What are the advantages of consolidating production of product lines at single factories in the EU? What are the disadvantages?
Write a 3-4 page paper in APA format (not including the cover page and reference page). Below is a recommended outline.
Read the case: Will Whirlpool Clean Up in Europe. Prepare your composition to cover the following topics or questions with in the Body section of the paper described for this assignment. Be sure to specifically address topics covered in this unit, which includes: international trade policy, economic integration, and foreign exchange.
A) What are the advantages of consolidating production of product lines at single factories in the EU? What are the disadvantages?
B) Should Whirlpool continue to produce and market in Europe its three product lines (Bauknecht, Whirlpool, and Ignis), which span the entire white-goods market, or should it focus on one market niche?
C) What benefits will Whirlpool gain by broadening the Whirlpool brand name from a North American brand to a global one?
D) In light of the aggressive responses of Electrolux and Bosch Siemens Hausgeräte, should Whirlpool revise or abandon its European strategy?
E) Do you think it is possible to design and sell the same basic appliance around the world? Why or why not?
Below is a recommended outline.
Cover page
Introduction
A thesis statement
Purpose of paper
Overview of paper
Body (Cite sources using in-text citations.)
Main issue 1.
Main issue 2.
Main issue 3.
(There may be additional sections of your paper)
Conclusion – Summary of main points
Lessons Learned and Recommendations
References – List the references you cited in the text of your paper according to APA format.
Reference Textbook:
Griffin, R. W., & Pustay, M. W. (2015). International business: A managerial perspective (8th Edition). Boston, MA: Pearson Publishing.
Will Whirlpool Clean Up in Europe?
For years, international businesses looked forward to the EU’s emergence as a single, integrated market. Among these firms are ones that produce so-called white goods, or appliances such as refrigerators, dishwashers, ovens, washers, and dryers. (In the past kitchen and laundry room appliances mostly came in white, hence, the industry’s name. Consumer electronics such as radios, televisions, and stereos came in brown, so these consumer durables are called “brown goods.” Today’s widespread use of color in appliances makes these labels somewhat anachronistic.) The emergence of a single market in Europe has changed the way white-goods manufacturers do business. Previously, they had to customize their products to meet the often conflicting requirements of the EU’s 28 national governments. Fortunately, the Single European Act promoted harmonized product standards, thus allowing the manufacturers to cut product development and production costs. Reduced barriers to intra-EU trade allow them to concentrate production in one factory that can serve markets throughout the EU. Reduced impediments to cross-border advertising make it easier to develop pan-European brands, which in turn reduce marketing and distribution costs. Elimination of physical barriers at border crossing points and of restrictions on trucking competition by national governments leads to productivity gains in logistics and physical distribution management.
One of the most aggressive firms seeking to conquer the European market is Whirlpool, one of the world’s largest white-goods manufacturers. The firm’s managers have a clearly defined view of this market: Among the truths about the European home-appliance market, there are two whose net effect Whirlpool has a particular interest in: first, consumers in Europe spend up to twice as many days of household income for appliances as do their U.S. counterparts, creating a consumer “value gap”; second, industry profit mar- gins in the region are traditionally much lower than those of North American manufacturers. The reason for this truth is cultural: historically, the industry was organized to do business in individual, national markets, an approach with inherent cost inefficiencies. Now, however, with barriers to pan-European business disappearing, Whirlpool believes that it can use its unique regional position to deliver greater home- appliance value to customers and, in turn, establish a competitive advantage for itself. A strategy to do so suggests that the opportunity to eliminate costs which do not add to consumers’ perceptions of value and invest some of the savings into product and service characteristics that do add perceived value will be substantial.
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