CASE $17\mathrm{.}2.$ MAYTAG$$S TRIAD STRATEGY

Firm strategy plays an important part in determining the competitiveness

of an industry in a global market. As governments embrace trade liberalization,

local industries have become increasingly exposed to fierce competition

from a growing array of international suppliers. Domestic producers of

bulk appliances like dishwashers and refrigerators were largely insulated

from foreign competition because of their size, which makes them expensive

to ship across the ocean. However, low labor and production costs, added to

declining transportation costs, has enabled many Asian appliance makers

such as China$$s Haier Group and South Korea$$s LG Electronics to increase

their U$.$S$.$ market share. They are also opening plants in Mexico and neighboring

countries to save on shipping.

Maytag had to adjust to the new competition through global sourcing

and collaborative supply chain networks. In the case of dishwashers, its triad

strategy entails sourcing the motors from suppliers in China, producing wire

harnesses in Mexico, and assembling the parts in Jackson, Tennessee.

Dispensing certain activities across the transnational value chain to lower

costs and gain competitive advantage is considered a successful global business

strategy. This approach allows U$.$S$.$ companies to share the risk with

suppliers and to choose foreign companies with the best product lines or

services.

Maytag selected certain suppliers $($of motors for dishwashers$)$ from China

largely due to their low prices. However, it decided to make the wire harness

in Mexico because they tend to be different in each model and because sudden

shifts in demand requires proximity to the market.

Questions

$1.$ Would you advise Maytag to produce motors for the dishwashers in

Mexico in view of the latter$$s proximity to the U$.$S$.$ market?

$2.$ Would you advise Maytag to lobby the government for higher tariffs

on imports of motors and$/$or wire harnesses in order to produce them

in the United States for the domestic and export market?