Free Essay

Strategic Sourcing at Whirlpool China

In: Business and Management

Submitted By vinayt
Words 3175
Pages 13
rP os t

Sw
W12079

STRATEGIC SOURCING AT WHIRLPOOL CHINA: FINDING THE IDEAL
SUPPLIER

op yo Dr. Martin Lockstrom, Thomas E. Callarman and Shengrong Zhang wrote this case solely to provide material for class discussion.
The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality.

Richard Ivey School of Business Foundation prohibits any form of reproduction, storage or transmission without its written permission. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Richard Ivey School of Business Foundation, The University of Western Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail cases@ivey.uwo.ca.
Copyright © 2012, CEIBS

Version: 2012-06-19

tC

It was April 10, 2011, when Gianluca Castelletti, head of Whirlpool’s Asia International Procurement
Office in Shanghai, was informed by his colleagues that the company was about to launch a new refrigerator model in just six months. With the current worldwide focus on energy saving, and as one of the biggest home appliances producers, Whirlpool China planned to introduce a new energy-efficient refrigerator. No

Castelletti immediately spotted a challenge in Whirlpool China’s plan to launch a new energy-efficient model within such a short period of time. Under the current global trend of energy-saving, consumers were demanding new energy-efficient products, which obviously would involve new kinds of technology.
For the new refrigerator model, the basic difference was in the motor, since the current style of AC motor, which offered a low cost, would need to be replaced with DC motors, which offered much higher energy efficiency. Castelletti would have to find a suitable supplier of DC motors, and he had less than six months to do so.

Do

Delayed components would cause delays in the production of a new refrigerator, and thus, a later launch of new products. Within the home-appliance industry, the fierce level of competition meant that any delays in launching new products would result in a severe loss of sales for the stragglers. Castelletti now faced a tough challenge: How should he go about the process of finding a suitable supplier for the required DC motor parts? Should he explore the possibility of developing the company’s current supplier, or should he quickly engage an existing supplier of DC motors?
Sourcing the right components was the first step in launching the new product. The pressure increased even further when Castelletti received call from his supervisor, inquiring about his planned strategy for sourcing the new motor for the energy-efficient refrigerator. Castelletti had to quickly decide where he could find the suitable suppliers in order to avoid delays in launching the new product. The question was
“how”? Castelletti called together his team to develop a plan.

This document is authorized for educator review use only by Surendra Kansara, (APPLYING ON OWN) until August 2013. Copying or posting is an infringement of copyright.
Permissions@hbsp.harvard.edu or 617.783.7860

9B12D012

rP os t

Page 2
COMPANY BACKGROUND
Whirlpool’s History

Whirlpool Corporation was the world’s leading manufacturer of major home appliances. In 2010, the company had more than $18 billion revenues and net earnings of $619 million (see Exhibit 1). On a worldwide basis, Whirlpool had 68,000 employees working in 67 manufacturing and technology research centres. It produced all major categories of home appliances, including stoves, washers and dryers, dishwashers, refrigerators, garage organizers, and countertop appliances. Whirlpool produced and marketed Whirlpool, Maytag, KitchenAid, Jenn-Air, Amana, Gladiator Garage Works, Inglis, Estate,
Brastemp, Bauknecht, Consul, and other major brand names to consumers in almost every country around the world .

op yo Whirlpool’s global headquarters were located in Benton Harbor, Michigan, with manufacturing facilities and sales outlets across North America, Latin America, Europe and Asia. In total, the company’s products were sold in more than 130 countries.
Ironically, Whirlpool was founded on a business failure. In 1908, Lou Upton’s invested his savings in a venture that manufactured household equipment, but the business did not succeed. Upton retained one asset from the business that he hoped would be valuable: the patents on a hand-operated wringer washing machine that he thought could be converted to an electric model.

tC

In 1911, Upton joined forces with his uncle and his brother to launch the Upton Machine Company in St.
Joseph, Michigan, which produced motor-driven wringer washers. After a quick business expansion,
1929 saw the company merge with the Nineteen Hundred Washer Company of New York. Twenty years later, the company’s name was changed to Whirlpool Corporation, and it soon earned the title of industry leader. After a series of other acquisitions, Whirlpool participated in an acquisition with the Maytag Corporation on March 31, 2006. This was a significant step for Whirlpool to become “the largest home appliance maker in the world,” a title that had previously been reserved for Electrolux.

