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Whirlpool Domestic, International Business and Its Environment

Essay by   •  September 13, 2017  •  Case Study  •  717 Words (3 Pages)  •  1,803 Views

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1. What is the nature of Whirlpool's domestic and international business environments? What types of risk does the firm face?

International business environment is obviously favoring Whirlpool. With the falling of trade barriers and the dramatic development of communication and transportation technology, international expansion is becoming easier than ever. Globalization and integration create many opportunities for firms and Whirlpool is no exception. Buyers’ demand is growing everyday in every aspect: quantity, quality and diversity. 60 percent of Whirlpool’s sales is within the country, this means that international market still poses great potential for Whirlpool. Moreover, domestic market of appliance in the US has already matured. Now, it is very competitive and offer low profitability which further support the idea of going global for Whirlpool.

However, going international also comes with many risks. Four main types of risk Whirlpool may have to face are: cultural risk, political risk, financial risk and commercial risk. Differences in business culture, communication and practices can lead to considerable difficulties when doing business with local companies. Laws, regulations and governments are other barriers of globalization. Financial risk can come from fluctuation of exchange rate or inflation. Finally, when entering local markets, Whirlpool can face many local competitors as well as new local demands that they has little to no information about.

2. How can Whirlpool benefit from going international? What types of advantages can the firm obtain? What advantages acquired abroad can help management improve Whirlpool's performance in its home market?

Advantages of going international

First of all, going international means Whirlpool will be able to enter untapped markets with high potential and reach a wider range of consumers. Hence, they can expand their global presence, raise brand awareness and increase market capital. This of course will result in increase of sales and revenue.

Secondly, economies of scale can be achieved through globalization. High demand of international market will allow Whirlpool to expand their production both domestically and internationally, which then create the cost advantage. Along with economies of scale, establishing facilities oversea creates chances for Whirlpool to locate low-cost location such as Poland, China or Mexico, low cost labor and new, potential suppliers, partners.

Finally, expanding globally opens up many possibilities of partnership and investment. Moreover, development of new products adds diversity and option for consumers.

By obtaining the cost advantages through economies of scale and low-cost labor, suppliers from abroad, Whirlpool can also improve their performance at home. With

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