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Written Strategic Audit:

For the 1993 Maytag


Corporation Case
Prepared by:
Salim Mohamed K (46)
Krishna Kumar (24)
Shyamjith (59)
Nishi (37)
An important part of business strategy is concerned with
ensuring that these resources and competencies are understood
and evaluated - a process that is often known as a "Strategic
Audit".
The process of conducting a strategic audit can be summarized
into the following stages:
(1) Resource Audit:
(2) Value Chain Analysis:
(3) Core Competence Analysis:
(4) Performance Analysis
(5) Portfolio Analysis:
(6) SWOT Analysis:

(1) Resource Audit:
The resource audit identifies the resources available to a
business. Some of these can be owned (e.g. plant and
machinery, trademarks, retail outlets) whereas other resources
can be obtained through partnerships, joint ventures or simply
supplier arrangements with other businesses.


(2) Value Chain Analysis:
(1) Primary Activities - those that are directly concerned with
creating and delivering a product (e.g. component assembly);
(2) Support Activities, which whilst they are not directly
involved in production, may increase effectiveness or
efficiency (e.g. human resource management). It is rare for a
business to undertake all primary and support activities.
Value Chain Analysis is one way of identifying which
activities are best undertaken by a business and which are best
provided by others ("outsourced").

(3) Core Competence Analysis:
Core competencies are those capabilities that are critical to a
business achieving competitive advantage. The starting point for
analyzing core competencies is recognizing that competition
between businesses is as much a race for competence mastery as
it is for market position and market power.
Senior management cannot focus on all activities of a business
and the competencies required to undertake them. So the goal is
for management to focus attention on competencies that really
affect competitive advantage.

(4) Performance Analysis
The resource audit, value chain analysis and core competence
analysis help to define the strategic capabilities of a business. After
completing such analysis, questions that can be asked that evaluate
the overall performance of the business. These questions include:
- How have the resources deployed in the business changed over
time; this is "historical analysis"
- How do the resources and capabilities of the business compare
with others in the industry - "industry norm analysis"
- How do the resources and capabilities of the business compare
with "best-in-class" - wherever that is to be found-
"benchmarking"
- How has the financial performance of the business changed over
time and how does it compare with key competitors and the industry
as a whole? - "ratio analysis"

(5) Portfolio Analysis:
Portfolio Analysis analyses the overall balance of the strategic
business units of a business. Most large businesses have operations
in more than one market segment, and often in different geographical
markets. Larger, diversified groups often have several divisions
(each containing many business units) operating in quite distinct
industries.
An important objective of a strategic audit is to ensure that the
business portfolio is strong and that business units requiring
investment and management attention are highlighted. This is
important - a business should always consider which markets are
most attractive and which business units have the potential to
achieve advantage in the most attractive markets.
Traditionally, two analytical models have been widely used to
undertake portfolio analysis:
- The Boston Consulting Group Portfolio Matrix (the "Boston Box");
- The McKinsey/General Electric Growth Share Matrix

(6) SWOT Analysis:
SWOT is an abbreviation for Strengths, Weaknesses,
Opportunities and Threats. SWOT analysis is an important
tool for auditing the overall strategic position of a business and
its environment.

A. Current Performance
Poor financials, high debt load, first losses since 1920s,
price/earnings ratio negative.
First loss since 1920s
Laid off 4,500 employees at Magic chef.
Hoover Europe still showing losses.
B. Strategic Posture
1.Mission
Developed in 1989 for the Maytag company: To provide our customers
with products of unsurpassed performance that last longer, need fewer
repairs, and are produced at the lowest possible cost.
Updated in 1991: Our Collective mission is world class quality.
Expands Maytags belief in product quality to all aspects of operations.

2.Objectives
To be profitability leader in industry for every product line
Maytag manufactures. Selected profitability rather than
market share.
To be number one in total customer satisfaction. Doesnt
say how to measure satisfaction.
To grow the North American appliance business and
become the third largest appliance manufacturer (in unit
sales) in North America.
To increase profitable market share growth in North
American appliance and floor care business, 6.5% return on
sales, 10% return on assets, 20% return on equity, beat
competition in satisfying customers, dealers, builder and
endorser, move into third place in total units shipped per
year. Nicely quantified objectives.
3. Strategies
Global growth through acquisition and alliance with Bosch-
Siemens.
Differentiate brand names for competitive advantage.
Create synergy between companies, product improvement,
investment in plant and equipment.
4. Policies
Cost reduction is secondary to high quality
Promotion from within
Slow but sure R&D. Maytag slow to respond to change in
market.

A. Board of Directors
1. Fourteen memberseleven are outsiders
2. Well respected Americans, most on board since 1986 or
earlier
3. No international or marketing backgrounds
B. Top management
1. Top management promoted from within Maytag company
2. Very experienced in the industry
3. Responsible for current situation
4. May be too practical for global industry. May need new
blood.
A. Natural environment
1. Growing water scarcity
2. Energy availability a growing problem
B. Societal environment
1. Economic
2. Technological
3. PoliticalLegal
4. Socio cultural
C. Task environment


A. Corporate structure
B. Corporate culture
C. Corporate resources
1. Marketing
2. Finance
3. R&D
4. Operation
5. Human resources
6. Information systems

A. Situational analysis(SWOT)
1. Strengths
a. Quality Maytag culture
b. Maytag well-known and respected brand
c. Hoovers international orientation
d. Core competencies in process R&D and manufacturing.
2. Weakness
a. Lacks financial resources of competitors
b. Poor global positioning.
c. Product R&D and customers service innovation areas of serious
weakness
d. Dependent on small dealers
e. Marketing needs improvement.
3. Opportunities
a. Economic integration of European community
b. Demographic favor quality
c. Trend to superstores

4. Threats
a. Trend to superstores
b. Aggressive rivals Whirlpool and Electrolux
c. Japanese appliance companies new entrant?

B. Review of current mission and objectives
a. Current mission appears appropriate
b. Some of the objectives are really goals and need to be
quantified and given time horizons.

A. Strategic Alternatives
1. Growth through concentrate diversification
2. Pause strategy
3. Retrenchment
B. Recommended strategy
1. Recommend pause strategy, at least for a year, so Maytag
can get on its European operation and consolidate its
companies in a more synergistic way.
2. Maytag quality must be maintained, and continued shortage
of operating capital will take its toll, so investment must be
made in R&D.

The only way to increase profitability in North America
is to further involve Maytag with the superstore
retailers; sure to anger the independent dealers, but
necessary for Maytag to complete.
Board members with more global business experience
should be recruited, with an eye towards the future,
especially with expertise in Asia & Latin America
R&D needs to be improved, as does marketing, to get
new product online quickly.
MIS need to be developed for speedier evaluation and
control.
The acquired companies do not all shares the
Midwestern work ethic or the Maytag corporation
culture, and Maytags managers must inculcate these
values into the employees of all acquires companies
Systems should be developed to decide if the size and
location of Maytag manufacturing plants is still correct
and to plan for the future.

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