Whirlpool

Background

Whirlpool is the largest manufacturer and marketer of major home appliances. Originally founded in 1898, it incorporated in Delaware in 1955. Whirlpool has approximately 71,000 employees in 12 countries and has four geographic divisions: North America, Latin America, Europe and Asia. Whirlpool's principal products include laundry appliances, refrigerators, cooking appliances, dishwashers, mixers and other small household appliances, as well as hermetic compressors for refrigeration systems. It is headquartered in Benton Harbor, Michigan. Whirlpool distributes its products under a variety of brand names that vary by geographic region but include Whirlpool, Maytag, KitchenAid, Jenn-Air, Amana, Roper, Estate, Admiral, Gladiator, Acros, Supermatic, Consul, Brastemp, Eslabón de Lujo, Bauknecht, Ignis, Laden, Polar and Privileg. Whirlpool's greatest strength is its brand equity. According to Datamonitor online, “Brand Finance, one of the world's leading independent brand valuation and marketing metrics consultancy, ranked Whirlpool among the world's most valuable brands with a brand valuation of $2,346 million” in 2009.

Whirlpool's customer base, especially in the United States, is mainly comprised of large, sophisticated customers who have a variety of choices, such as Lowe’s, Sears, Home Depot, Casas Bahia, and thereby possess the purchasing power to negotiate prices and services. One of their largest customers in the U.S. is Lowe's, “Lowe’s is a major outlet for Whirlpool, Maytag, KitchenAid, Roper and Gladiator brand products. Sales activity with Lowe’s represented 10%, 9% and 8% of our consolidated net sales in 2010, 2009 and 2008, respectively.” Sears, another major North American customer, accounted for approximately 10% of Whirlpool's sales in 2009. However, Whirlpool does not operate under long term agreements with trade customers leaving them vulnerable to larger customers demanding improved efficiency, lower prices, and other...