THE GAME PLAN

The global market place for white goods is on a big canvas. The market place is
dominated by popular brands like National, Frigidaire, Sony, GE and
Whirlpool.

The facts presented to you relate to circumstances over two decades ago when
the concept of globalization started catching on in a bigger way with the
developed countries which had their MNC”s reaching out to the markets found
existent in developing countries and the process of liberalization in the Indian
sub-continent which created vibrations all over the world.

Whirlpool the leading brand in white goods in the international market had then
started taking its steps in making out its business plans over the next decade in
the backdrop of the competition it was facing from other leading international
brands. With the sales volume in developed countries reaching a saturation there
was a need to understand the quantum of market potential that was available in
third world class appliances. in the third world countries.

A market survey was therefore undertaken keeping the internal projections of

sales growth as the base. The survey report presented some very interesting
results. The report not only confirmed that the market penetration in the
developed countries was slowly getting saturated but also that about 80% of the
projected sales growth over the next decade could be achieved only by
expanding into the Asian markets like China, India, Singapore and Hong Kong.

It was at this time the business canvas in India started changing its colours. The
government with a view to attract foreign capital, kick started a number of
liberalization measures like convertibility of foreign currency, allowing 51%
FDI and liberalized trading regime in stock exchanges and so on.

Whirlpool already on its course of business expansion decided to gain its

foothold in Asia through the FDI route. Mr Garry Desilva was nominated as the
CEO for Asian operations and the board convened a special meeting and
authorized his appointment and also the necessary budgetary support to
Mr.Gary Desilva for his Asian venture.

Whirlpool had until then, a Joint venture with TVS in India (with minority stake
holding given the restrictions in FDI) for manufacture of laundering machines.
The market which was hitherto dominated by brands like Videocon, Kelvinator
(collaborated by GE) ,Godrej IFB Bosch etc was getting ready for a taste of new
emerging brands.

A survey of the setting in the market place revealed to Whirlpool the following
facts:

1. The only major international brand in the race was GE through its
collaboration with Kelvinator.

2.The manufacturing facility (in collaboration)established by TVS (though in

the red)presented a ready made opportunity of taking control of existing facility
as compared to establishing a new facility through the organic method.

Mr Garry Desilva is response to the market trends (stated above) negotiated

with the both the organizations (Kelvinator & TVS) and persuaded them to part
with their majority stakes for a purchase consideration of Rs 100 crores and Rs
45 crores respectively

This move triggered off a two important offshoots a).GE (thrown out of the
Kelvinator JV) had to make a fresh start for establishing its foot hold in the
market and b)the joint dealer network of Kelvinator and TVs increased rapidly
to over 1800 dealers resulting in a surging opportunity for both the brands to
optimize their sales under the new brand name Whirlpool.

Questions for discussion:

1. In wake of the takeovers effected by Whirlpool in India make out the

SWOT analysis envisioned by Whirlpool for its Asian operations.
2. Reflect on the economic factors and governmental factors in India that
form part of environmental scanning of projects.
3. Analyze the profit potential of Whirlpool’s new venture using Porter’s
model.
4. Trace the events contained in the case study through the steps of pre-
feasibility study.