Date: April 27, 2014
Individual Case Study
International Business Practicum
Strategic Sourcing at Whirlpool China
Q1. Whirlpool’s Global Sourcing Strategy (GSS) in China had many advantages as well as disadvantages. As the case explains, China had become one of the world’s largest household appliance makers, and relocation of Whirlpool’s Asian HQ to Shanghai helped the company’s products gain acceptance within the market. Furthermore, setting up an international procurement office in Shanghai helped to eliminate various factors that could make global sourcing a difficult process. Whirlpools Shanghai HQ decreased transportation delays and cultural and language ...view middle of the document...
Lastly, Step 1 of the SSD should recognize possible switching costs. Once the internal need is identified, Step 2 analyzes the supplier industry and competitors and evaluates performance and strategies of the competition. Next, a sourcing strategy is developed during Step 3 of the SSD. During this phase, Whirlpool analyzes the competitiveness of the industry, gains understanding of existing strategies, formulates strategic options, and analyzes their financial impact. By the end of Step 3, preliminary negotiations could be carried out and suitable suppliers would be selected. Finally, the sourcing strategy developed in the previous stage is put into play in Step 4. The goal of this step is to give necessary feedback to the chosen suppliers, and to settle final negotiations. Should these goals remain unresolved by the end of Step 4, the strategy must be revised.
Q3. Single sourcing is when a company outsources the responsibility of a process or service to one individual or company. With a single sourcing model, the supplier is responsible for all matters related to the outsourcing agreement, and therefore assumes all of the outsourcing risks. Outsourcing all of the risks, however, usually comes with a very high price. This model can be very expensive for a company because suppliers charge a premium for the inconvenience of having to organize all services.
Multiple sourcing, on the other hand, is when a company selects more than one supplier to provide processes or services. Contrary to a single sourcing model, the...