ZMR INSTITUTE OF TECHNOLOGY

FACULTY OF ENGINEERING DEPARTMENT

SPRING 2015
EM 507 Financial Analysis and Engineering Economics
COMPANY REPORT

Mehmet KIRGZOLU
Faik KKL

1. INTRUDUCTION
It is obviously seen that the firm in the white goods sector has established new networks and
innovative works with emphasis on R&D and technology. Vestel is one of the biggest company which
has huge production facility and significant market share both in Turkey and abroad with its own brand.
Other firms in the same sector has become really important innovative firms as well, like Arelik,
Arnica Senur, etc.

2. ECONOMIC ANALYSIS
a. GDP (Gross Domestic Produce)
Annual Gross Domestic Product was 1 416 817 Million TL. at current prices. Annual gross domestic
product in 2012 increased by 9.2% and reached to 1 416 817 Million Turkish Liras current prices,
increased by 2.2% and reached to 117 754 Million Turkish Liras at constant prices.
GDP by production approach increased by 4.0% compared to previous year in 2013 and reached to
122 388 Million TL at constant prices and increased by 10.2% and reached to 1 561 510 Million TL at
current prices.
The nine months growth rate of gross domestic product increased by 2.8% in the third quarter of
2014 and reached to 93 billion 733 million Turkish Liras at constant prices. The nine months growth
rate of gross domestic product increased by 11.9% in the third quarter of 2014 and reached to 1 trillion
296 billion 774 million Turkish Liras at current prices. [1]
b.

Trade Deficit
In November 2012; exports increased by 24,8% and reached to 13 829 Million Dollars and imports

increased by 12,5% and reached to 20 986 Million Dollars compared with November 2011. At the
same month, foreign trade deficit decreased from 7 571 Million Dollar to 7 158 Million Dollars.
In November 2013; exports were 14 252 Million Dollars with a 3.6% increase and imports were 21
403 Million Dollars with a 2.2% increase compared with November 2012.
In November 2014; exports were 13 billion 132 million dollars with a 7.5% decrease and imports
were 21 billion 448 million dollars with a 0.2% increase compared with November 2013. [1]
c.

Budget Deficit
In December 2013, budget was 18,5 billion TL deficit while budget deficit 29,4 billion TL in

December 2012. The budget deficit was 22.7 billion TL in January-December 2014, while it was 18.5
billion TL in January-December 2013. [2]

d.

Interest Rate
The interest rate in Turkey between the years 2012-2014 is shown in the graph below. [3]

e.

Unemployment Rate
Unemployment rates between the years 2012 - 2014 are in the table (with the values of

beginning and end of the year) and shown in the graph.[3]

Unemployment Rate

3.

2012

2013

2014

9,2

9,7 - 9,1

9,2 - 10,7

SECTOR ANALYSIS

About The White Goods Industry

White Goods Industry, included in the scope of electricity appliances as well as durable goods,
possesses a wide range of products due to the varying technologies it incorporates. Refrigerator,
deep freezer, washing machine, dryer, dishwasher and oven are regarded as the six main products
whereas durable goods such as cookers, vacuum cleaners, toasters, food processors, fruit presses,
blenders, and mixers are included in the small home appliances category. Products such as airconditioners, water heaters and water purifiers are also counted among the electricity home
appliances.
With its production capacity of 25 million units and actual production of 21 million units, the white
goods industry has become a significant focus of production in the last 10 years and Turkey has
become the LEADING country in Europe in the white goods sector.
The industry, having achieved 14 million units in exports, is exporting 70% of its manufacture to
more than 100 countries in such markets as European countries, neighbouring countries and Africa.
The Turkish market used to sell 2 million units in domestic sales in the 1990s; however, in the last
5 years, domestic sales have gone up to 5 million units and achieved another record by rising up to
6.5 million units by the end of 2011.
The white goods companies operating in Turkey are making significant investments in the R&D
(Research and Development) area and they are able to achieve success in the world as a result of
the competitive power they gain through these investments. In the last 10 years, improvements in the
energy efficiency of the products have reached up to 65%.
The white goods sector also strikes out with the number of its patent applications. Having
assumed a leading position in many white goods categories, Turkey is making a significant impact in
the world with the washing machine that consumes the least water, the dishwasher that washes
fastest and consumes the least water, the refrigerator and tumble dryer that consumes the least
energy, the most silent washing machine, dishwasher and oven.

The Use of White Goods & Energy Conservation

Home appliances can be used with less energy without affecting the desired level of service and
comfort. It is possible to ensure a reduction in electricity bills by using efficient home appliances.
Efficient appliances might be more expensive than similar models but the difference paid when
buying efficient appliances returns through the reduction in electricity bills.
When buying white goods, it is important to compare the products not only on a price-basis but
also on the basis of their energy efficiency. Even though the investment cost of a more energy
efficient device is higher, the energy savings it will provide during its 10 to 15 years of service life will
return the difference. When buying home appliances, keep in mind that the ones bearing A and

higher marks are the most efficient. It should be remembered that there is more than 60% difference
between the consumptions of highly efficient and very low efficiency devices.

