Whirlpool Essay, Research Paper

Whirlpool

The world is experiencing a third wave in the economy and many changes are taking place. One of these changes is the ever-growing corporation that decides to go global. Most U.S. companies, both large and small, are rapidly acknowledging the necessity of global marketing. The demand for foreign products in the fast-growing economies of Asia and other Pacific Rim nations offers one example of the benefits of global thinking. One company that has adapted to this new economy by globalizing has been Whirlpool.

After a few months of becoming CEO of Whirlpool Corporation, David Whitwam wanted to form a strategy to secure future company growth, so he decided to meet with his senior managers and see what they could come up with. During the early 1990 s Whirlpool had become the market leader among U.S. appliance makers, however they did generate weak sales outside the U.S. Whitwam and his management team had explored several options they could either diversify into other industries, which would allow them to experience more rapid growth. The team did decide that it would be best if they expanded the appliance business beyond North American markets. The data of Whirlpool industry made the prediction that over time appliance manufacturing would become a global industry. For decades, Whirlpool had sold some appliances in other countries but only to the buyers who could afford them. Whitwam however had the desire to establish a vision of a company that could leverage global recourses to gain long-term competitive advantage. In the words of Whitwam this meant having the best technologies and processes for designing, manufacturing, selling, and servicing your products at the lowest possible costs.

What Whitwam did first to transform a largely domestic operation into a global powerhouse was purchasing the European appliance business of Dutch consumer goods giant Philips Electronics. The Whirlpool strategy called for reversing the decline in European market share and improving profitability and to achieve this Whirlpool had to change product designs and manufacturing processes and also by switching to centralized purchasing. This change reorganized the national design and research staffs inherited from Phillips into European product teams that worked closely with Whirlpools U.S. designers. The successful transformation trimmed Philip s list of 1,600 suppliers by 50% and it converted the national operations to regional companies. Whitwam believed that in order to make Whirlpool one company worldwide it first required making Whirlpool a global brand, which was a formidable task in Europe where the name was not well-known.

The next step the company took was re-branding the Philips product lines, supported by a $135 million pan-European advertising campaign that initially presented both the Philips and Whirlpool names and eventually converted to Whirlpool alone. Another important aspect of the Whirlpool global strategy was product innovation; Whirlpool sought to develop superior products based on consumer needs and wants. One successful product innovation was the Whirlpool Crispwave microwave oven. Extensive research taken with European consumers revealed a desire for a microwave that could brown and crisp food. In response, Whirlpool engineers designed the VIP Crispwave, which can fry bacon and cook pizza with a crisp crust. This new microwave oven did wonders in Europe and was later introduced in the United States.

Another goal of Whirlpool s global strategy was to become the market leader in Asia, which as of right now is the world s largest appliance market. In 1988, Whirlpool began setting up sales and distribution systems in Asia to help it serve Asian markets and to make the firm more familiar with those markets and potential customers. The company established three regional offices: one in Singapore, one in Hong Kong and one in Tokyo. The company also set up joint ventures with five Asian manufacturers for four appliance lines with the highest market potential: refrigerators, washers, air conditioners, and microwave ovens. With a controlling interest in each of the joint ventures, the newly global company confidently expects to excel in the world s fastest-growing market.

Indeed Whirlpool has come a long way since embarking on its global strategy. Revenues have doubled more than 80 billion. The company now reaches markets in more than 140 countries, leading the markets in both North America and Latin America. Whirlpool is now number three in Europe and the largest Western Appliance Company in Asia.

Whirlpool is defiantly not the only company that has improved their successes as a result of Globalization. Many more corporations are globalizing because of the many advantages going global has to offer. Over sea sales are important revenue sources for many U.S. firms. It is a fact that since 1986 U.S. exports have grown an average of 10.5 percent each year. The economy has indeed gone through many phases and changes but perhaps one of the most important phases is going global.