Whirlpool Case Study Essay
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 …show more content…
According to the case study, Whirlpool produces and markets three well-established pan-European brands: Bauknecht, a premium upscale production; Whirlpool, for the broad middle segment of the white-goods markets; Ignis, its low-price ¡§value¡¨ brand aimed at price-sensitive consumers. Although this comprehensive product strategy allows Whirlpool to fully utilise its European production facilities and distribution systems, and markets its good to Europeans at all income levels, however, with the earning of $81 million in profits on sales of $2.2 billion in 2002, it only represented a profit margin of 3.68% by operating three product lines in Europe. Although Whirlpool established itself as the number-three white-goods manufacturer in Europe, however, with such a poor profit margin, it is necessary for Whirlpool to review its market situation and international business strategy. By analysing the EU market situation, there are two prime competitors of Whirlpool being identified, that is, Germany¡¦s Bosch Siemens Hauqerate and Sweden¡¦s Electrolux. For Bosch Siemens Hauqerate, it specialises in product innovation which