Essay Preview: Maytag
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Having experienced an incredible loss with the UK Hoover crisis, Maytag has since created several new lines of washing machines and dryers. The washing machine that set the pace for many successes was the 1997 Neptune washer, which conserved both energy and water. As a result of this product, Maytag became an ENERGY STAR appliance manufacturing partner, teaming up with the U.S. Department of Energy and the U.S.E.P.A. These accomplishments along with getting products into Sears stores are some of the improvements CEO Leonard Hadley was able to make after the crisis that arose in Europe. Over the years, the company has gone through financial recovery, increasing sales. Today, Maytag Corporation is a $4.7 billion home and commercial appliance company. It is considered one of Americas Most Admired companies, and serves over 20,000 employees worldwide. The home appliances are sold primarily under the Maytag, Amana, Hoover, Jenn-Air and Magic Chef brand names. Maytag is a Fortune 500 company with more than 15 manufacturing plants and offices throughout the US, Canada and Mexico. However, reporting on this years numbers, Maytags operating income was down 52% in the third quarter and high steel and energy costs will likely negate cost reductions from a major restructuring for the fourth quarter and into 2005. As of 10/28/04, Maytags stock quote was 17.43, which was -0.15. This drop may have been a result of Maytags competitor, LG Electronics increase in advertising and their new distribution strategy.
Internal Firm Strengths and Weaknesses.
Maytag Corporation had achieved easy success of great market share in its ability to create the image of top quality products through its trouble free add campaign–a strength. However, as most companies look to expand sales they divest in external markets through subsidiaries. The idea of expanding sales was a good decision but they achieved weaknesses in such divestures due to the inability of Maytag Corporate to control management decisions in these external markets–best illustrated in its loose reign of foreign subsidiaries exemplified in the travel promotion. Poor decisions such as failing to use a cost benefit analysis and failing to consider the worst case scenario also deteriorated the company. Other bad decisions were its acquisitions of Magic Chef and Admiral. These lower priced appliances cheapened the reputation of Maytag while its competitors were going after top end product lines. Even after the long decline of profits in 1989, Maytag never even showed strong concern or took corrective action–another poor decision.
External Opportunities and Threats.
Some of the opportunities Maytag faced were increased sales through overseas intervention and increased awareness of product into a new market. They also acquired diversification of product line to reflect different quality and price points and the ability to expand sales through leverage buyouts.
In response to some of these opportunities, Maytag faced a number of threats. For example, because they increased sales through uncontrolled marketing strategies of subsidiaries, the decisions were not controlled by the corporation resulting in overspending as well as criminal exposure and charges of deception. The media also greatly publicized the weaknesses of the company which threatened their number of future consumers. Also, the inability to research foreign markets before acquiring through leveraged buyouts posed as a threat because they paid too much for CPC and acquired too much debt. This weakens the company and makes it vulnerable to other foreign intersession. Furthermore, it could have exposed their company to foreign competition because they didnt have enough of a presence in Europe, whereas its competitors-Germanys Bosch-Siemens and Italys Merloni Group dominated the market.
Analysis of Critical Issues.
One of the primary issues behind this crisis resulted from the companys lack of performing a market analysis of the business culture in Europe prior to purchasing the Hoover Company. Maytag overpaid for the leverage buy out of CPC–cost them 1 billion dollars including $500 million in debt.. This decision was initially