Strategies to deal with the competitors’ aggressive responses

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1.        Strategies to deal with the competitors’ aggressive responses


1.1    Background


Though Whirlpool seems to have successfully penetrated into the EU market through a number of strategies and actions such as upgrading and modernizing it European factories and strategic acquisitions, its major competitors have also reacted strongly. For instance, Germany’s Bosch Siemens Hausgerate has poured funds into the R&D to maintain the updates of its appliance in term of reducing the material and energy consumption and also it has invested heavily on automating the home country production and building new factories in Poland, Spain and Czech Republic to weaken the reliance over the high cost German labor. And Sweden’s Electrolux which competes strongly with Whirlpool for the no.1 position in the industry in the world, has also made strategic acquisition and reduced the labor cost by closing some factories. In the following we will talk about how the company should response to the competitors’ ambitious reactions.


1.2    Suggestions to Whirlpool in competition


1.2.1            Continual monitoring of the competitors’ strategic implementation and avoid overreaction


History has taught us that changes, especially big strategic changes do not necessarily come with definite business success. For example, facing challenges from Pepsi which positioned itself as a soft drink brand for young people that proved to be a great success, Coca-Cola started working on a new formula. A year later they had arrived at New Coke. Having produced its new formula, the Atlanta-based company conducted 200,000 taste tests to see how it fared. The results were overwhelming. Not only did it taste better than the original, but people preferred it to Pepsi-Cola as well. The trouble was that the Coca-Cola Company had severely underestimated the power of its first brand. As soon as the decision was announced, a large percentage of the US population immediately decided to boycott the new product ( 2010). Coca-Cola’s brand failure proves that overreaction to or following competitors’ strategies could be risky. And the same theory applies to the competitors’ strategies. Going back to the case of Whirlpool, its current strategies have proved to be contributing to the current market share expansion and business success of the brand; it should not easily overreact to the competitors’ strategic changes because even the competitors’ changes are not ensured success. The company should continuously monitor the market reactions to the competitors’ strategic changes and evaluate the necessity to perform any revision to the current strategic mix. While we say that it is not advisable that the company overreact to the competitors’ strategic changes, the company could still work on several directions to get ready for the possible future challenges brought by the competitors’ successful business changes. As in the following, we will provide some advices on the current strategies.


1.2.2            Enhance the green technology research and development


We all know that white goods consume a lot of water and energy such as electricity, and it is a major source of family expense, as the major competitors have invest a lot on the efficiency of the appliances (for example, Germany’s Bosch Siemes Hausgerate has reduced the energy consumption of its dishwashers by 62 per cent and reduced the water usage by 34 per cent), therefore the innovation in the these green technologies would attract more people into the purchasing of these innovative white goods and even in the premium positioned good segments, because of the people’s enhanced understanding of the importance of the preservation of the environment, they also prefer to buy more environmentally friendly white goods even at a higher price. In this point, following the competitors’ successful green technology innovation is recommended.


1.2.3            Focusing on supplementary service


While technology innovation and product design in the white good industry is said to be quite similar because any technological progress could be quickly followed up or copied by the competitors, this is more obvious in the EU market which is more mature and competitive than any other places in the world, to differentiate the products with the those of the competitors, the company could also seek additional competitiveness by focusing on the provision of the supplementary service such as presale online consumer service, warranty, technological support and after sale service.


2.        Question 5: Standard product design or product differentiations


2.1    What is product design and the stakeholders


Product design is the process of creating a new product to be sold by a business to its customers. It is the efficient and effective generation and development of ideas through a process that leads to new products. Product design is not an easy task. The stakeholders involved all demand something different from the product designer and from the design process. The manufacturer is concerned with production cost. At the end of the day, the manufacturer wants an economically produced product. The purchaser looks at price, appearance, and prestige value. The end user is concerned with usability and functionality of the final product (Morris 2009). Therefore, we can see that regarding how the product design should be done, whether standard product should be made or product differentiation is necessary, we not only need to take into consideration of the customers whom we will always think of, other key stakeholders are also needed to be considered.


2.2    Stakeholders involved


A stakeholder is any individual or organization that is affected by the activities of a business. They may have a direct or indirect interest in the business, and may be in contact with the business on a daily basis, or may just occasionally. The main stakeholders are: shareholders, local government, management and employees, local communities, customers and suppliers, the society and so on ( 2010). As when designing a new product in the white good industry, the following stakeholders could have significant impacts over the final design of the products. First of all, the local governments could have relevant laws and regulations or product standards over the design of the products; secondly, the management of the company should have a say on how the product should be targeting and how the product would be promoted; thirdly, the customers’ consumption behaviors in term of tastes and other preferences should be considered since they are the end users of the products; fourthly, the intermediaries and distributors could also have a say over the product design though they are usually appear after the products are produced, for example, large distributors could bargain down the price of the products which further suppress the cost of the products which in return have closed relationship with the company’s product design strategy.


2.3    Impossibility of producing the same basic appliance to be sold around the world


2.3.1            The government influence: different environmental acts and standards


It is claimed that the most effective means of promoting the principles of environmental quality in the context of design intervention, is the creation of standards which encourage a preventive approach to environmental problems. Standards have the great advantage of promoting the importance of design in industrial production and product development. It is now normal practice for the designer to have knowledge of and to refer to the relevant national and international norms. Various national and international regulatory bodies have initiated research into instruments of standardization aimed at improving the environmental impact of industrial production ( 2010). Though there are international standards such as ISO 14000 series that provides general guidelines for the company to design a possible product to be sold in the world, but detailed national laws and regulations have made such universal design impossible to be implemented.


2.3.2            The customer: different cultural systems


One usual model that could be used to identify the consumer behaviors differences in different nations is Geert Hofstede’s cultural dimensions. In 1980, Geert Hofstede’s book, Culture’s Consequences: International Differences in Work-Related Values was published. In this book, Hofstede describes the culmination of a research project begun in the 1960’s for the HERMES corporation, later revealed to be IBM. The original data set, derived from 117,000 questionnaires in 20 different languages comparing 88,000 respondents from 66 countries in 50 occupations, was eventually stabilized to include 53 countries and regions. Using theoretical guidance on the mammoth data set, Hofstede extracted the fundamental blueprint of his conceptualization of four basic dimensions across which employees of different countries may be meaningfully compared ( 1993). Take the power distance as an example which measures the extent to which a strong separation of individuals based on rank is accepted, it is believed that people in countries with high power distance acceptance would display preference of conspicuous consumption. Since power distance tends to be particularly high in Arab countries and some Latin American ones, while it is more modest in Northern Europe and the U.S ( 2010), as similar case could also be found in other cultural dimensions, therefore, it would be recommended that the company design products in such a manner that it meets the different needs of different nations.


2.3.3            The society: usage of different materials


Since there are distinctive societies in the world, for example, EU societies care very much whether any disputable chemicals are used in the production of any white good while it is less cared in other part of the worlds, as a result, the society could have impressive influence over the design and sale of the white good. To conclude the above analysis, it would be safe for us to conclude that because of the determination of the production design is based on the interactions of the different stakeholders which tend to different in different nations, it is not possible to product and sell the same product all over the world with any changes. Some extent of product differentiation should be applied. .

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