Whirlpool
By:
Katie Crawford
Gayle Proffitt
Meryl Riley
OPPORTUNITIES:
Whirlpool is the leading home appliance manufacturer in America, and is in the midst of
globalizing themselves into other countries such as Brazil, Mexico, and India. Whirlpool has
remained committed to its foreign operations, such as their markets in Europe, Asia, and Latin
America, and the company has been focusing on first-rate centers of production and design in
various countries, which includes the United States (Uchitelle). These products include, but are
not limited to, “microwave ovens engineered in Sweden and made in China for American
consumers; stoves designed in America and made in Tulsa, Oklahoma for American consumers;
refrigerators assembled in Brazil and exported to Europe; and top-loading washers made at a
sprawling factory in Clyde, Ohio, for American consumers although some are sold in Mexico”
(Uchitelle). This type of globalization allows Whirlpool to put the profits of their overseas
affiliates to their best use anywhere in the world. As long as Whirlpool continues to invest in
newer and better technologies and opportunities it will create more jobs at home and overseas.
In order to compete in their industry, Whirlpool “aggressively lowered costs and
improved efficiency and productivity. Several new product introductions in clothes washing,
refrigeration, air conditioning, and cooking under the company’s leading Brastemp and Consul
brand names were made” (Johansson p. 94). Consumers began making Whirlpool appliances
their top choice not only in America, but in India, Asia, and South America.
In March of 2006, Whirlpool purchased the Maytag Corporation, where Whirlpools CEO,
Jeff Fettig seems to believe that “this transaction will result in better products, quality and
service, as well as cost efficiencies, which will enhance our ability to succeed in the global
home-appliance industry” (Canadian). This merger will leave Whirlpool producing almost half
of all dishwashers and over 70 percent of clothes washers and dryers in the United States, which
in most circumstances would draw a court challenge because of market concentration by one
company, but it has yet to be determined whether these charges will arise or not (Canadian).
CHALLENGES:
Whirlpool’s global strategy is very risky, such as entering into markets like Europe,
where they would be faced with many competitors who have made a name for themselves in the
country. One of these competitors is the Swedish Electrolux, which dominated the European
market for many years. Whirlpool was unaware of the many different types of product that were
demanded in Europe by consumers in all of the different countries. Every different culture
needed all different types of appliances because of their climates or way of life. For example,
The Danish spin-dried their clothing, whereas Italians line-dried their clothing, and Italians are
more concerned with childproof safety features, whereas Germans are more concerned with the
environment. Whirlpool had to restructure their marketing plans and incorporate all of these
different needs into their product line to better suit the countries in which they were marketing
(Johansson p 92).
Another one of Whirlpool’s main challenges was with the Department of Energy and
their stricter energy standards. These standards stated that companies like Whirlpool should
manufacture more front-loading washing machines because they use less water and energy than
top-loading machines. This is most important in Europe because front-loaders were the standard
and most Europeans considered them to be better washing machines. The challenge for
Whirlpool was the cost. Front-loading washing machines are much more expensive than the
typical American top-loading washing machine, which would change the marketing strategy
entirely in the U.S. because of the lower energy usage standards. Whirlpools new strategy was
to make their washers and driers bigger with less noise that came with great service plans,
because that is what the consumers were asking for (Johansson p 93).
ISSUES:
Many of Whirlpool’s rival appliance manufacturers were beginning to ask questions
about their consumer psyche early on to understand what design features and functions their
target market was most interest in. Being that the overall target market throughout the industry
is women, many of the concerns remained around the ideas of cleanliness of the water, the
energy savings, and water filtration. In 1998, the idea of Design for Recyclability was a main
selling point for Whirlpool and its competitors, yet five years later, the idea was not nearly as
important as the design and functionality factors of the product.
Financial crises throughout South America caused interest rates in Brazil to double in
1997, and then fall again in 1998. Aside from being Whirlpools jewel of the global expansion
strategy, Brazil was one of the most profitable foreign operations under the company’s wing. In
Brazil, the “appliance sales were growing at double-digit percentage rates,” at about 20 to 30
percent per year (Johansson p 94). Whirlpool reduced the Brazilian workforce by 25 percent
which meant that 3,200 jobs were lost.
Whirlpool has also intended to experiment with new executive roles to better understand
and embrace the new technologies of the home appliance world. The company decided that
instead of splitting the tasks of technology and supply management, it would be much faster and
much easier to develop and test new ideas and came up with one executive who would perform
these tasks rather than two separate executives (Johansson p 94).
COMPANY
Whirlpool Corporation began as a homegrown washer company started up by three
brothers; Louis, Frederick, and Emory Upton. These men would never have guessed that their
small business would turn into a corporation that has become the leading worldwide
manufacturer of appliances in 13 countries (Whirlpool Corporation 1911). The company also
distributes and markets their products in over 170 countries (Buckmaster). Today, Whirlpool has
an annual sales of over $13 billion dollars and is the employer of around $68,000 people
(Buckmaster). Whirlpool trades on the New York Stock Exchange as WHR. Whirlpool’s global
platform could be the reason why they are so successful today (Whirlpool Corporation Today).