Energy Label
Energy label is designed to provide consumers with accurate, recognisable and comparable
information on domestic household products regarding energy consumption, performance and other
essential characteristics.
It allows consumers to identify how energy efficient a product actually is and to assess a products
potential to reduce energy costs.
The label is uniform for all products in a given category. Consumers can compare easily the
characteristics of appliances in a given category such as energy or water consumption, or capacity.
The label initially classified products from A to G, A being the most efficient energy class and G the
least efficient.
Turkish legislation introduces three additional classes, A+, A++ and A+++, can be added to the
current A to G classification scale to adapt to technological developments and to allow further
product differentiation in terms of energy efficiency.
Coloured arrows differentiate energy efficient from lower energy efficient products: dark green
indicates a highly efficient product and red a low efficient product.
Refrigerator
- 7 classes maximum from A+++ to D
- Coloured arrows are used to differentiate energy efficient from lower energy efficient
products: dark green indicates a highly efficient product and red a low efficient product
- Pictograms highlight selected performances and characteristics:
- Annual energy consumption in kW
- Capacity of all storage compartments in litres
- Capacity of frozen food storage compartments in litres
- Noise emissions in decibels
- The energy class is based on the energy efficiency index which takes into account:
- The annual energy consumption
- The volume

- The lowest temperature of different compartments

Other factors affecting this index are the type of construction (built in or free standing) and the
availability of frost free feature.
Washing Machine
- 7 classes maximum: from A+++ to D
- Coloured arrows are used to differentiate energy efficient from lower energy efficient
products: dark green indicates a highly efficient product and red a low efficient product
- Pictograms highlight selected performances and characteristics:
- Annual energy consumption in kWh
- Noise emissions in decibels
- Spin-drying efficiency class
- Capacity in kilograms
- Annual water consumption in litres
- The annual energy & water consumptions, and the spin-drying efficiency class indicated on
the label, are calculated on the basis of:
- 60C cotton programme at full and partial load
- 40C cotton programme at partial load
- Left-on mode and in off-mode
- Values for the annual water consumption and the spin-drying efficiency class are based on
the same set of washing cycles as the energy consumption data
- All washing machines with a rated capacity greater than 3 kg, must have an A class washing
performance. Washing performance is then no longer indicated on the label.
Dishwasher
- 7 classes: A+++ to D
- Coloured arrows are used to differentiate energy efficient from lower energy efficient
products: dark green indicates a highly efficient product and red a low efficient product
- Pictograms highlight selected performances and characteristics:
- Annual energy consumption in kWh

- Noise emissions in decibels

- Capacity in place settings
- Drying efficiency class
- Annual water consumption in litres (no longer per cycle)
- The energy class is measured from:
- The annual energy consumption of standard cleaning cycles, when loaded
with the declared place settings
- The power and the time duration in the left-on mode
- The power and the time duration in the off-mode
- The cycle information on the label is based on the standard programme which is:
- suitable to clean normally soiled tableware
- is the most efficient in terms of combined energy and water consumptions
- All dishwashers must now have an A class cleaning performance. Cleaning performance is
then no longer indicated on the label.
Electric ovens
- 7 classes: A to G
- Coloured arrows are used to differentiate energy efficient from lower energy efficient
products: dark green indicates a highly efficient product and red a low efficient product
- Electric oven performances and characteristics are shown on the label:
- Energy consumption in kWh for the heating function(s) (conventional and/or
the forced air convention) (of appliances) based on standard load
- Usable volume of the cavity in litres
- The size of appliance determined as follows:
Small: 12 l < volume < 35 l
Medium: 35 l < volume < 65 l
Large: 65 l < volume
- Noise emissions in decibels

Air conditioner
- 7 classes: A to G
- Coloured arrows are used to differentiate energy efficient from lower energy efficient
products: dark green indicates a highly efficient product and red a low efficient product
- Air conditioner performances and characteristics are shown on the label:
- Annual energy consumption, kWh in cooling mode
- The Energy Efficiency Ratio of the appliance in cooling / heating mode at full load
- Cooling / Heating capacity in kW
- Noise emissions in decibels

