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The Nature of Whirlpool’s Domestic and International Business Environments.

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Presentation on theme: "The Nature of Whirlpool’s Domestic and International Business Environments."— Presentation transcript:

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2 The Nature of Whirlpool’s Domestic and International Business Environments

3 The manufacturer of home appliance firm. Manufactures washers, dryers, refrigators, dishwashers, freezers, rangers, compacters and microwave ovens. Sells these in 170 others under brand names such as Whirlpool, Maytag, Magic Chef, Jenn- Air, Amana, Kitchen Aid, Kenmore Brastemp. In 2006, Maytag Coorporation joined to Whirlpool Coorporation.

4 Whirlpool is located in Michigan in U.S.A It has a global market in all over the world. Whirlpool established the intranet sites in 2001-2002.

5 GLOBALIZATION is the only solution on marketing for all the firms

6 Success on air conditioner

7 Types of risks which the firm faces

8 CHINA

9 Haier; South Carolina in the USA…

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11 WHIRLPOOL’S ACTIVITIES WITHIN INTERNATIONAL BUSINESS ENVIRONMENT YearEvent 1911 Louis, Frederick and Emory Upton founded the Upton Machine Company and began to produce electric, motor-driven wringer washers for Federal Electric 1929 Upton merged with Nineteen Hundred Washer Company from Binghamton, NY, taking the name Nineteen Hundred Corporation. 1942 Nineteen Hundred Corporation began converting all of its factories for war production. 1946 Nineteen Hundred Corporation begins manufacturing appliances for John Inglis and Company of Canada. 1949 First top-loading automatic washer sold manufactured for sale under Sears' brand. 1950 The Nineteen Hundred Corporation was renamed as the Whirlpool Corporation, and sold its first top-loading automatic washer sold under the Whirlpool brand. 1951 Establishment of the Whirlpool Foundation, a philanthropic arm of Whirlpool Corporation. 1955 Acquires Seeger Refrigerator Company and RCA's air conditioner and cooking range lines including ownership of RCA's Estate brand name. Company changes its name to Whirlpool- Seeger Corporation and began using the RCA-Whirlpool brand name until the mid-1960

12 Chronology YearEvent 1956 Opened a 100-acre (0.40 km2) administrative center in Benton Harbor, MI. 1957 The RCA Whirlpool Miracle Kitchen was introduced with an estimated 15 million television viewers. The company changed its corporate name back to Whirlpool Corporation. 1962 Won NASA's contract for the development of the feeding and waste systems for Project Gemini. 1967 Introduced a 24-hour helpline. 1968 Surpassed $1 billion in annual revenues. 1978 Surpassed $2 billion in annual revenues. 1986 Acquired KitchenAid, a division of the Hobart Corporation. 1987 Began selling compact washers in India and acquired majority interest in Inglis of Canada. 1988 Begins a joint venture with Philips called Whirlpool International with Whirlpool owning 53% of the company. The joint venture was formerly Philips' major appliance subsidiary. 1989 Acquired the Roper brand and Bauknecht of Germany. Surpassed $6 billion in annual revenue.

13 Chronology YearEvent 1991 Whirlpool becomes full owner of Whirlpool International by buying Philips' 47% stake. 1997 Acquired majority stake on Embraco, a Brazilian world-leading maker of compressors for refrigeration. 2000 Acquired Brazilian appliance maker Multibrás, owner of the brands Brastemp and Consul, including its stake on Embraco. 2001 Inglis Ltd. changes its name to Whirlpool Canada. Whirlpool continues to market Inglis appliances to this day. Surpassed $10 billion in annual revenues. 2002 Surpassed $11 billion in annual revenues. 2003 Surpassed $12 billion in annual revenues. 2004 Surpassed $13 billion in annual revenues. 2005 Maytag Corporation shareholders voted to accept Whirlpool Corporation's stock purchase. U.S. Justice Department began a review of the merger.