No

Whirlpool’s philosophy focused on customer loyalty. Its products were built to be reliable with long lifecycles, which meant substantial emphasis had to be paid to product quality. The company’s focus on quality was rooted at the conceptual stages and continued throughout the manufacturing process. The results of these quality efforts, combined with Whirlpool’s commitment to innovation and cost productivity, brought about a strong competitive advantage.

Do

Stiff competition from competitors such as Electrolux, General Electric, LG, etc. also created a competitive pricing environment, and hence, it was essential that Whirlpool concentrated on cost reduction, productivity initiatives, and innovation in order to offset high material costs and maintain its position in the market. Furthermore, lean manufacturing and operational excellence were the principles on which Whirlpool relied to ensure a continuous improvement of process and to meet its high standards of quality. China’s Household Electrical Appliance Market

Aided by the rapid development of the Chinese economy and a rising GDP per capita, China’s household electrical appliances industry grew quickly in response to the government’s policy of stimulus in domestic

This document is authorized for educator review use only by Surendra Kansara, (APPLYING ON OWN) until August 2013. Copying or posting is an infringement of copyright.
Permissions@hbsp.harvard.edu or 617.783.7860

9B12D012

rP os t

Page 3

demand. According to China’s Household Electrical Appliances Industry Report, China had become the largest household electrical market in Asia Pacific area in recent years. According to the data from China
Household Electrical Appliances Association, more than one-third of the household electrical appliances in the world were produced in China in 2007. Approximately 50 per cent of the world’s televisions were manufactured in China, along with 70 per cent of air conditioners and almost 100 per cent of the world’s microwave ovens. China stood out as one of the largest household appliance makers in the world, also boasting a large market share.

op yo Establishing a foothold in China had been a long and tedious process for Whirlpool since its entry into the market in 1995. At that time, Chinese regulations required foreign companies to work with local partners.
The company’s chief executive officer (CEO) at that time announced a joint venture agreement after its investments of more than $100 million with local house appliances producers. The joint venture agreements gave Whirlpool a chance to produce the top four household appliance categories: washing machines, microwave ovens, refrigerators and air conditioners. Three short years, later Whirlpool was forced to pull out of two of the five joint ventures due to its unfamiliarity with and unclear positioning in the Chinese market.

tC

In 2001, China joined the World Trade Organization, and the resulting freer access to China’s market greatly improved conditions for Whirlpool. Furthermore, relocation of the company’s Asian headquarters to _Shanghai changes in the Chinese consumer mindset (i.e., Whirlpool’s offerings began to be accepted as a high-quality products) and incorporating learning from other multinationals all helped Whirlpool to compete more successfully in the Chinese market. By 2011, China accounted for approximately 3 per cent of the company’s global sales, including sales to other manufacturers. Whirlpool employed more than 2,500 people in China, and its microwave factory in Shunde produced more than two million units per year, most of which were shipped to North America and Europe. Washers and refrigerators were produced in factories that had been newly established in a joint venture with Hisense, one of the largest appliance producers in China.
THE INTERNATIONAL PROCUREMENT OFFICE IN SHANGHAI

No

Various factors could turn global sourcing into a tricky process: transportation delays, lack of technology and capacity of foreign resources, cultural and language differences, quality assurance, political and economic stability, and proper inventory management systems, to name just a few. For these reasons,
Whirlpool set up an international procurement office in Shanghai to support its own manufacturing operations in Asia and to provide support for any other operation in the world that sourced components from Asia. In 2010, the Asian international procurement office sourced more than US$1 billion in China out of $8 billion global direct spend.

Do

Companies chose to source in China for many reasons, including reducing capital investment, gaining more market share, focusing on core competencies, and increasing the company’s flexibility in production. Although China may have shown a cost advantage when it came to raw materials, inconsistencies existed in the areas of quality and reliability. Other hindrances that companies often faced when operating in China stemmed from the fact that the country lacked capable service providers and suffered from shortcomings in the areas of transportation and IT infrastructure. At times, high rates of damage/loss in transit also caused a problem.
For a supplier to be considered as a Whirlpool supplier, it had to match the following criteria:

This document is authorized for educator review use only by Surendra Kansara, (APPLYING ON OWN) until August 2013. Copying or posting is an infringement of copyright.
Permissions@hbsp.harvard.edu or 617.783.7860








9B12D012

rP os t

Page 4

Whirlpool code of conduct and other requirements;
Minimum quality audit score;
Best total cost of ownership and manufacturing efficiency;
Continuous innovation in design and manufacturing for best-in-class quality and technology;
Structured project tracking, design reviews with management tollgates, utilizing design and process
FMEA, fault tree analysis, reverse engineering and other tools where applicable; and
Access to UL, CSA, VDE and other agency approval.

