further regarding the localization strategy. They argue that it isnot enough to adapt locally. To reap the rewards of local integration, companies need to become embedded in local distribution,supply, and talent networks, as well as in the broader society. Interaction with local partners may generate new knowledge and unexpected opportunities for global innovation. These opportunities maycome from new ways of learning and execution of different business models rather than implementing and adapting formulas craftedat the HQ. This kind of local integration can be painful because itundermines traditional cost efficiencies and traditional HQ powers.Instead of pushing from the HQ, the new mission of multinationalsis about fostering pull by local operational units (Santos & Williamson, 2015).Levitt (1983) introduced a new element to the standardization/adaptation discussion. He asserted that one important consequenceof the globalization is the emergence of global competition, whichimplies a competitive structure that encompasses several countrymarkets.Theories of competition (Dickson, 1992; Hunt & Morgan, 1996)also suggest that one of the primary objectives of the firm in generalis to create a sustainable competitive advantage. When the firmexpands its markets to new geographic domains globally, a primaryquestion that arises is whether the firm can continue to create sustainable competitive advantage with its existing strategy. If the firmcan sustain its competitive advantage in new markets with its existingstrategy, a strategy of standardization (centralization) will be facilitated. In spite of the important role that competition plays in thestandardization/adaptation strategy, there is only limited research onthe role of competition in the choice of standardization/adaptationstrategy. The few competition-related factors that have been identified as playing a role in standardization include competitive positionin terms of market share, number of competitors, and market competitiveness (Cavusgil, Zou, & Naidu, 1993; Jain, 1989; Viswanathan &Dickson, 2007).Considering that more emerging-market firms (EMFs) are entering the global market for white goods (e.g., Haier from China), it isinteresting to consider the importance of country cultural backgroundand institutional factors of these state-owned and private-ownedMNCs. Rao-Nicholson and Khan (2017) found that especially theinstitutional factors are very important in explaining these MNCs’degree of standardization (centralization) in the global strategy.This leads us to the first research question:RQ1: How is the degree of standardization (centralization)/adaptation (decentralization) at Electrolux—at thecorporate level—compared to key competitors like Samsung, Haier, Whirlpool, and BSH?2.2 | Glocalization strategy regarding value chainfunctions at the global versus regional levelThe idea that regionalization may better describe MNC internationalization than global integration or multidomesticity (Rugman & Verbeke, 2008) can help balance global integration (based on the HQ)and local responsiveness (based on country subsidiaries) (Prahalad &Doz, 1987). Most of the research on regional management structureshas focused on RHQs. An RHQ is a special type of MNC foreign affiliate, tasked with the coordination, control, development, and/orimplementation of business strategies in a specific region(Chakravarty, Hsieh, Schotter, & Beamish, 2017). The use of RHQs byMNCs (like Electrolux) leads to a three-tier nested structure(Hoenen & Kostova, 2014)—HQ-RHQ-SUB—with regular decisiondelegation from HQ to RHQs and from RHQs to SUBs, and the opposite way back to the HQ: SUB reporting to RHQs and RHQs reporting to corporate HQ. This three-tier approach is also illustrated in thecase of Electrolux (Figure 2).Verbeke and Asmussen (2016) suggested that strong RHQsstructures may be vital to identifying, absorbing, and disseminatingnew globally applicable knowledge coming from HQ. They alsoemphasized the importance of RHQs in orchestrating regional valuechains to exploit cross-border resource and market differences whileachieving scale efficiencies. Chakravarty et al. (2017) suggest thatwhen integration pressures are high and responsiveness pressuresare low, a standardized and “global” approach to upstream functionswith centralized decision making is recommended. When integrationpressures are low and responsiveness pressures are high, a “multidomestic” approach with autonomy delegated to SUBs is recommended.However, as Verbeke and Asmussen (2016) point out, it is less clearwhat MNEs should do, when both pressures are high, that is, what isan optimal “transnational” approach as, for example, a product cannotbe simultaneously standardized and locally adapted. Hence, Chakravarty et al. (2017) introduce a regional strategy dimension, whichmaintains consistency within a region while adapting to interregionaldifferences. This approach provides regional economies of scale aswell as regional responsiveness, when regions are sufficiently largeand internally homogeneous markets but differ substantially fromeach other and may therefore represent a feasible response to atransnational environment. HOLLENSEN AND MØLLER465 Consequently, our base research model for RQ2 can be illustrated as shown in Figure 2.In the case finding section, we will present a modified decisionmaking model based on our case learning process.This leads us to the second research question:RQ2: What is the degree of standardization (centralization)/adaptation (decentralization) across different valuechain functions and across organizational levels (HQRHQ-SUB) at Electrolux?3 | METHODOLOGY, RESEARCH DESIGN,AND DATA COLLECTIONWe have chosen to use a single case study with embedded units(Stake, 1995; Yin, 2003), because the holistic case study (seen fromthe Electrolux HQ in Stockholm) with embedded subunits (here thefour Electrolux regions) enable