CASE STUDY WHIRLPOOL

Case Study Whirlpool's Dramatic Turnaround through Internationalization



Case Study Whirlpool- Dramatic Turnaround through Internationalization

Q1 Answer

The Whirlpool Corporation manufactures dryers, washers, refrigerators, freezers, dishwashers, microwave ovens, compactors and ranges in thirteen countries and trades them in almost 170 countries under the brand names Whirlpool, Magic Chef, Maytag, Jenn-Air, Kitchen Aid, Amana, Kenmore, Bauknecht and Brastemp. Whirlpool generated more than $19 billion in 2006 as the annual sales indicting an increase of 26% from fiscal 2005. This was due to increased international demand for its innovative products and brands. Whirlpool acquired Maytag Corporation in the same year in a bid to increase the sale levels. The company employs not less than 80,000 employees in more than 60 technology and manufacturing centers in the whole world. The firm generates nearly 60% of its total sales from the North America niche, 25% from Europe, 15% from Latin America and 2% from Asian markets.

Whirlpool suffers some risks which include low profit margins due to increase in the number of demanding buyers counteracted with high domestic competition. The domestic markets are at risk due to the competition from Haier, the largest appliances brand in China. This fifth largest appliance maker in the world has established a distribution centre and some production base in U.S specifically, South Carolina. Haier has recently established a subsidiary in New York, thus threatening Whirlpool's domestic market on various appliances targeting the locals. For example, Haier has taken 20% of market for window air conditioners and 50% of the markets for small refrigerators, and it's currently expanding to feature full size refrigerators niche. This is a huge risk for the Whirlpool Corporation because a risk involving another company investing in the local market threatens whirlpool's capacity for retaining local niche as well as sourcing for human capital (Hill, 1999).

Q2 Answer

Whirlpool enhances competitiveness in the domestic market by going international. Internationalization raises the level of profits by stabilizing the seasonal fluctuations in the sales volumes commonly associated with local demand. Internationalization helps curtail production costs and other related marketing expenses owing to economies of scale. Similarly, going international extended the potential sales of the products that existed and helped the company to gain greater global market share. The firm also takes pride in advanced technology associated with some global markets such as China, Poland and Mexico. As a result, this has helped in saving on costs associated with unnecessary technology transfers. Considering internationalization has boosted whirlpool ability in retaining high technology levels as well as skilled labor force sourced across nations. Going global enhances profitability levels owing to the perceived currency strength across nations (Brown& Gutterman, 2003).

Q3 Answer

Whirlpool integrated local subsidiaries operations in order to enhance its technology capacity locally and perhaps transfer this to the global market for competitive reasons. As result, processes such as production and distribution are easily shared with the company divisions in global niche. During this integration whirlpool acquired other appliance businesses from various regions in Europe, Italy, Poland, Bulgaria, Hungary, Russia, Romania, Czech Republic and ...