GORENJE D.D: EVOLUTION OR REVOLUTION

Gorenje D.D: Evolution or revolution

GORENJE D.D: EVOLUTION OR REVOLUTION

Types of Changes in Gorenje

The company Gorenje faced numerous changes in its business environment. These changes can be categorised as changes in internal environment and external environment.

Changes in Internal Environment

The major change in the internal environment was the change in leadership. The company's former CEO retired and the new CEO took over the company. As the leadership style was quite different, from the participative and delegator style to authoritarian style. This instilled a change in culture of the company as people were very accustomed to the old leadership style. They appreciated the openness of the former CEO. Stanic used to frequently visit the production line for commuting objectives and create loyalty of lower level employees. Another major change was the change in loyalty of the employees. Previously employees made numerous sacrifices during the war time and even worked for reduced pay. This has changed as the younger workforce requires more compensation and growth opportunities. The joining of Slovenia to EU opened more opportunities for the work force and competitors in other countries were looking for talented and experienced workforce. The company faced risk of losing its intellectual capital. The company operated line production methods which were inefficient and uncompetitive as they require larger inventories level and had low service level. The attention of the management was divided on the allocation of resources due to unrelated diversification.

Changes in External Environment

As the country joined EU, the competitive market for the company transformed from the local to entire EU. Not only the company have to compete in the sales, but also meet the challenges of regulations, labour market, and face larger number of competitors. The company also faced challenges in catering its previously profitable market of Croatia as it was not a part of EU. the company's target market was also young people who had more spending power and were willing to spend on products which offered innovation and change. The other main issues for Gorenje after Stanic were brand positioning. However, Gorenje increased sales of the brand product, but the brand of Gorenje was unclear in market. The company reaped advantages from short term sales, but in the long term it faced difficulties, which are irregular in Central and Eastern Europe (CEE). It is noted that Gorenje faced difficulty in acquiring market share in front of competitors having stronger brand names such as Bosh Siemens Hausgeraete A.G. (BSH) and Electrolux. In addition to this, price to value of the product is considered valuable in Croatia and Slovenia, but in Hungary and Romania it is considered as overpriced. Therefore, it can be said that the first issue with the company is pricing of the product. Gorenje generates 5% of revenue from its local markets and 95% from export, but of Europe's exports Gorenje holds only 4% of total market, creating problems in developing brand name of Gorenje (Isabella et. al, n.d). The other issue Gorenje was facing is two views of ...