Whirlpool is a manufacturing company based in the United States and is among the most reputable firms across the globe that manufactures small and large home appliances as well as consumer durables. The company entails various brands produced under the initial Whirlpool Company, referred to as the umbrella brand. The company is devoted to being the ultimate global laundry and kitchen equipment supplier, thus, it is in constant pursuit of humanizing life in residential and office units. Since the company operates in a progressively digital world, it strives to drive purposeful innovation that meets the evolving consumer needs through its distinctive brand portfolio, which includes Maytag, Amana, Whirlpool, Bauknecht, Brastemp, KitchenAid, Yummly, Indesit, and JennAir. The company registered approximately $23 billion of annual sales, 55 research technology and manufacturing centers, and 69,000 workers in the past financial year (Cao, 2019). The umbrella company continuously pursues to enhance life at home by offering quality products.
Financial Analysis
To understand the financial situation of Whirlpool Company, conducting a comparative analysis is essential. The exercise will include a proportional breakdown of Whirlpool’s income statement and balance sheet for the 2021 financial year, submitted to the American exchange and securities commission. The main business activity conducted by the company involves the manufacturing of household appliances in accordance with federal code 363. In the course of the analysis, the main financial ratios are compared to the median values of individual ratios of the firm, with the finding being calculated for the specific sectors in the industry and other industries (Berta, 2017). The median values are calculated using the information from the 2021 financial statements submitted to the exchange and securities commission through electronic data collection, analysis, and reclamation systems. Through comparing the eleven primary metrics with the average value, it was possible to make an indiscriminate conclusion regarding the quality of the monetary condition of Whirlpool Company. The summary conclusions and calculations are made in an automated manner using methods and software developed through consultation with analytical and financial companies. Based on the analysis of the significant financial company ratios, it became evident that the company’s financial condition in 2021 was worse compared to the financial situation of approximately half of the firms engaged in the household appliances business (Changjuan, 2019). In comparison to averages for various industry sectors in the U.S, Whirlpool shows better results due to the high performance of companies taking part in-home appliance production.
In terms of profitability, Whirlpool generates approximately 50% of the net sales in North America since most of its manufacturing stations are located within the region. The company’s gross margin over the past five years stands at 10.19%, which is considerably lower compared to the industry, which stands at 35.04%. The net margin of Whirlpool Company over the past five years is 4.09% which is also lower compared to the 7.9 rates of the home appliance industry(Berta, 2017). The debt-equity ratio of Whirlpool Company to the household appliance industry is 0.98% to 0.29%, while the equity debt is 1.05% to o.51%. Whirlpool’s debt to equity ratio to the sector stands at 0.67 to 3.32 %, and compared to the entire industry ratio, it is 1.07 to 3.32%. The current ratio of Whirlpool firm to the home appliance industry stands at 1.15 to 0.58%(Cao, 2019).
The main challenge facing Whirlpool Company is rapid changes taking place in the global markets. Managing the swift modifications as well as the volatility of currency in the world market has had negative impacts on the company’s annual turnover. For instance, the Brexit motion has considerably affected the company’s revenue generation in Britain, where it records approximately $1 billion annually (Changjuan, 2019).
The value of the pound dropped significantly after the vote was passed, which in turn forced Whirlpool Company to increase prices to curb the losses. The value of the pound has reduced the profits and revenues generated. In the meantime, the cost of importing appliances from countries under the European Union where appliances are manufactured has increased (Berta, 2017). As a result, local prices have increased, which in turn affects the supply and demand chain.
Recommendations
To address the challenge of changes in global markets, Whirlpool can introduce price adjustments whereby the focus will be on reducing the cost of operation and considerably increasing the commodity prices to address the local inflation challenges. The company can also introduce new products to increase revenue by creating new markets. Whirlpool can also gain a competitive advantage in the global market by leveraging its presence in different regional markets. The regionalization strategy can enable the company to expand globally, which facilitates the opening up of new markets in other countries. The company can also establish a dominant customer franchise approach which requires a deeper understanding of the customer need to improve the quality of products and maintain a suitable pace in terms of prices.
