Haier: Taking a Chinese Company Global in 2011, Chinese Version 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 2011, Chinese Version
In 2011, Haier, China's leading appliance manufacturer, had over $20 billion in worldwide sales and had just been named the leading refrigerator manufacturer worldwide. This case describes Haier's rise over three decades, from a defunct refrigerator factory in China's Shandong province to an international player with $5.5 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 Middle Eastern and neighboring Asian markets. Looking ahead to the next decade, Haier CEO Zhang Ruimin saw opportunities for Haier to grow through product diversification and additional market penetration in both developed and emerging markets. He and his colleagues would depend on their experience of acquiring numerous companies, entering and retaining new markets, restructuring the organization, and managing hundreds of subsidiaries around the world. They would need to determine which of the lessons learned from Haier's international operations should be implemented in China and which skills learned at home could best be applied abroad.
Authors :: Tarun Khanna, Krishna G. Palepu, Phillip Andrews
Swot Analysis of "Haier: Taking a Chinese Company Global in 2011, Chinese Version" written by Tarun Khanna, Krishna G. Palepu, Phillip Andrews includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Haier Haier's facing as an external strategic factors. Some of the topics covered in Haier: Taking a Chinese Company Global in 2011, Chinese Version case study are - Strategic Management Strategies, Competition, Emerging markets, Globalization, Growth strategy, Operations management, Sales and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Haier: Taking a Chinese Company Global in 2011, Chinese Version casestudy better are - – increasing transportation and logistics costs, supply chains are disrupted by pandemic , central banks are concerned over increasing inflation, increasing household debt because of falling income levels, geopolitical disruptions, challanges to central banks by blockchain based private currencies, increasing inequality as vast percentage of new income is going to the top 1%,
there is backlash against globalization, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Haier: Taking a Chinese Company Global in 2011, Chinese Version
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 in 2011, Chinese Version case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Haier Haier's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Haier Haier'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: Taking a Chinese Company Global in 2011, Chinese Version can be done for the following purposes –
1. Strategic planning using facts provided in Haier: Taking a Chinese Company Global in 2011, Chinese Version case study
2. Improving business portfolio management of Haier Haier'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 Haier Haier's
Strengths Haier: Taking a Chinese Company Global in 2011, Chinese Version | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Haier Haier's in Haier: Taking a Chinese Company Global in 2011, Chinese Version Harvard Business Review case study are -
Diverse revenue streams
– Haier Haier's is present in almost all the verticals within the industry. This has provided firm in Haier: Taking a Chinese Company Global in 2011, Chinese Version 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.
Effective Research and Development (R&D)
– Haier Haier's 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 in 2011, Chinese Version - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Learning organization
- Haier Haier'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 Haier Haier's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Haier: Taking a Chinese Company Global in 2011, Chinese Version Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Haier Haier's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Haier Haier'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.
Analytics focus
– Haier Haier's 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, Krishna G. Palepu, Phillip Andrews 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.
Ability to recruit top talent
– Haier Haier's is one of the leading recruiters in the industry. Managers in the Haier: Taking a Chinese Company Global in 2011, Chinese Version are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Sustainable margins compare to other players in Strategy & Execution industry
– Haier: Taking a Chinese Company Global in 2011, Chinese Version firm has clearly differentiated products in the market place. This has enabled Haier Haier's to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Haier Haier's to invest into research and development (R&D) and innovation.
Training and development
– Haier Haier's 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 in 2011, Chinese Version 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.
Operational resilience
– The operational resilience strategy in the Haier: Taking a Chinese Company Global in 2011, Chinese Version 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.
High switching costs
– The high switching costs that Haier Haier'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.
Ability to lead change in Strategy & Execution field
– Haier Haier'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 Haier Haier's in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Low bargaining power of suppliers
– Suppliers of Haier Haier's in the sector have low bargaining power. Haier: Taking a Chinese Company Global in 2011, Chinese Version has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Haier Haier's to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses Haier: Taking a Chinese Company Global in 2011, Chinese Version | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Haier: Taking a Chinese Company Global in 2011, Chinese Version are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Haier: Taking a Chinese Company Global in 2011, Chinese Version, is just above the industry average. Haier Haier's 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.
Skills based hiring
– The stress on hiring functional specialists at Haier Haier's 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.
Low market penetration in new markets
– Outside its home market of Haier Haier's, firm in the HBR case study Haier: Taking a Chinese Company Global in 2011, Chinese Version needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Need for greater diversity
– Haier Haier's 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.
Capital Spending Reduction
– Even during the low interest decade, Haier Haier's 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.
Aligning sales with marketing
– It come across in the case study Haier: Taking a Chinese Company Global in 2011, Chinese Version 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: Taking a Chinese Company Global in 2011, Chinese Version can leverage the sales team experience to cultivate customer relationships as Haier Haier's is planning to shift buying processes online.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Haier Haier's is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Haier: Taking a Chinese Company Global in 2011, Chinese Version can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow decision making process
– As mentioned earlier in the report, Haier Haier's 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 Haier's 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, Krishna G. Palepu, Phillip Andrews suggests that, Haier Haier's 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Haier: Taking a Chinese Company Global in 2011, Chinese Version, in the dynamic environment Haier Haier's has struggled to respond to the nimble upstart competition. Haier Haier's has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Increasing silos among functional specialists
– The organizational structure of Haier Haier's is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Haier Haier's needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Haier Haier's to focus more on services rather than just following the product oriented approach.
Opportunities Haier: Taking a Chinese Company Global in 2011, Chinese Version | 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 in 2011, Chinese Version are -
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 Haier's 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 Haier's 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.
Learning at scale
– Online learning technologies has now opened space for Haier Haier's to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Haier Haier's can use these opportunities to build new business models that can help the communities that Haier Haier's operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Low interest rates
– Even though inflation is raising its head in most developed economies, Haier Haier'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.
Leveraging digital technologies
– Haier Haier'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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Haier Haier's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 Haier'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.
Buying journey improvements
– Haier Haier's can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Haier: Taking a Chinese Company Global in 2011, Chinese Version 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.
Manufacturing automation
– Haier Haier'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.
Using analytics as competitive advantage
– Haier Haier'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: Taking a Chinese Company Global in 2011, Chinese Version - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Haier Haier's to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Haier's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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 Haier's in the consumer business. Now Haier Haier's can target international markets with far fewer capital restrictions requirements than the existing system.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Haier Haier'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: Taking a Chinese Company Global in 2011, Chinese Version, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats Haier: Taking a Chinese Company Global in 2011, Chinese Version 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 in 2011, Chinese Version are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Haier Haier's 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.
Technology acceleration in Forth Industrial Revolution
– Haier Haier's has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Haier Haier'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.
Stagnating economy with rate increase
– Haier Haier's 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.
Increasing wage structure of Haier Haier'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 Haier Haier's.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Haier Haier's business can come under increasing regulations regarding data privacy, data security, etc.
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 Haier'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.
Environmental challenges
– Haier Haier'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. Haier Haier's can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Haier Haier'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: Taking a Chinese Company Global in 2011, Chinese Version .
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 Haier's can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Haier Haier's is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Haier's 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 Haier's needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
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.
Weighted SWOT Analysis of Haier: Taking a Chinese Company Global in 2011, Chinese Version 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 in 2011, Chinese Version 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 in 2011, Chinese Version 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 in 2011, Chinese Version 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 in 2011, Chinese Version 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 Haier's needs to make to build a sustainable competitive advantage.