14 Chronology YearEvent 2006 Acquired the Maytag Corporation, including the Maytag, Jenn-Air, Amana, Jade, Magic Chef, Admiral, Hoover, and Dixie-Narco brands, after Justice Department approved the merger. Sold Dixie Narco to Crane Co., and to AGA. Surpassed $18 billion in annual revenues. 2007 Sold Hoover to Techtronic Industries, TTI Floorcare and Jade Appliances to Middleby Corporation. Also closed plants in Newton, Iowa; Searcy, Arkansas; and Herrin, Illinois. This resulted in the sudden loss of 4500 jobs in the affected communities. Surpassed $19 billion in annual revenues. 2008 Location closings in La Vergne, Tenn; Reynosa, Mexico; and Oxford, Miss. 2009 Whirlpool acquired from Bankruptcy and to keep Ottawa, OH plant open; Whirlpool to close Evansville plant; Whirlpool has received $19.3 million in U.S. Department of Energy funding as part of its Smart Grid Investment Grant program.

15 General Overview of Whirlpool Whirlpool manufactures & markets a range of appliances & related products primarily for home use; laundry appliances, refrigerators, cooking appliances, dishwashers, mixers, other small household appliances(driers, microwave ovens, etc…) hermetic compressors for refrigeration systems 70.000 employees, Manufacturing Areas located in 12 countries under 13 brands;( KitchenAid, Bauknecht, Roper, Maytag, and Magic Chef) Geographic Area that Whirlpool operates are; North America( 60%), Europe( 20%), Latin America(15%), Africa, the Middle and Asia(5%) Major Competitors; Bosch Siemens, LG, Samsung, and Haier

16 Factors driven the global expansion Reduces R&D, Manufacturing by locating low cost regions Flat, declining sales in US Standardazation of existing products, parts in world-wide to make the company globally recognized brand Advantages that the firm utilized through International operations

17 Driving Major forces are; cost reduction and productivity initiatives, increased sales volume, brand names, innovation, lower price/mix North America( high sales volume, lower price, lower costs) Sales in US rose 4% to $2.6 billion, driven by an 8% increase in unit shipments The region reported an operating profit of $136 million (2009) compared to a loss of $20 million in the previous year(2008) Unit shipments in U.S. industry to increase between 2%–4% in 2010 The company took advantage of International Operations by;

18 Europe (lower costs and higher price/mix, lower sales volume) Sales gained 2% (currency effect), sales declined 9%, Overall industry unit demand during the quarter decreased 8%. The region reported an operating profit of $19 million compared to $2 million in the previous-year The company expects industry unit shipments for 2010 to be close to the 2009 levels The company took advantage of International Operations by;

19 Latin America (high sales volumes, productivity and favorable foreign currency fluctuations, lower monetization levels of certain tax credits and lower price/mix) Sales shot up 52% to $1.2 billion;( (currency effect ) excluding currency effects, the increase was 28%. The company anticipates appliance shipments in Brazil to go up 5%–10%. The company took advantage of International Operations by;

20 Asia (higher unit volume, lower price/mix) Sales advanced 34% to $188 million; excluding currency effects, the increase was 27%. Operating profit increased $3 million to $6 million from the prior year. The company anticipates industry unit shipments in Asia to increase by 3%–5% in 2010. The company took advantage of International Operations by;

21 In 2010 sales is expected to be driven heavily by replacement market for appliances Revenue expects industrywide sales of refrigerators, dishwashers, washing machines and other appliances in the U.S. to increase by 2% to 4% New housing starts in the U.S., one of the primary drivers for appliance demand, will rise about 27% from 2009, while existing homes to increase about 7% from 2009. In Europe, Whirlpool predicted industry-wide appliance sales in 2010 will be flat with 2009. Whirlpool expects sales in Brazil--a key market for the company- -to increase by 5% to 10% and sales in Asia to rise by 3% to 5%. Expectations for 2010 / demand side regarding regions

