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Whirlpool Corporation, headquartered in Benton Harbor,Michigan, is the world’s number one appliance company. Thecompany sells more than $18 billion worth of “white goods” eachyear; this category includes refrigerators, stoves, washing machines,dryers, and microwave ovens. Whirlpool’s success has been achieved,in part, by offering a brand portfolio of products in different priceranges. These include the premium KitchenAid and Maytag brands aswell as the medium-priced Amana and Whirlpool brands.Not surprisingly, the global economic crisis has translated intolower sales in North America and Europe, where Whirlpool generatesnearly 75 percent of its revenues. By contrast, sales in Latin Americaand Asia are showing double-digit gains. Whirlpool is not new toforeign markets; for example, the company has had a presence inLatin America since 1957. Today, it is the market share leader there,offering global brands (Whirlpool, KitchenAid, and Maytag) as well aslocal (Brastemp) and regional ones (Consul).At the beginning of 1993, David Whitwam, then-chairman andCEO of Whirlpool Corporation, told an interviewer, “Five years ago wewere essentially a domestic company. Today about 40 percent of ourrevenues are overseas, and by the latter part of this decade, a majoritywill be.” The CEO’s comments came 3 years after he placed his firstbet that the appliance industry was globalizing. By acquiring PhilipsElectronics’ European appliance business for $1 billion, Whirlpoolvaulted into the number three position in Europe. Whitwam pledgedanother $2 billion investment in Europe alone.As the decade of the 1990s drew to a close, however, Whitwam’sambitious plans for expanding beyond Europe into Japan and the developingnations in Asia and Latin America hadn’t achieved the desiredresults. Noting that Whirlpool stock underperformed the bull marketof the 1990s, analysts began questioning whether Whitwam’s globalvision was on target. As one analyst put it, “The strategy has been afailure. Whirlpool went big into global markets and investors have paidfor it.” Others faulted the company on execution. Another analyst said,“I respect Whirlpool’s strategy. They just missed on the blockingand tackling.”The challenge Whirlpool faces is rooted partially in the structure ofthe appliance industry. In Europe, for example, the presence of morethan 200 brands and 170 factories makes the appliance industryhighly fragmented and highly competitive. Electrolux, a Swedishcompany, ranks number one. Whirlpool’s various brands are availablein 30 countries; however, European appliance sales have been flat foryears, with sales volumes growing at a mere 1 or 2 percent; industryovercapacity is a major issue. Although analysts expect to see a surgein demand from Central and Eastern Europe within a few years,there will also be an influx of products from low-cost producers inthose regions.From its headquarters in Comerio, Italy, Whirlpool Europe operatesmanufacturing facilities in seven countries. In the 1990s, Whirlpoolexecutives began the process of streamlining the European organizationto cut costs and increase margins. When he was president of WhirlpoolEurope BV, Hank Bowman cut fixed costs by closing many of thecompany’s 30 warehouses. Today, the company even outsourcesmanagement of some distribution functions; in 2010, for example,France’s Norbert Dentressangle took over management of Whirlpool’snational distribution center at Aylesford in Kent, England.
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