The following requirements were dependent on the commodity analyzed:

Laboratory capability for engineering conformance and reliability testing.
Prototype capabilities.

op yo 


Whirlpool required a very restricted supply quality system, namely the Whirlpool Supplier Quality
System. The Whirlpool Supplier Quality System was developed based on the ISO 9001. The household appliance industry was broader than the ISO 9001 requirements, including process capabilities assessments (see Exhibit 2).

tC

Based on Castelletti’s experience, most suppliers in China, even those who supplied Whirlpool’s competitors, could not reach the minimum required score when audited as potential suppliers during the first round of Whirlpool’s selection of potential suppliers. With the minimum score required being
60/100, the first-round score among good, local suppliers was approximately 50. Elements were weighted separately to bring about the total score of 100. Since 1996, Whirlpool had followed a restricted Six
Sigma program, and within the company, more than 1,500 Whirlpool employees possessed Six Sigma training. The training program included teaching the employees to use Lean and Six Sigma techniques.
This system was intended to improve the quality and efficiency of Whirlpool’s manufacturing, technology, and business processes and products.
When a supplier showed a distinct advantage on cost structure and could provide clear value, the SQE
(Supplier Quality Engineer) and SDE (Supplier Development Engineer) team at Whirlpool’s international procurement office would provide resources to facilitate closing the gap within a certain time frame. The commodity team was also in charge of facilitating the supplier qualification process.

Do

No

The international procurement office had a special budget for the SQE team for supplier development, covering the travel costs of supplier visits and continuous training. The SQE members often travelled, moving from one supplier to another to conduct gap-closure development by providing training or by coaching the execution of given projects. The suppliers were not charged for the training they received from Whirlpool; however, they were expected to take some initiatives to acquire outside resources for self-improvement if their current situations were judged to be insufficient. For example, those local suppliers that did not have capable people in place would be pushed to hire the right people to enhance their quality process.
FINDING THE RIGHT SUPPLIER

To find a suitable supplier of DC motors for the new energy-efficient refrigerator model, Whirlpool used the Sourcing Strategy Development (SSD) process, which included four steps for sourcing the right suppliers: Step 1 - internal analysis; Step - 2 external analysis; Step 3 - Strategy development; and Step 4
- implementation. Even before Step 1, it was necessary to define the commodity and allocate

This document is authorized for educator review use only by Surendra Kansara, (APPLYING ON OWN) until August 2013. Copying or posting is an infringement of copyright.
Permissions@hbsp.harvard.edu or 617.783.7860

9B12D012

rP os t

Page 5

responsibilities and resources through co-ordination of global and regional activities. An internal analysis identified and prioritized the process-partner requirements, then evaluated the performance of the existing supply base, and reviewed the existing supply base. The SSD process should also identify the switching costs in Step 1.

op yo When the internal need was clear, then the process moved forward to Step 2, the external analysis, which included analyzing the supplier industry and competitors and evaluating competitor performance and strategies. The evaluation process made use of SWOT (Strength, Weakness, Opportunities, Threat) analysis and Best-in-Class performance analysis. From the results of the internal and external analysis,
Step 3 was then used to develop the sourcing strategy. In this stage, Porter’s Five Forces Model was also adopted to analyze the competitiveness. After understanding the existing strategies, strategic options were formulated and their financial impact was analyzed. In developing a sourcing strategy, preliminary negotiations could be carried out, a suitable strategy and suppliers should be selected, and the critical path for implementation should be defined. Step 4 addressed the implementation stage, wherein the planned strategy was put into play, feedback was given to the chosen process partners and suppliers, and final negotiations were nailed down. In the implementation phase, if the goals had not been met, the strategy needed to be revised.
With the complete SSD analysis, the sourcing strategy had put Whirlpool in a position to find suitable suppliers. THE CHALLENGES

tC

Acting as a supplier for one of the largest home-appliance makers in the world was not an easy job for suppliers. First, the suppliers had to agree to some aggressive payment terms. Whirlpool’s U.S. procurement team privileged the consignment stock process, which meant that any agreed-upon payment terms started when parts were withdrawn from Whirlpool’s components warehouse, located in every
Whirlpool factory. The warehousing time and the transportation lead time, including sea and land transportation times, were consequently added to the agreed-upon payment terms but were not predetermined — or even pre-determinable. Many suppliers found it difficult to accept these challenging payment terms.

