Maytag Analysis Report

Yi Ye
For: J.M. Walecki
BUS 525 ECONOMICS OF THE FIRM
Date: 07,24,2013

Abstract

Introduce and analysis the Maytag. Solve some problems also mention some theory. From this nine following part : Nature of Product/Service, Market trends, Production/ Supply Process & Costs, Structure of the industry/ Market, Government role, Business environment, Firm/industry location, Business & Pricing Strategies and Entrepreneurial ability of managers.

Abstract………………………………………………………………………………2
Maytag background…………………………………………………………………4
Nature of Product/Service……………………………………………………………5
Market trends…………………………………………………………………………6
Production/ Supply Process & Costs…………………………………………………7
Structure of the industry/ Market,……………………………………………………9
Government role……………………………………………………………………...10
Business environment………………………………………………………………..11
Firm/industry location………………………………………………………………..14
Business & Pricing Strategies………………………………………………………..14
Entrepreneurial ability of managers………………………………………………….15
Reference……………………………………………………………………………………17

Maytag Background
Maytag is a large company with a long history. The original business, formed in 1893, manufactured feeder attachments for threshing machines. In 1907, the company moved to Newton, Iowa, a small town 30 miles east of Des Moines, the capital. Manufacturing emphasis turned to home laundry equipment, and wringer-type washers.
The history of Maytag Corp can be divided into four stages: 1. at the turn of the century, pioneering period, F.L Maytag founded the company, and make it become the washing machine market leader; 2. in 1950s, the company stepped down from the market leader position, turn focus on high quality parts washing products in the market; 3. in 1980s, during this period, the company under the leadership of Daniel Klum, newly acquired through a series of mergers and acquisitions, thereby becoming a has a full set of production line, facing the global appliance manufacturers. 4. the 1990s, during this period, the company begun to explore for the stable development.
Maytag is famous for the production of vacuum cleaners, Maytag Corp ranked 361st in the list of 2004 the United States of America Fortune 500 PC. According to the market value of listing Corporation, Maytag is third large enterprises in the United States home appliance market, whirlpool and Lennox International, is a household and commercial electrical appliances enterprise group has annual sales of $4.7.billion.
In March 31, 2006, Whirlpool Corp completed the acquisition of Maytag.

Nature of Product/ Service
In 1893, a man named F. L. Maytag (Maytag) Americans in the United States, Newton, Iowa, founded the Maytag Corp. Maytag was originally a machinery manufacturer, in

In 1907, Maytag began to set foot in the domestic appliance industry, the same year introduced the first hand barrel washing machine (Pastime). After two years, Maytag launched the first power washing machine, the main use of farm tractors and other farm farming engine as power. In 1915, Maytag produced the first gasoline powered washing machine. When the product launched to the market, the sales double and this is the first time on the Maytag history that the washer production surpasses the agricultural production.
From the beginning of the last century twenty's, the Maytag Corp has become a famous electronics maker, and gradually evolved into a high-end products business company. According to statistics, in 1924, the United States of America washing machine user 1/5 is buying washing machine Maytag production. A year later, Maytag successfully listed in New York stock market. Maytag washing machine quality to win the United States consumer trust, to 1939, Maytag has become America's first batch of white appliances manufacturers.
In early 1946, Maytag began to enter the refrigerator industry. In 1949, the company produced the first full automatic washing machine, the washing machine is well known for its easy operation. In 1953, Maytag launched the first automatic drying machine. 13 years later, Maytag successfully developed the first portable dishwasher. In 1985, Maytag launched the multilayer cylinder dryer. In addition to independently developed products, Maytag also merge the other companies to expand the product range. In 1989, Maytag cost 0.96 billion to merged high-end appliances -- Hoover cleaner. Thus, Maytag have diversified home appliance products.
In 2000, Maytag developed the world's first washing machine with touch screen control. Second years, Maytag introduced high-tech zone refrigerator, not only lots of storage space, but also can automatically adjust the temperature of food preservation, prolong the storage time of food. In 2002, Maytag also launched the world's first three rack dish-washer; the product has attracted customers by using a unique flexible load technology and has unique characteristics of the industry performance.
Through continuous development and expansion, Maytag production areas related to dishwashers, refrigerators, stoves and cleaner and other products. Maytag in home appliances, washing machine is the best, the most famous brand products and the vending machine in North America even the whole world is one of the most popular products. It currently accounts for around 17% of the United States home appliance market share, become the United States of America's third largest home appliance manufacturers.