They provide their operations with resources and capabilities that no other manufacturer can
match and with brands that consumers can trust (Whirlpool Corporation Today). On the
corporate fact sheet for the company this next quote is what describes the global success of the
company. “Over the last decade, Whirlpool Corporation has transformed itself from a regional
manufacturing and trade-focused business into a global, consumer-driven enterprise. Now the
world's leading manufacturer and marketer of major home appliances, the success of Whirlpool's
global business is driven by its ability to truly understand and fulfill customer needs, develop
highly innovative branded solutions, effectively serve trade partners and continuously improve
productivity and quality (Whirlpool Corporate Fact Sheet).” According to the Buckmaster
Annual Report in 2005, Whirlpool won many awards that have made the company stand out
against the rest such as:
1) One of 100 Best Corporate Citizens (Business Ethics magazine)
2) One of Top 20 U.S. Companies for Leaders (Chief Executive magazine)
3) One of 25 Noteworthy Companies for Diversity (DiversityInc magazine)
4) 2005 Energy Star Partner of the Year Partner in Progress Award (Sears Holdings Corp.)
5) 2005 Impact Player and Master of Design (awarded to Whirlpool Corporation “vice president
for global consumer design by Fast Company magazine)
6) One of Top 100 Employers for College Graduates (Black Collegian magazine)
7) Honorable Mentions for Best Corporate Careers Web site and Most Innovative Recruiting
Process or Departmental Structure (Electronic Recruiting Exchange)
8) Industrial Design Excellence Award for the new Whirlpool Fabric Freshener (BusinessWeek
magazine and the Industrial Society of America)
COUNTRY
As mentioned previously, Whirlpool Corporation manufactures in 13 countries and
distributes their products to over 170 (Buckmaster). One of the company’s goals is to have “one
appliance in every home everywhere (Kile, J.). According to Joel Kile, “in order to accomplish
this goal they must set many of their business views with international differences in mind. In
particular Whirlpool’s service view was set completely with an international product in mind.”
Whirlpool seems to be doing an excellent job globally. As long as they keep catering to different
countries on an individual basis, they will remain the top appliance distributor in the world.
INDUSTRY
In recent industry news on March 29, 2006, Whirlpool Corporation bought out Maytag
Corporation for $1.79 billion dollars. It was expected that the Justice department would say no
to this deal because now Whirlpool will produce half of all dishwashers made in the United
States, as well at 70% of all washers and dryers” (CBS news). This merger will not reduce
competition substantially according to CBS news. Whirlpool will not likely raise prices on their
products because if they do, CBS news says that there are numerous other well-established
brands available in the market. “This merger could actually benefit consumers because of
continued development in products, quality and service, and cost efficiencies according to Fettig,
the CEO of Whirlpool” (CBS news).
PRODUCT
Whirlpool offers many appliances and products, but their main products are home
laundry appliances, home refrigerators and freezers, home cooking appliances, home
dishwashers, room air-conditioning equipment, mixers, and other small household appliances
(Buckmaster). Whirlpool markets its products and distributes them in the United States under
the name Whirlpool, KitchenAid, Roper, and Estate brand names. They sell to retailers, buying
groups, and builders (Buckmaster). In Canada, their products are distributed under Inglis,
Admiral, Speed Queen, Whirlpool, Roper, and KitchenAid. Mexico uses the name Whirlpool,
Acros, KitchenAid, Estate, Roper, and Supermatic. Not only do they market and distribute to the
above destinations, but they have also been the primary supplier of laundry appliances to Sears
for over 80 years. Sears uses the name Kenmore to sell Whirlpool products. According to the
Buckmaster Annual Report, 18% of the company’s net sales were because of doing business
with Sears (Buckmaster).
In other countries, Whirlpool markets and distributes their products under different brand
names as well. Some of these brand names include: Whirlpool, Bauknecht, Ignis, Laden, Polar,
Kenmore, Brastemp, Consul, and Eslabon de Lujo (Buckmaster).
Whirlpool’s business strategy is delivering a continuous stream of innovation to
consumers so that they will be the number one manufacturer of products for consumers. The
company wants to make sure that customers will receive the highest level of satisfaction from
their products. To do this, Whirlpool has 5,000 people employed strictly for the purpose of
finding new innovations (Whirlpool Corporation Fact Sheet).
TOUGHTS AND SUGGESTED ACTIONS
Whirlpool’s main problem with going global is that the standards the Americans have for
appliances is totally different than standards that other countries have. They are having to
change their whole line to accommodate the needs of these foreign countries. A huge factor that
comes in to play with these changes is the cost. Whirlpool has to change not only the product
but all of the marketing plans too.
.
“1911… The Beginning of Whirlpool.” Whirlpool Corporation. 9 April 2006.
http://www.whirlpoolcorp.com/about/history/1911.asp
“Business Views of Whirlpool.” Kile, Jay. 9 April 2006.
http://homepages.wmich.edu/~j1kile/bus270_proj.htm
“Canadian Regulators Approve Whirlpool Buy of Rival Maytag.” Dow Jones International
News. 19 March 2006. 9 April 2006. http://global.factiva.com.libproxy.radford.edu/ha/default.aspx
“Corporate Fact Sheet.” Whirlpool Corporation. 9 April 2006.
http://www.whirlpoolcorp.com/about/corpfactsheet/default.asp
Uchitelle, Louis. “Globalization: It’s Not Just Wages.” New York Times. 17 June 2005. 9
April 2006. http://www.corpwatch.org/article.php?id=12409
“Whirlpool Corporation.” Buckmaster Stockholder Annual Reports. 9 April 2006.
http://buck.com/10k?tenkyear=03&idx=w&co=WHR&nam=DEMO&pw=DEMO
“Whirlpool Corporation Today.” Whirlpool Corporation. 9 April 2006.
http://www.whirlpoolcorp.com/about/history/today.asp