group9_haier

8/10/2019 Group9_Haier

1/14

Haier:Taking a Chinese company global

Group- 9

Mrityunjay Basak, 17/094

Pragati Srivastava, 17/104

Pratyasha Burman Ray, 17/106

Sweta Satpathy , 17/118

Venkatesh Balakrishnan, 17/124


2/14

HAIERS DEVELOPMENT

BRAND-BUILDINGPHASE(1984-1991)

Focused primarily onrefrigerators,

technology licensingagreement for higher

quality products

Accumulatedbusiness and

managementexperience

Able to commandpremium on products

because ofcommitment to

quality, distinguisheditself from other

Chinese companies

DIVERSIFICATIONDEVELOPMENT

PHASE(1991-1998)

GLOBALISATIONPHASE(1998-2005)

Diversifies intofreezer, air conditioner,washing m/c, TVs and

Telecommunicationequipment

Total number ofacquisitions made=15

Internally, restructuredoperations, Group-wide Development

divisions

GLOBAL BRANDBUILDING

PHASE(2005-present)

Introduction of a fullline of products underthe Haier brand name

Moving from niche

markets and breakinginto the major leagues

International strategyphase to global brand

strategy phase

Entered foreign

markets through

licensing, JVs and

exports

Established wholly

owned subsidiaries-Haier America, Haier

India and Haier

Europe


3/14

National Advantage

Factors of Production

Has cheap, easily controllable labour

Easy to acquire land with government support, exceptin urban areas like Shanghai

Rich in natural resources

Capital is available from both local, and especiallyforeign sources

Since 1980s, there is rich infrastructure, but still toughto reach beyond coasts

Demand Conditions

Large domestic demand- but easily accessedareas are saturated and rural areas are tough

to profit from

Nature of demand is stable and growing

Firm Strategy, Structure and Rivalry

Chinese firms generally focus on low cost

Mass production is preferred

Low emphasis on quality

Orientation is towards export

Related and Supporting Industries

There are vast industrial complexes

There is huge support from raw material and capitalgoods industries

Logistics are tough due to differential laws, vastdistances and disparate terrain

CHINA

PoliticalStable, Pro-Industry, Against Labour

Formal Institutions, Regulatory- Weak IPR, Limited control over MNCs

Informal Institutions, CultureFrugality, growing consumerism


4/14

International Business Level

Strategy Haier has leveraged all components of

national advantage

It has used cheap and timid labour,preferential access to resources well

However, unlike most Chinese firms it has notused a low cost strategy and sold at apremium

It has used its local experience with its hugenetwork and logistics

The image of Chinese products as cheap ishurting Haiernational disadvantage

The limitations imposed on MNCs in China ishelping it maintain control


5/14

International Corporate Level

Strategy

GlobalStrategy

TransnationalStrategy

MultidomesticStrategy

Need for Local Responsiveness

NeedforGlobalIn

tegration


6/14

Haiers Choice Of Strategy

MULTIDOMESTIC-Strategic and operational decisions are decentralised

to SBUs(Haier America, Haier Europe and Haier India)

-Each unit tailors products to the local markets eg:refrigerators for students, beer dispenser for the Americanmarkets(paying attention to the local clienteles needs)

-Staffing consists of the locals itself to increase localresponsiveness and understand the local market

-Competition restricted by geographical boundaries

-Need for global integration and standardisation is low.This is because Haier wanted to be seen as the brand of thecountry in which it wanted to operate. This shall have twoadvantages

1)Being perceived as an indigenous firmwould enable higher sales(a local Haier brand)

2)It will help Haier get rid of the low cost andquality image associated with Chinese products


7/14

Entry Into International

Markets EXPORTING:

-First started with exporting refrigerators to Germany

-Ventured as a contract manufacturer for multinational brands-exporting to the UK, France and Italy

-Continued OEM production till 1999, after which focus shifted toselling Haier branded products

JOINT VENTURES

-Used JVs with Mitsubishi to set up air-conditioner plant for export toJapan

-JV with Indonesian firm and European firms for manufacturingwashing m/c s and refrigerators, later several more JVs fordeveloping countries

-Haier America formed as a JV with Welbilt appliances, Haier Europeand Haier India also established

-Engaged in JVS primarily to share risks and resources and acquire

localised knowledge


8/14

ENTRY INTO INTERNATIONAL

MARKETS

HAIER

Dodger

After 92

Contende

r

92

Extender

After

92

Defender

84-91

Home market Abroad

High

Low

High

Pr.toGlobalizationin

industry

Competitive assets


9/14

COMPETITIVE STRATEGY

Haier concentrated on 1)Product differentiation and 2) Response speed

BROAD

MARKET

NARROW

MARKET

DIFFERE

NTIATION

FOCUSED

DIFFERENTI

TATION

FOCUSED

COST

LEADERS

HIP

COST

LEADERSH

IP

COST DISTINCTIVENE

SSInitially, Haier avoided direct

competition with US giants likeWhirlpool and GE and concentrated on

niche markets, manufacturingdifferentiated products, however, the

future goal of Haier is to build brand

equity and create a full line of

differentiated and innovative offerings

The main aim of Haier is to build a

brand through- productdifferentiation, mainly throughpersonalisation(design centres) and

service differentiation

Haiers high quality & high

pricing strategy can strength itscustomer loyalty and attract more


10/14

CHALLENGES

Recognition of Haier as a brand

Moving beyond specific markets to

more mainstream products

Maintaining its superior position athome in response to competition from

multinationals

Securing human resources to maintainrapid growth and manage foreign

markets


11/14

SOLUTIONS1)RECOGNITION OF HAIER AS A BRAND

-use differentiation as a means of gaining recognition

1)Product differentiation

2)Service differentiation

-glocal strategy i.e. think globally and act locally. e corporatelevel shall give global strategic direction while local units focus

on the individual consumer differences across global markets.

-adapt their prices, products, and promotions to meet the

unique needs of each areas targeted customers-Follow localisation

-design the products to meet local consumers needs

-manufacture the products in the local market

-market the products in local ways


12/14

SOLUTIONS 2) MOVING BEYOND SPECIFIC MARKETS TO MORE

MAINSTREAM PRODUCTS- It is the strong backing for Haier to enter the international markets as

Haier owns more than 26.2% of the total Chinese home appliance market

-3 third goals: Sales of goods in 3 categories

1/3rd from goods produced n sold in china

1/3rd from produced in china and sold overseas

1/3rdfrom produced n sold in overseas

- Enter the most stress and most critical marketsto occupy a commanding

height, and then can easily access other market. enter the foreign most stressand most critical markets to occupy a commanding height, and then can easilyaccess other market

-Market development should precede production plants. Exports products tothis

market at first, and then have a joint research and development with a localCompany, and finally a build design center, manufacturing and tradecompany there

-Choose the most excellent and well-established product to enter the market

first(refrigerators and Air conditioners for Haier). Thus the leading product willbe used to build a strong brand reputation


13/14


14/14

THANK YOU

group9_haier

Documents