Merloni Group

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Merloni Group
Merloni Group (1930) is a diversified, multinational appliance manufacturer headquartered at Fabriano in Italy. Its technical and production oriented strategy with outstanding growth and diversification record helped it to become fourth largest manufacturer in Italy in 1970’s. Due to death of its founder Aristide Merloni in 1970 and success of product diversification in 1950’s and 1960’s, they changed their organizational structure from functional to product division. But due to economy slow down in Europe and resulted oil crisis, appliance market has experienced slow demand growth which led to focus on international markets by domestic players. To fill the capacity and lower their costs, Merloni expanded into other markets with subsidiaries in 6 European Nations.
Ariston France is one of the sales subsidiary selling low and medium priced appliances of parent line in France. In spite of increased sales from high prioritised market France, AF experienced huge losses which lead to conflict between Headquarters and subsidiary due to difference in opinion of Organizational structure and Strategic mission linking parent and subsidiary company.
International Strategy of Merloni:
The international strategy of Merloni's appliance division was to sell all of its product line in each national market through its subsidiaries. Due to slow growth rate and oil crisis in Europe, it began expanding its operations in other markets from 1970. Due to high competitive pressure, Merloni adopted European strategy of building more volume in low price segment and high quality in medium priced segment and overseas strategy as it provides high volume to leverage plant operations. To establish its presence in European market by selling all its product lines through subsidiaries, subsidiary operations were further integrated to overall operation leading to…...

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