Competitive Strategy & Innovation: Key to Business Growth

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CASE A

1. Main features of Haier's internationalisation strategy

Contemporary strategy evaluation is selected by the manager with the concepts, framework, and techniques required to make better strategic decisions (Bouncken & et al., 2019. ). These strategies endeavour to be both rigorous and relevant. Internationalisation strategy is defined as distributed subsidiaries acting independently and conducting as if they were belonging to a local organisation with less connection from the parent organisation. These strategies lead to a high level of selection in the local business environment. There have been different dimensions of group action schemes since the early 1990s. During the 1990s, Haier acquired 16 other Chinese companies with the outcome that it became a supplier of not only a wide network of domestic appliances but also televisions, telecom equipment, and other consumer electronic products.

• Entered a number of overseas markets: From the start of 1992 to 1997, Haier set up a number of partnerships, mainly in particular in Asia, to analyse active concern systems.
• Directly export: The company makes the decision to manufacture in China and export to another nation to secure from set again costs and tardily cover all over the industry effectively.
• Divided production strategy: As per the development, the market has been divided into different segments, but the company applies demographic age segments that are categorised by age, such as 18-25, 25-30, 28-40, and 40-55, to target various customers based on the orientation as well as the expenditure.
• Covering all relevant organisations: Haier conducted an analysis to collect information about relatable companies and then take relevant steps in the context of an organisation (Chen and Liu, 2019). 
• Established good brand image in the marketplace: Due to coming different changes, companies change their pricing policies that are based on low- to middle-class people to enhance the profitability of the business.
• Set up subsidiaries in various industries: The company opens new subsidiaries in different enterprises after collecting information, and it is profitable for the business.

The company has been following different strategies at different stages, which started from 1984 to 2015, and as per the changes, applies changes in products and related strategies. In the year 1984, Haier followed a brand-building strategy where existence was inside the Chinese activity by selecting client services. In 1991, conditional approaches in which companies adopted other Chinese industries to increase their product network. After that, apply the internationalisation strategy in 1998 to enter 19 different international markets as well as sustain itself as the global largest internal convenience institution in regards to technology results. Due to coming changes in modern enterprises, companies applied a global brand strategy in 2005, where alteration as per commodity motivated a consumer to be driven as per the request manner. Economic processes utilise world origin to develop organisations with regard to localised mainstream brands. After that, in 2012, the networking strategy where the system undertaking scheme was personified (Cornett, Erhemjamts, and Tehranian, 2019). These strategies are changing as per the international development of Western enterprises. All the features are different from international development because when organisations enhance their operations in other countries, they apply different types of strategies.

According to Western entities, a particular scale of the system is utilised by the business to set the effective level of different items offered by the organisation in the marketplace. According to that company, prepare different types of strategies for selling and make effective decisions about business. Haier set new strategies for their products and connected with joint ventures to sell their products in other nations easily. It helps to understand another country's conditions and how to do business in different situations. They want to sell out products in the Middle East and also sell out other equipment. The company has decided to understand the culture of Western companies and, after that, make plans for the business expansion. Such as when organisations begin to sell out compact coolers in the USA, they face many problems, but with joint ventures, they understand all the legislation of the particular nation, and after that, it becomes easy for them to conduct business activities easily. Moreover, it restrains their brand as well as expanding selected items as per the demand in the market area. 

Pestel Analysis:

This is considered a tool that is utilised by marketers for observing as well as analysing external environmental factors that have an effect on firms. For example, Haier Group is a Chinese international customer of home appliances and electronic entities. So, pestle analysis of the respective company is discussed below:

• Political factors: As China is a developing economy, the government is very interested in making its growing sector flourish. It set various rules as well as regulations that impact the electronic industry. For example, Haier is performing in a hugely populated country, so it has to comply with the China regulations such as exports, imports, and others. So, in case the political condition of a specific country is not stable, this impacts the respective organisation's growth.
• Economic factor: This includes factors such as exchange rates, inflation rate, and others that affect the firm positively and negatively. For example, as Haier Group is operating internationally, this impacts the respective country's economic condition. For it, as economic growth is reduced, which leads towards inflation, its sales get impacted as individuals will not have the power to purchase its goods. In case a country has a stable economy, it will have various opportunities to extend and enhance sales.
• Social factor: This includes age distribution, customer lifestyle, religion, and other social factors that have an integrated impact on the operations of Haier for entering the electronic electronic sector. For instance, they have to analyse deeply, and the strategy has to concentrate on brand awareness that will enhance their market shares.
• Technological factors:The products of Haier are related to technology, as they have to always focus on researching its products to have knowledge about updated technology as well as keep its growth rate higher. For example: in case clients of the respective country desire advanced technology, they have to deliver that technology to keep their market safe. 
• Environmental factors: As per the current awareness about the environment among people, this is essential for entities to keep on contributing towards the environment as well as modifying its last process so that they do not damage it. For example, in the international market, Haier has to understand its rules for the protection of the environment and follow them to avoid any lawsuits. Also, CSR practices of all types may develop a reputation and contribute towards its enterprises.
• Legal factors: To keep its business in a smoother way in various countries, Haier has to comply with those countries' regulations so that its needs are accomplished. It involves copyrights, patents, and others that contribute towards the business security and the future of a particular country.

Porters Five Force Analysis

This is considered a business analysis model that aids in describing why several industries are able to survive at various levels of profit. It involves five forces that are frequently applied through Haier Group for measuring the intensity of competition and profit of the sector. All five forces are discussed below:

• Threats of new entrants: This represents how players in a new market enforce threats to an existing one. As for the electronic industry, the barriers to new entrants are high, not only as it is capital intensive but also due to higher consumer loyalty with brand choices, so this threat is quite low for the respective organisation.
• Bargaining power of suppliers: This shows the pressure exerted by suppliers upon businesses through adapting various tactics such as minimising product availability, decreasing quality, or enhancing prices. So, the bargaining power of suppliers in the electronic industry is high, as there are fewer suppliers and the demand for products is high.
• Bargaining power of buyers: This shows that consumers exert upon entities to obtain higher quality products at reasonable rates with great consumer service. It directly influences Haier to attain their goals. So, in the respective industry, the bargaining power of customers is low, as they are not very focused on price and concentrate on quality.
• Rivalry upon exiting firms: This represents various numbers of competitors, which provide tough competition to Haier as it faces great pressure from competitive firms that may limit one another's growth potential. So, in the electronic industry, the rivalry of existing firms will be low.
• Threats of substitute products or services: This makes the competitive market more challenging for Haier, as higher threats of substitutes represent that the client may utilise alternative goods or services from another sector to meet its requirements. Therefore, the threats of substitute products are higher in the electronic industry as cheaper products are available in the Chinese market.