Market trends
Pay attention to the quality of products is the Maytag product advantage, and this is consistent with an important indicator of consumer demand for products. Therefore, the success of the Maytag is not only because of the needs of the society, but also conforms to the consumer behavior, purchase to attract consumers with high quality products.
Leo Burnett dramatically demonstrate the durability and reliability of Mattel washing machine, launched the "lonely repair workers" advertising, means that Mattel repair personnel, due to excellent product quality and had nothing to do all day, so feel lonely. "". This advertisement is one of the most profound influence and impression of TV advertising. Market survey results also show that, without considering the price under the condition of Mattel, washing machine brand is not only the most consumers tend to buy products, but also the most trusted consumer products. Because the washing machine and dryer, excellent product quality, in 1974 1983 has won the "quality first" honor, won the reputation of leading quality, in the home appliance industry, the Mattel Inc in the once a year "consumer reports" the United States of america. In the nineteen seventies end, Mattel's washing machine and dryer 15% market share.
Market Forecasts:
With the development of the market, competitors Mattel in product quality gap is getting smaller and smaller, at the same time, along with the American and the United States home appliance saturation increases gradually, the industry growth rate began to slow down. Although the changing market environment, but a long time, the Mattel Inc is higher than the general level of 10% - 15% of the sale price of product strategy has not changed; household washing machine and dryer in the production of high quality never changes. However, in the Mattel Inc still clinging to the established strategy, is still a major production of washing machine and drying machine manufacturers at the same time, its main rival, expanding product line width (its major competitor's product line includes washing machine, refrigerator, dishwasher, oven, microwave oven, stove and air conditioning), sales all kinds of products and price.
Production/supply process &costs
Because of the global economic recession, low-end products occupy the mainstream consumer electronics. After 2003, Maytag high-end product destiny therefore changed.
Huck (Chairman and CEO) in addition to find cheap overseas market and high-end products, but also control the cost. Reduce costs is bound to affect the development of new products, as well as the lack of new products, for the enterprise competition in a ve ry disadvantageous. In fact, the new products in the gap, the important reasons of Maytag income.
Fluor Co, engineering construction company, where he has been executive vice president of Mattel Inc Ralph F. hack. Prior to this, he spent the main rival whirlpool appliance maker Mattel 12 years, various administrative positions.
High-end products with high brand maintenance cost, COD, cut spending on advertising to shareholders is not good, on the contrary, advertising is the key to Mattel brands. Therefore, he still spare no effort to support the brand advertising.
But the Hake, reducing the cost of the work had the effect to get instant results. In order to maintain its former dignitaries, Maytag paid a high cost. In 2004 the Maytag annual report, the company's sales revenue since 2000 has been hovering in the $4.1 to $4.7 billion, the cost of production over the same period increased from $3.3 billion dollars to $4 billion.
In 2004, the parties under the pressure of the Hake criticism began to make snap to cut costs. First reduce the staff 20%, and then close the Galas factory. Maytag 15 factories in the United States in 11 are losses. Hake ready to shut down the production line which measures the diffusion. In April 22, 2005, the Hake says, if the company in this year not slash costs, Maytag Newton washing machine factory will be moved to other plant or outsourced, and plans to close Hoover cleaner factory.
In product prices continue to reduce, Maytag refrigerator sales decline, cleaner average price is reduced, so that the overall home sales continue to decline. At the same time, iron and steel and raw materials prices continued to rise, sharp rise in sales channel cost, profit more and more thin. As of 2005 April, Maytag 4% reduced sales revenue. First quarter net income of $38 million a year ago decline to $7 million. Maytag stock prices reached the highest point in 1999 of $68.25 in August, and by early 05, Maytag's earnings per share less than 20 cents. Today, the Maytag Corp market status has been challenged. In the past few years, Maytag not only lost three important relationships with retailers, and large home appliances chain retailer is also very nervous. If the Maytag Corp lose these American appliance sales channels, its market position will be placed in jeopardy.
Structure of industry/Market
Competition
Maytag's main competitors are Whirlpool, General Electric, Frigidaire and Raytheon.
Oligopoly models
Oligopoly is also contains the monopoly factors and competitive factors and more close to a monopoly market structure. It is a notable characteristic of a few companies monopolize a market, the firm's output accounted for a high proportion of total production industry, so as to control the supply of the industry's products. Maytag, there are many strong competitors, so I think it does not exist oligopoly.
From the industry structure, the global home appliances industry mainly has the following characteristics: first, household electrical appliance industry is a highly competitive industry, household electrical appliances manufacturers generally pursue scale economy, efforts to reduce production costs by expanding the scale; second, household electrical appliance industry is a high capital investment industry, due to the high investment, reduce the white household appliance industry new entrants; again, with the acceleration of global economic integration, competition of household appliances industry gradually break between country and country boundaries, large home appliances manufacturers for production and market of the war in the global scope slightly deployment, household electrical appliance enterprises competition has from the past domestic enterprises turns into the competition between multinational group contest; finally, the range of household electrical appliance industry is speeding up the reorganization of assets.

