Home Appliances Swot

U.S Major Home Appliance Industry in 2002 (Case 15)

The household appliance industry is huge! The number of household appliance grows every year, but there is one sector of the industry, the major appliance sector that remains constant. The appliances that comprise this sector are ranges, refrigerators, washers, dryers, and dishwasher. The major appliance industry is both saturated and mature. The five major players are General Electric, Maytag, Whirlpool, Electrolux, and Raytheon. All are well established in the industry and have been major players for many years.

Prior to World War II, most appliance manufactures produced a limited line of appliances derived from one successful product. For example, General Electric made refrigerators, and Maytag focus on washing machine. During this era a company was reluctant to enter the market of another company. It was not until 1945 that firms begin to offer full lines of various appliances.

The industry almost double in size during the 1960s, as sales of several products grew rapidly. The sales continue to increase in the 1970s despite the high interest rates and inflation. During the 1980s the industry was beginning to expand, because of the acceptance of the microwave by the U.S. consumers. By 1990s, U.S. manufactures offered a full range of products even if they did not make the items themselves.

By 2002, new technologies and designed were being introduced into major home appliances. Due to governmental pressure, appliance manufactures were introducing energy efficient versions of refrigerators and washing machines. Today's kitchens are often the entertainment center of the home. Many consumers are demanding appliances that are attractive, convenient and easy to clean. Many consumers are willing to pay top prices for top of the fine appliances that enhances their dйcor's and save precious time. The manufactures have responded to the consumer demands, by manufacture smart appliances with sophisticated electronic controls and self diagnostic features.

The major appliance industry is a stable and profitable industry, although it is mature and saturated in the United States, there are many growth opportunities available abroad. The industry will always be affected by interest rates, new housing construction, kitchen remodeling and the market for replacement appliances, but as long as consumers need take care of clothes and prepare foods, there will always be a market for major household appliances.

Finding of Fact#1: A concern for manufactures of home appliance was the environmental and government regulations standards that they must adhere to.

Government environmental regulations continued to be one of the greatest hurdles facing appliance makers. The Department of Energy's (DOE) National Appliance Energy Conservation Act of 1987 had set new standards that limited energy consumption by new appliances. The act required manufacturers to cut product energy consumption by 25 percent every five years. More recent regulations were aimed at reducing harmful gas emissions. While most industry participants achieved compliance with all regulations on schedule, and some manufacturers had boost sales with environmentally friendly products, some appliance makers resented the new regulations, citing the capital investments required to meet the stipulations of such legislation, as well as the small amount of energy consumed by appliances--only 4 percent, according to the Association of Home Appliance Manufacturers. As of 2003, manufacturers had more than doubled the energy efficiency of their appliances over those of 30 years prior, but at great cost to the industry in both dollars and employment, particularly for smaller firms.

Why it is important for customers to buy energy efficient appliances? Every time a customer buys a home appliance, they are making the decision that affects the environment. The biggest environment problems are directly associated with energy production and use: urban smog, oil spills, acid rain, and global warming, to mention a few. Theirs a big difference each customer can make by taking energy use into account in their household purchasing decision. By purchasing energy-efficient appliances, you can have a positive effect on the environment. In fact, choosing energy-efficient appliances is one way a customer can immediately reduce their contribution to global climate change.

How was the standard for energy efficiency appliance implemented worldwide? They created an International Electro-technical Commission which serves as the worldwide standard for manufacture regardless of what country a firm is operating or selling their product in. It allow for a few deviation to meet the country specific needs. Prior to the IEC being created, some countries were put at a disadvantage when competing on a global scale.

Finding of Fact#2: Industry consolidation was raising the competitive stakes.

The appliance industry remains highly consolidated; five major firms supply more than 98

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