No

Second, the suppliers had to endure a long sample-testing process When suppliers were deemed qualified
(i.e., after passing the quality system audit) to move ahead for a particular project, Whirlpool still required them to provide samples that passed the sample tests and application tests (see Exhibit 3).

Do

Third, suppliers faced a continuous challenge in terms of cost and quality improvement, year on year, especially since Whirlpool placed a great deal of emphasis on both quality and cost. For the sourcing team, continuous improvement was expected in terms of each year’s sourcing performance. Whirlpool used a technology road map for its own corporate technology evolution; therefore, its suppliers were expected to meet that same requirement each year to ensure continuous progress.
Whirlpool’s strict selection criteria made it difficult to find suppliers in China. To launch new products,
Castelletti had to make full use of Whirlpool’s Asia International Procurement Office in Shanghai.
Finding the right supplier for DC motors in less than six months was the key challenge in front of
Castelletti. With the help of its Global Sourcing Strategy and its selection criteria, Castelletti had to decide how to find the optimal supplier.

This document is authorized for educator review use only by Surendra Kansara, (APPLYING ON OWN) until August 2013. Copying or posting is an infringement of copyright.
Permissions@hbsp.harvard.edu or 617.783.7860

9B12D012
Exhibit 1

rP os t

Page 6

KEY FINANCIAL FIGURES
Consolidated Statements of income
( Millions of dollars, except per share data)

2010

2009

2008

$18,366

$17,099

$18,907

15,652

14,713

16,383

2,714

2,386

2,524

1604

1544

1798

28

28

28

74

126

149

1,008

688

549

Interest and sundry income ( expense)

197

175

100

Interest expense

225

219

203

586

294

246

64

61

201

650

355

447

Year Ended December 31
Net Sales
Expenses
Gross margin

op yo Cost of products sold
Selling, general and administrative
Intangible amortization
Restructuring costs
Operating Profit
Other income (expense)

Earnings before income and taxes and other items
Income tax benefit

Earnings before equity earnings

tC

Equity loss of affiliated companies
Net Earnings

N/A

1

N/A

650

354

447

31

26

29

$619

$328

$418

Basic net earnings available to Whirlpool

$8.12

$4.39

$5.57

Diluted net earnings available to Whirlpool

$7.97

$4.34

$5.50

$1.72

$1.72

$1.72

Less : Net earnings available to non-controlling interests
Net earnings available to Whirlpool

No

Per share of common stock

Dividends

Weighted-average shares outstanding ( in millions)
Basic net earnings available to Whirlpool

76.2

74.6

75.1

Diluted

77.6

75.6

76.0

Do

Source: Internal resource provided by the company.

This document is authorized for educator review use only by Surendra Kansara, (APPLYING ON OWN) until August 2013. Copying or posting is an infringement of copyright.
Permissions@hbsp.harvard.edu or 617.783.7860

9B12D012
Exhibit 2

rP os t

Page 7

Do

No

tC

op yo SUPPLIER EVALUATION MATRIX

Source: Internal resource provided by the company.

This document is authorized for educator review use only by Surendra Kansara, (APPLYING ON OWN) until August 2013. Copying or posting is an infringement of copyright.
Permissions@hbsp.harvard.edu or 617.783.7860

9B12D012
Exhibit 3

rP os t

Page 8

SUPPLY CHAIN FLOW DIAGRAM

Sampling process in
China or in any other
Engineering center in the world

Comparative benchmarking On site quality assessment: Minimum criteria of 60 required

op yo Shortlist suppliers based on stringent criteria Agreement of commercial conditions, including Payment terms International
Procurement Office works with suppliers to ensure min quality is
met

Similar Documents

Premium Essay

Strategic Sourcing at Whirlpool China Case Study Analysis

...Business Practicum Strategic Sourcing at Whirlpool China Q1. Whirlpool’s Global Sourcing Strategy (GSS) in China had many advantages as well as disadvantages. As the case explains, China had become one of the world’s largest household appliance makers, and relocation of Whirlpool’s Asian HQ to Shanghai helped the company’s products gain acceptance within the market. Furthermore, setting up an international procurement office in Shanghai helped to eliminate various factors that could make global sourcing a difficult process. Whirlpools Shanghai HQ decreased transportation delays and cultural and language differences and supported the company’s own manufacturing operations in Asia. Other advantages to global sourcing in China include: reducing capital investments, gaining market share, focusing on core competencies, and increasing flexibility in production. Although China may provide a cost advantage in regards to raw materials, disadvantages occurred in areas such as quality, reliability, a lack of capable service providers, and inadequacies in transportation and IT infrastructures. Q2. When it came to potential suppliers, Whirlpool set their standards high. In order to be considered a supplier of Whirlpool, quality requirements set forth by the Whirlpool Supplier Quality System had to be met. Most suppliers in China, however, found difficulty in reaching the minimum required score of 60/100 during the first round of audits. Whirlpool used the Sourcing Strategy......