us to explore the Electrolux case whileconsidering the influence of the different regions. The ability to lookat the subunits is powerful, when we consider that data can be analyzed within the subunits (here regions), between the differentsubunits, or across all the five units (including the Electrolux HQ). Thecase design has been employed to take advantage of extensiveresearch access to key members of the Electrolux organization thatwas derived through a personal network. Our single case studyapproach enables us to answer the “how” and “why” type of question,while taking into consideration how a phenomenon (glocalization inElectrolux) is influenced by the social context within which it is situated (Ridder, Hoon, & Baluch, 2014). It is an excellent opportunity forus to gain insight into Electrolux and its glocalization strategy. It alsoenables us to gather data from a variety of sources and to convergethe data to enlighten the Electrolux case. It is a frequent criticism ofthe single case study that the method is lacking generalization, andthat the results are not widely applicable for other types of companies. Yin (2003) responds to the criticism by explaining the differencebetween analytic generalization and statistical generalization, wherethe results are generated through a survey, based on a large sample.With analytical generalization (represented by a single case study)previously developed theory is used as a template to compare theempirical results of the case study and give input for developing newtheoretical approaches and models. The depth of analysis possiblefrom a single case study can generate a high level of understandingand help to build theory. The role of theory prior to conducting anyFIGURE 2 Research model regarding glocalization at Electrolux. (Note: EMEA = Europe, Middle East, and Africa; NA = North America;LA = Latin America; APAC = Asia Pacific, including China) 466HOLLENSEN AND MØLLER data collection is seen as a central characteristic of the case studymethod (Ridder et al., 2014). Nonetheless, the authors have beensensitive to the potential selection bias that a nonrandom single caseselection might bring and have been careful not to overgeneralizebased on the case study findings.For this article we conducted different types of data collection:secondary and primary. First, we did a secondary data collection, inorder to explain the topic of glocalization from an internal and external (Electrolux) perspective:• We analyzed internal Electrolux documents (e.g., financialreports) that generally constitute the Electrolux glocalizationstrategy.• We analyzed external international market reports (e.g., Euromonitorreports) in order to evaluate which effects the Electrolux glocalization strategy has on the external market performance in global markets (market share, etc.), compared with its key global competitors.Next, we did primary data collection, in the form of personalinterviews with Electrolux managers, who provided us with indepth knowledge about the Electrolux global corporate strategy,compared with its key global competitors. We chose to do anapproximately two-hour personal interview with 10 top managersof Electrolux, based on the questionnaire in the appendix. Wedivided the interviews into two steps (according to the Figure 2research model):• Step 1: The standardization (centralization)/localization (decentralization) choice seen from the different key value chain functions in the Stockholm headquarters (HQ) and going out to thedifferent regions. Besides the CEO, we interviewed the responsible managers from the following HQ group functions: Operations, Modularization, Innovation, Marketing, and HR. Here, weinterviewed six people.• Step 2: The standardization (centralization)/localization (decentralization) choice in the region itself, seen from each of the four differentregional headquarters and going out to the different countries. Here,we interviewed the responsible managers from the different regionalheadquarters: EMEA (regional headquarters in Stockholm, Sweden),NA (regional headquarters in Charlotte, United States), APAC(regional headquarters in Singapore), LA (regional headquarters inCuritiba, Brazil). Here, we interviewed four people.We conducted the 10 interviews during December 2015 andJanuary 2016.Throughout the paper, we underline our analysis points regardingthe two research questions with some of the different Electroluxmanagers’ statements that came up during the interviews.Furthermore, on a more informal level, we observed the realbattlegrounds—on the shop floor—in Denmark, Sweden, Norway, andGermany, where we also made informal interviews with some of theshop owners.4 | CASE BACKGROUND—ELECTROLUXElectrolux is one of the world’s leading producers of appliances forhouseholds and professional use. The Electrolux sells 60 million products annually across 150 countries under various brands. Some ofits products include refrigerators, freezers, cookers, dishwashers,washing machines, and small domestic appliances (primarily vacuumcleaners) that are sold under brands such as Electrolux, AEG Zanussi,Frigidaire, and Electrolux Grand Cuisine. Electrolux operates in thefollowing regions: Europe, Middle East, and Africa (EMEA); NorthAmerica (NA); Latin America (LA); and Asia Pacific (APAC).Electrolux is headquartered in Stockholm, Sweden, and the groupemployed 55,400 people as of December 31, 2016.As seen in Figure 3, the Electrolux organization consists of a geographic division principle—four regions concentrating on MajorFIGURE 3 The organization of major divisions in the Electrolux group. Source: Electrolux (2017) [Color figure can be viewed atwileyonlinelibrary.com] HOLLENSEN AND MØLLER467 Appliances—plus two further product divisions (Small Appliances andProfessional Products), which will not be the focus of this article.In January 2016 the Electrolux board of directors informed thatthey had