Free Essay

Whirpool Global Strategy

In: Business and Management

Submitted By shmpradhan
Words 1548
Pages 7
Whirlpool and the Global Appliance Industry
Xavier’s Institute of Management

By:
Soham Pradhan - UEMF15027
Srijeet Mishra - UEMF15028
Sumeet Patnaik - UEMF15029
By:
Soham Pradhan - UEMF15027
Srijeet Mishra - UEMF15028
Sumeet Patnaik - UEMF15029

INTRODUCTION TO HOME APPLIANCE INDUSTRY:
Home appliances market include; washing machines/ dryers, fridges and freezers, coffee machines, air conditioners, heaters, TVs, recording devices etc.
The global market for household appliances can be split into two parts. 1. Mature markets (Western Europe, North America, Japan and Australia/New Zealand) : * Population growth is low. * Sales are dominated by replacement products. * Consumers are more conscious about Green aspects of every product. 2. Growth markets (Africa, the Middle East, Eastern Europe, Latin America, Southeast Asia and China) : * Rapidly rising standards of living. * Growing middle class per capita income. * Higher economic growth.

GLOBAL MAJOR HOME APPLIANCE PLAYERS Whirlpool | LG Electronics | Haier | Samsung | Bosch-Simens | Electrolux | MIdea | |

Company Overview: Whirlpool
Whirlpool (WHR) a US based company ,is one of the world’s leading household appliance manufacturers, which specializes in laundry appliances, refrigerators and freezers, cooking appliances, dishwashers, mixers, and other portable household appliances. These household appliances are sold under various brand names, including Whirlpool, Maytag, Kitchen Aid, Jenn-Air, Amana, Roper, Estate, Admiral, Gladiator, Inglis, Acros, Supermatic, Consul, and Brastemp.
Whirlpool has largest markets share in USA.
Under The guidance of CEO Mr. David Whitman, Whirlpool could see the opportunities in growth market and could conclude to control own destiny and shape the very nature of globalisation. * VISION: To integrate geographical businesses so that the best expertise can be transferred and leveraged upon all operations worldwide.
Global Strategies adopted by Whirlpool: 1. Entry Strategies : * Europe: Acquisition of Dutch consumer goods giant, Philips Electronics. * Asia: Joint venture with five Asian manufacturers for refrigerators, washers, air-conditioners and microwave ovens.

2. Branding : * Whirlpool prime motive was to promote itself as single Global brand.
Eg: Spent $135 million in Europe for its branding after acquiring Philips. * A successful single global brand will help in easy acceptability of new products.

3. Centralised Purchasing : * It helped in controlling the price of the raw materials * Number of suppliers were reduced by 50% ( from 1600 to 800).

4. Product Standardisation : * Basic functionalities and technology of home appliances are similar across the globe. * Product has to be only altered in terms of size and capacity.
Eg.: Whirlpool redesigned the automatic washers of Philips Italy and Germany so that it shared more parts. * This led to reduction of warehouses form 36 to 8.

5. Product Innovations : * Product innovations were triggered by local consumer need and expectation.
Eg. : It developed new Crisp wave microwave oven for European customers appetising for brown and crisp food.
OVERVIEW OF GLOBAL KEY SUCCESS FACTORS
Brand and price sensitivity are the factors that is globally applicable. Apart from this following are the key success factors relevant to growth or mature market. S.NO. | KEY SUCCESS FACTOR | GROWTH MARKET | MATURE MARKET | 1 | Access to distribution channel | Asia, China | - | 2 | Availability of large product mix | Asia, China | - | 3 | Innovative Product | - | Japan,USA,Europe | 4 | High Product Quality | Latin America | Japan,USA,Europe | 5 | Excellent After slaes service | Latin America | - |

This helps global company to have broad positioning of their products and mode of service selection.
Benefits from going Global * Whirlpool has reduced its costs of R&D, manufacturing, and service by locating plants and other operations in lower cost locations such as China, Mexico, and Poland. * Management integrated the activities of regional subsidiaries so that Whirlpool’s most advanced expertise in appliance technology, production, and distribution could be shared with the firm’s division’s worldwide. * Whirlpool is a leading exemplar of how globalisation revives declining sales and optimizes cost structures. It has developed international value chains that minimize expenses, leading to higher profits.
Questions
1. Whirlpool’s marketing goal is to leverage resources across borders. How is this evident in its marketing approach?
As evidenced on the Whirlpool’s international websites, * A similar “look and feel “of high quality is maintained, and satisfaction is consistently advertised. However, products are designed specifically to meet individual country and cultural demands. * The high standard for each particular demand is met through this “look and feel” of Whirlpool. * Because of this similar overall structure of the product, the basic resources used in production will be the same across the board, although the individual functions will be slightly different.

