One of the most important industries inTurkey is white goods sector because Turkey has become the world’s 2nd largestwhite goods manufacturer and the largest white goods manufacturer in Europe.
The first production was carried out in 1955 based on the assembly industry TheTurkish white goods sector is nowadays developed technology, innovativestructure, which provides income, export revenue and employment to Turkey isamong the locomotive sectors of the economy. According to ?? Bank report aboutTurkey white goods market, in 2015 compared to the previous year, theproduction of white goods in Turkey increased by %8.7 and it was 24.6 million products.75% of the products that produced in the sector is exported to about 150countries.
In 2015, totally 24.563.133 white goods were produced. Approximately 15,000 dealers and 3,500authorized service companies operate in the sector and there are 500subsidiaries / suppliers in the sector.
There are many manufacturer firms inwhite goods industry and they differentiate designs of similar products whenproducing. Therefore, this industry is in monopolistic competition. Monopolistic competition implies that there are nobarriers to entry seemingly, however there might exist unseen barriers createdby market leaders having huge power over the industry which is brought byowning very high percentages of market share. Therefore, they use these barriersto keep weaker firms out of the market.
Although there are many producers ofwhite goods in Turkey, the market is dominated by a few company. Koç, BSH andZorlu Groups hold market. Koç Group’s subsidiaries are Arçelik, Beko, Grundig,Flavel, Altus.
BSH Groups’ are Bosch, Siemens, Profilo, Gaggenau and ZorluGroups’ are Vestel, Vestfrost, Regal, Finlux, Seg, Nexon, Sharp. In addition,with over %50 share Arçelik owns the leadership of the market of white goodsfollowed by Bosch and Siemens who have approximately 24-25% and Vestel withabout 15-16% Clearly, Arçelik 7.470 sold millionproducts, BSH Group sold 5.489.041 products and Zorlu Group sold 3.
037 millionproducts in Turkey in 2016. In any kinds of market, short-rundiminishing returns cause marginal costs to rise. Diminishing returns happen inthe short run when production factor is fixed (e.g. capital). It is inevitablethat there will be a point where the productivity will decrease If the variablefactor (e.g.
labor) of production keeps on being increased marginal cost. Sinceit is a main necessity in life and people don’t have a choice whether or notbuying them, white goods industry buyers are almost anyone who owns a house whichmeans that there are many buyers engaging in the white goods industry. White goods market continues with verysimilar substitutes. The companies like Arçelik, Bosh, Siemens, Vestel, LG,Samsung have affective way to differentiate their products. Therefore, thesecompanies have invested heavily in R department. Also, Arçelik wasawarded as ‘R&D leadership’ and LG was awarded as ‘Most innovative’ andVestel was winner of ‘Red Dot Awards 2016’. The companies that in white goodsmarket aim to maximize their profit in the short run and long run.
Also,Vestel, Arçelik, Bosh, Siemens increased their profit compared to previousyears but Arçelik is a better example for this subject because Arçelik’s profitincreased by %35 in 2016. The next is strategic variables, whichcompanies follow which strategy to compete with other firms and increase theirmarket shares. In the industry there are many variations except for quantityand price. Somefirms use charging higher prices, value-added pricing but also addingfeatures and differentiating products in order to compete and stay with market.
For example, we look at the new models washing machine in the market. Arçelikpreferred classical washing machine and its price is 4.350,00 TL. Samsungproduced smart door washing machine. The door can be opened while the machineis running such laundry can be added and its price is 4.800,00 TL. Also, Boschproduced home connect washing machine and its price is 5.550,00 TL.
It can beconnected from far away. LG produced a versatile product that is 17 kg washing10 kg drying machine + 3,5 kg washing and its price is 7.350,00 TL (Appendix1).This shows the large range of difference in prices in the industry. Arçelik,Bosch, Vestel, LG and other white goods brands also use many promotionalefforts such as advertising or discount to gain market share. Although mostdesigns are similar in this industry, companies differentiate their productsmostly through quality and added features as it can be seen. Finally, how firms react their rival’sactions, like all industry, in the white goods industry there is monitoring howcompetitors are going.
As most popular strategies are differentiation andvalue-added. Therefore, firms control each other to follow and produce newdesigns and qualities. There are many close substitutes for almost all models supplied in theindustry. This means the.
industry.is changing with technology market, and firms are reacting.to that changes and eachother’s actions. In conclusion, for the white goods market,as firms have many competitors, but each sells a bit different product, andfirms follow each other so, the market has a monopolistic competition.
Thereare a few big firms like Arçelik, Bosch, Siemens, Beko, Vestel, Samsung and LGin the white goods market in Turkey. Some brands are domestic sellers and someof imports.