Words: 770 - Pages: 4

Free Essay

International Management

...Running he WHIRL ead: LPOOL’s GL LOBAL STR RATEGY CA ANAL ASE LYSIS 1 Whirlpool Co W orporation’s Global Str s rategy Case Analysis International Man nagement – Assignmen 2 nt Candidate: Emad Abou uElgheit ISM - International School of Manageme f ent Doctor of Philosophy ( P (Ph.D.) Presented to: Professor Peter Horn t P 26 July 201119 July 2011 1 Word Coun 3,706 nt: WHIRLPOOL’s GLOBAL STRATEGY CASE ANALYSIS 2 Abstract The paper analyses Whirlpool Corporation’s Global Strategy case study conducted in the year 2001. The paper aims to spot key reasons behind the declining performance the company experienced in the late 1990s a few years after the start of its globalization plan in the year 1987. The plan initiated under the new leadership of David Whitwam encountered many problems in its early stages illustrated in a declining profitability in its home market, losses in the European market and failure in some of its joint ventures in the Asian market.1 With such poor performance and failure in achieving competitive edges in global markets, Whirlpool was at a great risk of losing huge investments made in foreign markets, and losing highly-potential market shares in emerging international markets to aggressive competitors. The paper illustrates core strategic mistakes around three main strategies; sourcing and operations, entry, and marketing strategies adopted. The goal is to address lessons learned from Whirlpool’s experience in globalization in order to shed...

Words: 6106 - Pages: 25

Free Essay

Business

...Running he WHIRL ead: LPOOL’s GL LOBAL STR RATEGY CA ANAL ASE LYSIS Whirlpool Co W orporation’s Global Str s rategy Case Analysis International Man nagement – Assignmen 2 nt Candidate: Emad Abou uElgheit ISM - International School of Manageme f ent Doctor of Philosophy ( P (Ph.D.) Presented to: Professor Peter Horn t P 26 July 201119 July 2011 1 Word Coun 3,706 nt: 1 WHIRLPOOL’s GLOBAL STRATEGY CASE ANALYSIS 2 Abstract The paper analyses Whirlpool Corporation’s Global Strategy case study conducted in the year 2001. The paper aims to spot key reasons behind the declining performance the company experienced in the late 1990s a few years after the start of its globalization plan in the year 1987. The plan initiated under the new leadership of David Whitwam encountered many problems in its early stages illustrated in a declining profitability in its home market, losses in the European market and failure in some of its joint ventures in the Asian market.1 With such poor performance and failure in achieving competitive edges in global markets, Whirlpool was at a great risk of losing huge investments made in foreign markets, and losing highly-potential market shares in emerging international markets to aggressive competitors. The paper illustrates core strategic mistakes around three main strategies; sourcing and operations, entry, and marketing strategies adopted. The goal is to address lessons learned from Whirlpool’s......

Words: 6106 - Pages: 25

Premium Essay

Case Whirlpool

...GLOBAL SOURCING Strategic Soucing at Whirpool China Finding the ideal supplier CASE ANALYSIS Assignment 1 STRATEGIC SOURCING AT WHIRLPOOL CHINA FINDING THE IDEAL SUPPLIER CASE ANALYSIS 1. What are the key problem areas for Whirlpool? Finding the right supplier. 2. What is the importance of strategic sourcing? Sourcing the right components is the first step in launching the new product. 3. What are the pros and cons of Whirlpool’s global sourcing strategies? Cons: Payment terms. Pros: To avoid delays in launching the new product. 4. How are suppliers identified, evaluated and selected? It was necessary to define the commodity and allocate responsibilities and resources through co-ordination of global and regional activities. Using the Sourcing Strategy Development (SSD) process in 4 steps: Step 1: internal analysis, identified and prioritized the process –partner requirements, then evaluated the performance of the existing supply base and reviewed the existing supply base, it also identify the switching costs. Step 2: external analysis, which includes analysing the supplier industry and competitors and evaluating competitor performance and strategies. The evaluation process makes use of SWOT (Strength, Weakness, Opportunities, Threat). Step 3: strategy development, is to analyse the competitiveness and their financial impact. Preliminary negotiations could be carried out, a suitable strategy and suppliers should be selected......