1. How successful has Haier's internationalisation strategy been and why?

The attainment of the internalisation scheme of the Haier group is because of these strategies in the Haier group. It became the reason for success. The company had been established as a commercial enterprise, some in the USA and the Middle East. The connection has over fifty thousand sales agents internationally and kind commodities to 100 & 60, and preceding states of the USA are now concentrating on different approaches (Danso et al., 2019).  In the context of Haier, to analyse the market conditions, they conducted R&D. They found that the domestic market of electronics became more competitive and did not provide adequate profitability, so they decided to expand into the Chinese market to enlarge business opportunities. In respective situations, it is very important and understandable for Chinese companies to think globally. Using Dawar and Frost's survival strategy, helps them position themselves in the international marketplace as it offers a profound theoretical approach to analyse or evaluate Haier's internalisation while exporting the goods to gain desirable outputs.  In the 21st century, the local industry of electronics is dominated by large companies, as they use advanced tools to give one of their best attributes to consumers, which are Electrolux, Whirlpool, LG, and Samsung. The major strategy of the respective organisation before the early 1990s was a brand-building strategy that helped to capture the Chinese market by delivering high-quality products. For an organisation, it is very important to expand its market in other countries to gain desirable goals and objectives. In the context of Haier's in 1996 and 1997, they opened their production facilities in the markets of Indonesia and the Philippines, respectively, and they failed to attempt to enter the market of Thailand's domestic market due to the presence of local companies. In the year 1998, they adopted the internalisation strategy as they aimed to capture the nineteen markets of the national sphere to gain a higher level of profitability and sustainability in the market (Giménez, Madrid-Guijarro, and Duréndez,  2019). The major significance of the respective strategy of internalisation was when Zhang Ruimin was appointed as the GM of the Quigdao refrigerator factory in the year 1984, which is a cooperative enterprise. The crucial problem that they want to solve is to provide one of the best designs of products by using advanced tools and techniques.  The major strategy in that situation is a change in organisational culture and quality standard practices. By following the order of Zhand, they destroy the defective refrigerators to demolish the negative effects from them.  By using ISO 9001 to maintain the quality of the products and services to serve the consumers in the best manner. Achievement of the international quality standards requires a total reformation and upgrade in process (Gomes and Romao, 2019). While adopting the internalisation strategy, they majorly focus on improving customer service by building a strong chain of networks to track consumer tastes and preferences by using computerised services for working in consumers' self-interest. By using the respective strategy in the organisation, the company was able to improve its quality by strong-fuelled demand between 1984 and 1989, and revenue climbed from 3.5 million to 410 billion yuan. So the internalisation strategy not only proved beneficial in improving the quality of products but also improved the culture of the organisation, which is one of the most important attributes for an organisation to improve profitability within the organisation. 
Another major strategy in front of the organisation is the global brand strategy, which helps to transform from the product-driven to the user-driven demand mode. By using respective strategies, organisations can utilise the worldwide origin by creating localised thought and brand equity in the market (Guo, 2019). In 2015, Haier began investing in the integration of the Internet of Things into their devices to obtain the desirable outcomes positively. By collaborating with the Stanford Artificial Intelligence Laboratory, they found three main barriers to the adaptation of smart home technology: a lack of unified protocols and passive services with incomplete solutions. At that time, Haier's core competency resides in the large appliance sector, not in the small electronic sector. By using Cogobuy's ecosystem and supply chain, they can be able to merge the portfolio of components. By using respective strategy organisations, they become technologically advanced and able to introduce their smart appliances across the various product lines in the major appliance industries such as air, water, clothes, security, voice control, and information. 
Another major strategy is networking strategy and its significance, which consists of borderless organisation, management free from the manager, and scalar chain supply. By using the respective strategy from 2015, they can be able to transform the contemporary organisation for building appliances for households with the help of incubators for society to become internet-orientated organisations (Martin-Rios and Ciobanu, 2019). It aimed to come as the self-managed system of contemporary organisations to acknowledge the consumer's needs and demands to reach the global marketplace. By using respective strategies, Haier can be able to conduct seditious explorations in strategy, organisation, employer, users, recompense, and many more. 
So by using respective strategies and tactics, enterprises can effectively sustain themselves in the market, as it is the requirement of today's competitive world. With the help of an internalisation strategy, which proved very beneficial for the organisation as it operates in a major part of the world by using its distinctive products and its features.

1. Principal features of Haier's management system.

MS is the set of logical arguments and procedures used by the organisation to ensure that it helps in achieving or fulfilling the requirement of tasks to achieve desirable objectives (Nuruzzaman, Gaur and Sambharya,  2019). In the context of Haier, they develop some sort of management system in their organisation while adopting innovation and strategy so that all people within the firm move in a systematic direction. The major principle features of the respective organisation are:

Governance:

In MS of organisation comes an important factor, which is administration; officially, Haier was an agglomerate supervising the Qingdao municipal government. In actual possession, organisational constitution and administration are unclear as they operated two establishments, Qingdao Haier Company and Haier Electronics Group Company Ltd. They both have an opaque relationship with one another. There is no consolidated kind of financial statements available in front of the group (Perez-De-Lema et al., 2019). So it is very important to build healthy relationships with the subsidiaries for positively gaining development and enhancement. 

