Innovation at Whirlpool - Creating a New Competency

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Case Details:

Case Code : HROB081
Case Length : 21 Pages
Period : 1999-2006
Pub. Date : 2006
Teaching Note : Available
Organization : Whirlpool Corporation
Industry : Electricals and Electronics
Countries : USA, Europe

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Background Note

In 1911, three brothers - Frederick, Louis, and Emory Upton - set up a company, Upton Machine Corporation (Upton) at St. Josephs, Michigan, USA. The company produced electric motor-driven wringer washers.5 Upton later went on to become Whirlpool.

Upton got its first major order for 100 washers from Federal Electric.6 However, when the machines were put to work, there was a recurring problem - a cast-iron gear in the washer failed to function. The company's General Manager, Louis Upton, offered to repair all the gears free of cost, although he could hardly afford it then. Impressed with the company's ethical standards, Federal Electric not only agreed to repair the machines themselves, but also ordered an additional 100 washers. In 1916, Upton entered into a partnership with Sears, Roebuck and Co (Sears)7 under which Sears marketed the washers manufactured by Upton under the brand name 'Allen'. Sears sold two models of washers - one for US$54.75 and another deluxe model for US$95.

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The partnership turned out to be a huge success and the demand for the washers exceeded supply. By 1925, Upton had become the exclusive supplier of electric and gasoline powered washing machines for Sears.

In 1929, Upton merged with Nineteen Hundred Corp. (Nineteen Hundred) of New York, USA. By 1936, Nineteen Hundred began entering global markets, and sold its washers in Europe and Asia. In 1948, Nineteen Hundred marketed an automatic washer under the Whirlpool brand. (Refer to Exhibit I for Whirlpool's logo).

With this, the company had dual distribution - one line of products marketed by Sears and the other by Nineteen Hundred. In 1950, Nineteen Hundred officially changed its name to Whirlpool. Whirlpool expanded its product range to include automatic dryers, refrigerators, and air-conditioners. To keep pace with the competition it faced, Whirlpool decided to spread out its manufacturing facilities around the globe...

Excerpts >>

5] "Wringer washers" were the forerunners of washing machines. They had a tub for washing the clothes and a double roller arrangement above the tub to wring out the wet clothes as there was no "spin drying" in those days.

6] Federal Electric was a manufacturer of low voltage switch gear. Federal Electric was the biggest company of the Federal Group, which comprised six companies.

7] Sears Holdings Corporation was the third largest retailer in the US as of April 2006, with approx. US$ 55 billion in annual revenues, and 3,900 full-line and specialty retail stores in the United States and Canada.


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