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 - – increasing energy prices, there is increasing trade war between United States & China, supply chains are disrupted by pandemic , wage bills are increasing, cloud computing is disrupting traditional business models, there is backlash against globalization, geopolitical disruptions,
talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, 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 -
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.
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.
Diverse revenue streams
– Haier Whirlpool is present in almost all the verticals within the industry. This has provided firm in Haier: Taking a Chinese Company Global case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
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.
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.
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.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Haier Whirlpool digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Haier Whirlpool has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
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.
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.
Ability to lead change in Strategy & Execution field
– Haier Whirlpool is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Haier Whirlpool in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Haier Whirlpool is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Tarun Khanna, Ingrid Vargas, Krishna G. Palepu can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
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 -
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.
High operating costs
– Compare to the competitors, firm in the HBR case study Haier: Taking a Chinese Company Global has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Haier Whirlpool 's lucrative customers.
Lack of clear differentiation of Haier Whirlpool products
– To increase the profitability and margins on the products, Haier Whirlpool needs to provide more differentiated products than what it is currently offering in the marketplace.
Capital Spending Reduction
– Even during the low interest decade, Haier Whirlpool has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Haier: Taking a Chinese Company Global, it seems that the employees of Haier Whirlpool don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
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.
High bargaining power of channel partners
– Because of the regulatory requirements, Tarun Khanna, Ingrid Vargas, Krishna G. Palepu suggests that, Haier Whirlpool is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
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.
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.
Workers concerns about automation
– As automation is fast increasing in the segment, Haier Whirlpool needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
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.
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 -
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.
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.
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.
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.
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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Haier Whirlpool can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Haier Whirlpool can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
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.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Haier Whirlpool in the consumer business. Now Haier Whirlpool can target international markets with far fewer capital restrictions requirements than the existing system.
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.
Loyalty marketing
– Haier Whirlpool has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
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.
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.
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.
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 -
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.
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.
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.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Haier Whirlpool can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 .
High dependence on third party suppliers
– Haier Whirlpool high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Shortening product life cycle
– it is one of the major threat that Haier Whirlpool is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
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.
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.
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.
Technology acceleration in Forth Industrial Revolution
– Haier Whirlpool has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Haier Whirlpool needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Regulatory challenges
– Haier Whirlpool needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
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.