appointed Jonas Samuelson as the president and CEO ofElectrolux as of February 1, 2016. In the financial year endedDecember 2016 (FY2016) Electrolux recorded total revenues ofSEK106 billion (US$12.2 billion). In Table 1, the 2016 financial resultsfor the four major regions (exclusive of the last two divisions, SmallAppliances and Professional Products) are shown.The United States is the single biggest Electrolux market, accountingfor approximately one-third of the total net sales (35%), followed by Brazil (8%) and Germany (5%). Electrolux has sales subsidiaries in 28 countriesacross all the four regions. Electrolux operates 60 manufacturing facilitiesin 18 countries, including several in each of the four regions. The group’smanufacturing operations consist mainly of the assembly of componentsmade by suppliers. The need for cost-efficient manufacturing has becomeincreasingly important due to globalization and the emergence of manufacturers from low-cost areas. Approximately 60% of the Electroluxhousehold appliances are today manufactured in low-cost areas that arenear rapidly growing markets for household appliances.4.1 | Major appliances–major product linesElectrolux kitchen products in major appliances include:• Kitchen (hot: cookers, hobs, ovens; cold: refrigerators, freezers. Inaddition, there are dishwashers and hoods)• Laundry (washing machines, dryers, etc.)• Home comfort (air conditioners, air cleaners, and heat pumps)Some of these products are shown in the picture of Electroluxrepresentation in a typical kitchen (Figure 4). In 2016 these kitchenproducts accounted for 60% of the Electrolux’s total sales, and thecompany holds strong positions in all major categories of kitchenappliances and commands significant global market shares. Electroluxalso hold a strong position in home laundry (washing machines),which accounted for 20% in 2016.The strongest global position currently held is for cookers,enabling, for example, know-how from Electrolux cooking solutionsfor the world’s best chefs and restaurants to be utilized when developing consumer appliances. In recent years, Electrolux has strengthened its leading position in built-in appliances through extensiveproduct launches and partnerships with kitchen manufacturers.Electrolux also offers restaurants and industrial kitchens completesolutions for cookers, ovens, refrigerators, freezers, and dishwashers.Electrolux’s strongest position is in Europe, North America, and LatinAmerica (especially Brazil). For example, in Europe about half of allMichelin-starred restaurants use kitchen appliances from Electrolux.In the laundry segment, the Electrolux also holds strong positionsin front-load washing machines, especially in the European market.4.2 | The world market—global competitionregarding major household appliancesThe total worldwide sales volume of major appliances was 491 millionunits in 2014 (Table 2).The world household appliances industry is still rather fragmentedwith no single manufacturer commanding more than 15% of the worldmarket (Table 3). Fragmentation reflects the high incidence of transportcosts, persistent differences in consumers’ preferences and brand loyalty.The world’s top 10 manufacturers, ranked by volume sales,include two South Korean companies, two Chinese companies, twoU.S. companies (actually only one as GE Appliances has been acquired byHaier in 2016), and one each from Sweden, Germany, Japan, and Turkey.In Table 3 the total sales volume is divided among the top10 world manufacturers, plus the rest.Only a few offer the whole product range and are present in allkey world markets. In fact, only Whirlpool, AB Electrolux, Haier, andSamsung have a clear global orientation. Others (like Bosch SiemensBSH, Miele from Germany, Panasonic from Japan, or Arcelik fromTurkey) have a strong regional position or are leaders in specific product niches (sometimes of high quality—like Miele). While they maynot be present on all geographical markets, most manufacturers offercomplete or nearly complete lines of major household appliances.4.3 | Market development in the regions4.3.1 | EMEA (Europe, Middle East, and Africa)The European market is fragmented and characterized by widelyvarying consumer patterns between countries and a large number ofmanufacturers, brands, and retailers. Structural overcapacity and pricepressure has led to ongoing industry consolidation.Europe comprises Electrolux’ largest market and the companyhas a broad offering under the three main brands: Electrolux, AEG,and Zanussi. In many countries and segments, Electrolux has strongmarket positions with a particularly strong position in kitchen appliances, such as cookers, refrigerators, and built-in appliances.In Eastern Europe, the level of market development varies substantially between countries. The geographic spread plays its part inhindering manufacturers and retailers from capturing substantial market shares. Eastern Europe is dominated by Western manufacturersand a large market for replacement products is emerging.Penetration is low in Africa, but growth is high and in line withincreasing household purchasing power. The Middle East offers abase for regional here manufacturing but is impacted by the politicaluncertainty. The main Electrolux market is within home comfort.In major appliances, Electrolux has the following market shares inthe different subregions:TABLE 1 Electrolux’ key 2016 financial results (number ofemployees) for four key regionsRegionNetsales(billionSEK) %Operatingincome(billionSEK) %Operating margin(operatingincome/net salesin %)Numberofemployees EMEANALAAPAC37.843.415.49.435411592.,99110,06416,2188,127Total106.0100 4.6100 5.555,400 Source: Based on Electrolux (2017). 