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Change at Whirlpool Corporation

Groupe ESC - Strategic Management Course

Pedro Sousa

on 12 December 2012

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Transcript of Change at Whirlpool Corporation

Agenda Industry Analysis
Porter 5 Forces Change at Whirlpool Corporation CONCLUSION & FURTHER RECOMMENDATIONS INDUSTRY ANALYSIS KEY CONCLUSIONS Strategy for a company acting in this environment should account for:

•Global approach – to secure the production competitiveness, gain scales and ensure the arise of new competitors that are regional players;

•Technological investment – New features and consumption efficiency present as the new trends in the industry;

•Price and quality competitiveness – The end consumer is now able to compare prices and quality reviews from all over the world;

•Distribution and standardization – Be able to quickly put the product in any international market and preferable the “same” product. It’s important though to be aware that standardization can mean inability to adapt to certain markets. Based on Whirlpool internal and external analysis and from studying what they have done so far in terms of strategy we came up with some recommendation for their future.

First, Whirlpool needs to innovate: Innovation has never been mentioned as an adjective to qualify the company neither in the culture definition, nor after. Whirlpool has chosen to be the first to move on a global market and it won’t last if they don’t propose new concepts.

Improving its globalization process -The strategy Whirlpool applied in Europe when they acquired Phillips should be implemented in other regions. Whirlpool should increase its worldwide implantation by acquiring local entities in emerging countries and in Asia. INTENSITY OF COMPETITIVE RIVALRY THREAT OF SUBSTITUTE PRODUCTS BARGAINING POWER OF SUPPLIERS THREAT OF NEW COMPETITION BARGAINING POWER
OF CUSTOMERS Four major players: Whirlpool, Electrolux, GE and Maytag (About 93% of market share)
Agility of the Asian markets forecasts the shift in “Business as Usual” New major competitors depend on:
Cost efficiency
& Price competitiveness Ongoing incremental change, more then breakthrough innovation Fear of arrival of substitute products is low,
nevertheless is important to keep up
with the industry's change Increasing over time, mainly due to the Internet
Access to user reviews, worldwide online retailers and price comparison Companies need to have an integrated strategy and ensure that prices and quality are constant worldwide Four major players control the majority of the manufacture of home appliances.
Ongoing pursuit for new advances (incremental research)
The first one to come up with a new approach is in the position to charge premium
Other companies follow-up in less than one year Need to keep up in the technology development and have fast responses Raw Materials:
Need easily fulfilled
Not a difficult market to access
Specialized components:
Inside production Outsource
Strict relationship Although the raw material suppliers easy to access, the specialized are more loyal and difficult to access Industry Analysis
PESTEL P T E S E L olitical Due to the industry size and worth some countries present protectionism measures. As so, there is a need to create joint-ventures or other investments when entering certain markets.

Reallocate manufacturing may imply home-countries de-investment and unemployment what can jeopardize the brand recognition and appreciation on those markets conomic echonologycal nvironmental ocial egal Regular consumer market: suffers from the oscillation in financial markets ( Consuption retraction)

Construction Market (New house owner ): clearly linked with the economic issues, thus being a market that will be severely harmed in case of any crisis linked real estate. Increasing pace level of society induces the appliances market growth. For more and more working families, from heating food, to wash clothes and dry them, everything as a mechanical help that provides time to the family.

This is a social phenomenon that tends to grow all over the world. As every industry that relies on technology, the home appliance industry needs to have a constant pursuit of knowledge in order to create and improve products and gain leverage from their competitors.
Any company that wants to succeed in this industry has to ensure that an investment in R&D is made in order to be successful. Growing trends in the world point to a need to have a higher efficiency appliances
Target on decreasing the energy consumption
Production that ensures less possible resources usage.
Green Growth policies The legal disposition that applies specifically to this industry are mainly related to security for the consumers, as so, this is not a key issue thus manufactures have already internal policies to prevent accidents in the usage of the products. Whirlpool Company Overview Company Analysis SWOT Analysis I. Home appliance industry
Industry Porter’s 5 forces Analysis
PESTEL Analysis
Industry analysis key conclusions
II. Company Analysis
Company Overview
Competitors analysis
III.Company Strategy analysis
Different changes and actors
IV. Conclusion & Further Recommendations Whirlpool Brands Chronology 1911 1929 1947 1916 1950 1958 Upton Machine Company begin producing electric wringer washers. Upton begins making washers for Sears, under the Allen trade name Merger with the 1900 Washer Company of forming 1900 Corp. First automatic, spinner-type washer under Sears' Kenmore brand Whirlpool Brand First move outside the US: Bought a stake in Brasmotor S.A.(Brazil) 1986 Company acquires the KitchenAid 1989 Joint Venture between Whirlpool - Phillips
in Europe 1986 1991 1997 Whirlpool buys out its European partner, taking full control of Whirlpool Europe Global restructuring involving the elimination of 4,700 jobs, the closure of plants and other facilities Whirlpool buys Maytag
Some representative figures about Whirlpool:

•170 countries
•67 factories and production centers
•5 design studios
•3 centers of technologies and development
•54 millions of appliance by years produced all over the word
•71 000 Employees Company acquires the KitchenAid WHIRLPOOL TODAY 2006 S trengths Global market leader
Brand Name
Economies of scale
Multi-local management W eaknesses Regional adaptation of the products
Insufficient knowledge to penetrate Asia markets O pportunities Potential for increasing demand
Global expansion
More market share in BRICS T hreats Increasing competition
Lower return of investments
Overcapacity due to over optimistic demand forecast Company Analysis Competitors Analysis Changes in Whirlpool Conditions of an Effective Management of Change Type of Changes Globalization Market saturated , each and every company was on the same state locally speaking

Do we get global or not ? Answer is YES

Vision :“reaching worldwide to bring excellence home”

Acquisition of Philips in Europe, expended alliances in Brazil and joint ventures in Asia Manufacturing Major differences in the manufacturing practices and performances

Little share among facilities globally and locally because of a complex product line

Challenge: integrate global operations

Creation of a global operating platform to rationalize allocation of products to plants Organization, brand, product line The P&L was built on products category but in reality, each brand had its core best product. Shift to a P&L built on brands.

Diverse channels of distribution (independent appliance chains, store dedicated to home improvement and mass merchants)

Whirlpool was always closer of one of them than the other.. Whirlpool, which has always focused on what makes a retailer successful, must be careful and concerned equally by all its retailers. Support functions Central organization and marketing team and low turnover Whirlpool is “a small big corporation”

1990: First work on the culture. Common adjectives and values, set up as a list for which people voted

1995: Rework on the culture: concerted effort among every employee in the company. Core values of whirlpool: respect, integrity, teamwork and customer insight The path to brand value creation Simplification of the product.

Ultimate goal : Operational excellence

Not sufficient for Witwam: New vision “every home … everywhere … with pride, passion and performance” and new way of thinking:
The “customer passion team”
The “employee pride team”
The “shareholders performance team”

For each employee to had a deep understanding of the end-customer and to be more customer focused

The « employee pride team »

To develop employees’ leading and changing capacities and make their work meaningful

The « shareholders performance team »

Maximize the shareholders return Time available: A few years to make the change effective
Scope of change: large breadth and medium depth..
Preservation of some aspects of the organization
Capability of managing change: Whitwam is the leader
Capacity for change: Whirlpool has the resources needed
Readiness for change: awareness that change is needed
Power to effect change: the executive committee and the shareholders have this power Context of change Forcefield Analysis Whitwam is the key agent of change. He is a leader and a link between all units.
Participative style of change : he creates involvement in the change and the strategy and make people work on the issue by group
Benefits: increase in the ownership and improvement of the quality of the decision. It contributes to create readiness and capability for change. Change agents Combination of Theory E (levers as changes of structure, change of system, portfolio changes ) and Theory O (development of organizational capability through culture change, learning and participation in change, programs and experimentation)

Challenging the taken for granted.
Changing the routines
Symbolic processes Levers of change Empowering the organization
A clear strategic vision:
Continual change and a commitment to experimentation
Stages of transition
Irreversible changes
Sustained top management commitment
Winning hearts and minds Managing the evolutionary change Thank you for your attention Marie-Caroline Colin
Pedro Correia
Camille Kunetz
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