Whirlpool Case Study
1.0 Will Whirlpool Clean Up in Europe? (See appendix 1)
1.1 What are the advantages of consolidating production of product lines at single factories in the EU? What are the disadvantages?
With the effect of the Single European Act on 1st July 1987, the emergence of European Union (EU) as a common market has essentially been created. The benefits of this act are substantial to European firms, economies, and workers. It eliminates conflicting national regulations and trade barriers, as well as offering firms opportunity to sell their goods to all other EU members (Griffin & Pustay 2005).
In light of conflicting national regulations and trade barriers to pan-European business disappearing, Whirlpool, the world¡¦s largest white goods manufacturer, adopted the ¡¥acquisition strategy¡¦ (Griffin & Pustay 2005) as an entry mode to participate in international business. Furthermore, Whirlpool also adopted the ¡¥global strategic rivalry theory¡¦ (Krugman 1981 & Lancaster 1980) as its corporate strategy in order to build a ¡¥sustainable competitive advantage¡¦ (Porter 1980) for itself in achieving the fundamental goals of expanding market share, revenues and profits. The strategy deployed by Whirlpool included:
- Purchasing of Philips Industries based in Netherlands, to gain control over Philips European white-goods production facilities and distribution systems.
- Acquiring Polar SA, an appliance manufacturer in Poland, to offer itself a low-cost production platform.
- Reorganising its manufacturing capacity; such as concentrate its production of automatic washers for its European customers in Schondorf of Germany, and that of refrigerators in Trento of Italy.
- Upgrading and modernising its European factories.
According to the actions being taken by Whirlpool, since the firm has deployed the ¡¥overall cost leadership strategy¡¦ (Porter 1980) as its business level strategy, Whirlpool has consolidated its production of product lines at single factories in
1.1 What are the advantages of consolidating production of product lines at single factories in the EU? What are the disadvantages?
With the effect of the Single European Act on 1st July 1987, the emergence of European Union (EU) as a common market has essentially been created. The benefits of this act are substantial to European firms, economies, and workers. It eliminates conflicting national regulations and trade barriers, as well as offering firms opportunity to sell their goods to all other EU members (Griffin & Pustay 2005).
In light of conflicting national regulations and trade barriers to pan-European business disappearing, Whirlpool, the world¡¦s largest white goods manufacturer, adopted the ¡¥acquisition strategy¡¦ (Griffin & Pustay 2005) as an entry mode to participate in international business. Furthermore, Whirlpool also adopted the ¡¥global strategic rivalry theory¡¦ (Krugman 1981 & Lancaster 1980) as its corporate strategy in order to build a ¡¥sustainable competitive advantage¡¦ (Porter 1980) for itself in achieving the fundamental goals of expanding market share, revenues and profits. The strategy deployed by Whirlpool included:
- Purchasing of Philips Industries based in Netherlands, to gain control over Philips European white-goods production facilities and distribution systems.
- Acquiring Polar SA, an appliance manufacturer in Poland, to offer itself a low-cost production platform.
- Reorganising its manufacturing capacity; such as concentrate its production of automatic washers for its European customers in Schondorf of Germany, and that of refrigerators in Trento of Italy.
- Upgrading and modernising its European factories.
According to the actions being taken by Whirlpool, since the firm has deployed the ¡¥overall cost leadership strategy¡¦ (Porter 1980) as its business level strategy, Whirlpool has consolidated its production of product lines at single factories in