468HOLLENSEN AND MØLLER Western Europe: 16%Eastern Europe: 13%Africa: 2% (higher in North Africa—30% in Egypt through OlympicGroup)Middle East: 5%The major Electrolux competitors in this EMEA region includeBSH (no. 1), Whirlpool (no. 2), Arcelik (no. 3—Turkish), Samsung(no. 4), Miele (no. 5), and LG Electronics (no. 6).4.3.2 | NA (North America)North America (United States and Canada) is a mature, homogeneousmarket with high product penetration that is dominated by replacement products. Large homes allow space for many household appliances, including large appliances. The market is composed of severaldomestic and global manufacturers. Four major retailers (Sears,Lowe’s, Home Depot, and Best Buy) sell 70% of the appliances onthe market. The recovery in the housing sector generates opportunities for growth in the coming years.In major appliances, Electrolux has approximately 19% in this region.The major Electrolux competitors in this region include Whirlpool (no. 1),GE Appliances (no. 2), Samsung (no. 3), and LG Electronics (no. 4).4.3.3 | LA (Latin America)Brazil is the largest market in the region (accounts for 50% of the totalmarket in LA), and the two largest manufacturers (Whirlpool and Electrolux) account for about 80% of the appliances market. Despite theeconomic slowdown in the region, there exists considerable growthFIGURE 4 Some of the Electrolux kitchen products. Source: Retrieved from http://afterinc.com/electrolux/ [Color figure can be viewed atwileyonlinelibrary.com]TABLE 2 Total worldwide sales volume of major appliances in 2014ProductWorldwide salesvolume—1,000 units Dishwashers22,567Large cooking appliances115,615Refrigeration appliances153,834MicrowavesHome laundry appliances (washing machines)Total65,311133,746491,072 Source: Based on Euromonitor (2015), p. 2.TABLE 3 Top 10 (+ rest) manufacturers on the world market 2014(total sales volume: 491 million units from Table 2)Manufacturer of majorappliancesHeadquarters(HQ)Volumeshare % WhirlpoolHaierElectroluxLGBosh-Siemens (BSH)SamsungMideaPanasonicArcelikGeneral Electric AppliancesRestUnited StatesChinaSwedenSouth KoreaGermanySouth KoreaChinaJapanTurkeyUnited States—12.611. Source: Based on Euromonitor (2015), p. 11. HOLLENSEN AND MØLLER469 potential for appliances in the longer term, especially in low-penetratedcategories. The growing middle class is expected to drive demand forbasic cookers, refrigerators, and washing machines. Growing interestfor energy and water efficiency may also drive demand.The Electrolux brand occupies a strong position in Latin Americathrough its innovative products and close collaboration with marketleading retail chains. Brazil is Electrolux’s largest market in the regionand accounted for about 60% of Electrolux sales. In major LatinAmerican countries such as Brazil, Chile, and Argentina, Electrolux isthe market leader in a large number of product categories inappliances.In major appliances, Electrolux has approximately 35% marketshare in this region. The major Electrolux competitors in this regioninclude Whirlpool (no. 1), GE Appliances (no. 2), Samsung (no. 3), andLG Electronics (no. 4).4.3.4 | APAC (Asia Pacific)In this region, China is the largest total market for household appliancesmeasured by volume. The market share of Electrolux in the Chinesemarket is relatively low, but there is great potential for increased salesto the rapidly expanding middle class in major cities in China.Japan is the world’s third-largest single total market for majorappliances and is dominated by major domestic manufacturers andretailers. Small living spaces have led to consumers demanding compact products such as hand-held vacuum cleaners. Penetration is highin Australia and New Zealand, and demand is primarily driven bydesign and innovations as well as water and energy efficiency. Competition between manufacturers from Asia and Europe is intense.About half of Electrolux appliance sales in the region are inAustralia, where Electrolux is the market leader. The Electrolux brandis positioned in the premium segment with a focus on innovation,energy and water efficiency, and design. The Westinghouse and Simpson brands command strong positions in the mass-market segment.In major appliances, Electrolux has the following market shares inthe different subregions:Australia: 40%Southeast Asia (including China): 1%The major Electrolux competitors in these regions include:• Southeast Asia & China: Haier (no. 1), Samsung (no. 2), LG Electronics (no. 3), Midea (no. 4), Whirlpool (no. 5), BSH (no. 6), Panasonic (no. 7)• Pacific: Samsung (no. 1), Fisher & Paykel (no. 2), Haier (no. 3), LGElectronics (no. 4), Panasonic (no. 5)5 | CASE FINDINGS—ELECTROLUXIn this section, the most important case findings are discussed in relation to the two research questions.5.1 | Glocalization strategy on the corporate level inrelation to key competitors (RQ1)We asked the 10 top managers (on a scale from 1 to 7) about theirgeneral opinion/perception about the degree of globalization (centralization) of Electrolux’s strategy from the Stockholm HQ to the different countries. The average result is shown in Figure 5.Based on the perception of the 10 Electrolux top managers, theresults clearly show that Samsung is the most globalized householdappliances company of the ones listed. Furthermore, Electrolux is theleast globalized company, which means it is a relative localized company that adapts to the local environment in a relatively high degree.Normally, we would expect that worldwide consolidation of thehousehold appliance industry would imply making use of “scaleeconomies” to force down unit costs, and consequently favor globalization. However, this has not been the primary driver of Electrolux’sacquisitions—instead, Electrolux has tried to buy up brands that areperceived as local and regional brands.The centralization in decision making of innovation by the twocompetitors, Samsung and BSH, was further explained by the CEO atElectrolux:Both Samsung and BSH have a high degree of centralized decision making in, for example, innovation.They do most of their innovation in their homes—South