Mission Statement:

To be the leader in the home appliance industry of North America, specializing in manufacture and sale of laundry equipment (washers and dryers), kitchen appliances (cooking ranges, dishwashers, refrigerators), floor-care products (vacuum cleaners and floor polish equipment). The company also runs a vending machine equipment manufacturing business. The company operates through two business segments: home appliances and commercial appliances. Outside USA, Maytag has some interests in the European market and is also entering into the Asian market. Its major strength is customer recognition due to its product durability and reliability and its dedication to quality and service.

Major Goals and Objectives:

The goals of the company are to strengthen its position in the home market, through a continuous commitment to quality, product development and cost reduction. The company operates in all customer segments (high, middle and low cost product ranges), using both independent dealers and mass marketers (Sears) at the higher end, and discount stores at the lower end to market its products. The company has also tried to acquire businesses with expertise and reputation, so that they can be incorporated into the company’s corporate structure as a fully functioning operational unit in a short time. The company looks to acquire businesses that match its credo of commitment to quality, service, product development and innovation.
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Company Strategy:

The company strategy as of 2002 is to recoup its falling status in the industry and investor confidence. Over the years, it had made some bad decisions in acquiring businesses, for example,

Chicago Pacific’s Hoover subsidiary facilities in Europe and Australia/New Zealand, and these had to be sold at a loss. C.S Blodgett was also bought and sold in a short time. Due to the company’s use of its own cash in most of the acquisitions, its cash position has been low. The company has paid consistent but low dividends in recent years and its shareholders have been disillusioned by its lacklustre status. There have been three CEO’s in the last 3 years.

However the company has recently purchased Amana Appliances in June 2001 and hopes to strengthen its position in the home industry with the acquisition of Amana brand kitchen appliances and its manufacturing facilities. The company is concentrating a lot on product development and innovation to change the lifestyle of the American public by giving attention to their particular lifestyle needs. The success of the Maytag Appliance stores in 11 cities is a reflection of this goal.

The corporate philosophy of Maytag Corporation is reflected in its founding principles, a testament to the character of Fred Maytag. They are as follows:

Commitment to Quality Concern for Employees
Concern for Community Concern for Innovation
Promotion from Within Dedication to Hard Work
Emphasis on Performance

According to a Year 2000 survey of 26,000 Americans from all walks of life, Maytag ranked second in the corporate reputation of all U.S. firms. The company’s Hoover brand has been identified as one of the 100 brands that changed America in the 20th century.

Supporting Policies:

In line with its corporate philosophy, Maytag Corporation has made a number of supporting policies that have been responsible for its success and prosperity. The company has a high commitment to quality and service, widely perceived as the ‘dependability’ company. Concern for the safety and health of its employees is reflected in the fact that it offered accident and life insurance policies and established safety standards. The company is also concerned for the community and established most of its facilities in its hometown Newton, Ohio to provide employment to the local people. It is also concerned about pollution. Its promotion from within policy is a reflection of commitment to its staff, rewarding them for hard work. The company is committed to innovation and product development to continue its journey to success.

Evaluation of Strategies in Functional Areas:

Production: Following industry standards, Maytag has established dedicated plants to cater to its separate product lines: Refrigeration, Laundry, Cooking, Dishwashing and Floor-care. There are variations for multiple brands and price levels. The company has adopted a Lean Sigma concept (combination of lean manufacturing and Motorola’s six-sigma for quality/ reduction of defects). With automation of its ordering and inventory procedures, it will achieve further cost efficiencies in these areas. It has also entered into strategic alliances with its suppliers. One such alliance resulted in the development of fuzzy logic for its washing and drying appliances, which was a great success.

Marketing: The company markets its products to all sections of society (high, middle and low cost brands.) Its marketing and advertising strategies also differ for its products. Management perceives that it has 3 Power brands (Maytag, Amana, Jenn Air) and 2 Value Brands (Magic Chef and Admiral). So the marketing and advertising effort promotes a variety of messages from dependability and performance (Maytag) to clever conveniences and styling (Amana) to innovation, elegance and high performance (Jenn Air). Its ol’ Lonely Ad campaign is considered highly successful in promoting the image of dependability and durability in its products. Maytag has recently determined that 80% of its sales were done through 70 power retailers and has decided to market through them instead of through independent, smaller retailers.

Finance: Maytag has made losses in the past due to strategic errors in acquiring businesses. Most of its acquisitions have been self-financed, with the resultant weaknesses in the balance sheet. Though it has a good short term liquidity (2001 Current Ratio 1.27:1) its debt: equity is 0.96:1 which is not so good. In the light of falling operating incomes and low dividends, combined with changes of 3 CEOs in three years, shareholder confidence is suffering. However there are efforts towards cost reduction, product development and quality and this should be reassuring from a CEO who has 12 years experience in the home appliances industry.

Personnel: Maytag has one of the lowest instances of union action in the industry and remained without a major strike for the period 1974-2000, notwithstanding that it laid off 4800 people in the period 1990-92. Lately there has been some concern about the way in which layoffs are being handled and the CEO plans to look into it. Its major strength is that it created employment opportunities for local people in the hometown headquarters of Newton, Ohio.

Organization: In spite of its size and complexity, the company has adopted fewer layers of management. Promotion from within has been a successful strategy. The company’s experiment with hiring heads from other corporations like IBM and Thomson failed. However the present CEO Ralph Hake has 12 years experience in the home appliances industry and by concentrating on the company’s strengths, will slowly help it regain its lost position. Efforts for good corporate governance are already being made.