Grupo Elektra Company (Essay Sample)

GLUPO ELEKTRA
Background: Elektra was founded in 1950 by Hugo Rocha, first Mexican manufacture of TV sets. It offers a wide range of consumer finance and financial products and banking. Elektra sold its manufacturing products directly from door to door until 1954 when the first store was inaugurated. It has changed from offering hard goods and credit then international money transfer, sales policy to cash only and change in leadership in 1987 led the turning point of the company because there was an introduction of Credifacil and Dinero en Minutos in partenership with Western Union, domestic wire transfer, extended warranty program, photo products and processing, saving accounts, acquisition of Hecali and increase in number of stores. The company has expanded to countries like El Salvador, Guatemala, Honduras, Peru and Dominican Republic
Competition analysis: Companies strive to increase sales volume by utilizing the four components of the marketing mix, referred to as the 4p’s: product, place, promotion and place. Competition from La Curacao, Dutch owned company in Latin America which had started operating Southeast of Mexico. This company was selling the same product as Elektra and doing their sales using credit just like Elektra. Elektra set up strategy to counter this competition by sending one of their staff to Latin America to benchmark the competition , establish partnership and to set up potential location for building the Elektra with an aim of expanding it internationally and to compete better with La Curacao. They created Bodega De Remates chain to retail, refurbished and reprocessed goods and discontinued models which targeted low income customers of classes E of Mexican population hence enabled it to compete with the regional players this led to more attraction of the customers than their rival companies. The partnership with the Azteca TV also helped them in their advertising efforts and this TV did not advertise for the Elektra rival companies.
Industry drivers; The Company has been able to grow revenues from $7.9 B MXN to $10.6B MXN. It has been able to reduce the percentage of the sales devoted to selling, general and administrative costs from 436.97% to 327.17% and his has led to the bottom line growth from $827.3M MXN to $ 7.6B MXN. Salinas y Rocha stores, a furniture and home appliances retail chain branded with a very strong national recognition, and this targeted higher income customers of classes C+ and B. They had US$6 billion clothing market and were considered to suit the lifestyle of the majority of the Mexican people. The strong relationship formed between them and the local and government leaders also enable it to expand it stores thus attracting more customers.
Key success factors: The Company formed a partnership with Xoom Corporation which is a leading internet based money transfer. Elektra can capture more market share of the first growing online and mobile money transfer to Mexico from US. Its growth has been boosted by Azteca financial services companies. Most of their customers are low income earners and this has boosted its operation. Creation of channel to retail refurbished and repossessed goods and discontinued models which targeted low-income customers of class E of the Mexican population. They also had professional team which consists of talented and competent professional managers that led to the improvement of performance.
The SWOT analysis: The strength of the company comes from the professional team which consists of talented and competent professional managers. The company also has a unique internal credit rating system which is both simple and sophisticated and can enable the portfolio managers visiting the customers to build a picture of the cash flow of the household and trying to identify the sources of income and expenses of the customer. They can also estimate the customers’ income without having their for...