Words: 437 - Pages: 2

Free Essay

Electrolux Case Analysis

...success in the European markets, Electrolux appliances were introduced in North America in 2004 and Hans Straberg was appointed President and CEO in 2002. * Electrolux is worlds second largest appliance maker behind Whirlpool, 50,000 employees in over 50 countries Product Offerings & Brands * Sells consumer durables (kitchen products, laundry products, floor care products) and professional products (food service equipment, laundry equipment) which are 40 million products in 150 countries. * Through its acquisition strategy in 1980s and 1990s, Electrolux has acquired different brands in global markets with various brands with half of the 40 million products sold under the global Electrolux brand. Strategic Direction * Principle is to offer products and services that consumers prefer, they benefit both the people and the environment which consumers are willing to pay a h9gher price for. * In the premium market category of household appliances * Consumer driven company with the “Thinking of You” slogan shows that they place importance on focusing on customer needs. * Vision of the company coincides with vision of its founding father 90 years ago that said every home should have a vacuum cleaner and the vision is to surpass Whirlpool and become the world s largest manufacturer of household appliances. Vision illustrated with N America marketing campaign featuring Kelly Ripa with tag line “be even more amazing.”...

Words: 1354 - Pages: 6

Premium Essay

International Relations

...Chapter 8 1. What are the advantages and disadvantages or using licensing as a market entry tool? Give examples of companies from different countries that use licensing as a global marketing strategy. Licensing: Advantages: • Low cost entry alternative • Allows licensor to circumvent tariffs, quotas, or similar export barriers • Limits political risk and risk of expropriation • Provides additional profitability with little initial investment • Provides method of circumventing tariffs, quotas, and other export barriers • Attractive ROI • Low costs to implement Disadvantages: • A limited form of participation; licensor generally has no control on marketing program associated with product produced under license. • Financial upside limited by royalty rate. • Licensees can become competitors. 2. The president of XYZ Manufacturing Company of Buffalo, New York, comes to you with a license offer from a company in Osaka. In return for sharing the company's patents and know-how, the Japanese company will pay a license fee of 5 percent of the ex-factory price of all products sold based on the U.S. company’s license. The president wants your advice. What would you tell him? Assuming XYZ is a small manufacturer with limited international experience, and if the picture for both market and sales (market share) potential are promising, licensing can be an attractive entry mode. Possibly entry into the Japanese market could be expedited by following this approach,......

Words: 3386 - Pages: 14

Premium Essay

Introduction to the Third Edition

...Spring’ and the newly formed governments are trying to find a way between global exchange and Islamic tradition. During these difficult times, emerging countries from Asia, Latin America and Africa have increasingly asserted their newly found economic and financial power and demanded a bigger participation in world governance. The tsunami that struck Fukushima in Japan in March 2011 creating a nuclear accident has convinced many nations to reconsider their energy policy. Despite all of this, globalization, even though criticized, is still active. Firms are moving to the new emerging economies in order to capture the consumption appetite of the growing middle classes. It is still relevant and important to put together all aspects of global strategic management. This third edition is still about global firms and global management. Its objective remains to help undergraduate and graduate students, as well as company executives, to understand the main issues that companies and their managers confront when they ‘go global’ or ‘manage globally’, and to cope with these issues. Data have been updated and several new cases and examples added. At the end of each chapter there are now one or two new ‘Mini-Cases’ that students may discuss in class. The book...

Words: 2794 - Pages: 12

Premium Essay

International Business

...The lesson we can derive from this case is that outsourcing is not just a wage difference between two places but skills and attitudes. Finally, there are a large number of US companies buying professional services from Asian countries. Clearly, skilled workers will be found and hired wherever they are. Countries, such as, India, Pakistan and China are good labor pools (Prahalad 2005.) It follows that multinational and global companies will find skilled labor overseas and start operations or buy services in foreign lands. Qua hay The influence of outsourcing should be recognized. Whirlpool, for instance, has a global network, supplies washing machines from Germany, and microwave ovens designed in Sweden that are and made in China while other appliances come from Brazil. Global companies develop first-rate centers of production and design in various countries. Countries that are abundant in human capital with a supplier base have a chance to become first-rate centers. Within this framework, designed to promote a global network, financing depends on corporate profits and funds owned by prospective partners. Du Pont, for instance, raises funds through joint ventures but retains corporate control by retaining at least 51% of the share. The importance of outsourcing and globalization is that some market imperfections are removed. When imperfections are removed, prices converge. This means that factor price differentials in...

