EMBA XVII edition
Whirlpool Corporation’s Global Strategy - Case Report
As many American based companies, Whirlpool Corporation after building strong position and success in North America, decided to “go international” and start its global expansion. The main Whirlpool’s objective was becoming the world market leader in home appliances, in what CEO of Whirlpool – David Whitwam strongly believed.
Whitwam’s “go global” strategy plan was based on:
* entering different markets, European, Asian, South American in parallel;
* acquisitions of competitive appliance companies, i.e Philips, Indian companies;
* creating joint ventures in targeted ...view middle of the document...
Whirlpool couldn’t find a way to build effective cross-border business teams, furthermore idea of regular rotation of managers across countries haven’t brought assumed value, even opposite, it led to situation, where company was considered as irresponsible, as new management amended early established management styles and initiatives. In my opinion Whirlpool have made also mistakes within location economies, as placed its two main European manufacturing centers in Italy, where labor costs are high, while they could’ve been placed in Eastern European locations.
2/ As second failure factor, I would indicate inappropriate or more likely not deeply analyzed strategic assumptions:
* European market becomes more “American”;
This assumption of market similarity within home appliances industry is completely wrong, as each of markets, i.e European, Asian, American has its own preferences, characteristics, distribution channels and competition.
Many distribution and demand-related issues related to each targeted markets, that Whirlpool entered, were discovered after the entry. This shows a poor market research prior to making the investment decisions. Also volume of markets was overestimated, like it was for Indian and Chinese markets.
Additionally, I think that Whirlpool have made mistake in entry strategy, as the company entered mostly all of its new markets mostly at the same period of time, and using same entry strategy for each of them, despite the fact, that strategy, that worked in Europe should not necessarily work in Asia or Latin America. I would suggest to focus on entering mostly similar markets (i.e. after CAGE analysis), i.e. Canada, Australia, and after success there would go for other markets.