Strategic Alliance – Whirlpool Corporation and Inland Steel CASE Faced with intense competition, increasing expectations from customers, reduced product life cycles, and localized geographic markets, Whirlpool Corporation (a Fortune 500 manufacturer of appliances) realized that the need to achieve a competitive advantage from its sourcing and material efforts was greater than ever. Part of the strategy to achieve this advantage involved pursuing an alliance with a key steel supplier. Steel is a major component used across all of the company’s finished products (such as washing machines, dishwashers, refrigerators, and others). The purchasing managers at Whirlpool faced a number of questions with regard to their purchasing strategy: …show more content…
The strategy of forming a formal buyer-supplier partnership was a relatively new one. As these two companies explored the idea, it became obvious that a complementary common strategic vision existed between the two companies, which could make such a partnership a reality. This common vision was based on the fact that the Whirlpool Corporation needed to sustain a competitive advantage and support its direct customer relationships, while Inland needed to manage the transition inherent in a customer-focused market strategy. Thus, Whirlpool Corporation sought to work with Inland Steel to realize reduced costs vis-à-vis the competition, and Inland sought to obtain a major share of Whirlpool’s steel contract. While this initial concept seemed straightforward, it required almost seven years to make it a reality. The vision was made a reality by first understanding that reducing cost did not simply mean lowering the price paid per ton of steel, but rather to take cost out of the business processes, which takes much more time. Linkages throughout every step of the value chain, not just between purchasing and sales, had to be established (See Exhibit 1). The end goal became to maximize profitability at both companies, while not relying on explicit formulas and equations formalized in contract form. Along the way, the companies encountered a number of obstacles. However, as the vice president of
Whirlpool is the world’s largest producer and marketer of small and large home appliances such as mixers, food processors, washing machines, refrigerators, air conditioners, etc. Whirlpool also has a long standing relationship with Sears, which sells Whirlpool products under the brand name Kenmore. In addition to its North American presence (both manufacturing and sales), Whirlpool also has a strong presence in Mexico, and Europe. Being the largest producer in the world has helped Whirlpool to compete on lower costs through economies of scale and through its Global Procurement Organization (GPO). In addition, its large networks also help in
The Bargaining Power of Suppliers (Moderate): Most of the industry’s products are sourced and manufactured by a network of third parties. The supplier group is diluted compared to the industry; KMD alone has over 45 suppliers. There is credible threat of suppliers adopting forward integration resulting in loss of major suppliers and emergence of new competitors for the industry. Highly effective and specialised products will pose high supplier switching costs for industry firms.
A resource based view can help determine, and maintain a competitive advantage for Wal-Mart. In order to gain a clear understanding of their advantage, or lack thereof, it is vital that Wal-Mart determine what resources they have available to them. Once these resources are identified they must capitalize on them, and ensure that they provide them with a sustained advantage, and not a temporary advantage. For instance, Wal-Mart might find that there is a manufacturer that is not being used to their full potential, and is able to provide them with fast production and quick delivery of items for a great price. It would be beneficial for Wal-Mart to take advantage of this opportunity, as well as build a long lasting relationship with this manufacturer that will carry them both into the future.
This case analysis explores the possibility of Breezy, a leading supplier of carburators and air filters in North America, the possibility of developing offshore busines in countries where car manufacturing is growing. The report is structured as follows: First, there are five important questions that Breezy must consider and ask itself before developing a relationship with a new customer. After Breezy decides to go offshore, it will have to go through the negotiating process, which involves five steps. Breezy then, must have capabilities of how an offshore business is organized, consider the many different costs and risks involved in the implementation and decide how it will finance the project. The report also talks
Strategic planning can dictate the success of any organization if properly planned as well as the failure of an organization if not implemented as planned. Strategic planning is all about making choices. It is a process designed to support leaders in being intentional about their goals and methods. Simply stated, strategic planning is a management tool, and like any management tool, it is used for one purpose only—to help an organization do a better job. This portion of the strategic plan will explain why an
Answer 2. There should have successful partnership with long term commitment and it encourages in investing improvements in supply chain to mutual advantages. Thus, it will build and improve long term commitment with the form of collaborative framework partnership with the involvement of business to business relationship and it will meet the expectations in terms of goals and objectives.
