Whirlpool’s Dramatic Turnaround Through Internationalization

Whirlpool’s Dramatic Turnaround through Internationalization

1. What is the nature of Whirlpool’s international business environment? What types of risk does the firm face?

Whirlpool Corporation, headquartered in Michigan, is  an American multinational manufacturer and marketer of home appliances. Whirlpool makes washers, dryers, refrigerators, dishwashers, freezers, and microwave ovens in 13 countries and sells them in 170 others, under brands names such as Whirlpool, Maytag, Magic Chef, Jenn-Air, Amana, KitchenAid, Kenmore, Brastemp, and Bauknecht. In 2006, Whirlpool acquired competitor Maytag (horizontal integration) and its brands (Amana, Jenn-Air, Magic Chef, and Maytag).

Whirlpool generated over $19 billion in 2006 annual sales: 60 percent from North America, 25 percent from Europe, 15 percent from Latin America, and 2 percent from Asia.

Types of risk the firm faces are political, export-import risks, varied forms of payments and receipts, exchange rate risk, risks related to regulatory compliances, and so on. Marketing and branding strategy of two countries also share considerable differences about product planning, expenditure allocation, consumer preferences, technical requirement, availability of manpower. All these differences can create risk for the international business dimension of Whirlpool in the future. The expansion of business internationally demands the enterprise to conduct a careful research and examination on various environmental factors playing dominant role in the environmental settings of respective countries.

2. How can Whirlpool benefit from going international? What types of advantages can the firm obtain? What advantages acquired abroad can help management to improve Whirlpool’s performance in its home market?

Expanding business internationally can bring a variety of advantages to the Whirlpool. These advantages can help the firm to improve the performance in the domestic as well as in international markets.

Economies of scale: Expanding operations worldwide gives it the opportunity to gain cost advantages. In the initial years, company had to spend adequate amount on constructing infrastructure overseas, but it will make benefits in the long term. Locating and expanding business internationally also help the company locate less expensive suppliers worldwide 

Boost sales and revenues: The international business environment provides the company with the huge opportunity of enhancing sales and revenue figures through remarketing existing products in the new markets.

Diversification: The expanding international business strategy adds diversification to the existing portfolio of Whirlpool. For instance, in case of weak customer demand in domestic market, the company can sell the existing