Page 193 - Introduction to Business

CHAPTER 5 Managing and Organizing Business 167

may have formulated a strategy for achieving this goal by purchasing additional
Polish appliance companies to add to its Polar acquisition. Now, tactical plans
have to be developed specifying precisely which Polish firms Whirlpool wants to
try to buy during the next few years and how exactly to go about doing this.
Tactical planning generally involves both upper- and middle-level company
management.
Once tactical plans are established, strategy implementation requires busi-
nesses to set operational plans. Operational plans are a list of what a company has operational plans Very short-term
to do in the very short run to achieve its strategic goals. Operational plans are usu- (less than one year) plans formulated
for achieving organizational strategic
ally set for one year or less and sometimes involve even just daily or weekly plan-
goals
ning. In the case of Whirlpool Corporation in Poland, operational planning might
involve deciding what newspaper, radio, and television advertisements to place for
Polar products during the next three months (business quarter) in order to increase
Polar’s quarterly sales by 5 percent.

Strategic Planning Review: “Whirlpool Goes to China”. Strategic
planning is a multitiered and multistep process. The first part involves a company
formulating its mission statement. The heart of Whirlpool Corporation’s mission
statement is “Every Home ...Everywhere.” To achieve this mission, Whirlpool has
established a strategic goal of expanding and developing its international opera-
tions. More specifically, since the mid-1990s Whirlpool has had the strategic goal of
developing its business in the world’s most populous country with more than 1 bil-
lion people, China.
Formulating a strategy to achieve this goal, however, has not been easy for
Whirlpool. It entered the market by way of joint ventures with a variety of Chinese
electric companies and ended up losing a good part of its initial $145 million invest-
ment. In 1999, though, it decided to sell off its money-losing home refrigerator and
air conditioner ventures and concentrate on its Chinese clothes washing machine
business. Today, Whirlpool is breaking even or doing slightly better on its clothes
washing machine business in China.
Whirlpool in recent years has also shifted gears about where in China it wants
to concentrate its business efforts. Initially, Whirlpool concentrated its efforts on
major affluent coastal cities like Shanghai. It found, however, competition for busi-
ness in places like Shanghai to be very intense. In Shanghai, it was competing not
only with homegrown Chinese appliance companies like Haier but also with other
international conglomerate appliance makers like Germany’s Siemens Corporation
and South Korea’s LG Electronics. Consequently, Whirlpool has today reformulated
its strategy and is concentrating its efforts in the Chinese heartland in small rural
cities like Huainan, which is about an eight-hour drive northwest of Shanghai and
has 2.1 million people.
Whirlpool executives recently visited with top Chinese Communist Party offi-
cials in Huainan and discussed more investments in that city, including possibly
even building a factory there (see Exhibit 5.1 on p. 168). Company plans to build a
Whirlpool factory in Huainan, China, during the next one to three years would rep-
resent company tactical plans. Currently, at the Hualian commercial store in beau-
tiful downtown Huainan, China, Whirlpool sells about 33 automatic clothes wash-
ing machines per month. Company plans involving improving the Whirlpool
display at the store so that during the next few months the company can improve
its monthly sales at the store by about 10 percent to 36 to 37 washing machines
would represent company operational plans. 11

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