Page 192 - Introduction to Business

166 PART 2 Managing Business Behavior

potential consumer appliance market with over 1 billion people and a growing mid-
dle class.
A company’s environmental analysis also involves analyzing external threats to
the company and its business. Whirlpool has a number of major competitors
including Maytag Corporation, based in the United States, Siemens Corporation of
Germany, and LG Electronics of South Korea. Before entering a new international
market, Whirlpool needs to closely examine what these major competitors are up to
in that market. Changing consumer tastes and new government regulations, such
as new tax or antitrust laws, are also examples of possible threats to the company.
In addition to the analysis of environmental factors, managers engaged in strat-
egy formulation need to examine internal organizational factors, that is, conduct
organizational analysis A strategic an organizational analysis. An organizational analysis involves taking a close look
scan by an organization of its own at the company’s own strengths and weaknesses, and how they interact with the
strengths and weaknesses
company’s strategic goals.
For example, Whirlpool may want to purchase various foreign appliance mak-
ers, but it just doesn’t have the spare cash to do so. Of course, it may be possible for
a company to borrow some or even all of the money needed to make a foreign pur-
chase, but this will depend on the kind of credit available to the company and on
whether the company’s overall financial situation can handle the additional debt
and interest payments. Also, in expanding overseas, a company has to carefully
examine the strengths and weaknesses of its managerial talent. Thus, in Whirlpool’s
case, having a cadre of highly skilled managers who speak Polish or Chinese would
be a major strength, while having no such managers might be a significant weak-
ness. One critical strength for Whirlpool in expanding internationally is the fact that
a recent global marketing survey found Whirlpool to be the world’s most recognized
appliance brand. 9
Finally, there may be special circumstances that any company needs to take
into account in corporate strategy formulation. In the case of Whirlpool Corpora-
tion, the special circumstance has the name of Sears, Roebuck & Company.
Whirlpool and Sears have a special relationship dating back to 1916, when a brand-
new Whirlpool clothes washer was listed in the Sears catalog for $54.75. The rela-
tionship between the two was later cemented when Sears lent Whirlpool money for
expansion, in exchange for stock in the company. For many years, Whirlpool has
been the largest supplier of major home appliances to Sears, with Whirlpool-made
products sold at Sears under the Kenmore brand name. Sears has sold Kenmore
clothes washers in overseas locations since 1936, and Whirlpool will definitely have
to check with Sears before it starts selling its regular brand products in interna-
tional locations. Clearly Whirlpool does not in any way want to offend its largest
customer by far, Sears, Roebuck & Company. 10
In sum, strategy formulation is a very difficult and complicated process. It
involves examining and weighing a wide range of possibilities and issues in decid-
ing how best to pursue the company’s strategic goals.

Strategy Implementation. Once strategic goals have been set and a gen-
eral strategy for achieving these goals formulated, the strategy needs to be
implemented. Specific plans need to be made regarding hiring people, buying
tactical plans Shorter-term (one to assets, forming alliances and joint ventures, and so on. Tactical plans are
three years) plans formulated for smaller-scale plans developed to implement formulated company strategic goals
achieving organizational strategic and usually covering one to three years. For example, Whirlpool Corporation
goals
may have a broad strategic goal to further expand its operations in Poland and

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