22 Innovation Differentiation of appliances market; Among manfacturers it began to known as white business, in which appliances percieved by product leading lower price levels due to increased competition Launched a Campaign to differentiate firm’s offerings by emphasizing value added and innovative aspects of products cross regional R& D teams collobrate on innovations to adopt oferings to meet local demans in diverse international environment( italians often line dried their clothings, while the Danes spin dry their clothes Developed a microwave ovens that grill stakes, bake pizzas Invented a washer with a built in sensor making all decisions for the user automatically ( detects the size of the load and autimatically picks the water level, spin speed, ant the type of wash cycle)

23 Going Global But How? Vision of Whirlpool : “Every Home… Everywhere… with Pride, Passion and Performance”

24 Going Global But How? Without compromising geographical uniqueness, there is a differentiation of products being sold in each country. “All roads to revenue lead to the customer.” The needs of customers are extremely important, innovative actions in direction of fulfiling those needs.

25 Global Local Markets Culture is a distinctive factor that affects the consumer behavior at most. After culture; In appliance business climate is also a very important factor. Family, Lifestyle, Economic Situation can be ordered.

26 Success In Global Local Markets To reach success in the distinct local markets;  Deep Research  Strong Management  Contact with Households (Feed-back) is required. Sustained growth of the corporation can be provided and maintained by a strong research and management. That’ s the priority of Whirlpool in creating a new product.

27 Brazil Case “Ideale” Households in Brazil, especially ones with low income level, wanted a low-priced refrigerator. Directors with a strong research method developed a low-cost, medium level refrigerator called “Ideale”. This new product also sold in China and India the countries that show economic similarities with Brazil.

28 Examples of Local Market Products In Spain customers care about the refrigerator’s capacity for meats.

29 Examples of Local Market Products In North America, energy- and water- efficient washers developed.

30 Examples of Local Market Products In Britain, people want a well-constructed refrigerator. Splited shelves and cells for each type of food is preferred.

31 Examples of Local Market Products In India white color is the symbol of purity and freedom. People give importance to the clothes’ whiteness. That’s why the washing machines should clean the stain completely.

32 To what extent is the appliance business local rather than global? Customized products, local responsiveness, minimized political and exchange rate risk are the advantages of localization. Product customization and competition make the appliance business local rather than global.

33 Appliance Business: Local or Global On the other hand, centralization of control, reduced costs, coordinated activities and quick product development are the advantages of globalization. Maximizing the profits and decreasing the cost of production make the appliance business global rather than local.

34 Competition Growing competitive Threat from Abroad Haier, China’s largest appliance maker, established a production base and distribution centre in South Carolina in the US. The worlds 5th largest kitchen appliance maker, Haier has captured nearly 20% & 50 % of the markets for window air conditioners and small refrigirators, respectively. Now it is expanding into full size refrigirators. Haier’s moves are especially troubling given that Whirlpool generates very little of its sales from Asia,the world’s most populous region, where Haier already has a strong presence. Ironically, Haier’s South Carolina factory is creating new jobs in a state that witnessed a mass exodus of textile jobs to factories in China. South Carolina recieves foreign direct investment from various countries and is home to four Japaneses and 18 European facilities.

35 Competition Management wants to expand its sales in emerging markets while defending the home market from global rivals from China and elsewhere.. The firm seeks to continue to leverage and enjoy all the benefits of international business.

36 Competition Industries Where Whirlpool Corporation Competes -Appliances -Consumer Products Manufacturers Current Situation -Whirlpool’s share of the worldwide refrigerator and washing machine market stood at 15.5% and 16.5% respectively, the highest in the world -By 2007, Whirlpool’s annual sales revenue in the Chinese market accounted for less than 2% of its global sales revenue.

37 Competition Actions for Competition Strategy 2005 re-location of its China/Asia-Pacific headquarters to Shanghai Joint-venture with Chinese local producers (venture with Hisense-Kelon,900 million Yuan of investment) Introduction with new products in the Asian Markets Whirlpool enter with its air conditioners to the Chinese market when it signed an exclusive deal with Sunning, a leading appliances retailer in China.

38 Take Place in Whirlpool’s International Ops?

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