David Whitwam’s timing couldn’t have been worse. Just as the company was planting its feet in international markets, economic turmoil hit Asia and Europe. Whildly fluctuating foreign exchange rates wreaked havoc in Asia, where Whirlpool had participated in several joint ventures. Fortunately, less than 5% of Whirlpool’s sales came from Asia, so the company was not seriously hurt. Still, ongoing global economic woes contributed to Whirlpool’s multimillion dollar losses overseas. The global economic crisis forced Whitwam to fine-tune his expansion plans. Whirlpool dropped one joint venture in China (costing the company 350 million) and rearranged others as weak economic conditions and intense competition drove appliance prices down and sapped profits. “The thing we misjudged was how rapidly Chinese manufactureres could improve their quality,” notes Whitwam. In Brazil, where Whirlpool had long been profitable, a currency crises coupled with inflation worries slowed appliance sales to a trickle. Still, Whitman remained commited to the market. Anticipating future growth opportunities in this emerging market, Whirlpool invested hundreds of millions dollars to modernize operations, cut costs, and solidify its position as the country’s market leader in refrigerators, room air conditioners, and washers. David Whitwam’s global strategy, however, was not widely copied by rivals. As Whirlpool continued to expand in Europe, Latin America, and Asia, the company’s major businesses to refocus on the lucrative North American market. Nevertheless, Whitwam was willing to ride out the storm, even as global economic troubles dragged on. Whitwam expedited Whirlpool’s entry into foreign markets by focusing less on manufacturing it’s own products overseas and more on developing licensing arrangements and strategic alliances with other companies. For example, Whirlpool formed strategic alliances with Tupperware to work joinly on marketing, branding and product developmnet in Europ, Africa and the Middle East. Whirlpool also kept things simple by developing basic appliance models that used 70% of the same parts. For instance, feature-rich German appliances were combined with efficient, low-cost Italian technologies to produce a “world washer.” Then Whirlpool modified the machines for local preferences. Front-loading washing machines were scaled down for European homes, as were refrigerators for India. Despite their widely different exteriors and sizes, the appliances had plenty of common parts and designs. In less than a decade, Whitwam transformed Whirlpool from essentially a US company into the world’s leading manufacturer of major home appliances. With more than a dozen major brands sold in 170 countries, international sales now account for about 45 percent of the company’s 11 billion annual revenue. Moreover, the outjlook for growth in the global appliance industy looks promising. Still, Whitwam understands that doing business in the global marketplace is fraught with risk; conditions can change at th edrop of a baht, ruble, or dollar. 1) Identify 5 threats and 5 strengths for Whirlpool 2) Does Whirlpool use multinational or global strategy? Justify Your answer
David Whitwam’s timing couldn’t have been worse. Just as the company was planting its feet in international markets, economic turmoil hit Asia and Europe. Whildly fluctuating foreign exchange rates wreaked havoc in Asia, where Whirlpool had participated in several joint ventures. Fortunately, less than 5% of Whirlpool’s sales came from Asia, so the company was not seriously hurt. Still, ongoing global economic woes contributed to Whirlpool’s multimillion dollar losses overseas.
The global economic crisis forced Whitwam to fine-tune his expansion plans. Whirlpool dropped one joint venture in China (costing the company 350 million) and rearranged others as weak economic conditions and intense competition drove appliance prices down and sapped profits. “The thing we misjudged was how rapidly Chinese manufactureres could improve their quality,” notes Whitwam.
In Brazil, where Whirlpool had long been profitable, a currency crises coupled with inflation worries slowed appliance sales to a trickle. Still, Whitman remained commited to the market. Anticipating future growth opportunities in this emerging market, Whirlpool invested hundreds of millions dollars to modernize operations, cut costs, and solidify its position as the country’s market leader in refrigerators, room air conditioners, and washers.
David Whitwam’s global strategy, however, was not widely copied by rivals. As Whirlpool continued to expand in Europe, Latin America, and Asia, the company’s major businesses to refocus on the lucrative North American market. Nevertheless, Whitwam was willing to ride out the storm, even as global economic troubles dragged on.
Whitwam expedited Whirlpool’s entry into foreign markets by focusing less on manufacturing it’s own products overseas and more on developing licensing arrangements and strategic alliances with other companies. For example, Whirlpool formed strategic alliances with Tupperware to work joinly on marketing, branding and product developmnet in Europ, Africa and the Middle East.
Whirlpool also kept things simple by developing basic appliance models that used 70% of the same parts. For instance, feature-rich German appliances were combined with efficient, low-cost Italian technologies to produce a “world washer.” Then Whirlpool modified the machines for local preferences. Front-loading washing machines were scaled down for European homes, as were refrigerators for India. Despite their widely different exteriors and sizes, the appliances had plenty of common parts and designs.
In less than a decade, Whitwam transformed Whirlpool from essentially a US company into the world’s leading manufacturer of major home appliances. With more than a dozen major brands sold in 170 countries, international sales now account for about 45 percent of the company’s 11 billion annual revenue. Moreover, the outjlook for growth in the global appliance industy looks promising. Still, Whitwam understands that doing business in the global marketplace is fraught with risk; conditions can change at th edrop of a baht, ruble, or dollar.
1) Identify 5 threats and 5 strengths for Whirlpool
2) Does Whirlpool use multinational or global strategy? Justify Your answer
3) Should Whirlpool be concerned about a currency devaluation in a country where it sells few appliances? Why? Explain your answer
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