Korea and Germany, whereas we have innovation centers in around 15 places around the world.Our more decentralized approach partly origins fromall the acquisitions we have done over the years.CEO at ElectroluxContrary to a manufacturer like Haier, Electrolux starts to move“downstream” in the value chain, trying to “own” the relationship tothe consumers. This is further explained by the CEO:The challenge for Electrolux 10 years ago was tobring cost down by producing in low-cost countries.The time where everybody thought that you just hadto produce in China and then ship to the rest of theworld is over. The next challenge is to be close to thecustomer. The threat for a supplier like Electrolux isFIGURE 5 Globalization/Localization ofElectrolux compared to its keycompetitors. Source: Electrolux survey(average of 10 respondents) 470HOLLENSEN AND MØLLER that we just stay as a supplier in the value chainto the retailers instead of owning the interaction withthe consumer, which is the ultimate goal. Gradually,the push model is changing towards a pull model,where the consumers are actively searching for certain brands. Consequently, the next challenge will beabout how to create new revenue stream based onthe digital interaction.CEO at ElectroluxThis quote is in line with a recent interview with the CEO ofElectrolux in Financial Times where he said: “This is a €1,000 washingmachine that is able, using soft water, to wash a little black dress fiftytimes without ruining it. This is technology, but for us it is not abouttechnology or not. It’s about: does it solve something for the customer” (Milne, 2016, p. 16).The position of Haier in Figure 5 as a relative globalized (withcentral decision making) is in line with Rao-Nicholson and Khan(2017), who found that when Chinese state-owned and privateowned companies make cross-border mergers and acquisitions, theyare more likely to standardize their marketing strategies toward target foreign companies, as these Chinese MNCs are often restrictedfrom exercising the full breadth of their strategic decision makingbecause of political restrictions. In this way, the standardization strategy also facilitates the Chinese companies’ easier implementation oftheir home governments’ policies. It is expected that the same tendency will be found in other companies with similar Asian culturebackground, like Samsung (South Korea).One of Electrolux’s core competences lies in the cooking segment, where Electrolux is known as the main supplier of cookers forthe kitchen to Michelin-starred chefs, especially in Europe. This position has helped with pushing Electrolux’s induction and steam technology to millions of European homes. This is underlined by thestatement of the head of human resources, who explained:One of our focus areas is “appliances for cooking,”which perfectly fits to our core competence aboutbeing able to adapt to local needs, because “cooking”is very much about being confronted with diversifiedfood cultures and different ways of preparing food indifferent cultures.Head of Human Resources (HR) and OrganizationalDevelopment at ElectroluxAccording to Electrolux’s CEO, there is also a risk-minimizingaspect connected to choosing a glocalized strategy:If you are “global,” you have to make one big “bet.” Ifyou are more “local”—like Electrolux—you have tomake many small bets, each of them with less risk.This also explains the trade-off between high speed(big bet) and adaptation to many different local needs(many small bets)—and why it makes sense to be inthe middle, i.e., a “glocal” company.CEO at Electrolux5.2 | Glocalization strategy regarding value chainfunctions on the global versus regional level (RQ2)According to Porter (1985), we divided the value chain functions intoupstream (and support) and downstream functions. These questions(see the questionnaire in the appendix) reflect a more diversified “picture” of activities across the value chain of Electrolux. The resultingprofiles are illustrated in Figure 6.For both perspectives (blue and red profiles), the upstream functions are generally more centralized/standardized than for downstream functions. There are three exceptions to this generaltendency, which are generally regarded as more globalized/centralized both from the HQ to the four regions and from the regional HQto the countries in the region:• Market communication• Branding process (unique selling proposition)• Social mediaGenerally, we have observed an increasing “consumer insight”tendency at Electrolux, and it points in the direction of localized/decentralized consumer solutions, where, for example, the local foodculture is taken into consideration when designing new innovativesolutions. In order to keep production costs down, this would alsorequire a high degree of modularization in the production function,which is also reflected in Figure 6.Overall, this points in the direction that Electrolux follows a trueglocalization strategy, which is also underlined by the CEO:We have a global strategy at the back end—at theupstream part—of the value chain, but we localize the“content” at the front end—at the downstream part—towards the consumers, meaning that Electrolux is a“glocal” company. There are limits to how far we cango global at the front end because we need to beclose to our consumers. For example, when I amdoing marketing towards consumers in Vietnam, I amtelling about Vietnamese food and cooking style, sothe content and how we interact with the consumerhas to be local.CMO at ElectroluxThe CEO’s point about the more globalized strategy of the“upstream” part is generally supported by Figure 6.Example 1 also explains how a content of a global core technology can be communicated in different ways in different regions ofthe world.EXAMPLE: Globalize “core technology” and localizethe sales arguments = glocalizationA good example of how Electrolux works with a global core technology is the