Government Role
Whirlpool is the United States white home appliance industry monopoly; its market share ranks the first in North America. Maytag is the United States famous brand in white household electrical appliance industry. In 2004, a rating agency will soon its credit rating to "junk" level, the company announced reorganization. In 2004, May and June, the United States Ripple wood Holdings led a consortium of private capital and China Haier American trading Co proposed acquisition plan. At the beginning, Whirlpool to halt the troops and wait, because the market size of the company, its acquisition of Maytag had not anti-monopoly review this. Soon after, Whirlpool joined the competition for bid for Maytag. For antitrust investigation by 6 months, the United States Department of justice antitrust officials announced the approval of the United States of America, the largest household electrical appliance enterprises to Whirlpool for $1.7 billion acquisition of third major household electrical appliance enterprises Maytag Corp. The Anti-monopoly Bureau of the United States Department of Justice investigation shows, after the merger, whirlpool will occupy 70% of the United States of America in the white goods market, is in absolute dominance in the North American market.
Under the background of economic globalization, according to the assessment, the international market structure, monopoly. When the United States Department of justice in the review of Whirlpool Corp to buy Maytag, not only to the United States domestic white goods production, sales of investigation and assessment, and the competition of the global market has also carried on the investigation and assessment. The United States Department of justice antitrust think the United States home appliance market has not only limited to China, but the globalization of the market. The two companies after the merger, the new company is still facing South Korea LG, Japan Panasonic, and Haier Chinese foreign peer pressure. The United States Department of justice antitrust in the assessment of the degree of concentration of international market, the domestic market, believes that the Whirlpool Corp and Tektronix, the two companies share in the global home appliances market together cannot dominate the market, think with whirlpool and Tektronix will promote the company producing high quality products, improve the efficiency of enterprises, make enterprises more American forces in the global home appliances industry competition. So, the United States antitrust bureau approved the acquisition of Maytag Whirlpool.

Business environment 1. Home-appliance development the first stage to the second industrial revolution, from the beginning of the development of the lighting industry, production of radio, television, refrigerator gradually, washing machine and so on, until the start of telecommunication system; the second stage from the beginning of 1945, home appliances products began to spread, consumer electronic products gradually rise; the third stage from the beginning of the 70's, the small household electrical appliances has begun to enter the consumer family, some with personalized, convenient carrying electronic products favored by consumers. 2. Production and supply of world home appliance industry
The world home appliance production mainly in North America, Asia and Western Europe, 83% of the global home appliances products produced by the three regions. Among them, 80% North American production concentrated in the United States of America and the Mexican border; Europe to Italy as the manufacturing center; Eastern Europe with its cheap labor and close to the Western European market two big advantage is rising; the Asian market potential is enormous, the local cheap labor, will become the largest home appliance production base in twenty-first Century.
The United States home appliance manufacturer in Whirlpool, GE, Maytag led, mainly based on the domestic market, at the same time through acquisitions and exported directly into the South American market; European home appliance manufacturers by the Chinese small household electrical appliances and kitchen appliances large impact in Korea. Among them, Electrolux company specializing in home appliances, Holland Philips to consolidate its important position in the consumer electronics field; the Japanese manufacturer of local competition is particularly fierce, the market is very difficult to open by foreign manufacturers, Japanese home appliance manufacturer mainly acts as a technology provider in Asia; South Korean manufacturers are at a low price strategy to the Asian and European markets. 3. The world home appliance industry market size and distribution
From the geographical distribution, consumer electronic products in the market mainly concentrated in Asia, Western Europe and North America, accounting for more than 85% of the global market share, of which Asia and Western Europe have accounted for more than 30% of the global market, North America accounted for 25% of the global market. From the product point of view, in the global consumer electronic products, TV market share of more than 40%, and increasing every year, portable consumer electronic products market capacity is about $230 billion, also showed an increasing trend.
The world of white home appliance products market size of about 235 million units, the next three years the growth rate of about 7.3%. From the regional point of view, the Asia-Pacific market is the world's largest white goods market, accounting for about 1/3 of the global market; Western Europe and North America are the world's second and third largest white household appliance market. From the product structure, refrigerators accounted for about 1/3 of the share, followed by washing machine and the stove.
The establishment of Maytag is adapted to the economic environment, launched by technology development and new products, expanding market share. In 1922, Maytag launched a drum washing machine brand new, this new type of washing machine to make Maytag company from 1921 loss of $280 thousand, to $6.8 million in 1926. In the nineteen twenties to the 30's, Maytag in the United States of America washing machine market average occupancy rate reached 40% -- 45%. Even during depression time, Maytag never get losses.
Firm/industry location
As of 2008, Maytag had 14 manufacturing plants throughout the United States and Mexico. These include: * laundry manufacturing plants in Newton, Iowa; Herrin, Illinois; and Searcy, Arkansas, in the U.S., and Ciudad Juárez, Chihuahua * refrigeration manufacturing plants in Amana, Iowa and Reynosa, Tamaulipas * cooking manufacturing plant in Cleveland, Tennessee * dishwashing manufacturing plant in Findlay, Ohio * vending manufacturing plant in Williston, South Carolina * subassembly manufacturing plant in Reynosa, Tamaulipas