This report discusses the challenges that The Nucor Corporation faces during this era of social and economic climate change. Using Porter's Five Forces Analysis and Four Generic Strategies, we will assess the steel industry standards as it relates to the strategies implemented by the Nucor Corporation. We will also assess what Nucor’s strengths and weaknesses are, and if they will be able to continue
U.S. Steel and other steel companies for decades, relied on the tried and true strategies of vertical integration and price control (Hoerr, 1988). In the 1960’s, foreign competition from developing countries like South Korea, Taiwan and Brazil entered the market "with low material and labor costs, modern equipment, and the support of government policies" (Hoerr, 1988, p. 99). Because of lower costs and concern over supply created by constant threat of strike, many
Victoria Heavy Equipment’s most recent organization has been lacking effective communication practices amongst all of its divisions. The company has been suffering from lack of clear goals in measurable terms, for its divisions. The idea of each division functioning as an independent unit, whether it being cost or profit center, is a remarkable beginning. However, clear goals and key measurable need to be set for each center, which in our case have been overlooked. As a result, many of these centers have over spent, resulting in over expenditures, something we can definitely not afford with anticipated slower market.
Over the years Nucor emerged as a market leader in the American steel producing industry due to its sustainable growth strategies and incorporation of sophisticated technologies that enables the company to grow exponential and become a market leader by offering high quality steel products at lower costs. The company backed its growth strategies by massive integration in the American market. However, this growth strategy proved to be predominant in capturing the American market thus ignoring the potential competitive threats that could come from foreign steel producers. This included both steel producers integrating with American minimills and foreign producers who used America as a lucrative export market and dumped their products.
QI-TECH, a Chinese manufacturer of precision Coordinate Measurement Machines, is a joint venture established by Indiver BV, a Dutch aircraft engine manufacturer and a Chinese state-owned enterprise QQMF. Looking for a strategic exit, Indiver BV, which holds 50% of QI-TECH, must negotiate a sale with its Chinese partner and a potential buyer, Brown & Sharpe. For this purpose Roger Kollbrunner, the Business Development Manager at Indivers BV, has to develop a viable deal structure and negotiation strategy.
Based on the given information in the case study regarding the acquisition of Nicholson File Company by Cooper Industries, there is no question that Cooper should try to gain control of Nicholson. This decision is based on an analysis of the bargaining positions of each group of Nicholson stockholders which have disparate goals and needs that need to be met. In addition, an appropriate payment method and specific dollar value based on a competitor's offer and Cooper financial data was decided. The remainder of this paper will provide the analysis and rationale for this determination.
Globalization changes have impacted Burger King in the following ways; since the company began in 1953 with its first restaurant in Jacksonville, Florida and opened several locations across the United States, the company began its international expansion in 1969 with its first international franchise location in Canada, followed by Australia in 1971, and Europe in 1975. The setting up of franchises outside the United States was as a result of fast food opportunities arising outside the United States. So as to fully integrate in the international market, Burger King had to adopt and embrace
4. What is IKEA’s strategy toward suppliers? How important is this strategy to IKEA’s success?
For international business strategy, Hill and Jones (2004) suggested that there is four basic components of strategy development need to be addressed by a firm in order to succeed in foreign markets. These components are: ¡¥distinctive competence¡¦, ¡¥scope of operations¡¦, ¡¥resource deployment¡¦, and ¡¥synergy¡¦. By applying the theory, it is revealed that Whirlpool¡¦s distinctive competence is its brand name ¡V Whirlpool, the world¡¦s largest white-goods manufacturer. For the scope of operations, Whirlpool is specialised in broad middle market niche of white-goods products. In terms of resource deployment, Whirlpool allocates the resources equally to its three product lines. As far as synergy concern, due to the poor business performance of Bauknecht and Ignis, Whirlpool is not benefited in whole.