Whirlpool Company SWOT analysis
The strengths, weaknesses, opportunities, and threats analyze the brand from various perspectives, whereby the weaknesses and strengths are considered internal factors. In contrast, the threats and opportunities are deemed as external factors. The analysis technique is a certified framework of management that helps Whirlpool Company scale its performance and business compared to other competitors. The company has several strengths which have played a significant role in building a reputable brand. Whirlpool has an exceptional product portfolio, making it one of the leading home appliance manufacturers and consumer electronics. The company produces high-quality air conditioners, refrigerators, washing machines, and numerous products, thus creating an in-depth portfolio. The company’s high revenue is also a significant strength since it has massive revenue that amounts to over $22 billion annually (Henriques, 2020). Whirlpool has immense employee strength, which is beneficial when it comes to conducting various activities across the globe. Being a top producer is also a strength that has seen the company rise in the manufacturing hierarchy, standing at 199th globally, and plays a significant role in the home appliance business. The company is also the most potent producer of washing machines and has established dominance in the sector to become the leader surpassing other brands. It has a manufacturing advantage which enables it to operate production hubs in over 60 countries. The firms have optimized functions that facilitate excellent output, thus enabling Whirlpool to match the market demands. The company operates in over 100 countries globally, and its widespread presence has enabled the brand to generate high revenues (Chakraborty, 2017). After investing heavily in multiple countries, Whirlpool Company has also invented a charity work initiative meant for helping the less privileged in society. The company is a star in the home appliance sector with a remarkable market potential that facilitates exceptional market growth.
Whirlpool Company has several weaknesses which derail its ultimate financial growth. It faces a challenge in total revenue stagnancy. Over the past few years, it has dropped and risen, generating revenue of approximately $20 billion annually, which indicates that the company is not losing or growing in terms of market share as compared to other competitors (Mykola, 2020). Since the company is based in America, it has developed a high dependence on the local market, which has made it lose to various brands from other countries in the global market, thus reducing its potential revenue generation. Whirlpool is deemed a market follower rather than an innovator since most of the products offered are annexations of existing products. The consumer electronics industry is made up of brands that tend to copy some ideas from each other, meaning that there is minimal differentiation between brands in Whirlpool Company. The revenue generated by the company is considerably high but maintaining the revenue subjects it to higher expenses; and s a result, Whirlpool’s income is high, but the overall margin keeps dropping.
Whirlpool Company has been able to identify and take advantage of various opportunities which have enabled it to grow tremendously over the past few decades. The company is mainly known as a massive producer of large appliances as well as home products. However, there are numerous small appliances that are not included in the Whirlpool portfolio. Companies such as LG have managed to incorporate small devices into their portfolio. Whirlpool can also use the strategy to expand its target customer base and present more products from its brand. Whirlpool can also capitalize on the rise of E-commerce trading to take over the global market, especially in developing countries. The company can concentrate on emerging and developing markets in Asia and some parts of Africa (Zavidna, 2019). The markets can play a vital role in building the Whirlpool brand in a blossoming market, thereby boosting its revenue. The company can also increase its product portfolio to help in selling more products to the existing and emerging customer base. The purchaser durables sector is a segment whereby service is typically a severe problem due to the products’ nature. Whirlpool can take advantage of service delivery innovations which can enable the brand to achieve equality as well as building trust with the customers.
Despite having numerous strengths and opportunities for expansion, Whirlpool faces various weaknesses that derail the company’s productivity. For instance, intense competition from other brands is a significant challenge in the home appliance industry. There are upcoming and existing brands that are taking away sizable market shares, which in turn make the revenue generated by Whirlpool, remain stagnant. The competition is expected to increase with time; thus, the company needs to formulate additional avenues that will help generate revenue and increase profits. There are also dropping margins which pose a significant threat to the company since they challenge the existence and expansion of brands (Lin, 2016). The domestic American market, as well as other European and Asian markets, are deemed as mature avenues whereby multiple brands are penetrated and presented. As a result, developing a footprint in these areas tends to be difficult, thus posing a significant challenge to the company.
References
Berta, N. (2017). Transactions in the European carbon market: a bubble of compliance in a whirlpool of speculation. Cambridge Journal of Economics, 41(2), 575-593.
Cao, Y. (2019). THE DEVELOPMENT STRATEGY OF HAIER GROUP IN INTERNATIONAL INTEGRATION. In Актуальные проблемы авиации и космонавтики (pp. 370-372).
Changjuan, Y. (2019). COMPARATIVE ANALYSIS OF BUSINESS DEVELOPMENT STRATEGY IN RUSSIA AND CHINA. Актуальные проблемы авиации и космонавтики, 3.
Chakraborty, A. (2017). Leverage Analysis: A Study on Whirlpool Ltd. Available at SSRN 2949166.
Henriques, D. M. A. (2020). Whirlpool corporation business risk factors: sensitivity analysis (Doctoral dissertation).
Lin, X. (2016). Strategy analysis of a boutique and lifestyle hotel: a SWOT analysis (Doctoral dissertation, California State Polytechnic University, Pomona).
Mykola, T.,(2020). Protection of information in assessing the factors of influence. In 2020 IEEE 2nd International Conference on Advanced Trends in Information Theory (ATIT) (pp. 285-289). IEEE.
Zavidna, L. (2019). Strategy of innovative development as an element to activate innovative activities of companies. Academy of Strategic Management Journal, 18(4), 1-6.
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