Whirlpool Case StudyEssay Preview: Whirlpool Case StudyReport this essayIn 1992 a joint venture was established between the European subsidiary of Whirlpool Corporation, Whirlpool Europe B.V and the Slovak company Tatramat in the former Czechoslovakia. The new company of the joint venture was called Whirlpool Tatramat. This strategic alliance was the result of both internal and external environment problems that both companies were facing at the time.
Whirlpool Corporation is a leading global manufacturer and marketer of major appliances and related products for use within the home. Whirlpool has a worldwide presence in over 170 countries. The company is broken up into four segments based on geography which include: North America, Europe, Latin America, and Asia.
•Manufacturing locations: United States, Mexico, France, Germany, Italy, Poland, Slovakia, South Africa, Sweden, Brazil, China and India•Whirlpool, KitchenAid, Gladiator, Roper, Estate, Acros, Supermatic, Crolls, Inglis, Ingnis, Polar, Laden, Bauknecht, Brastemp, Consul, Embraco, Eslabon de Lujo
•Also a supplier to Sears, including some of the products that Sears markets under the Kenmore brand name.•Various products include: air purifiers, automatic dryers, automatic washers, bakeware, built-in ovens, cooking gadgets, cookware, countertop appliances, dehumidifiers, dishwashers, fabric fresheners, freezers, garbage storage organizers, hot water heaters, ice makers, microwaves, portable appliances, ranges, refrigerators, room air conditioners, trash compactors, water dispensers
•Net sales were $14,317,000,000•65,682 employees (Year End Average Staff as of 12/31/05)•Whirlpool North America, headquartered in MI, saw revenues of $8.9 billion•Whirlpool Europe, operations center in Italy revenues of $3.2 billion•Whirlpool Latin America, headquartered in Brazil delivered regional revenue of $2 billion•Whirlpool Asia, headquartered in Peoples Republic of China reported revenues of $422 million•There are 7,438 shareholders of Whirlpool Corporation’s stock and its closing stock price was $87.31 as of November 7, 2006•For the quarter ending March 31, 2006, net income increased 37.2% to $118.0 million from $86.0 million in the year-earlier quarter.•March of 2006 the company acquired Maytag Corp. and announced that it is expected to generate pre-tax annualized cost savings of over $400 million from cost efficiencies from all areas of the value chain.
\r
Thinking about the past: Whirlpool, one of the largest and most recognized global conglomerates, had just created its first profitable and first successful company in the Americas with a global investment of $300 million in 2014. As a result of the firm’s ability to generate a robust business climate that was driven by high levels of innovation, growth and investment quality, Whirlpool expanded through a $200 million strategic multi-year investment plan. The group’s key asset has been, and continues to be, the management of its global customer base that continues to be the fastest growing segment of the value chain with more than 100 of the world’s 200 largest companies with over $1 billion in revenue, making it the third largest corporate entity in the global value chain in just four years. For this team, Whirlpool may very well play an important role in creating and maintaining a strong global value chain. Our long-term strategy: as a global company, Whirlpool intends to build and grow strong and sustainable value companies which will be based in every corner of its portfolio, including the Americas and Europe with major strategic partnerships with high-tech and technology industries. As a result, we believe that Whirlpool, one of the largest conglomerates, is able to leverage strong value chain dynamics and performance to establish and maintain strong strong values in key global areas such as equity, equity, stock market trading, and consumer electronics, from consumer electronics on down to consumer electronics, smartphones, smart TVs, and consumer electronic devices.\r
Industry to continue expanding: As a group, Whirlpool continues to have the third largest and most relevant global position in the value chain with $43.7 billion in total gross market capitalization. This position was boosted by its success in growing both worldwide and global the value chain. As our global brand, we are fully embracing and leveraging the latest value offering from an innovator. As Whirlpool continues to grow and expand globally, it will also increasingly be recognized globally for its successful products from the global brands it works with. As an industry, Whirlpool is also increasingly pursuing a global brand identity with a focus on new, innovative innovations and new products delivered for the people of the globe in new and innovative markets. As a company strategy: We have seen the value of our brands increase and in other areas are expanding our global brand leadership position in the value chain of the company. As a leader in world brands and in global corporate media (NYSE: WEB), we maintain its position as the world’s leading global brand in the value chain. While we are looking to take more active initiatives in Europe, Asia, and Latin America, we are also looking to pursue a global strategic partnership with Apple, we can expect to become a major shareholder in a global brand by the end of the year.
\r
Consensus data: In the second quarter of 2006, Whirlpool held a consensus price per share
•Net income is $422,000,000(www.mergentonline.com)Tatramat was the leading manufacturer of washing machines in Czechoslovakia, controlling almost 88% of the market. For many years the company produced household consumer goods. When the company merged with Whirlpool they changed their principal focus to the manufacture of water heaters. Today, Tatramat is a supplier of parts to Whirlpool’s production of washing machines.
•various water heaters which include electric, gas, interchanger and solar models, with volumes ranging from 5 to 500 liters•Also produces tin parts and components, cables, plastic molded parts and components, polystyrene heating panels and building parts, custom molded polystyrene
•Has seven domestic and four foreign subsidiaries which are in the Czech Republic, Poland, the Ukraine and Germany•Exports its products to 16 countries in Europe including Belgium, Belarus, Bulgaria, Czech Republic, Estonia, Lithuania, Latvia, Hungary, Germany, Poland, Austria, Romania, Russia, Serbia and Montenegro, and Ukraine
•The company gained exposure into the North American market in 2001-2002 by opening market development in Canada and the United States•Uses a strategy of partnering with foreign producers in order to generate new sales opportunities and to expand their partner’s offerings.(www.tatramat.sk)Whirlpool made the best possible decision at the time when the company chose an international joint venture as its participation strategy. The company entered the joint venture with the primary motives of entering the Central and Eastern European market and finding a low cost competitive advantage for labor. Whirlpool was able to benefit from Tatramat’s brand name, market share, distribution facilities, and low production costs. The company also viewed the alliance as an opportunity to gradually increase its equity share until it was able to totally acquire the company. For Tatramat a joint venture was its only logical possibility. The company explored the idea of licensing but realized that it would be costly and would not increase its market share. Licensing would not increase the company’s cash flows or introduce new skills. Instead a joint venture allowed Tatramat to share the risks involved in the company. The company thought that this was the best choice because Whirlpool was only interested in their washing machine unit production. Whirlpool had the capital base and technology that Tatramat was looking for. The two companies weighed their options and then began to look at international joint venture negotiation issues in order to create a written agreement.
A greenfield investment would not have been an ideal strategy because of the increased risk involved in such a project. Starting Whirlpool Tatramat from the ground up would have been very expensive. In order to establish a wholly owned subsidiary Whirlpool would have had to also invest much more time into the project by finding property to build. Starting this type of investment would have also made Whirlpool vulnerable to the Czechoslovakia government. Another disadvantage for Whirlpool to use this approach would be the