2. The challenge facing Whirlpool is not only external in catering to local customer’s needs worldwide, but also internal – all the regional and local units have to “buy in “ to the global vision .What types of particular issues (such as product or technology transfer) may arise, and how should they be dealt with?
We think Whirlpool's difficulties with its global strategy are due to both internal factors and external factors beyond its control, but maybe the internal factor affect it most. * It is not only important to recognize new market opportunities, but to also recognize that needs change even among those consumers in mature, replacement markets. Shifting demands driven by all aspects of our society are an opportunity for us to deliver different value to consumers,” Whirlpool's president said. According to these words from Henry O. Marcy, we can know the internal factors * Innovating in itself is a challenge because it requires investment in R&D. Of course, increased investment is difficult when the cost of manufacturing in regions like the U.S. is so high. Pulling out some more useful facts, * Some study revealed that external overhead costs experienced by U.S. producers add at least 22.4 percent to unit labor costs compared to U.S. trading partners. Another challenge is that as today's manufacturers try to branch out to other markets, certain international barriers make it hard to compete.
Eg: U.S. manufacturers of hair clippers, for example, can't sell their products to China without paying a 40-percent import tariff, while the U.S. tariff on the same product is only 4 percent, he said. Also, European advocates are pushing to ban the use of Huffs, which discriminate against American-style refrigerator designs that heavily rely on the refrigerant.
While challenges certainly exist in today's competitive landscape—whether on a global scale or at the local retail level—Mr. Whitman concluded that it all comes back to innovation and differentiation. * Whirlpool has thrived through sensitivity and commitment to consumers diverse cultural and economic setting around the world. * As part of its innovation strategy, cross regional teams collaborate to adapt Whirlpool offerings to local markets * Examples like * Spanish want refrigeration capacity for meats. * British want well-constructed units. * French want refrigeration capacity for fruits and vegetables. * Germans care about environmental features. * Danes spin-dry clothing. * Italians line-dry clothing and care about child safety features. * Indians want a high level of cleanliness, whiteness = purity. * The appliance Industry can leverage global efficiencies in terms of appliance technology, production and distribution. However tailoring appliances to local markets is also important, as exemplified above. Thus the industry demands the integrated approach – global and local/regional.

3. NEW MARKET TRENS IN HOME APPLIANCE as per Home Appliance Manufacturers.

The below mentioned products are not under the product portfolio of Whirlpool .It has to further diversify itself to cater to the new demand and opportunity.

I. Small Appliances : Consumers want appliances that are time savers, are convenient to use, provide easy clean-up, are stylish, have multiple applications, promote healthy cooking and maintain a healthy environment in the home.
There is growing trend towards the use of cordless electrics in the kitchen.
High on trendy list are: bread makers, rice cookers, sandwich makers, coffee grinders/mills and espresso/cappuccino makers.

II. PERSONAL CARE : In the personal care category, trends include the introduction of a wide selection of massagers, plaque fighting electric toothbrushes and steam hair rollers. Massagers are the heavy hitters in this category since so many homeowners try to maximize leisure time with strenuous exercise/fitness programs, gardening and catching up on household chores resulting in tired, achy muscles. Personal care products are always popular. From hair care products to irons, they help improve your appearance, pamper your body and save you time.

III. Food Waste Disposer : Each year in the United States, millions of tons of food waste is trucked to landfills. Once there, it quickly decomposes and produces methane, an environmentally harmful greenhouse gas that is at least 21 times more harmful than CO2.
Food waste disposers provide a convenient and environmentally friendly alternative to transporting leftovers to landfills. Plus, capable wastewater treatment plants can even recycle food scraps into energy and fertilizer.
Through this environment beneficial product can be easily promoted to Green conscious customers.

Conclusion:
The Whirlpool Corporation is a strong company with a solid strategy as its base. For many years Whirlpool has been a leading manufacturer and marketer of home appliances, at home as well as abroad. With the ever increasing globalization of our economy, Whirlpool will need to treat each of its foreign markets as a separate market with its own separate needs and identity. To grow and to remain successful and capitalize on the many growing world markets, Whirlpool has, and must continue to expand globally. While expanding, Whirlpool must continuously evaluate and assess its performance and direction so that it may continue as a global market leader in the appliance industry.

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