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Whirlpool and the Global

Appliance Industry
Xaviers Institute of Management

By:
Soham Pradhan UEMF15027
Srijeet Mishra UEMF15028

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 worlds 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 :

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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.
1
2
3
4
5

KEY SUCCESS FACTOR

GROWTH MARKET

MATURE MARKET

Asia, China

Asia, China

Latin America
Latin America

Japan,USA,Europe
Japan,USA,Europe
-

Access to distribution channel


Availability of large product
mix
Innovative Product
High Product Quality
Excellent After slaes service

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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
Whirlpools most advanced expertise in appliance technology,
production, and distribution could be shared with the firms divisions
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. Whirlpools marketing goal is to leverage resources
across borders. How is this evident in its marketing
approach?
As evidenced on the Whirlpools 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 customers 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
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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 levelMr. 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.

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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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