Environment of Global Home Appliance Industry

Our analysis shows that the Home Appliance industry of U.S has matured and has a slow growth of 1.9%. Competition in the U.S market is very intense, everyone is pulling out others market share. However there is a great potential of this industry in other regions of the world such as, Europe, Asia & Latin America where the market growth is about 5% to 6%. 

Present Strategy of the Company

Cooperative Strategy

 Maytag is following cooperative strategies such as Strategic Alliance and Joint Ventures strategy to obtain access to specific markets and to ensure competitive advantage.

Competitive Strategy

At the time of the case in 2002 Maytag’s competitive strategy would be classified as “Low Cost”. However, this was not their first choice of strategies. Maytag first started off with a differentiation strategy because of their high product quality. When Maytag was first becoming a market leader they were offering a higher quality product then most of their competitors. This is how they made a name for themselves and in turn gave then a very distinct advantage over the competition.

Outsourcing Strategy

Maytag is also using this strategy for the purpose of repair work services. It has outsourced its after sales service (repair) to independent retailers.

Does this strategy (ies) match (es) with the environment?

Answer to this question is “Yes” Maytag is following the right strategy.

Explanation

After many government regulations were put into place all of their competitors were forced to also create higher quality products that allowed them to catch up to Maytag with their market shares. Maytag is now the second highest leader in market share behind Whirlpool.

In 1945 there were over 300 appliance manufactures, whereas now in 2002 there are only a few companies who remain major competitors. This consolidation of the industry was due to the fierce competition in the United States. Also, the industry was under a lot of stress from governments around the world. They were putting many regulations on the appliances that were being produced to make them more environmentally safe. They wanted the products to be significantly improved in terms of water consumption and energy usage.

The operating margins through out the appliance industry have been dropping as appliance manufactures have been forced to keep prices low to remain competitive, although, the costs of manufacturing the products kept increasing over time.

This emphasis on quality and durability is what made Maytag have to move away from the differentiation strategy that they first wanted to go with. They were no longer the only company that was focusing on high quality and long lasting products. With these new regulations that were being imposed by the government every company (Whirlpool, General Electric, Maytag, and AB Electrolux) now had to produce higher quality products. Maytag now had to change its strategy from a differentiation strategy to low cost strategy.