Transition at Whirlpool-Tatramat: Case Studies

Sonia Ferencikova and Hans Brechbuhl

No 225, William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan

Abstract: These cases are about the origin and the development of the operations of the joint venture Whirlpool-Tatramat established between the Slovak washing machine producer, Tatramat and the European subsidiary of Whirlpool Corporation, Whirlpool Europe B.V. in 1992 in the former Czechoslovakia. The first case, entitled "How to Enter Emerging Markets in Central and Eastern Europe" is designed to evaluate the impact of the fall of the Iron Curtain on the business climate for foreign companies in this region as well as on the opportunities for local companies. The case study is also used to gain an understanding of why and how firms choose an alliance partner through an analysis of Whirlpool's and Tatramat's needs and intentions. It describes the situation in both Whirlpool Europe and in Tatramat at the beginning of the 1990's. These two companies faced many problems and challenges at that time because of obstacles in their internal situations and changes in their external operational environment. After looking for the right partner and the right form of cooperation, and after evaluating all possibilities, they decided to negotiate with each other to find the right form of strategic alliance. This case can be used in courses dealing with the entry of companies on emerging markets of Central and Eastern Europe (e.g. World Economy, Corporate Strategy, International Business, Doing Business in Central and Eastern Europe, etc.) The second case, entitled "Management Aspects of the Operations within an Emerging Market" is focused on two issues: how to manage successfully the transition of a small local post-socialist company into an integrated and efficient part of Whirlpool's global network and how to market goods produced locally, as well as merchandise obtained from the global network, in a small local market. The case describes the operations of the joint venture Whirlpool-Tatramat, the initial struggles with production volume and quality, downsizing, building a local supplier network, a drop in demand, and the gradual process of the ownership change to eventually become Whirlpool's wholly-owned subsidiary and the final involvement of the company into Whirlpool's global network. This case can be used in courses dealing with special aspects of international expansion (e.g. International Management, doing Business in Central and Eastern Europe, etc.).

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Date: 1999-03-01
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