CLOSING CASE Whirlpool: A Global Vortex Whirlpool Corporation started its journey back in 1908, with same year, Whirpool's earnings increased by 38 percent. In just 15 employees, as a manufacturer of household equip 1992, Whirlpool acquired Sagad of Argentina and Whirlpool ment. Over a century later, it is now one of the world's leading Hungarian Trading was established in Hungary. manufacturers of home appliances, with 92,000 employees In the mid 1990's, under Whitwam's aggressive glo- and annual sales revenue of approximately $21 billion. bulization strategy, Whirlpool formed JV's in China and in To meet the growing customer demands in the India to enter the Asian market. However, in 199%, despite United States, the company's first merger was in 1929 with India and China being its largest markets, Whirlpool's rev- Nineteen Hundred Washer Company, New York. The merger, cues from its Asian operations accounted for only 6 percent also known as the Nineteen Hundred Corporation, flourished of total revenues, and the company incurred losses worth during the Great Depression, and allowed the companies to 570 million. Due to the losses incurred, and as a part of its experiment with new products and innovative technologies. restructuring strategy, Whirlpool withdrew two of its JV's in It was in 1949, after World War II ended, that the owner Lou 1997. By late 1999, Whirlpool faced difficulties in driving and Fred Upton officially changed the company name from growth in its global businesses. Despite adopting various Upton Machine Company to Whirlpool Corporation. With operational initiatives to cut costs and achieve economies the brand's continued success, its product portfolio also grew of scale in its operations, Whirlpool's revenues, profits, and through mergers with various well-known brands like Seeger market share were stagnant. Refrigeration Company and RCA's air conditioning. In addi- Whitwam believed that innovative products were the tion, Whirpool entered into a partnership with Brasmotor solution, and would command premium prices and build cus- S.A, in Brazil, its first foray into the foreign market. tomer loyalty. As part of the company's competitive strategy. Whirlpool's former CEO David Whitwam, through his he emphasized the need to develop an organizational cul- determination to make Whirlpool a global brand, has been ture that would spur Whirlpool's growth through consumer- credited with integrating the international businesses and focused innovation. And he did not want it to be limited to a creating a truly global company and not just a series of inde- few people in the organization. Appointing Nancy T Snyder pendent operations by revising business goals and strategies. as the vice president of leadership and strategic competency Taking over from his predecessor Jack Sparks, Whitwam's development at Whirlpool was a way to ensure all employ- goal was to increase manufacturing productivity, reduce ces took part in the creative process. Snyder introduced the costs, and integrate new technology to appliance production. "1-box" graphing tool to allow employees to demonstrate that When he took the helm of the company, Whirlpool's primary their proposals were something that consumers would want operations were in North America. But seven years later it backing their arguments with adequate market research expanded its market around the world, with manufacturing The I-box tool allowed the flow of ideas from employees to units in II countries. His business strategy was to leverage decision makers. all its operations worldwide by bringing the best capabilities Innovation led to the introduction of more products, together in diverse geographical areas to gain competitive but integrating these products into all its markets was dif- advantage. In 1989, Whirlpool acquired N. V. Philips' floun- ficult and expensive. Whirlpool found that integrating the dering European appliance business worth $1 billion that best technologies and design processes for manufacturing resulted in catapulting Whirlpool to the number one position its products lowers costs. For each product group, it identi- in the appliance business worldwide. Unifying the strengths fied the resources and skill sets required, and built develop of both firms, Whirlpool combined the resources and tech- ment centers for that product in the region that aligned to nologies to achieve a breakthrough performance in the global the requirements. It employed the latest technology to allow market. Under his leadership, in 1990, Whirlpool formed a seamless communication between the development center IV with Japan's Panasonic Corporation, formerly known as and employees in other parts of the world. For example, the Matsushita Electric Industrial Company, to produce vacuum development center for Whirlpool's refrigeration products is cleaners, In 1991, for the first time in the history of the com- in Benton Harbor, but employees from China and Italy, who parry. full-time employees were provided stock options, In the are a part of that development center, can work remotely asCHAPTER 12 . STRATEGIES FOR ANALYZING AND ENTERING FOREIGN MARKETS virtual teams-a concept that has proven to be quite success- entirety. However, at Whirlpool, the development of strate- ful for Whirlpool. gies involves striking the right balance between regional and While a large product portfolio does meet the varying national business values to ensure effective and efficient run customer preferences, it poses a logistical issue as product of operations globally. Whirlpool aims to foster coopera sizes are different and warehousing and shipping won't be tive business ethics among regional operations and enhance viable for all locations. Thus, regional manufacturing centers cross border teamwork to strengthen its position globally. is a crucial requirement for Whirlpool. It is able to ensure For example, the company may use compressor technology that the core processes of manufacturing and technology from its Brazilian affiliates or insulation technology from its are the same even though the configurations, dimensions, European businesses, while gathering manufacturing and and features of home appliances like refrigerators, washing design expertise from its U.S. operations machines, and ovens are tailored to the individual markets. Whirlpool's strategy is to understand the customer and As a part of the global strategy, Whitwam began acquir translate that understanding in the service offered in terms ing regions to understand customer preferences and offer of design, feature, superior products, and after sales support. them the best appliances. To conquer the Southeast Asia Marc Bitzer, the current CEO, believes in rethinking and region, Whitwam implemented a central distribution system readjusting business strategies at regular intervals to ensure in Singapore. This center functions as a design, engineering. that the nature of the business aligns to the needs of the cus- and product development hub that has access to the opera- tomers in a dynamic global business environment. tions of all the manufacturing centers across Asia. In 201 1. while setting up its operations in the Asia-Pacific region. Whirlpool faced challenges such as cultural differences in Case Questions business ethics, availability of quality resources, and identify- 12-27. What are the strategies used by Whirlpool in ing suppliers that matched the company's criteria of "Whirl pool Supplier Quality System." It used the sourcing strategy becoming a global company? 12-28. What are the reasons for the mergers and acquisition development (SSD) process to find suppliers who would in the U.S. and European appliance industries? match the company's style of work and meet the company's 12-29. Whirlpool's former CEO David Whitwam encour quality and cost requirements. Whirlpool's vision is to be represented as one global aged low-cost strategies before going in for big projects. Evaluate the statement. brand company. Unifying focus of the brand's vision, mis- sion, and objectives is communicated to every employee of 12-30. Discuss Whirlpool's strategic approach to world- wide expansion. Given the conditions of the exter- Whirlpool across the globe. Whirlpool's key objective is to nal environment, do you think this approach is be in the top 25 percent of publicly held companies in terms correct? Explain of total returns. The drive of the company lies in offering shareholders great value through given economic cycle. Sommers: Maraca, R. (1994) "The Right Way to Go Global: An Interview Usually, top-level managers view an industry as an with Whirlpool CEO David Whitwam." Hurtand Bavines Review, NCEWE assortment of various specialized businesses, each with its March 30, 2019, Whirlpoolcorp.com, hops/www.whirlpoolcorp.com/hi own pros and cons, and believe that firms cannot operate bary, served Much 27, 2019, Mullet, A. and Hutchins. N. (2012) Opus globally as a unified entity. Thus, while developing busi- novation helps Whirlpool Corporation docover new market opportuni- the. Sourgy & Leadership, 4041 pp.36-42 Whirlpool Corporation (2015 ). ness strategies, regional managers tend to look at different Whirlpool Amad Report 20/1 pp. 15-80, Whirlpool's biggest challenge is aspects of the industry locally rather than the company in its un h phil merits CEO" Basheris Jmailer, July 22. 2016