Change at Whirpool Corporation (A)
MM6013 Leading and Managing Organizational Change
Syndicate 1
Widya Wardani | 29112003 Malendra Rusni | 29112031 Sabrina Desinta | 29112301 Seto Kusparyanti | 29112306 Reska Putri Praslita | 29112512
General Analysis
Political Economical Social
Different policy in each country of Whirpool branch can influence its strategy
PESTEL ANALYSIS
Macroeconomic condition affect buying ability of consumer that will impact the company directly
In several countries, own luxury stuff lead to increase in social status which is prospective for company
Technological
Environmental Legal
Rapid changes in electronic appliances tech. need to be concerned since it leads to innovation among player
Environmental issue should be taken into account esp. in manufacturing process
Safety and workplace policy in every countries have to be considered
Industry Analysis
INDUSTRY OVERVIEW
Began to emerged industry in early 20th century by the introduction of electric washing machines, household refrigerators, and temperature-controlled stoves (1906 1915) Market penetration came to significant increase after world war II. Early players : Whirpool (top loading automatic washer), Frigidaire (refrigerator), Maytag (washer with auto agitator and clothes dryer), Raytheon (microwave)
CONSUMERS
In the late 90s, majority are new residential construction (25% of total demand) and replacements (75% of total demand) Consumers characteristic are a diverse lot, depends on the house condition, appetite, etc
Industry Analysis
DISTRIBUTION CHANNELS
In 1960s, specialty appliance stores had sold over 50% of all appliances (US). Mass Merchant : Sears, Montgomery Ward, J.C Penney Late 1990s, independent appliance stores diminished, most of mass merchant were struggling and some faced bankruptcy
PLAYERS
During 1980s and 1990s, trend were consolidation and acquisition among players By 1998, 93% of US major home appliances were manufactured by Big Four : General Electric, Electrolux, Maytag, Whirpools
Industry Analysis
Industry Analysis
Threat of New Entrants
New entrant cannot be easily entered the industry because existing sellers are really active in launching fresh moves to boost their market standing and business performance
LOW Bargaining Power of Supplier
Only few suppliers of particular input are presence in the market. Due to the consolidation in the market only few suppliers are available in the home appliance industry, so it would be little bit difficult for the buyers to switch from one supplier to another.
Rivalry Among Competitor
Compete with several strong competitors which own strong brand as well Strong players : Whirlpool, Maytag, GE and Elextrolux
Bargaining Power of Buyer
Easy to switch if find more quality and reliable product
HIGH
HIGH
HIGH
Threat of Substitutes
Due to the rapid changes of technology, innovation is on the track. It leads to invention of better product even new substitutes. However, Life expectancy is very high and Perceived value doesnt exist as there is no any close or direct substitute of home appliance products.
MEDIUM
Company Profile
Roots lay in the Upton Machine Company, headquartered in rural Michigan Offered first electric and motor-driven wringer washer in 1911 and began to expand rapidly in 1916 when Sears, Roebuck offered Uptons washer in its catalogue under the trade name Allen. In 1929, merged with the 1900 Washer Company and became the Nineteen Hundred Corporation and renamed to Whirpool (1950). By mid 1980s, became the 2nd-largest white goods maker in US, market leader in refrigerators, washers and dryers.
1987, appointed new CEO : David Whitman (joined company since 1968, VO sales in 1983, CMO in 1985).
Problem Identification
GLOBALIZATION
Triggered by domestic competition and Electroluxs moves into US.
August 1988, Launched new Strategy guided by vision Reaching Worldwide to Bring Excellence Home, to establish a strong presence in all major world market
1989 - 1991
1990s
European Expansion, Purchased a majority stake in Philips European Appliances Business. Brazil and Asia Expansion, Long standing alliances in Brazil, Joint ventures in Asia
1998
Operated 44 significant facilities in 13 countries, sold products in 170 countries under 21 brand names. Revenue reached $10.3 billion, 46% from outside of North America
Problem Identification
GLOBALIZATION
Effort to leverage expertise across locations and to develop common technologies were beginning to take hold i.e touted a Brazilian-built microwave oven that used Swedish design and a Chinese product platform
Effort to increase market share in Europe had met with stiff resistance Unprofitable joint venture with a Chinese Firm had been shuttered Had incurred heavy loses in Asia and Latin America
Problem Identification
MANUFACTURING
[1] Different across plants in manufacturing practices with very little shared among facilities even within same continent
GLOBAL OPERATING PLATFORM
Rationalize the allocation of products to plants Disseminate best practices Establish WORLDWIDE EXCELLENCE SYSTEM (WES)
[2] Product Complexity which often pooled aside and produce on separate, slower assembly lines and separate plant design
Problem Identification
ORGANIZATION, BRANDS, AND PRODUCT LINES
During Whitwam era, Profit-and-Loss (P&L) Responsibility switched from Product Categories to Individual Brands
The flagship Whirpool
Strong brand in laundry room line of washers, dryers, refrigerators, freezers, ranges, and dishwashers in the middle to high end segment. Emphasis on Kitchen Appliances, middle to high end segment Similar to other brand, low end segment Owned by Sears but the featured product manufactured by Whirpool
Kitched Aid
The Roper Brand The Kenmore
Problem Identification
ORGANIZATION, BRANDS, AND PRODUCT LINES
Products are sold through different channels KitchedAid and Whirpool : Independent Appliance Chains, Home Improvement Stores, Warehouse Clubs and Mass Merchants Ally with strong retailers only : Sears, Lowe and Costco
ISSUE Sears, which accounted for 17% of Whirpools global sales and 35% of US sales, received special attention which led to occasional complaints from manager of other accounts and of non-Kenmore Brands
Problem Identification
SUPPORT FUNCTIONS
Company maintained a central technical organization and a central marketing team at corporate headquarters R&D expenditures were 2% of sales while advertising expenses were 1.7% of sales (in headquarter) Brand management & marketing strategy was not integrated but vary for each brand Company was identified as small big corporation with close relationship among employee and management and loyal employee as well
Problem Identification
SUPPORT FUNCTIONS
Company Culture Situation
Midwest or small town like Friendly Ethical Deterministic Integrity Respect Team Decision Making Cost containment and quality centered
Everyone can say no, risk averse Lack of alignment and consistency Too many programs and projects Not-invented here syndrome Change Averse Not customer centered Silo mentality Internal or trade only focused
Analysis of Change
BACKGROUND SITUATION
Challenges in facing globalization
Problems in manufacturing and product complexity
Unbalance strategy between separate brand Problem in culture and value
Analysis of Change
TYPE OF CHANGE
Incremental Transformational / discontinuous Re-orientation Re-creation
Proactive (Anticipatory)
Reactive
Fine Tuning Adaptation
As we look at the future, we realize that this is going to be a very different, very though industry. Many people in the company think, The only way to drive change is out of crisis There is no crisis at this time. There is no burning platform. But Ive always felt you can drive change if you paint a picture of a better tomorrow -Dave Whitwam, 1998-
Analysis of Change
CORPORATE LEVEL STRATEGY
Brand Oriented + Consumer Focus
Brand-Focus Value Creation + Innovation
Analysis of Change
CORPORATE STRATEGY : BRAND-FOCUSED VALUE CREATION
1989,Whirpool started to focus in brand 1993, Company launched the Dominant Consumer Francise (DCF) : give final consumer a compelling reason beyond price to desire its brands. 1997, launched new corporate vision Every Home Everywhere with Pride, Passion and Performance
July 1998, Launched Brand Focused Value Creation
MM6013 Leading and Managing Organizational Change
