Case Analysis on Whirlpool and the Global Appliance Industry

1. 2015
Case Analysis on Whirlpool and
the Global Appliance Industry
By:-
Pratick Choudhury-22
Ranjini R -24
Samrat Mazumdar -25

2. GROUP 4 Analysis on Whirlpool and the Global Appliance Industry Page 2
Introduction
 The Whirlpool Corporation is an American multinational manufacturer and
marketer of home appliances, headquartered in Benton Charter Township,
Michigan, United States, near Benton Harbor, Michigan.
 This Fortune500 Company has an annual revenueof approximately $20
billion, 100,000 employees, and morethan 70 manufacturing and
technology research centres around the world.
Current facts & figures
CEO: Jeff M. Fettig
Operating income: US$ 1.188 billion (2014)
Profit: US$ 650 million (2014)
Total assets: US$ 20.002 billion (2014)
Total equity: US$ 4.885 billion (2014)
AreaServed: Worldwide
Mission and Vision:
Mission: CreateDemand and Earn TrustEvery day.
Vision: The Best Branded Consumer Products … in Every Home Around the
World
Whirlpool Corporation is the #1 major appliance manufacturer in the world
7 brands each generate more than $1 billion in annual sales

3. GROUP 4 Analysis on Whirlpool and the Global Appliance Industry Page 3
Problem Statement
 Low bottom line in mature market due to price war.
 Need to increase revenue and bottom line.
 Weak sales outside North America.
 Customers were demanding more environmentally friendly products.
What Whirlpool did?
 Integrated it’s geographical businesses across boundaries wherever possible, so that
 Advanced expertise in any given area—whether it’s refrigeration technology, financial
reporting systems, or distribution strategy—isn’t confined to one location or one division.
According to Whirlpool CEO David Whitwam, “We want to be able to take the best capabilities
we have and leverage them in all of our operations worldwide.”
Why did it think to go global ?
 They first analyzed were they stood during the latter half of 1980’s.Since Whirlpool was
successful, profitable, and reasonably secure in the domestic market in US it had never
thought of future growth where it would stand after a decade. They did extensive analysis
ranging 8 months and turned up a great deal of evidence that, over time, the house hold
appliance industry would become global.
 Profit margins in North America had been declining because of tough competition among
big 4 - Whirlpool, General Electric, Maytag, and White Consolidated, which had been
acquired by Electrolux.
Although they thought of going global
Since Whirlpool was only catering to the domestic market of US, it wouldn’t have been possible
with the existing capabilities to go global.
Analyzed what options were there at hand
1.Ignore the future growth and let Whirlpool proceed the way it was doing then.
2.Get to a catch up mode and wait for globalization to start.
3.Change their strategy and go global to let competitors follow them.
But Electrolux was already one step ahead.It was acquiring several appliance makers in Europe
but was only taking advantage of individual opportunities rather than aiming for the broader
perspective. Whirlpool decided to go global for it’s future growth.

4. GROUP 4 Analysis on Whirlpool and the Global Appliance Industry Page 4
What strategy did Whirlpool follow to go global?
1.Get the whole organization to think globally. How?
So they started by
1. Redefining their vision and setting organizational goals to develop common technology
and process.
 For a company to become global,the entire organization needs to align itself with the
vision and objectives and change the way they think and act taking more initiatives and
responsibilities to achieve the objective of a global company.
 There needs to be a vision to help the employees of the organization know what they are
striving to achieve. The employees of Whirlpool needed a vision so that their efforts
could be guided by these set of organizational goals.
2.Align the senior, middle management and the employees with these organizational goals.
Adopted a People excellence strategy.
 Employees are very much a part of the organization decision making process and
challenge if they are not satisfied with any decision. In Whirlpool there were employees
in manufacturing plants and operations who were working for 25-30 years and didn’t sign
up to be a part of global organization. So Whirlpool had to first build a trust among its
employees and encourage them to think as owners.
 Also they gave employees more responsibility and they did all activities starting from
recruitment to operations to employee termination recommendations without any
supervisor heading them. They were allowed to drive the quality across Whirlpool to
make it a global player.
 Employees were explained that by going global they would be creating value for
shareholders and in turn creating value for all the stakeholders of the company.
 Whirlpool also had a ‘pay for performance’ compensation system to motivate employees.
3.Embed the organizational goals and vision in the day to day activities of Whirlpool.Led
to OperationalExcellence.
 Brought 150 of senior managers to Montreux, Switzerland, for a week to develop their
global vision.

