dependence on their president, who accidentally died in an airplane crash. Zanussi was a very centralized firm. To this situation you have to add the bad diversification program that the company was implementing from a while. This resulted to be costly and to add to the company many unprofitable businesses, from televisions to coffee makers. 2) As Leif Johansson, would you have recommended the Zanussi acquisition in 1983?Yes. Zanussi went into many unrelated businesses and neglected its core business. As a result their diversified businesses incurred heavy losses. In 1982 the company had debts amounting to over Lit 1300 billion and was losing over Lit. 100 billion a year. Although its core businesses were profitable the losses of the other business units were simply too high. Another major concern was the unprofitable Spanish appliance company IBELSA, which was owned by Zanussi. The Italian company had received subsidies from the Spanish government and in case of a breach of their commitment to try to boost the Spanish industry, they would have incurred in heavy fines. Electrolux was also facing another problem with Zanussi. In fact, Zanussi's previous managing directors had sold equipment to a German company and then leased them back. Such transaction was illegal under Italian tax law. Electrolux wanted to buy shares in order to rescue Zanussi. Electrolux was able to integrate the new acquisition since it was a supplier as well as a distributor. Certainly, the acquisition of Zanussi gave Electrolux the opportunity to take control of the supplier and the distribution channel. Also, Electrolux could use Zanussi's products to expand its product lines as well as expand geographically. In fact, Electrolux had a large market share in Scandinavia where Zanussi was almost absent, while Zanussi had a large market share in Italy and Spain, where Electrolux was not very present. Zanussi was also strong in France. Finally, I have to reinstate my ...
