Whirlpool Case Report

Whirlpool Case Report

Overview

        The Whirlpool brand was launched into the market in 1948.  The company was originally founded in 1911 under the name “The Upton Machine Co.” in St. Joseph, Michigan.  The company began its ventures producing an electric motor-driven wringer washer.  After merging with “The Nineteen Hundred Washer Company”, Whirlpool began manufacturing and selling its first automatic washing machine.

        The initial source of selling this new washing machine was through Sears, Roebuck & Co. in 1947.  The actual Whirlpool brand was later introduced in 1948.  The company experienced many mergers and acquisitions leading to success and force within the U.S. industry of appliances in 1978.   Through global expansion, Whirlpool Corporation manufactured in 13 different countries and marketed to 140 countries utilizing 11 different major brand names, as of 1998.  

Key Issues

         Whirlpool began global expansion with international investments in the 1950s.  The first investments were in the form of equity interest with established manufacturers within countries such as Brazil and Canada.  By the mid-1980s it was established that the U.S. market growth for appliances was limited.  This leads Whirlpool to develop and implement a global strategy to expand beyond the U.S. borders.  The expansion lead to Whirlpool purchasing a major stake of N.V. Phillips in the European market, later purchasing the remaining equity.  

        Sales began to level off on the 1990s and profits slipped requiring lay-offs.  Whirlpool attempted to restructure, but this did not solve its problems.  After global lay-offs in Europe, Whirlpool looked to further expansion within Asia and Latin America.  Brazil ended up being the most profitable for Whirlpool in the 1990s.  The region had good potential for market growth and economic stability, but in the end sales fell by 25 percent.  This decline forced Whirlpool to make further cut-backs globally and ended with further lay-offs.

Options/Course of Action

Becoming the world market leader in home appliances was no easy task.  The results of Whirlpool’s commitment to quality are a justifiable and competitive advantage.  Whirlpool continues these efforts globally by utilizing lean manufacturing and operational excellence to ensure continuous improvement.  In order to secure long-term success, Whirlpool should move into more strategic alliances and less foreign direct investment especially in global sites where local market understanding is critical for success.

The Pros of Strategic Alliance

• Goals can be reach quicker and expand the presence and reach of your respective brands.
• When collaborating with a partner outside the industry products with greater innovation, greater value, and better results can be produced.
• Strategic alliances can expand customer base.
• Financial assistance

The Cons of Strategic Alliance

• Weakness from having to deal with the mistreatment or misuse of each partner’s team.
• Lawsuits may arise from disagreements of ownership jeopardize financial success.
• Issues could arise from sharing expenses or how profits are split
• An unclear partnership agreement

SWOT Analysis

Strengths:

• Customers are constantly looking for change in product.  Whirlpool is quick to make necessary adjustments to adhere to customer’s wants and needs.
• Whirlpool is consistently looking for new opportunities within the market to increase their profitability and make themselves leaders within the appliance industries.
• They are constantly looking for new product opportunities within the market.
• Whirlpool has the funding available to finance growth in the market by expanding their location, product adjustments, or process improvements.
• Customer satisfaction is key and they are willing to make adjustments to their existing products or add new products to support the customer’s preferences.

Weaknesses:

• As with any company, Whirlpool struggles once they step outside of their core business and expand their business opportunities.
• They struggle with the various cultures as they merge their firms with others in other countries.
• Whirlpool is faced with constant competition which impacts their performance.
• There is a high turnover rate with their employees which increases the cost of training and educating the new employees.
• They struggle with allocating their funds properly.
• Whirlpool gets caught up in their current business model and has a hard time adjusting the model to adhere to the various product segments.

Opportunities:

• With continuous changes to environmental guidelines, Whirlpool can share their expertise by showcasing their enhanced technology over their competitors.
• Any increase within the economy allows Whirlpool to increase customer base and increase their profits.
• Market development will showcase Whirlpool’s newest products and will minimize the want and need of products produced by their competitors.
• Whirlpool can use their financial stability to their benefit to increase growth and stay above the competition.
• By offering fair pricing they not only maintain existing customers but it also places them in a position to bring in new customers.

Threats:  

• The availability of local distributors puts Whirlpool at risk of decreased customer base.
• With continuous changes to environmental guidelines, it increases the demand to constantly revisit product designs which costs additional money.
• Since the profit margin has increased, this provides additional competition within the appliance goods market.
• There could be potential learning obstacles by operating within a global market.
• There is a variance within the liability laws across various locations which opens up risk for legal ramifications if not managed appropriately.
• Online purchases could decrease the need to be global.

Recommendations / Supporting Reasons

Whirlpool aggressively developed and implemented a global strategy which had some setbacks and proved to be quite the mission to accomplish.  Acquiring, starting and running so many subsidiaries on so many foreign soils was quite the undertaking.  Whirlpool needed to do more market research and not attempt to dominate the global market so quickly.  Learning what different markets needed such as smaller more portable appliances or that some countries did not yet have the need for appliances such as microwaves, then they might have focused their efforts more efficiently.