Words: 2265 - Pages: 10

Premium Essay

Global & International Business Contexts

...management issues will be taken into account and analysed before developing any further operations into the Indian food retail industry. In Part 3, two market entry strategies will be selected, compared, and discuss the advantages and limitations of each to determine the optimal strategy to be implemented in regards to the Indian food retail industry. 2.0 Part 1: PORTER’S NATIONAL DIAMOND ANALYSIS India has experienced significant social and economic change as of late, enabling a solid consumer market for foreign retailers. According to UNICEF, the Indian economy has been booming, with an average GDP growth rate of 4.5% from 1997 to 2007 (Mann & Byun, 2011), and is anticipated to be the world's third greatest economy after the USA and China by 2050. When market size, development prospects, and consumer wealth and preparedness are considered to determine the retail food index, India falls within the main five nations (Mann & Byun, 2011).This spell of flourishing has come...

Words: 3769 - Pages: 16

Premium Essay

Aaa Framework

...Ghemawat’s “AAA” Global Strategy Framework Ghemawat so-called AAA framework offers three generic approaches to global value creation. Adaptation strategies strategies that seek to increase revenues and market share by tailoring one or more components of a firm’s business model to suit local requirements or preferences. Aggregation strategies focus on achieving economies of scale or scope by creating regional or global efficiencies; they typically involve standardizing a significant portion of the value proposition and grouping together development and production processes. Arbitrage is about exploiting economic or other differences between national or regional markets, usually by locating separate parts of the supply chain in different places. Adaptation Adaptation—creating global value by changing one or more elements of a company’s offer to meet local requirements or preferences—is probably the most widely used global strategy. The reason for this will be readily apparent: some degree of adaptation is essential or unavoidable for virtually all products in all parts of the world. The taste of Coca-Cola in Europe is different from that in the United States, reflecting differences in water quality and the kind and amount of sugar added. The packaging of construction adhesive in the United States informs customers how many square feet it will cover; the same package in Europe must do so in square meters. Even commodities such as cement are not immune: its pricing in......

Words: 5113 - Pages: 21

Premium Essay

Report 1

...Progress Report 1 * Which stocks did you invest in during this period? 1. Apple 2. Intel 3. Microsoft 4. International Business Machines 5. General Motors 6. Go Pro 7. AT&T INC. 8. Skyworks solutions 9. Cognizant Technology Solutions 10. CVS Caremark Corporation 11. Merck 12. Home Depot 13. Whirlpool Corporation 14. Vertex Pharmaceuticals Incorporated 15. Tata Motors 16. TreeHouse Foods 17. Amira Nature Foods 18. SAP AG 19. Infosys Sponsored American Deposit Receipt 20. Qualcomm Incorporated. * What are the weights you allocated to each stock and why?   In my stategy, I said that I am going to divide my total money into 4 part, 125,000 each. One for technology stock, one for consumer stocks, one using the value investing strategy and lastly, one for investing in bond. Since the beginning of the trading period I haven’t invested in any Bonds yet because I’m still trying to figure out which one to invest in. So far my weights for ever sector is as follows: Technology stocks (0.5937), Consumer Stocks (0.0217), Value Investing strategy (0.5096). I also calculated the individual weights for every stock against the total. The weights are as follows: Apple – 0.001920. I only bought 10 shares of AAPL because, even though the stock has been doing really good in the market, I’m still quite hesitant about it and I feel like it’s a risky......

Words: 4038 - Pages: 17

Premium Essay

Pure It

...A PROJECT REPORT ON A Study on marketing mix & competitive analysis of “Pure it” (HUL) Submitted By: Smruti Ranjan Das Roll No. 049 PGDM-RM 2009-11 UNDER THE GUIDANCE OF Dr. R. Padmaja (Assistant Prof. Marketing) IN PARTIAL FULFILMENT FOR THE AWARD OF THE DEGREE OF POST GRADUATE DIPLOMA IN MANAGEMENT (RETAIL & MARKETING) INSTITUTE OF PUBLIC ENTERPRISE OSMANIA UNIVERSITY CAMPUS HYDERABAD – 500 007 DECLARATION I, Smruti Ranjan Das, a student of PGDM-RM (2009-11) studying at IPE (Institute of Public Enterprise), Hyderabad, solemnly declare that the project work titled- ‘A Study on Effectiveness of Kiosk-based sales channel & competitive analysis of “Pure it” (HUL)’ was carried out by me at Hindustan Unilever Limited; Hyderabad, in partial fulfillment of the PGDM programme.This programme was undertaken as a part of academic curriculum according to the University rules and norms and by no commercial interest and motives. Place: Date Smruti Ranjan Das PGDM-RM (049) 2009-11 ACKNOWLEDGEMENT I feel great pleasure for the completion of this project. At the......

