It's about international business.. Arcelik is one of MNC that succeed to defeta any competitor in Europe.

1. Muhammad Setiawan Kusmulyono [email_address] I INTERNAT ONAL BUS NESS

2. International Aspirations of an Emerging Market Firm

3. A G E N D A Company Profile Case Background Theoretical Concept Analysis Case Question Discussion Theoretical Concept Analysis Q & A Session

4. T U R K E Y P R O F I L E www.lexicorient.com Republic of Turkey

5. T U R K E Y P R O F I L E Republic of Turkey G D P 2007 www.indexmundi.com hazelnut , fig , apricot , cherry , quince and pomegranate textiles and clothing tourism and banking TURKEY’S BEST PERFORMANCE COMPANY Electronics Arcelik, Vestel (Europe Top 3) Construction Enka, Tekfen, Ucgen Insaat (Top International Constructor) Automotive Fiat (Tofas), Renault (Oyak), Hyundai (Ossan) (Top 6 in Europe) TURKISH NEW LIRA AGRICULTURE 8.9 % INDUSTRY 30.8 % SERVICES 59.3 %

6. C A S E B A C K G R O U N D ADVANCED ECONOMIES DEVELOPING ECONOMIES EMERGING MARKETS Post-industrial countries characterized by high per-capita income, highly competitive industries, and well-developed commercial infrastructure. US Western Europe Japan Canada Australia New Zealand Low-income countries that have not yet industrialized. They have low buying power, limited appeal to foreign firms, and limited participation in international business. Africa Former developing countries that develop their economies more dynamics. EM is transforming into market-driven by liberalizing trade and investment. More participation in international business and regional economic integration. Asia and Latin America International Business; Strategy, Management & New Realities. p. 265 CONCEPTS

7. C A S E B A C K G R O U N D www.imf.org TURKEY;s GDP is EMERGING MARKETS

8. T U R K E Y P R O F I L E Lift Iron CLIP 1

9. C O M P A N Y P R O F I L E Origins Establishment Ownership Business Line Product Market Area Subsidiaries 1955 KOC Group [ Family Business Conglomerate ] Appliance Manufacturer [ White Goods Business ] > 100 products AC, Dishwasher, Washing Machines, Cooking Appliances, and Refrigerator Brands Beko, Altus, and Arcelik Turkey, Europe (UK, Italy, Czech, Spain, Germany, Romania, Hungary) Blomberg, Grundig, Elektra Bregenz, Tirolia, Leisure, Flavel, and Arctic

10. C O M P A N Y S U B S I D I A R I E S B R A N D S

11. C O M P A N Y S U B S I D I A R I E S P R O D U C T S

13. C A S E B A C K G R O U N D Competition Operations Consumer's

15. I N D U S T R I A L P R O F I L E Competition B S H Electrolux G E Haier Merloni National Whirlpool The COMPETITOR : TODAY, Merger & Acquisition is the strategy to be Worldwide It caused: only 5 companies control >70% market in Europe (from 400 companies) ARCELIK : Acquired more than 7 companies in EUROPE Dishwasher Refrigerators and Vacuum Cleaners China (Low Price) High Technology Involvement Home Laundry National

16. I N D U S T R I A L P R O F I L E Standardization the material, parts, and components Operations TECHNIQUES 1 Automated manufacturing process 2 Arcelik is categorized as HIGH TECHNICAL COMPLEXITY firms. It is operated in fully automated machine and programmed in advance. Joan Woodward; Organizational Design and Dynamics; p. 241 Build manufacturing plant outside original state 3 Arcelik : Build plant in Russia and Western Europe. Whirlpool : Build plant in China CONCEPTS

17. I N D U S T R I A L P R O F I L E Home appliances are commodities Consumer's PROFILE Product life-span is 10 – 15 years  the lifecycle is slow Value lower prices  create lower profit margin In advance economies country, market are saturated Different market, different country, different culture Appliance manufacture & world market share reporter

