The nature of the domestic and international business environment of Whirlpool :
Whirlpool is a home appliance maker, based out of US. The firm has manufacturing units in 13 countries and sells them in 170 countries across the globe. Whirlpool generates 60% of its sales from North America, 25% from Europe, 15% from Latin America & just 2% from Asia.
The nature of domestic and international business environment of Whirlpool is highly competitive in nature. There are a number of opportunities to make a mark with the type of product that is more preferred at a certain place but at the same time the level of risk involved sees no bounds. The company feels that this competitive environment has a single solution of internationalization. Hence, the company has not only expanded its business in USA but it has also gone a huge leap forward in making a mark in countries like Bulgaria, Hungary, Russia, Slovakia, Russia and also Czech Republic. In India, Whirlpool has made a name for itself. The company has come up with a variety of products so as to suit the dynamic environment at both local and international levels. But as we know, a larger return would only come from a bigger risk, there are also various amounts of risks associated with the company’s proceedings.
Risks that the firm face:
The company was forced to invest lesser in the research and development in some of the lower-cost locations. This can be an advantage for the new entrants. Other than this, the company had to face declining sales in USA with its expansion strategy as the focus on the home country shifted elsewhere. The threats from competitors to the country are also ever-increasing. The reason for the same is that as Whirlpool is expanding its market to Asia as well, companies like Haier are giving it immense competition. So, there are chances that the company’s cost of investment in these countries might not reach break-even as predicted. These are some of the vital risks that Whirlpool is associated with in its international expansion program
Q2. How can Whirlpool benefit from going international? What type of advantages can the firm obtain? What advantages acquired abroad can help management improve Whirlpool’s performance in its home market?No comments Join Now For Free
Whirlpool can benefit from going international:
* A well designed global strategy can help a firm gain a competitive advantage. The advantage can arise from the following sources: a) Efficiency :
* Economies of scale from access to more customers & products * Exploit another country’s resources – labor, raw materials * Extend product life cycle-older products can be sold in other countres * Operatonal flexibility – Shift production as costs, exchange rates ,etc change over time. b) Strategic:
* Fist mover advantage and only provider of aproduct to market * Cross subdization between countries
* Transfer price
* Diversify macroeconomic risks
* Diversify operational risks (labor problems, earthquakes,wars) d) Learning
* Broaden learning opportunities due to diversity of operating environments e) Reputation
* Crossover customers between markets – reputation and brand identification
Following advantages acquired abroad can help management improve Whirlpool’s performance in its home market:
* Good brand recognition
* Exposure to multi cultural and diversified market
* High ROI
* Cost efficient manufacturing processes
Q3. What actions has Whirlpool management taken to ensure that firm succeeds in local markets throughout the world? To what extent is the appliance business local/regional rather than global?
Actions taken by Whirlpool management to ensure that firm succeeds in local markets throughout the world: * Lower costs , improve efficiency and...