Haier: Taking a Chinese Company Global SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Haier: Taking a Chinese Company Global
In 2005, Haier, China's leading appliance manufacturer, had over $12 billion in worldwide sales and was the third-ranked global appliance brand behind Whirlpool and GE. Describes Haier's rise from a defunct refrigerator factory in China's Qingdao province to an international player with nearly $4 billion in overseas sales. Haier had followed a nontraditional expansion strategy of entering the developed markets of Europe and the United States as a niche player before venturing into neighboring Asian markets. Facing intense competition and price wars in the domestic market, in 2005 Haier was redoubling its efforts to build a globally recognized brand. Could Haier complete with the likes of Whirlpool and GE in their home market? Could Haier successfully defend against Chinese and multinational challengers in China while building a brand overseas?
Authors :: Tarun Khanna, Ingrid Vargas, Krishna G. Palepu
Swot Analysis of "Haier: Taking a Chinese Company Global" written by Tarun Khanna, Ingrid Vargas, Krishna G. Palepu includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Haier Whirlpool facing as an external strategic factors. Some of the topics covered in Haier: Taking a Chinese Company Global case study are - Strategic Management Strategies, Competition, Growth strategy, International business, Operations management and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Haier: Taking a Chinese Company Global casestudy better are - – technology disruption, increasing commodity prices, cloud computing is disrupting traditional business models, competitive advantages are harder to sustain because of technology dispersion, digital marketing is dominated by two big players Facebook and Google, there is increasing trade war between United States & China, supply chains are disrupted by pandemic ,
increasing government debt because of Covid-19 spendings, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of Haier: Taking a Chinese Company Global
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Haier: Taking a Chinese Company Global case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Haier Whirlpool, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Haier Whirlpool operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Haier: Taking a Chinese Company Global can be done for the following purposes –
1. Strategic planning using facts provided in Haier: Taking a Chinese Company Global case study
2. Improving business portfolio management of Haier Whirlpool
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Haier Whirlpool
Strengths Haier: Taking a Chinese Company Global | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Haier Whirlpool in Haier: Taking a Chinese Company Global Harvard Business Review case study are -
Effective Research and Development (R&D)
– Haier Whirlpool has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Haier: Taking a Chinese Company Global - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High brand equity
– Haier Whirlpool has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Haier Whirlpool to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Superior customer experience
– The customer experience strategy of Haier Whirlpool in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Training and development
– Haier Whirlpool has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Haier: Taking a Chinese Company Global Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Low bargaining power of suppliers
– Suppliers of Haier Whirlpool in the sector have low bargaining power. Haier: Taking a Chinese Company Global has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Haier Whirlpool to manage not only supply disruptions but also source products at highly competitive prices.
Successful track record of launching new products
– Haier Whirlpool has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Haier Whirlpool has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Innovation driven organization
– Haier Whirlpool is one of the most innovative firm in sector. Manager in Haier: Taking a Chinese Company Global Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Sustainable margins compare to other players in Strategy & Execution industry
– Haier: Taking a Chinese Company Global firm has clearly differentiated products in the market place. This has enabled Haier Whirlpool to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Haier Whirlpool to invest into research and development (R&D) and innovation.
Operational resilience
– The operational resilience strategy in the Haier: Taking a Chinese Company Global Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Highly skilled collaborators
– Haier Whirlpool has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Haier: Taking a Chinese Company Global HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High switching costs
– The high switching costs that Haier Whirlpool has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Organizational Resilience of Haier Whirlpool
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Haier Whirlpool does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses Haier: Taking a Chinese Company Global | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Haier: Taking a Chinese Company Global are -
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Haier Whirlpool supply chain. Even after few cautionary changes mentioned in the HBR case study - Haier: Taking a Chinese Company Global, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Haier Whirlpool vulnerable to further global disruptions in South East Asia.
Slow decision making process
– As mentioned earlier in the report, Haier Whirlpool has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Haier Whirlpool even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Skills based hiring
– The stress on hiring functional specialists at Haier Whirlpool has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Need for greater diversity
– Haier Whirlpool has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Slow to strategic competitive environment developments
– As Haier: Taking a Chinese Company Global HBR case study mentions - Haier Whirlpool takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
No frontier risks strategy
– After analyzing the HBR case study Haier: Taking a Chinese Company Global, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Interest costs
– Compare to the competition, Haier Whirlpool has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Low market penetration in new markets
– Outside its home market of Haier Whirlpool, firm in the HBR case study Haier: Taking a Chinese Company Global needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Products dominated business model
– Even though Haier Whirlpool has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Haier: Taking a Chinese Company Global should strive to include more intangible value offerings along with its core products and services.
Increasing silos among functional specialists
– The organizational structure of Haier Whirlpool is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Haier Whirlpool needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Haier Whirlpool to focus more on services rather than just following the product oriented approach.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Haier: Taking a Chinese Company Global, is just above the industry average. Haier Whirlpool needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Opportunities Haier: Taking a Chinese Company Global | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Haier: Taking a Chinese Company Global are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Haier Whirlpool can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Using analytics as competitive advantage
– Haier Whirlpool has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Haier: Taking a Chinese Company Global - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Haier Whirlpool to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Haier Whirlpool to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Haier Whirlpool to hire the very best people irrespective of their geographical location.
Low interest rates
– Even though inflation is raising its head in most developed economies, Haier Whirlpool can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Leveraging digital technologies
– Haier Whirlpool can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Developing new processes and practices
– Haier Whirlpool can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Building a culture of innovation
– managers at Haier Whirlpool can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Haier Whirlpool can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Haier: Taking a Chinese Company Global, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Haier Whirlpool can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Haier Whirlpool to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Haier Whirlpool can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Creating value in data economy
– The success of analytics program of Haier Whirlpool has opened avenues for new revenue streams for the organization in the industry. This can help Haier Whirlpool to build a more holistic ecosystem as suggested in the Haier: Taking a Chinese Company Global case study. Haier Whirlpool can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Haier Whirlpool can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Haier: Taking a Chinese Company Global suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Threats Haier: Taking a Chinese Company Global External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Haier: Taking a Chinese Company Global are -
Environmental challenges
– Haier Whirlpool needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Haier Whirlpool can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Haier Whirlpool in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Haier Whirlpool will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Haier Whirlpool can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Haier: Taking a Chinese Company Global .
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Increasing wage structure of Haier Whirlpool
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Haier Whirlpool.
Stagnating economy with rate increase
– Haier Whirlpool can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Consumer confidence and its impact on Haier Whirlpool demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Haier Whirlpool in the Strategy & Execution sector and impact the bottomline of the organization.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Haier Whirlpool needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Haier Whirlpool with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Haier Whirlpool.
Weighted SWOT Analysis of Haier: Taking a Chinese Company Global Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Haier: Taking a Chinese Company Global needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Haier: Taking a Chinese Company Global is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Haier: Taking a Chinese Company Global is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Haier: Taking a Chinese Company Global is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Haier Whirlpool needs to make to build a sustainable competitive advantage.
