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Whirlpool Case Study

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In 1992 a joint venture was established between the European subsidiary of Whirlpool Corporation, Whirlpool Europe B.V and the Slovak company Tatramat in the former Czechoslovakia. The new company of the joint venture was called Whirlpool Tatramat. This strategic alliance was the result of both internal and external environment problems that both companies were facing at the time.

Whirlpool Corporation is a leading global manufacturer and marketer of major appliances and related products for use within the home. Whirlpool has a worldwide presence in over 170 countries. The company is broken up into four segments based on geography which include: North America, Europe, Latin America, and Asia.

• Manufacturing locations: United States, Mexico, France, Germany, Italy, Poland, Slovakia, South Africa, Sweden, Brazil, China and India

• Whirlpool, KitchenAid, Gladiator, Roper, Estate, Acros, Supermatic, Crolls, Inglis, Ingnis, Polar, Laden, Bauknecht, Brastemp, Consul, Embraco, Eslabon de Lujo

• Also a supplier to Sears, including some of the products that Sears markets under the Kenmore brand name.

• Various products include: air purifiers, automatic dryers, automatic washers, bakeware, built-in ovens, cooking gadgets, cookware, countertop appliances, dehumidifiers, dishwashers, fabric fresheners, freezers, garbage storage organizers, hot water heaters, ice makers, microwaves, portable appliances, ranges, refrigerators, room air conditioners, trash compactors, water dispensers

• Net sales were $14,317,000,000

• 65,682 employees (Year End Average Staff as of 12/31/05)

• Whirlpool North America, headquartered in MI, saw revenues of $8.9 billion

• Whirlpool Europe, operations center in Italy revenues of $3.2 billion

• Whirlpool Latin America, headquartered in Brazil delivered regional revenue of $2 billion

• Whirlpool Asia, headquartered in Peoples Republic of China reported revenues of $422 million

• There are 7,438 shareholders of Whirlpool Corporation’s stock and its closing stock price was $87.31 as of November 7, 2006

• For the quarter ending March 31, 2006, net income increased 37.2% to $118.0 million from $86.0 million in the year-earlier quarter.

• March of 2006 the company acquired Maytag Corp. and announced that it is expected to generate pre-tax annualized cost savings of over $400 million from cost efficiencies from all areas of the value chain.

• Net income is $422,000,000


Tatramat was the leading manufacturer of washing machines in Czechoslovakia, controlling almost 88% of the market. For many years the company produced household consumer goods. When the company merged with Whirlpool they changed their principal focus to the manufacture of water heaters. Today, Tatramat is a supplier of parts to Whirlpool’s production of washing machines.

• various water heaters which include electric, gas, interchanger and solar models, with volumes ranging from 5 to 500 liters

• Also produces tin parts and components, cables, plastic molded parts and components, polystyrene heating panels and building parts, custom molded polystyrene

• Has seven domestic and four foreign subsidiaries which are in the Czech Republic, Poland, the Ukraine and Germany

• Exports its products to 16 countries in Europe including Belgium, Belarus, Bulgaria, Czech Republic, Estonia, Lithuania, Latvia, Hungary, Germany, Poland, Austria, Romania, Russia, Serbia and Montenegro, and Ukraine

• The company gained exposure into the North American market in 2001-2002 by opening market development in Canada and the United States

• Uses a strategy of partnering with foreign producers in order to generate new sales opportunities and to expand their partner’s offerings.


Whirlpool made the best possible decision at the time when the company chose an international joint venture as its participation strategy. The company entered the joint venture with the primary motives of entering the Central and Eastern European market and finding a low cost competitive advantage for labor. Whirlpool was able to benefit from Tatramat’s brand name, market share, distribution facilities, and low production costs. The company also viewed the alliance as an opportunity to gradually increase its equity share until it was able to totally acquire the company. For Tatramat a joint venture was its only logical possibility. The company explored the idea of licensing but realized that it would be costly and would not increase its market share. Licensing would not increase the company’s cash flows or introduce new skills. Instead a joint venture allowed Tatramat to share the risks involved in the company. The company thought that this was the best choice because Whirlpool was only interested in their washing machine unit production. Whirlpool had the capital base and technology that Tatramat was looking for. The two companies weighed their options and then began to look at international joint venture negotiation issues in order to create a written agreement.

A greenfield investment would not have been an ideal strategy because of the increased risk involved in such a project. Starting Whirlpool Tatramat from the ground up would have been very expensive. In order to establish a wholly owned subsidiary Whirlpool would have had to also invest much more time into the project by finding property to build. Starting this type of investment would have also made Whirlpool vulnerable to the Czechoslovakia government. Another disadvantage for Whirlpool to use this approach would be the



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