5. GROUP 4 Analysis on Whirlpool and the Global Appliance Industry Page 5
 Those 150 people were accountable for educating all of our 38,000 people around the
world about Whirlpool’s vision and long term goals.
 Managers at Montreux commissioned 15 projects towards the end called One-Company
Challenges which ranged from creating a global product-strategy review process to
developing a product-creation process worldwide.
 Led to the creation of Whirlpool Excellence System (WES).
 Annual meetings of the top 150 managers bringing all development, marketing, and
manufacturing leaders together twice a year for global product and technology reviews.
 Remind everyone frequently about the new organizational goals.
4.Inject new skills
 Since Whirlpool executives were from North America, their knowledge and experience
was limited.
 Tried to match existing skills with emerging global market requirements and found that it
needed training programs in some cases but for others ,they recruited from outside/local
areas.
2. Adopted a long term growth and Brand Leadership strategy rather than thinking
about short term gain.
 To reach the global level, requires patience and things can’t happen overnight.
 When Whirlpool acquired Philips on entering into Europe, instead of simply forcing their
own pre-conceptions they sent only 2 people in the 1st year and none was a senior
manager, in the 2nd year they sent 6 US managers. Their aim was to communicate the
company’s vision, objectives, and philosophy to the European workforce. Building a
shared base of understanding takes time, and Whirlpool had to learn how to do that in a
multilingual, multinational environment. Gradually it redesigned Philip’s business model.
 Similarly in Asia, first started with learning phase to build a distribution system in
Southeast Asia and to gain an understanding of the consumer.
 Has been successful in developing a branding strategy. Whirlpool is an umbrella brand
that operates 7 brands under it. Different brands are targeted to certain quality and price
levels. Strong Brand reputation helps it to expand operations into new regions with new
products.
 Example-Maytag Launched a new line of products in dish washer segment and was able
to through successful branding and large brand presence in washer/dryer category it was
able to capture the second largest market share in the segment.

6. GROUP 4 Analysis on Whirlpool and the Global Appliance Industry Page 6
3.Taking customer needs into consideration to attain customer satisfaction
 According to David Whitwam a compelling reason other than price had to be provided to
attract consumers, which was to understand customer requirements and translating them
into products with superior designs, features, and after-sales support.
 To create breakthroughs,Whirlpool realized that it had to study lifestyle of consumer and
gain knowledge as to what type of appliance consumer wanted.
 Whirlpool’s goal was to make consumers prefer the brand because it offered greater
overall value than the other competing products. To achieve this goal, Whirlpool took a
step back from the current business and thought about the needs of the customer. It meant
rethinking and restructuring the very nature of the existing business.
 Whirlpool didn’t widen the range of products, but innovated and manufactured such
products which accomplished the needs of customers for which they purchased the
product. In a nutshell, they targeted at increasing the product line rather than expanding
the product depth of the existing products.
 Whitwam said that in rapidly segmenting consumer markets, an organization had to
understand kinds of lifestyles consumers had five years from then and beyond.
This could be achieved by two ways:
 By developing close relationships with organizations in related businesses.
 By moving towards consolidation of suppliers.
 At the same time, Whirlpool was also careful to prevent any weakening of functional
excellence. It was the job of the vice president of manufacturing for the North American
Appliance Group to drive functional excellence. It was very important to benchmark
single functions even while working multi-functionally. Though it was a tough balance, it
was achieved with the ongoing effort.
 Eventually this approach created a relationship between Whirlpool and its customers as
that of partners where both would be trying to solve the consumer needs.
 With globalization it was no longer necessary that the best minds be concentrated at 1
place and Whirlpool was already working in virtual teams effectively.

