Case Study Description of Haier's U.S. Refrigerator Strategy 2005
Haier, the first Chinese consumer durable brand in the United States, succeeded in the compact refrigerator, freezer, and air conditioner markets and then built a U.S. factory to enter the full-size market. Issues include the value of a local entrepreneur to the Asian manufacturer entering the United States; brand building and price positioning; the sourcing location decision trade-off between production costs and logistics costs; the role of change in the U.S. appliance distribution channels; global and regional competitive analysis; the response of U.S. competitors to the global sourcing evolution; and the time horizons of Chinese company management.
Authors :: Pankaj Ghemawat, Thomas M. Hout, Jordan Siegel
Swot Analysis of "Haier's U.S. Refrigerator Strategy 2005" written by Pankaj Ghemawat, Thomas M. Hout, Jordan Siegel includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Refrigerator U.s facing as an external strategic factors. Some of the topics covered in Haier's U.S. Refrigerator Strategy 2005 case study are - Strategic Management Strategies, Costs, Globalization, Operations management, Strategy and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Haier's U.S. Refrigerator Strategy 2005 casestudy better are - – cloud computing is disrupting traditional business models, there is backlash against globalization, increasing inequality as vast percentage of new income is going to the top 1%, central banks are concerned over increasing inflation, challanges to central banks by blockchain based private currencies, increasing transportation and logistics costs, wage bills are increasing,
increasing household debt because of falling income levels, increasing energy prices, etc
Introduction to SWOT Analysis of Haier's U.S. Refrigerator Strategy 2005
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Haier's U.S. Refrigerator Strategy 2005 case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Refrigerator U.s, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Refrigerator U.s 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's U.S. Refrigerator Strategy 2005 can be done for the following purposes –
1. Strategic planning using facts provided in Haier's U.S. Refrigerator Strategy 2005 case study
2. Improving business portfolio management of Refrigerator U.s
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 Refrigerator U.s
Strengths Haier's U.S. Refrigerator Strategy 2005 | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Refrigerator U.s in Haier's U.S. Refrigerator Strategy 2005 Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Refrigerator U.s in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Cross disciplinary teams
– Horizontal connected teams at the Refrigerator U.s are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Sustainable margins compare to other players in Strategy & Execution industry
– Haier's U.S. Refrigerator Strategy 2005 firm has clearly differentiated products in the market place. This has enabled Refrigerator U.s to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Refrigerator U.s to invest into research and development (R&D) and innovation.
Diverse revenue streams
– Refrigerator U.s is present in almost all the verticals within the industry. This has provided firm in Haier's U.S. Refrigerator Strategy 2005 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.
High switching costs
– The high switching costs that Refrigerator U.s 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
– Refrigerator U.s has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Refrigerator U.s to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in Strategy & Execution field
– Refrigerator U.s 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 Refrigerator U.s in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Refrigerator U.s digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Refrigerator U.s 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.
Strong track record of project management
– Refrigerator U.s is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Operational resilience
– The operational resilience strategy in the Haier's U.S. Refrigerator Strategy 2005 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.
Learning organization
- Refrigerator U.s is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Refrigerator U.s is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Haier's U.S. Refrigerator Strategy 2005 Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Successful track record of launching new products
– Refrigerator U.s has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Refrigerator U.s 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.
Weaknesses Haier's U.S. Refrigerator Strategy 2005 | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Haier's U.S. Refrigerator Strategy 2005 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 Refrigerator U.s supply chain. Even after few cautionary changes mentioned in the HBR case study - Haier's U.S. Refrigerator Strategy 2005, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Refrigerator U.s vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– It come across in the case study Haier's U.S. Refrigerator Strategy 2005 that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Haier's U.S. Refrigerator Strategy 2005 can leverage the sales team experience to cultivate customer relationships as Refrigerator U.s is planning to shift buying processes online.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Haier's U.S. Refrigerator Strategy 2005, in the dynamic environment Refrigerator U.s has struggled to respond to the nimble upstart competition. Refrigerator U.s has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Low market penetration in new markets
– Outside its home market of Refrigerator U.s, firm in the HBR case study Haier's U.S. Refrigerator Strategy 2005 needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Products dominated business model
– Even though Refrigerator U.s 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's U.S. Refrigerator Strategy 2005 should strive to include more intangible value offerings along with its core products and services.
High cash cycle compare to competitors
Refrigerator U.s has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Refrigerator U.s is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Haier's U.S. Refrigerator Strategy 2005 can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Workers concerns about automation
– As automation is fast increasing in the segment, Refrigerator U.s 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.
No frontier risks strategy
– After analyzing the HBR case study Haier's U.S. Refrigerator Strategy 2005, 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.
Lack of clear differentiation of Refrigerator U.s products
– To increase the profitability and margins on the products, Refrigerator U.s needs to provide more differentiated products than what it is currently offering in the marketplace.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Haier's U.S. Refrigerator Strategy 2005, it seems that the employees of Refrigerator U.s 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.
Opportunities Haier's U.S. Refrigerator Strategy 2005 | 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's U.S. Refrigerator Strategy 2005 are -
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. Refrigerator U.s can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Leveraging digital technologies
– Refrigerator U.s 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Refrigerator U.s 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's U.S. Refrigerator Strategy 2005, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Refrigerator U.s can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Better consumer reach
– The expansion of the 5G network will help Refrigerator U.s to increase its market reach. Refrigerator U.s will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Refrigerator U.s in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Refrigerator U.s can use these opportunities to build new business models that can help the communities that Refrigerator U.s operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Using analytics as competitive advantage
– Refrigerator U.s 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's U.S. Refrigerator Strategy 2005 - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Refrigerator U.s to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Manufacturing automation
– Refrigerator U.s can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Low interest rates
– Even though inflation is raising its head in most developed economies, Refrigerator U.s 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Refrigerator U.s 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 Refrigerator U.s to hire the very best people irrespective of their geographical location.
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 Refrigerator U.s 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.
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 Refrigerator U.s in the consumer business. Now Refrigerator U.s can target international markets with far fewer capital restrictions requirements than the existing system.
Threats Haier's U.S. Refrigerator Strategy 2005 External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Haier's U.S. Refrigerator Strategy 2005 are -
Increasing wage structure of Refrigerator U.s
– 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 Refrigerator U.s.
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.
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. Refrigerator U.s 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.
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 Refrigerator U.s.
Consumer confidence and its impact on Refrigerator U.s 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Refrigerator U.s 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's U.S. Refrigerator Strategy 2005 .
Regulatory challenges
– Refrigerator U.s 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.
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.
Environmental challenges
– Refrigerator U.s 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. Refrigerator U.s can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Technology acceleration in Forth Industrial Revolution
– Refrigerator U.s has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Refrigerator U.s 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.
Shortening product life cycle
– it is one of the major threat that Refrigerator U.s is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Refrigerator U.s 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 Refrigerator U.s with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Weighted SWOT Analysis of Haier's U.S. Refrigerator Strategy 2005 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's U.S. Refrigerator Strategy 2005 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's U.S. Refrigerator Strategy 2005 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's U.S. Refrigerator Strategy 2005 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's U.S. Refrigerator Strategy 2005 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 Refrigerator U.s needs to make to build a sustainable competitive advantage.