MAN3025 Debate - In August 1992, Hoover Limited, Maytag's...

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In August 1992, Hoover Limited, Maytag's British subsidiary, launched a travel promotion: anyone who bought more than $150 worth of Hoover products would get two free round-trip tickets to selected European destinations and anyone who bought more than $375 worth would get two free round-trip tickets to New York or Orlando. While it looked like a great idea, looks can be deceiving! And those looks were extremely deceiving to the US managers, who should've seen through it like a glass window. It was obvious that the value of the tickets easily exceeded the cost of the appliances, and the US managers let it go. These were not loss leaders such as Xbox 360s, where you are likely to buy other items (games, accessories, etc.) All you needed was to buy a vacuum and you get the tickets! In 1992, income for Maytag decreased from a $79 million net income to a $315.4 million net LOSS. Maytag's US managers are directly responsible for the Hoover travel promotional disaster. While the company's British managers conceived of the promotions, the US corporate headquarters should have realized that it would be a debacle and put things to an end before things got out of hand. The US managers should have taken a closer look at the European market before they made acquisitions. Secondly, after acquiring UK Hoover, they should have acted on Maytag's decline sooner. Thirdly, the US managers had much too loose of a rein on its subsidiary company. Additionally, Leonard Hadley, Maytag's CEO at the end of the catastrophe, fully turned things around for the better. Finally, Maytag and its US managers are the parent company, and as a parent company, are ultimately responsible for whatever its subsidiary does. Their failure to
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This note was uploaded on 03/17/2010 for the course ACC 1001 taught by Professor Limpski during the Spring '10 term at Florida Memorial.

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MAN3025 Debate - In August 1992, Hoover Limited, Maytag's...

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