18. I N D U S T R I A L P R O F I L E Consumer's PROFILE Different market, different country, different culture in INDIA : Low Price in CHINA + LATIN AMERICA : Ample Features but Low Spending Power in EUROPE : Strict Environmental Rules EFFECT to the BUSINESS Difficult to suit the local market Difficult to charge average price in every country “ Hard Factors”  tooling, factory layout, procurement, and design do not provide long-term competitive edge R I S K

19. I N D U S T R I A L P R O F I L E Consumer's PROFILE CONCEPTS

20. I N D U S T R I A L P R O F I L E Grand Strategy most companies Emphasize in Dynamic “S O F T” Factors innovation in INFORMATION TECHNOLOGY Merger and Acquisition Find Global Opportunities target the ASIA-PACIFIC & LATIN market Comparative Advantage find LOW-COST LABOR and TAX-FRIENDLY Benefited from Regional Economic Integration Erin 1 CLIP 2

21. A R C E L I K International Aspirations To Become a Global Player SUCCESS FACTORS Produce product in lower-income countries 1 Modernize the operations and Double the capacity 2 Establish Distribution Centers throughout Europe 3 Cooperated with IT Companies to build World IT System 4 THREATS Arcelik’s brands are largely unknown outside Europe 1

23. A R C E L I K’s success factors Establish Distribution Centers throughout Europe 3 1.700 unparalleled distribution network (Beko) and 1.700 non-exclusively agents 530 authorized service shops Cooperated with IT Companies to build World IT System 4 CISCO builds Virtual Networked Organization Online Establish after-sales service network International Aspirations To Become a Global Player COMPETITIVE ADVANTAGE CONCEPTS

24. A R C E L I K’s success factors COMPARATIVE ADVANTAGE Concept that helps answer the question of all nations can gain and sustain national economic superiority COMPETITIVE ADVANTAGE Concept that helps explain how individual firms can gain and sustain distinctive competence vis-à-vis competitors CONCEPTS

25. A R C E L I K THREATS Arcelik’s brands are largely unknown outside Europe 1 Brand becomes barrier to entry and threats for short-term success International Aspirations To Become a Global Player The Strategy Merger and Acquisition Global Distribution Network - Tailor the meet customer needs in respective country

26. A R C E L I K the F U T U R E To Sustain Becoming a Global Player To sustain continuous growth To become a leading global household company G O A L S Strategy Improve operational efficiency Increase investment in high-growth markets Focus in emerging market [Eastern Europe, Asia, and LA] Lowering operating manufacturing cost Leveraging low-cost manufacturing platforms and IT Produce product that appeal to foreign markets

27. CASE QUESTION Case Question Orbital CLIP 3

28. CASE QUESTION Arcelik has been very active in Western Europe, Do you expect Arcelik’s prospect to be better in EM & DE than Advanced Economies ? 1 - In what ways, are EM and DE attractive to Arcelik? - How can firm reap benefits from such market in order to maximize performance? -

29. CASE QUESTION (number 1) Do you expect Arcelik’s prospect to be better in EM & DE than Advanced Economies ? - Prospect Arcelik in emerging market and developing market than advanced market DIMENSION Advanced Market Emerging Market Developing Market Population (% of the word) 14 62 24 Approximate average per capita income (US dollars; PPP basis) 33.750 13.250 6.450 Trade volume High Low High Education level High Moderate Low Trade barriers Minimal Rapidly liberalizing Moderate to high Industry Highly developed Rapidly improving Poor Inward FDI High Moderate to high Low Economic or political system Capitalist Rapidly transitioning to capitalism Authoritarian, socialist, or communist Country risk Low Variable Moderate to high

32. CASE QUESTION Arcelik is keen on entering EM and DE, What type of risk that they challenge in EM? 2 - What management do to identify the most promising market? - How should firm adapt the product? -

36. CASE QUESTION (number 2) - How should firm adapt the product? Merge and acquisition with other company in emerging market Collaboration technology, knowledge (product and market), share distribution channels, etc. Produce potential product base on customer wants Purchasing power in emerging market is relative low

41. REFERENCES REFERENCES Cavusgil, et.al. International Business Gardner, et.al. Organization Design and Dynamics www.lexicorient.com www.imf.org www.indexmundi.com www.arcelik.com www.turkivz.com

42. closing Thank you