Haier Case Analysis

As an avid reader and learner of global economic and brand development trends, I came across a Harvard Business School report on Haier. I would like to take this opportunity to provide my insight and analysis of Haier case study.

Major Problem: With significant foot hold in the Global market everything looks good for Haier in its quest for fulfilling its global objectives. But, increasing Labor cost in china and significant influence of Chinese government in Haier, and emerging South Korean brands the factor of unpredictability in the longer run looms large.

Analysis:

1. Strengths:

a. Strong brand image with effective after sales service.

b. Successful diversification of brand in consumer electronic goods industry.

c. Significant innovation in both product and management strategies.

d. Global inclusion of suppliers for improvement in product line and R&D

e. Acquisition of other companies globally have further strengthened Haier’s position.

2. Weakness:

a. Dependency on domestic (Chinese) market for large sale volumes.

b. Inconsistency in marketing at global level.

c. Dependency of Haier conglomerate on Chinese government and subsidies.

3. Opportunities:

a. Increasing market potential for Green products.

b. Acquisition of brands gives opportunity to Haier for expanding its business in growing Asian markets.

c. Transform itself from a global manufacturer to a worldwide service provider.

4. Threats:

a. Increasing wage demands and stiffening labor structure in China.

b. Lack of investment in information and technology as compared to its direct competitors.

c. Slowing down of economic growth rate in China means possible decrease in appliance spending in China, which is the major source of revenue for Haier.

Alternatives:

a. Consider mergers for joint development with other competent foreign brands to overcome any major obstacle Haier may face in terms of capital, technology and management.

b. Target countryside in China to market its green products as the ever-increasing electricity cost would give Haier a brilliant opportunity to attract new customers.

Recommendation: Haier should take advantage of its innovation and target the novice green market of electronic appliances. Increase in economic growth and electricity prices go hand in hand in all emerging markets. If Haier adopts “go green” strategy in both developing as well as developed markets, it would be able to form a separate identity of itself as a brand which is not only environment friendly but also manufacture products which consume less energy. With growing awareness about global warming and CFC emissions, this is the perfect time for Haier to build an image of “environment sensitive” brand (similar to the strategy adopted by Volkswagen when it came to U.S market in 1960s with its diesel run VW beetle).

Majority of Haier products are sold in china, with increasing energy costs in both rural and urban Chinese regions and increasing awareness about global warming and other environmental issues, it would be best suited for Haier to target the novice green market of electrical appliances in China. As Haier is already a lead player in China, it can use its success stories of “energy efficient green products” to enter other emerging markets in Asia, South America and in developed markets of Europe and North America.

Limitations/Challenges: South Korean companies like Samsung have already started to acquire majority of Asian markets with its own line of “green products”. If Haier does not act quickly to enter the green market in Asia and other emerging economies, it would limit itself to China and that would be a major setback to their initial policy of global expansion.

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