4. ABOUT THE COMPANY

Vestel White Goods
Demonstrating a strong growth trend since its foundation in 1997, Vestel Beyaz Eya is today
positioned as one of the major white goods manufacturers in both the Turkish and the European
markets. Vestel Beyaz Eyas manufacturing facilities are located in Manisa, Turkey. The Company
undertakes its manufacturing activities at Vestel City, the largest industrial complex in Europe in a
single location, by deploying state-of-the art technologies. Manufacturing refrigerators, washing
machines, cookers, dishwashers, air conditioners and water heaters in an enclosed area of more
than 311,000 m, Vestel Beyaz Eya has become a major player in all of the markets where it
operates thanks to its high production capacity and its capability to develop new technologies.
Ranking among the top manufacturers in Europe to employ the latest technology, Vestel Beyaz Eya
is one of Turkeys top three and Europes top ten white goods manufacturers. Vestel Beyaz Eya is
one of Europes largest original design manufacturers (ODM). Selling its products in EU countries on
an ODM basis, Vestel Beyaz Eya also pursues a strategy of expansion under the Vestel brand in
Turkey, the MENA region and CIS countries, especially Russia. With a strong R&D organization,
Vestel Beyaz Eya goes to great lengths to bring more comfort to millions of homes with its
continuously expanding portfolio of environmentally friendly products which globally address a wide
consumer mass. Flexible production capability, high production capacity, product differentiation
competence, proximity to Europe, and low unit labour costs are Vestel Beyaz Eyas key competitive
advantages which reinforce its position in the market. Vestel Beyaz Eyas marketing-sales services
are undertaken by Vestel Ticaret. Vestel Ticarets logistics-distribution capabilities, widespread dealer
network and technologically well-equipped service network reinforce our strong brand image in the
domestic market. After-sales services are provided by the authorized service centres and the Vestel

General Directorate of Customer Services. Flexible production capability, high production capacity,
competence in product differentiation, the logistical advantages of its proximity to Europe and low
labour costs are Vestel Beyaz Eyas key competitive advantages which reinforce its position in the
market. 14 Vestel Beyaz Eya 2013 Faaliyet Raporu Vestel Beyaz Eya is currently active
throughout Turkey with the Groups:
1,160 Vestel stores
14 Vs Outlets
726 dealers with Regal signboards
E-store
Vsoutlet.com.tr
331 authorized service centres
15 central services
In Europe and other regions:
The Company carries out its marketing-sales activities in France, Germany, Spain, Finland,
Kazakhstan, Romania, the UK and the Netherlands through Vestels international offices and local
sales-distribution channels; and in Russia and in the Middle East and the CIS through a total of
2,750 stores and sales points.[4]
Shareholders
Vestel Elektronik*
Other
Public Shares
Total

Stock Value (TL)

130.199.992
8
59.800.000
190.000.000

(%)
68,53
0,00
31,47
100,00

SWOT ANALYSIS OF WHITE GOODS SECTOR IN TURKEY

The strengths of the leading brands who engaged in production of White goods sector like
Arelik, Vestel, Bosch and Indesit, can be listed as follows.
Arelik : (Arelik, Beko ,Altus)

The highest share in domestic sales

Be a part of one of the biggest groups in Turkey (KO) and having two more brands. These
are Beko and Altus.

Having adequate infrastructure for a much better performance

Making some of the major important brand purchasing in abroad.

Having competitive structure both domestic and foreign firms and the success in White goods.

Having a happy customer base who are more effective advertising than TV and newspapers.

Vestel : (Vestel, Regal)

Having aggressive, enterprising and strong management.

The presence of significant projects such as Europe's largest TV facilities passed to Life

The new and reliable image for consumer dissatisfaction or unhappiness of customers across
the market and being a good alternative to its competitors

Begin to exceed their competitors in the export amount.

Having many known firms purchase license on Europe.

Bosch : (Bosch,Siemens,Profilo)

Consisting of a very high customer satisfaction in the products sold as original German made
before the start of production in Turkey in the 1980s,

Being known as a high tech firm.

Reliable image with its advertisements.

Ariston : (Ariston,Indesit)

Being a new alternative to customers

The different designs in the products.

The weaknesses of the white goods brands in Turkey are as follows.

Arelik : (Arelik, Beko ,Altus)

Inability to produce quality goods and high customer dissatisfaction in small house appliances
comparing with only the competitors operating in this group like Tefal and Arzum.

Although having many dealers most of them have problems with not having enough attention
and support.
Vestel : (Vestel, Regal)

On the contrary Its electronic products, the firm does not provide the same quality in white
goods

Lack of common and successful services such as Arelik or Bosch

Bosch : (Bosch,Siemens,Profilo)

There are some shortages in sales points and the amount of necessary products cannot be
provided.

The absence in electronics group, not producing TVs or cell phones.

Ariston : (Ariston,Indesit)

Lack of home appliances and electronics group

It is less than the competitors' advertising and promotional activities

The opportunities in white goods sector are listed on the below.

On the contraction of the domestic market, producers have an opportunity to engage in

producing products for export.

Selling cheaper and quality products in Europe in comparing with European white goods
producers.

The high exchange rate made import products more expensive than domestic products and
domestic producers gained advantage in domestic market.

Labour costs are lower compared with the European average.

New generation of quality products keep alive the customer demand

The Threats to the making production in white goods sector are these,

The purchase of most of the white goods depends on the persons income and that poses risk
in white goods sector.

The governments support to industry is low rate for productions, sales and exports of white
goods.

Direct and indirect taxes are high

Very high risk at sales by reducing prices and long term.

Sending more goods than necessary to the dealers to melt the stock of companies and
because of that reason compressing liquidity the dealers.

Selling goods with incorrect competition or transferring goods to spot market by lowering
prices by the dealers for just save the day.

REFERANCES
[1] www.turkstat.gov.tr
[2] www.bumko.gov.tr
[3] www.tradingeconomics.com
[4] www.vestel.com.tr