launch of their “concentrated wash” innovation inseveral of their washing machines, for example, AEG Ôkomix.Most washing machines today mix laundry, water, and detergenttogether, meaning that the detergent can take a long time to dissolve and get to work. With the concentrated wash system, the HOLLENSEN AND MØLLER471 In order to answer the last RQ2 in relation to the three-tier approachHQ-RHQ-SUB, we will have to compare the blue (from HQ to thefour regions) and the red (from the RHQ to the countries in theregion) profiles in Figure 6.We conclude that the centralization/standardization within theregions (from RHQ to the different SUB) is generally higher than fromthe HQ (in Stockholm) to the four different RHQs. However, generallythe blue and red downstream profiles (across regions vs. withinregions) are quite similar. The most striking difference is the evaluationof distribution and logistics, which seems to be much more centralizedfrom RHQ to SUB than from HQ to RHQ. This makes sense, as only afew companies provide global distribution and logistics, whereas thereare several distribution and logistics providers on the regional level.Consequently, it is easier to centralize these functions on a regionallevel. The other explanation for a higher centralization within regionscan be found in the following quote, which indicates that in times of“war” (which the household appliance industry always seems to be in),there is a tendency for the regions to take over the operational controlof the primary value chain functions and centralize to a high degree.We are a regional-driven company, which means weare globally organized in regions that own and drivethe business. The regions are responsible for theregional profit and loss and are responsible for strategy, implementation, execution, and the results. Thereare some global functions that define ways of workingand functional strategies, but the implementation “prioritization” is all done locally in the operational units.It is much like in the army … supply chain, HR, modularization, and intelligence are all global functions inpeacetime, but when we are “at war”—as we alwaysare—the regions are the operational lead. That is whythe centralization in the regions is higher, but acrossthe regions the centralization is lower.Head of Major Appliances EMEA at ElectroluxIn line with the traditional understanding of “marketing myopia”(Levitt, 1960), but supplemented with the new extended view (Smith,Drumwright, & Gentile, 2010), Electrolux’s chief marketing officer(CMO) points out that it is important to think outside the box and beinspired by other top-of-mind brands in the consumer home, also onthe differentiated regional level.The competitive household appliance arena and theconsumer expectations within it are moving so rapidlythat when I benchmark, I don’t do it against our traditional household appliances competitors, but moreFIGURE 6 Degree of globalization(centralization) of different Electroluxvalue chain functions. Source: Electroluxsurvey (average of 6 [blue] + 4 [red]respondents), based on questionnaire inappendix [Color figure can be viewed atwileyonlinelibrary.com]detergent is first added to water to make an instant, concentratedwash mix. The washing machine system then delivers this mixdirectly into the heart of your laundry, where it begins to workimmediately. This core technology (resulting in a more effectiveand concentrated wash) was launched worldwide in 2014, but thesales arguments regarding the consumer benefits have been different in different parts of the world. The consumer can chooseto utilize different benefits coming out of this innovation:In United States the key argument has been the ability to washfaster (everything should be fast in the United States).In Europe the sales argument has mainly been that the core technology has made it possible to save up to 50% in energy (electricity) compared to an ordinary wash.Source: Based on http://newsroom.electrolux.com/uk/2014/05/21/aeg-introduces-its-most-efficient-high-performance-washingmachine-ever-aeg-okomix/ 472HOLLENSEN AND MØLLER against other categories of brands, where we look atsome specific top-of-mind brands, in beauty brands,sport brands, and food brands—all brands that theconsumers have in their homes. With these brandswe look—especially on the regional level—at, whatkind of value and experience the consumer is lookingfor, and then we try to transform it into our ownindustry and make sure that we are delivering thatkind of expected experience in the consumer home.CMO at ElectroluxBefore ending up with only positive statements about the decentralized approach to decision making in MNCs, the head of humanresources and organizational development questions the effectiveness of the “consensus” part of the Swedish negotiation culture,which is also discussed by Meyer (2015).We have a strong corporate culture with a strong individual commitment and team spirit among employees.We share a deep respect for decentralized decisionmaking, where employees take on responsibilities. Butwe also are inspired by the Swedish consensus culture,which sometimes results in blurred report lines and aslower speed of decision making because too manyhave to be involved and asked. We could have used amore German, American, or South Korean leadershipphilosophy, but the consensus philosophy is part of ourdeep-rooted culture and has the advantage that we getall on board, and we all work in the same direction. Infact, we can work with high speed, as soon as we haveanalyzed the situation and agreed on a certain direction.Head of Human Resources and OrganizationalDevelopment at ElectroluxOverall, our research results indicate that the initial Electroluxresearch model is being transformed into the model shown in Figure 7.Figure 7 shows that the Electrolux managers’ perception of thelevel of centralization within the regions (from RHQ to the