Words: 10345 - Pages: 42

Premium Essay

A Strategic Analysis of Surging Chinese Manufacturers the Case of Galanz

...Manage (2008) 25:667–683 DOI 10.1007/s10490-007-9073-0 A strategic analysis of surging Chinese manufacturers: The case of Galanz Gloria L. Ge & Daniel Z. Ding Published online: 10 November 2007 # Springer Science + Business Media, LLC 2007 Abstract Recent years have witnessed the surging of Chinese manufacturers, as China has become the world’s factory floor. This paper presents a case study of one of the most successful manufacturers in China, the Galanz Group, now the world’s largest microwave manufacturer. Based on theories of multinational corporations from emerging economies, the paper examines the process of Galanz’s integration into the global market. The company has developed unique competitive strategies that have made it a great success within China and in overseas markets. The Galanz model suggests strong strategic implications for both Chinese firms and incumbent multinational corporations. Keywords Chinese manufacturers . Strategic analysis . Internationalization . Galanz In the last two decades, China has maintained an average annual growth rate above 7%. China is rising as one of the world’s largest economies and trading powers. As China becomes the world’s manufacturing floor, the competitiveness of Chinese manufacturers and their impacts have emerged as a hot topic. China’s manufacturing output now ranks third in the world only behind the United States and Japan, after overtaking Germany in 2003 (China Daily 2005). Many Chinese manufacturers have grown......

Words: 8653 - Pages: 35

Free Essay

Philips vs Matsuhita

...9-910-410 DECEMBER 11, 2009 CHRISTOPHER A. BARTLETT Philips versus Matsushita: The Competitive Battle Continues Throughout their long histories, N.V. Philips (Netherlands) and Matsushita Electric (Japan) had followed very different strategies and emerged with very different organizational capabilities. Philips built its success on a worldwide portfolio of responsive national organizations while Matsushita based its global competitiveness on its centralized, highly efficient operations in Japan. During the first decade of the 21st century, however, both companies experienced major challenges to their historic competitive positions and organizational models. Implementing yet another round of strategic initiatives and organizational restructurings, the CEOs at both companies were taking their respective organizations in very different directions. At the end of the decade, observers wondered how the changes would affect their long-running competitive battle. Philips: Background In 1892, Gerard Philips and his father opened a small light-bulb factory in Eindhoven, Holland. When their venture almost failed, they recruited Gerard’s brother, Anton, an excellent salesman and manager. By 1900, Philips was the third largest light-bulb producer in Europe. Technological Competence and Geographic Expansion While larger electrical products companies were racing to diversify, Philips made only light-bulbs. This one-product focus and Gerard’s technological prowess......

Words: 9318 - Pages: 38

Free Essay

Korea Analysis

...exclusive use of C. Fang, 2015. 9-910-410 DECEMBER 11, 2009 CHRISTOPHER A. BARTLETT Philips versus Matsushita: The Competitive Battle Continues Throughout their long histories, N.V. Philips (Netherlands) and Matsushita Electric (Japan) had followed very different strategies and emerged with very different organizational capabilities. Philips built its success on a worldwide portfolio of responsive national organizations while Matsushita based its global competitiveness on its centralized, highly efficient operations in Japan. During the first decade of the 21st century, however, both companies experienced major challenges to their historic competitive positions and organizational models. Implementing yet another round of strategic initiatives and organizational restructurings, the CEOs at both companies were taking their respective organizations in very different directions. At the end of the decade, observers wondered how the changes would affect their long-running competitive battle. Philips: Background In 1892, Gerard Philips and his father opened a small light-bulb factory in Eindhoven, Holland. When their venture almost failed, they recruited Gerard’s brother, Anton, an excellent salesman and manager. By 1900, Philips was the third largest light-bulb producer in Europe. Technological Competence and Geographic Expansion While larger electrical products companies were racing to diversify, Philips made only light-bulbs. This one-product focus......

Words: 10078 - Pages: 41