Whirlpool Corporation’s Global Strategy
Whirlpool Corporation’s global strategyInternational Business Strategy – Part II[pic 2]290691-2387Copenhagen Business School 2014April 3 Character count: 21153 = 9,3 standard pagesTable of ContentsIs the global appliance industry an oligopolistic industry? Case study: Whirlpool US market European Market Asian Market Global expansion – international or regional? From interregional to international oligopoly Explain Whirlpool’s expansion using IPM Internationalization process in Europe Internationalization process in Asia Internationalization Process in Latin America References Is the global appliance industry an oligopolistic industry?An oligopoly is a structure of competition in between perfect competition and monopoly. In an oligopoly suppliers can control price by controlling supply. According to Knickerbocker, the oligopoly structure consists of few sellers controlling a majority of the market, supplying substitutable products where firms experience close market interdependence in competitive policies. (Ietto-Gillies 2005)
Case study: WhirlpoolThe competition in the global appliance industry is highly inter-regionalized, where transnational corporations compete in multiple markets. Furthermore, there is a clear distinction between developed markets like the US and Europe and developing markets such as Latin America and Asia, whereas developed markets tend to have small clusters of big firms controlling large market shares in contrast to developing markets with more and smaller firms competing in a dynamic setting. US marketThe US appliance industry experienced high competition in the early 1990s and there was a general consensus to focus on cost reduction, product efficiency and product quality. The region has a market structure of 5 firms controlling 80% of the market. Due to heightened competition they segmented their products, but the firms still struggled to enhance their competitive situation. (Meredith Martin 2000) This evidence could be explained by looking to the theory of Knickerbocker who states that in oligopoly, price warfare should be abandoned since the oligopoly conditions exist due to high similarity in strengths of the competing firms. There therefore exists interdependence in production and the firms should instead compete on intangible traits like advertising in order to maintain the oligopolistic equilibrium (Ietto-Gillies 2005)European MarketIn Europe, the market for appliances is a much more regionalized, where the firms have historically been forced to segment their products for consumer needs for the 320 million consumers. Despite this, there are still only 5 producers controlling 70% of the market. (Meredith Martin 2000)