Globalization Drivers and Whirlpool
General Management | Course: International Business Strategies 2012-2013 (BKM06GM) | Learning Questions Whirlpool |
Dan Beseda 376211db@eur.nl
11/5/2012
|
Introduction This first part of this paper analyses appliances industry and identify globalization drivers. The second part argues whether Whirlpool should continue its global expansion strategy. Last part examine why Whirlpool struggled with the expansion and what lesson could we take from this case.
The appliances industry and identify globalization drivers The globalization in the appliances started in 80’s. Therefore, the analysis starts at this point. For purpose of the analysis I used the theoretical framework of Yip (1989). Yip distinct between six teen different globalization drivers categorize in four groups: Markets, Cost, Government, Competitive. The appliances industry in 80’s had several main characteristics that drive players to globalization. First were the market drivers. The market was highly saturated and it was not expected to grow much in the future. Even though, Yip does not recognize this drive, it is very important in this case. This pushed companies to look for another markets. Whirlpool saw several possible markets for expansion. First market was Europe because Whirlpool CEO thought that European and U.S. market are very similar and therefore ideal from expansion. Furthermore, Whirlpool saw European market as highly fragment. This was seen as possible advantage because players in Europe could not leverage the economics of scale as much as Whirlpool. Second market was Asia which was fragmented and was the fastest growing market in 80’s. Third market was Latin America which was mainly chosen because of the future predicted growth and lower appliance penetration rates. This was also reason for choosing Asia and Easter Europe.
Second were cost drivers. The industry environment was hypercompetitive. There were only few players that hold similar shares of the market.
Dan Beseda 376211db@eur.nl
11/5/2012
|
Introduction This first part of this paper analyses appliances industry and identify globalization drivers. The second part argues whether Whirlpool should continue its global expansion strategy. Last part examine why Whirlpool struggled with the expansion and what lesson could we take from this case.
The appliances industry and identify globalization drivers The globalization in the appliances started in 80’s. Therefore, the analysis starts at this point. For purpose of the analysis I used the theoretical framework of Yip (1989). Yip distinct between six teen different globalization drivers categorize in four groups: Markets, Cost, Government, Competitive. The appliances industry in 80’s had several main characteristics that drive players to globalization. First were the market drivers. The market was highly saturated and it was not expected to grow much in the future. Even though, Yip does not recognize this drive, it is very important in this case. This pushed companies to look for another markets. Whirlpool saw several possible markets for expansion. First market was Europe because Whirlpool CEO thought that European and U.S. market are very similar and therefore ideal from expansion. Furthermore, Whirlpool saw European market as highly fragment. This was seen as possible advantage because players in Europe could not leverage the economics of scale as much as Whirlpool. Second market was Asia which was fragmented and was the fastest growing market in 80’s. Third market was Latin America which was mainly chosen because of the future predicted growth and lower appliance penetration rates. This was also reason for choosing Asia and Easter Europe.
Second were cost drivers. The industry environment was hypercompetitive. There were only few players that hold similar shares of the market.
References: Beamish, B. A. (2007). Transnational Management: Text, Cases and Readings in Cross-Boarder Management. McGraw-Hill. Martin, M., Algar, S., Kumar, V., Inkpen, A.C. (2001). Whirlpool corporation’s global strategy. Thunderbird Case TB0175. Yip, G. S. (1989). Global strategy... in a world of Nations? Sloan Management Review, 31(1). Pp. 29-41.