Electrolux, the worldâs largest manufacturer or electrical household appliances, once pioneered the marketing of vacuum cleaners. However, not all products bearing the Electrolux name have always been controlled by the Swedish firm. For example, Electrolux vacuum cleaners were independently sold and manufactured in the United States from the 1960s until 1987. The Swedish firm also manufactures Eureka vacuum cleaners.
Electrolux pursued its early international expansion largely to gain economies of scale through additional sales. The Swedish market was too small to absorb fixed costs as much as the home markets for competitive firms from larger ...view middle of the document...
Electrolux acquired vacuum-cleaner producers in the US and in France; to gain captive sales for vacuum cleaners, the company bought commercial-cleaning service firms in Sweden and the US. Electrolux also bought a French kitchen-equipment producer, Arthur Martin, along with a Swiss home-appliance firm, Therma, and a US cooking-equipment manufacturer, Tappan.
Except for the Facit purchase, these acquisitions all involved firms with complementary lines that would enabled the new parent to gain certain scale economies. However, not all of the acquired firmsâ products were related, and Electrolux sought to sell off unrelated business. In 1978, for example, Electrolux bought a diverse Swedish firm, Husqvarna., because of its kitchen-equipment lines. Electrolux was able to sell Husqvarnaâs motorcycle line but could not get a good price for the chain-saw facilities. Reconciled to being in the chain-saw business, Electrolux then acquired chain saw manufacturers in Canada and Norway thus becoming one of the worldâs largest chain-saw producers. The firm made approximately 50 acquisitions during the 1970s.
In 1980, Electrolux announced a takeover distinguished from those of the 1970s. It offered $175 million, the biggest Electrolux acquisition to date, for Granges, Swedenâs leading metal producer and fabricator. Granges was itself a multinational firm (1979 sales of $1.2 billion) with about 50% of its sales outside of Sweden. The managing directors of the two firms indicated that the major advantage of the takeover would be the integration of Grangeâs aluminum, copper, plastics and other materials into Electroluxâs appliance production. Many analysts felt that the timing of Electroluxâs bid was based on indications that Beijerinvest, a large Swedish conglomerate, wished to acquire a nonferrous-metals mining company. Other observers thought that Electrolux would have been better off to continue international horizontal expansion, as it had in the 1970s.
Since the Granges takeover, Electrolux has resumed its acquisition of appliance firms. It bought Italyâs Zanussi to become Europeâs top appliance maker with 23% of that market. In 1986 it acquired White Consolidated Industries, the US manufacturer of such appliance brands as Frigidaire, White-Westinghouse, Kelvinator,...