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Arcelik

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Submitted By Paco23
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1. What are the problems and or causations this firm and management team are facing at the time of the case?

The problem that the company has at this moment is to decide whether to tackle the international market or concentrate in the Turkish market. Turkey in that specific moment was in an unstable economic situation with high inflation (80%) and political uncertainties. The most important issue that Koc is that Turkey was in the process of joining the European Community what implied a progressive reduction to zero tariffs that is concluded in the time of the case. Before this reduction, tariffs between 40-55% where basically protecting the market from foreign competitors. After the elimination of tariffs, is expected that imports of appliances arrive from Western Europe with more competitive prices than ever. The case states that the tariff cuts to zero has rocketed imports, and is expected a sustainable penetration rate of 5% of refrigerators, 10% for washing machines and 15% for dishwashers.

Other important issue that the company is facing is the arrival of new competitors especially from Bosch-Siemens which recently bought Arceliks main competitor, Peg Profilo, which enjoyed a substantial market share. This is a situation that arises from the opening of the Turkish market to the rest of the EC.

From inside the company, it is stated by the end of the case that the “Capacity is tight” and the demand for appliances in Turkey might commit almost all of the capacity. This represents a constraint for the company’s growth especially in its refrigerator line.

2. From these problems, identify and prioritize a list of key options and decisions to be made for the company at the time of the case.

Arcelik has to take proactive measures to manage the continuity of the division in the long term. At this moment the company needs to determine wich is the

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