Growth Strategies Case Study

The Growth Trap : A Case of Maytag Corporation

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Abstract:
Maytag Corporation (Maytag) was one of the most profitable companies in home appliance industry. During 1983 - 1987, the company’s revenue and net profit, grew at more than 5% and 9% annually, respectively. Traditionally, the company’s product line was restricted to washers, dryers and dishwashers. It had always targeted the niche market with premium-priced products and not the price-conscious market segments. During 1980s, the premium-quality niche for laundry and kitchen appliances started eroding as the consumers became aware that the quality difference between high-priced and medium-priced appliances was diminishing. Foreign players, who had entered the US market, intensified the competition further. Maytag, like other companies, increased its operational efficiencies, thereby tried to reduce costs and increasing competitiveness. In response to the challenging market conditions, Maytag made several acquisitions by taking the advantage of its cash rich condition. Through these acquisitions, the company diversified into other product segments, apart from laundry and kitchen appliances where it had core competence. It also expanded its geographic reach to newer markets worldwide. Though Maytag changed its traditional high-quality, high-priced positioning, it failed to maintain its profitability. During 2001-2004, the company’s revenue was almost stable, but return on sales declined. In 2004, the company even recorded a net loss.

The case deals with the growth trap in which Maytag fell. It discusses the company’s success phase, when it had turned out to be the most profitable company in the industry, catering only to the niche upscale market segment with high-quality, premium-priced laundry and kitchen appliances. The case has also covered the detailed inorganic growth strategy that the company followed. Finally, the case offers a scope for discussion about the consequences of such strategy.

Pedagogical Objectives:

• To understand the market dynamics of Home appliance industry in US
• To analyse Maytag’s STP strategy
• To understand the concept of growth trap in the context of Maytag.

Keywords : Maytag Corporation; Growth Strategies Case Study; Major home appliances; Laundry appliances; Operational efficiency; Growth through acquisition; Premium brands; Brand positioning; High quality, high priced positioning; Full-line appliance manufacturer; Growth trap; Hoover; Amana appliances

Keywords : 
Introduction
The Path To Success
Growth Through Acquisitions
The Growth Trap
Mergers, Acquisitions And Jv By Maytag
Divestment By Maytag
Maytag – Key Financial Information
Maytag: Brand Matrix