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Case 3 Arcelik

Arcelik faces both opportunities and challenges from expanding into emerging markets. Opportunities include access to growing consumer demand and lower production costs. However, emerging markets also present political and economic instability, weak intellectual property protection, and risks in partner selection. To mitigate risks, Arcelik should carefully evaluate market potential using indicators like per-capita income and middle class size. It can also demonstrate corporate social responsibility by developing affordable products, offering installment plans, and prioritizing local suppliers to support economic development.

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Nidhi Mittal
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1K views3 pages

Case 3 Arcelik

Arcelik faces both opportunities and challenges from expanding into emerging markets. Opportunities include access to growing consumer demand and lower production costs. However, emerging markets also present political and economic instability, weak intellectual property protection, and risks in partner selection. To mitigate risks, Arcelik should carefully evaluate market potential using indicators like per-capita income and middle class size. It can also demonstrate corporate social responsibility by developing affordable products, offering installment plans, and prioritizing local suppliers to support economic development.

Uploaded by

Nidhi Mittal
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
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Question1: Arcelik has been very active in Western Europe.

Do you

expect Arcelik’s prospects to be better in emerging market and

developing economies than in advanced economies? In what ways are the

emerging market and developing economies attractive to Arcelik? In

general terms, how can the firm reap benefits from such markets in order

to maximize company performance?

Answer 1: Firm can reap benefits from emerging markets and developing

economies because of the following reasons:

 Emerging markets represent promising export markets for products

and services.

 They are ideal bases for locating manufacturing activities because

of low labour costs.

 Emerging markets are popular destinations for global sourcing-

procurement of products and services from foreign locations.

 The growing middle class in these countries implies substantial

demand for a variety of consumer products.

Arcelik should adapt the strategies and tactics to suit unique conditions.

Firm can reap benefits from such markets by partnering with family

conglomerates.
Question2: Arcelik management is keen on entering some emerging

market or developing economies. What types of risks and challenges does

Arcelik likely face in doing business in emerging markets? What should

management do to identify the most promising markets? How should the

firm adapt its product?

Answer 2: Emerging markets exhibit certain risks that affect their

viability for international business. These risks are as follows.

 Political Instability: The absence of reliable or consistent

governance from recognized government authorities adds to

business costs, increases risks, and reduces manager’s ability to

forecast business conditions.

 Weak Intellectual Property Protection: In many Emerging markets,

laws that safeguard intellectual property rights may not be

enforced, or the judicial process may be painfully slow.

 Partner availability and Qualifications: Arcelik needs to seek

alliances with local companies in countries characterized by

inadequate legal and political frameworks. Through local partners,

foreign firms can access local market knowledge, establish supplier

and distributor networks and develop key government contacts.


Special considerations must be taken into account to estimate the true

demand in emerging markets. Managers can follow one of three

approaches to more realistically assess emerging market potential. They

can rely upon per-capita income, considered the size and growth rate of

the middle class, and build a more comprehensive set of indicators such

as the emerging market potential index.

Question3: Originating from an emerging market, Arcelik may be better

poised to cater to the economic development needs of emerging market

and developing economies. In what ways can Arcelik skilfully fulfil its

corporate social responsibilities in such countries? Suggest specific

approaches that may include: developing simpler, less expensive

appliances, arranging for multiple instalment purchases, encouraging the

f local suppliers and designing products that conserve water and energy.

Answer 3: Arcelik can display good corporate social responsibility by

engaging in activities that facilitate economic development in emerging

market and developing economies. It can serve low income countries

with inexpensive, specifically- designed products. To lead in global

household appliances, management needs to improve operational

efficiency to levels that match or exceed major competitors and increase

investment in high growth markets.

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