differentcountries) is generally much higher, than from the headquarters inStockholm and out to the different regions.The reason for the centralization/decentralization tendency inFigure 7 can be found in the perception that it is generally easier andfaster to centralize key functions like distribution, logistics, and pricing “within a region” than globally “across regions.”The arrows between the different regions indicate the need forincreasing transfer of “best practice” across the regions. What hasFIGURE 7 Modified Electrolux decision-making model based on research results. Source: Based on interviews and analysis at Electrolux [Colorfigure can be viewed at wileyonlinelibrary.com] HOLLENSEN AND MØLLER473 been successful in one region (e.g., a certain value chain function) canmaybe be transferred and used successfully also in other regions. Thiswould imply more cross-regional contacts and meetings.6 | CONCLUSION AND IMPLICATIONSA strong local/regional brand culture (with decentralized use ofdownstream functions) combined with an intelligent use of modularization (with centralized use of upstream functions) is transformingElectrolux into what can be defined as a true glocal company.Among the market leaders in the global household appliancesindustry, our results for the first research question (RQ1) clearly showthat Samsung is the most globalized company of the ones listed. Furthermore, Electrolux is the least globalized company, which means itis a more regionalized company that adapts to the local and especiallythe regional environment to a relatively high degree. This can beexplained through the many acquisitions (of different brands) thatElectrolux has undertaken over time, which has formed “local kingdoms” with relatively strong decentralized power.Regarding the second research question (RQ2), the upstreamfunctions of the value chain are generally more centralized/standardized than for downstream functions. However, there are three exceptions to this general trend: market communication, branding, andsocial media.The centralization/standardization within the regions (from RHQto the different countries) is generally higher than from the HQ inStockholm to the different RHQs. The two downstream profiles(across regions vs. within regions) are quite similar. The most strikingdifference is the evaluation of distribution and logistics, which seemsto be more centralized within a region than across regions.We conclude that Electrolux has chosen a true glocalization strategy. Electrolux is the company in the worldwide household appliancesindustry with the widest geographic reach, also product-wise. Still, Electrolux manages to cope with regionalization in a clear and effectiveway, based on its dedication to deep consumer insight. Electrolux is balancing between globalization and localization in the different key valuechain functions searching to take the best from the two.Through a strong corporate vision, foundation, and values, Electrolux has been able to communicate these to all employees, so theyare getting common understanding and “all on board “around theglobe.6.1 | Implications of analysis for ElectroluxEach company has to find its own balance between globalization andlocalization. For Electrolux, with its context, background, and history,the best position is in the middle—in the glocalization area, with atendency toward localization.As indicated by Figure 7, there is a general need to transfer bestpractice and new marketing ideas (e.g., regarding use of social media)across the four Electrolux regions. However, there still remain sometough future challenges for a glocalization company like Electrolux,which were clearly highlighted in the interviews with its top managers:• The reporting lines through the organization are often blurredand too slow because of the Swedish consensus culture (Meyer,2015), which means that everybody has to agree/be involved.More speed in worldwide execution is necessary in today’s globalcompetition.• Local kingdoms (regional/local companies, sales units and factories)acquired over time by Electrolux) are sometimes getting too muchpower, which also adds to the blurred reporting lines in the organization, and which significantly reduces top management’s ability toensure efficient and aligned execution of the decided strategy forElectrolux. Thus, some vital areas of the strategy remain only “PowerPoint proclamations” and fail to get really embedded in the realmind-set and behavior of the organization.• The local adaptation strategy may undermine traditional cost efficiencies and traditional HQ governance. Electrolux uses modularization in order to compensate for this possible threat by combiningeconomies of scale in development and component sourcing withlocal adaptations of products based on common platforms. However, only a clear and strong centralized global governance fromthe Stockholm HQ central key functions can ensure that the necessary scale effects and cost efficiencies are implemented in theworldwide product platforms and organizational setup.6.2 | General managerial implicationsIn a managerial marketing context, it is most important to acknowledge that a company strategy strives to accomplish success in themarketplace. Markets are apparently similar but often have importantregional differences. A firm’s marketing strategy is doomed to fail if itinstinctively indicates that a formula that works in one country mustalso work in another. The key issue to success in the marketplace is athorough understanding of why consumers want the company’s product in each market. This may vary across markets. Success will beachieved when a thorough understanding of the consumers needs,wants, and requirements is accomplished. This will not be achievedthrough a global marketing approach but requires a thorough balanceand harmony between operative, tactical, and strategic activities on aregional level.The current use