We want to be able to take the best capabilities we have and leverage them in all our companies worldwide. David Whitman, Whirlpool CEO, 1994
Quoted in the Harvard Business Review
In 1989, Whirlpool Corporation (Whirlpool) embarked on an ambitious global expansion with the objective of becoming the world market leader in home appliances. Beginning with the purchase of a majority stake in an appliance company owned by Philips, the Dutch electronics firm, Whirlpool purchased a majority stake in an Indian firm, established four joint ventures in China, and made significant new investments in its Latin America operations.
However, by the mid-1990s, serious problems had emerged in the company’s international operations. In 1995, Whirlpool’s European profit fell by 50% and in 1996, the company reported a $13 million loss in Europe. In Asia, the situation was even worse. Although the region accounted for only 6% of corporate sales, Whirlpool lost $70 million in Asia in 1996 and $62 million in 1997. In Brazil, Whirlpool found itself a victim in 1997, and again in 1998, of spiraling interest rates. Despite the company’s investments of hundreds of millions of dollars throughout the 1990s to modernize operations there, appliance sales in Brazil plummeted by 25% in 1998. Whirlpool expected that 1999 would be the third straight year of declining sales for the Brazilian subsidiary. In response to these problems, Whirlpool began a global restructuring effort. In September 1997, the company announced that it would cut 10% of its global workforce over the next two years and pull out of two joint ventures in China. In announcing the cuts, Whirlpool’s CEO David Whitwam said, “We are taking steps to align the organization with the marketplace realities of our industry.”1 In Latin America, 3,500 jobs were abolished, and significant investments were made to upgrade plants and product lines.
After the optimism of the early...