7. GROUP 4 Analysis on Whirlpool and the Global Appliance Industry Page 7
4.Expansion and Diversification-Adopted Standardization and ProductLeadership
Strategy
1. Even though Whirlpool needed plants in Europe, the United States, Latin America, and Asia
to make products that meet special needs of local markets, it was still possible and desirable for
those plants to share the best available product technologies and manufacturing processes which
means that although features, dimensions, and configurations of machines like refrigerators,
washing machines, and ovens will vary from market to market, much of the technology and
manufacturing processes involved were similar.There was a common standardization platform
after which appliances were adapted according to local and consumer needs.
SWOT Analysis:
Strength: Weakness:
 Market Leader . Local Agility
 Brand Name .Insufficient knowledge to
 Economies of Scale penetrate Asia & others market
 Management
Opportunities: Threats:
 Potential for increasing .Increasing demands of
 Global expansion customers for new
 More market share in standards.
BRICS . Increasing competition.
. Increasing production cost
China and Asia:
 For global success, manufacturers should have access to distribution channels so that
products could be easily available across different Chinese regions.
 Large appliance manufacturers should have large scope of products i.e. varied product
line, for a greater success.

8. GROUP 4 Analysis on Whirlpool and the Global Appliance Industry Page 8
United States:
 Companies must develop innovative products that incorporate new features efficiently.
 The products should be of high quality.
Europe:
 Companies should develop innovative products that are efficient and environmentally
friendly.
 Quality of products must be a priority for the company.
Latin America:
 Company should provide excellent service to the customer since customers hold the
products for a longer time in Latin America.
 High quality products should be developed by the company.

9. GROUP 4 Analysis on Whirlpool and the Global Appliance Industry Page 9
Future scope
1997:
Company launches a global restructuring involving the elimination of 4,700 jobs, the
closure of plants and other facilities, and a charge of $350 million.
2000:
Another major restructuring is launched that includes more than 7,000 job cuts and $373
million in charges over the following two years.
 Whirlpool is still following these strategies that led to it’s success as a global player.
 With two acquisitions in 2014, Whirlpool Corporation became more geographically
diverse.
 Whirlpool is a global collection of small communities. They leverage broad scale but rely
on individual regions to personalize products to meet the consumers’ needs.
 Introduced more than 70 new product launches in 2014 alone — across all of their
brands.
 Proactive management approach in emerging markets which includes a continual
emphasis on cost productivity, restructuring programs that lower fixed costs, new
product introductions that drive improved price-mix and, as appropriate, cost-based
price increases to offset inflationary headwinds.
 Successfully integrated the businesses in Europe and Asia and fully leveraging the new,
expanded global platform to create shareholder value in 2014.
 On the way to create a great global platform for future growth.

10. GROUP 4 Analysis on Whirlpool and the Global Appliance Industry Page 10
Our Analysis
 China and Asia are part of emerging markets and targeting these was the right expansion
decision by Whirlpool.
 Think global act local was a success. They adapted their standardized products according
to customer needs and expectations were they expanded. Adopted standardization
strategy.
 Price and quality ,they thought of customer needs also. They designed their vision and
objective goals taking into consideration customers.
 Instead of greater product depth they increased product lines by continuous innovation
based on customer needs and expectations. Adopted Product Leadership strategy. Catered
to number of product segments with a wide scope of products.
 More focused on long term brand leadership strategies rather than short term gains.
 Aligned the entire organization into a single mentality company.
 Had competitive and low prices to compete in the industry and increase demand to
achieve economies of scale. Adopted price sensitivity strategy.
 High Quality products at Low prices was it’s aim based on customer needs and wants.
References
1.Wikipedia-Whirlpool Corporation -https://en.wikipedia.org/wiki/Whirlpool Corporation
2. The Right Way to Go Global: An Interview with Whirlpool CEO David Whitwam-HBR
(March-April 1994)
3.Whirlpool site-www.whirlpool.com
4.Whirlpool Corporation Reports Full Year(2014)
http://investors.whirlpoolcorp.com/releasedetail.cfm?releaseid=894543