of the “glocalized”: concept is often ambiguousand misleading. The use of the concept is not black or white butrather mixed up or gray. There is always a need for further explanation of the term global strategy to comprehend in what sense it isused. Therefore, it is appropriate to abandon the concept of globalstrategy and move beyond to apply the concept of glocal strategy.The global market differs in terms of demand characteristics, thenature of competition, and the development of the market infrastructure. Factors such as customer interests, taste preference, purchasingpatterns, and, in particular, price sensitivity differ substantially amongregions and countries. Also, the nature, importance, and tactics ofregional and local competitors and the degree of sophistication anddevelopment of the market infrastructure vary considerably. As aresult, companies must adapt and develop new and different strategies tailored to a region’s and/or country’s unique characteristics.Consequently, the company’s focus needs to shift away from globalintegration, coordination of strategy, and issues such as global 474HOLLENSEN AND MØLLER branding to development of divergent strategies geared to differentcustomer needs, competitors, and market conditions in different geographic locations. In turn, this requires a more regional, rather than aglobalized, focus and greater reliance on development regional skills,capabilities, and knowledge.6.3 | Suggestions for further researchAs mentioned, a limitation of our study is that the single-case-studyapproach restricts the degree to which we can generalize based onour results. Therefore, a survey based on a larger sample of MNCswould help with generalizing the results. In this context, especiallythe focus on standardization (centralization)/adaptation (decentralization) of the different value chain functions might generate more indepth knowledge of the glocalization potential of the differentupstream and downstream activities.This article grew out of the standardization/adaptation debate, whichmaintains a view on the value chain that is largely company-centric—inthis case, seen from the Electrolux perspective. Akaka, Vargo, andLusch (2013) argue that the S-D Logic service ecosystem approachcan help with a unified framework that can move focus fromvalue as created by the company to value as collaboratively created among multiple stakeholders in the industry value chain. Inthis case, by considering both the positioning of Electrolux andthe views of their customers (and other stakeholders) acrosscountries and cultures, a richer and a more robust framework forstudying glocalization can be established. 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The fundamentals of standardizing global marketing strategy. International Marketing Review, 24(1),46–63.Yin, R. K. (2003). Case study research: Design and methods (3rd ed.). Thousand Oaks, CA: Sage.AUTHOR’S BIOGRAPHIESSvend Hollensen ([email protected]) is an associate professorof international marketing at the University of Southern Denmark(Sønderborg). His research interests are in relationship marketing,social media marketing, globalization, and internationalization ofcompanies. He has published articles in well-recognized international journals such as California Management Review. Furthermore, he is the author of globally published textbooks, forexample, Marketing Management, 3rd ed. (Pearson Education,2014) and Global Marketing, 7th ed. (Pearson Education, 2017),which has also been translated into Chinese and Russian. Specialeditions for India and Spanish-speaking areas (Spain and LatinAmerica) have also been developed. Through his company,HOLLENSEN AND MØLLER 475Hollensen ApS (CVR 25548299), Svend has also worked as abusiness consultant for several multinational companies, as wellas global organizations like the World Bank.Erik Møller is a former general manager for Electrolux MajorAppliances in the Nordic Region, having worked within ElectroluxMajor Appliances Europe in various senior management positionsand locations in Europe for more than 25 years. In 2015, Erikmoved back to his origin of birth in the south of Denmark andjoined the Danish health care company Abena as ManagingDirector for Abena International A/S.How to cite this article: Hollensen S, Møller E. Is “glocalization” still the golden way for Electrolux? Is there more to bedone? Thunderbird Int. Bus. Rev. 2018;60:463–476. https://doi.org/10.1002/tie.21923APPENDIX: QUESTIONNAIREPlease indicate your perception about the centralization (standardization) of Electrolux’s strategy across national borders/clusters in your function (from HQ)/your region (from RHQ).Degree of perceived centralization (standardization)High degree(Standardization)7 6 5Medium4 3 2Low(Adaptation)1R&D/Product development• Basic needs (cooking etc.)• Features (pyro, steam etc.)Design• Aesthetics• FeaturesModularization• Modularity and commonality in subsystems Production• Production technology (same production technology across border and factories?)• Suppliers (to which degree is the supplier base thesame across production sites)Product line (to which degree is the breadth of the product linethe same across borders?)Talent development (to which degree is the HR policy the sameacross borders?) Marketing• Distribution channels—same retailers across borders? • Online distribution directly to consumers—is a standardizedsystem used across borders?• Logistics—are the same logistics providers being usedacross the region?• Pricing—to what degree are prices to retailers standardized• Pricing—to what degree are online prices to consumers standardized• Market communication tools in general• Core brand message—USP• Use of social media (YouTube, Facebook, LinkedIn, Twitter,Instagram, etc.)• Sales promotion at retailers• Timing of marketing campaigns476 HOLLENSEN AND MØLLER


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