Business & Pricing strategies
In 1960s, Maytag continues to focus on high-quality washing machine and drying machine production, thus becoming the United States home appliance market, follow an out of the ordinary general competition strategy -- differentiation strategy. In the process of long-term adherence to the differentiation strategy, Maytag company in the durability and reliability of the product, the difference with other enterprises. Maytag prolonged washing machine durable, rarely need to repair, even if the need to repair, the cost is not high.
Maytag succeeded in implementing the differentiation strategy as a result, companies can be higher than the general level of 10% -- 15% of the sale price of the product, making it the highest profit margins in household appliances industry in the United States, at the same time, focus on the control of quality and cost, make the Maytag company has become the industry the most productive enterprises. In the long-term adherence to the differentiation strategy, Maytag company has formed a set to adapt to the production of high quality household appliances production skills and technical resources, organizational resources and marketing resources, at the same time, the company's operating system, organization structure, culture and value system is its strategy to adapt to. The main source of Maytag in the culture company founder F. L. Maytag personal beliefs, and founded experience obtained during the early in the twentieth Century. The main effect of F. L. Maytag on corporate culture is: (1) ensure the quality; (2) care staff; (3) social concern; (4) pay attention to innovation; (5) internal promotion system; (6) hard work; (7) emphasis on performance. Maytag has been maintained and continued with the original company culture.

Entrepreneurial Ability of managers
Leonard Hadley retired August 12, 1999. He knew he had surprised everyone in the organization by going outside Maytag for his successor. He chose Lloyd Ward,
50, Maytag’s first black executive, a marketing expert from PepsiCo, and before that
Procter & Gamble, who had joined Maytag in 1996 and was currently president and chief operating officer,
However, with extreme regret Hadley found that his choice of successor was flawed, or maybe Ward was just a victim of circumstances mostly beyond his control. After 15 months, Ward left, citing differences with Maytag’s directors amid sorry operating results. Hadley came out of retirement to be interim president and CEO. Some 3,400 Maytag workers, a quarter of Newton’s population, roared when they heard the news. They had feared the company would be moved to either Chicago or Dallas, or that it would be sold to Sweden’s Electrolux. Hadley assured them that such things would never happen as long as he was at the helm.
Hadley retired again in June 2001 when Ralph F. Hake became his successor.

Hake kept the headquarters in Newton, Iowa, but moved three plants to Reynosa, Mexico, intensifying fears that Maytag might export even more jobs to countries with cheap labor. He tried to allay such concerns: “I do not anticipate multiple plant shutdowns or restructuring here.” However, some analysts cautioned that consumers were becoming increasingly cost conscious—and less concerned with whether a product was made in the United States or abroad.
Hake also sought to move the company’s product line beyond the traditional to more unusual products. He created a Strategic Initiatives Group with 10 to 12 members to introduce a premium-priced line of mixers, blenders, toasters, and coffee makers under the brand name Jenn-Air Attrezzi. The hope was that such a focus on creative thinking would move the company out of its slump.

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