Case Study on Whirlpool Corporation: American home appliances manufacturer Whirlpool intends to turn its Indian business into a global sourcing hub for components and finished products, safeguarding from potential disruptions arising from reliance on China supply chain. Whirlpool India Ltd. (WIL) is working with suppliers in China and Southeast Asia on ways to incentivise them in conjunction with Indian government’s policies to set up shop in India, for components - compressors, motors and PCBs, all of which are capital-intensive manufacturing investments.According to WIL, there are US-China geopolitical tensions. WIL is making efforts at educating component makers how India can become a sourcing hub for Whirlpool globally. Indo-China geopolitical situation and benefits offered under Make-in-India programme has shifted focus on creating a local sourcing base. WIL imports 28% of required components, which will be reduced. While Indian government is encouraging domestic sourcing, it is difficult to balance disincentivising imports and ensuring enough local capacities.WIL plans to expand exports of refrigerators and washing machines from India, presently this business is extremely small. WIL is transforming its three India factories to match world-class manufacturing standards. With this Whirlpool joins Apple in seeking ways to expand its local production and build a component eco-system in India to de-risk global operations amid US-China trade skirmishes.India, under Atmanirbhar Bharat initiative, introduced a production linked incentive scheme for ACs, mobile phones and laptops, to discourage imports. WIL is continuing with capacity expansion for the next three years due to 15% volume growth in business in the first half of 2020-21. Despite increased product prices demand is expected to grow.Presently, over 90% of WIL’s revenue is from refrigerators and washing machines. WIL claims to be the 3rd largest player in these two categories after LG and Samsung. WIL wants to build other categories - ACs, dishwashers, microwave ovens etc. Question: State the reasons behind Whirlpool’s decision to turn its Indian business into a global sourcing hub for components and finished products. Which factors are crucial for the successful implementation of conversion of Whirlpool’s Indian business into a global sourcing hub
Case Study on Whirlpool Corporation: American home appliances manufacturer Whirlpool intends to turn its Indian business into a global sourcing hub for components and finished products, safeguarding from potential disruptions arising from reliance on China supply chain. Whirlpool India Ltd. (WIL) is working with suppliers in China and Southeast Asia on ways to incentivise them in conjunction with Indian government’s policies to set up shop in India, for components - compressors, motors and PCBs, all of which are capital-intensive manufacturing investments.According to WIL, there are US-China geopolitical tensions. WIL is making efforts at educating component makers how India can become a sourcing hub for Whirlpool globally. Indo-China geopolitical situation and benefits offered under Make-in-India programme has shifted focus on creating a local sourcing base. WIL imports 28% of required components, which will be reduced. While Indian government is encouraging domestic sourcing, it is difficult to balance disincentivising imports and ensuring enough local capacities.WIL plans to expand exports of refrigerators and washing machines from India, presently this business is extremely small. WIL is transforming its three India factories to match world-class manufacturing standards. With this Whirlpool joins Apple in seeking ways to expand its local production and build a component eco-system in India to de-risk global operations amid US-China trade skirmishes.India, under Atmanirbhar Bharat initiative, introduced a production linked incentive scheme for ACs, mobile phones and laptops, to discourage imports. WIL is continuing with capacity expansion for the next three years due to 15% volume growth in business in the first half of 2020-21. Despite increased product prices demand is expected to grow.Presently, over 90% of WIL’s revenue is from refrigerators and washing machines. WIL claims to be the 3rd largest player in these two categories after LG and Samsung. WIL wants to build other categories - ACs, dishwashers, microwave ovens etc.
Question:
State the reasons behind Whirlpool’s decision to turn its Indian business into a global sourcing hub for components and finished products. Which factors are crucial for the successful implementation of conversion of Whirlpool’s Indian business into a global sourcing hub?
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