Zhang Ruimin:

There are opaque relationships in Haier's departments and administration construction and whole quality resides in the hands of Zhang Ruimin, managing director of Haier. Respective power comes partially from their formal position as chairman and CEO and partially from their informal authorization. Zhang, soon after taking the position of managing director in 1985, ordered to destroy the 76 refrigerators by using a hammer by following the complaint of consumers by radically changing the culture of the organisation. The culture of the organisation is one of the most important attributes to one that embodies quality control practices. At that time, Chinese products were regarded as poor-quality consumer goods by comparing the foreign brands manufactured in China. So leaders and leadership styles work as important for organisations to bring the establishment in China to acquire ISO 9001 certification. So it can be said that Zhang is one of the most crucial parts of Haier's MS to improve the quality of their products and serve consumers in the best manner.

Performance management:

Performance management is the chain of activities to ensure that activities or actions meet the goals and objectives of the organisation in the most effective manner (Salim,  Ab Rahman and Wahab,  2019). It helps to focus on the organisation, its department, and employees processes which take place to manage specified tasks and duties. In the context of Haier, it follows a management system to ensure answer ability and hardback by motivator approach of incentives that are different in Chinese companies. As per the head of Haier's human resource OEC, E stands for everyone, everything, every day. O stands for overall, C for control, and clear. A respectful management system helps to control everything about the employee's job in regards to it every day. By using the performance management section, submit a divisional action programme, which is a month-by-month system of performance management that helps to compare actual performance with the previous one.

Innovation and new product development:

In the context of respective organisations, they always focus on the side of consumers needs and demands to build products as per their wishes. Under the leadership of Zhang, due to consumer complaints, the organisation commanded to break the refrigerators by using a hammer. They design their products to compensate for the specific consumer's needs, such as washing machines in rural areas of China for washing vegetables. In that regard, Haier reverted to a change in their design by suggesting to farmers their usage of cleaning vegetables and peanuts.  So to gain market sustainability, they use flexible design modules and subsystems to add some more features (Salunke,  Weerawardena and McColl-Kennedy,  2019). for gaining a competitive advantage, and the organisation extended to providing the Internet of Things by launching its "Smart living" integrated wireless property, which helps consumers control devices positively.

Building the networked enterprise:

In 2015, they adopted the Networking strategy The idea behind the respective strategy is market responsiveness, the initiative of the entrepreneur and the building of a team to gain desirable goals and objectives. The major concept behind this is the formulation of some 2000 self-managed teams that each have 10 to 20 groups living in the same destination. They come from various kinds of serviceable functions and bring jointly for accomplishing the special goal and objective within the organisation. By occupying their own accounting system and full accountability in acquiring and distilling workers and getting interior rules regarding disbursement and distribution of positive stimulus in order to gain desirable outcomes. In it, the team have to obey the orders of their supervisor to create value to become entrepreneurs and makers. So in an organisation, it is very important that all members work in a team by communicating the roles and responsibilities with one another (Tynchenko et al., 2019). In a team, all people are obliged to work in the interest of others and the organisation so that desirable objectives can be obtained. 
The management system of Haier's is different from the Western companies, which are challenged and committed to building high-quality products; for that, they destroy faulty fridges (XU and HOU, 2019). In the 80s, Zhang did not want to follow the manufacturing style other Chinese companies used, but they used what consumers actually wanted. Respective factors provide lessons to others that consumers possess the superior position and organisation needed to produce products as per their demand. 

CONCLUSION

As per the above report, it is concluded that international strategy is one of the most important steps in an arrangement for gaining enhancements in the quality of products. While expanding in the international market, it is very important to have essential information such as the financial position of the market, the best entry mode and political market, and the best strategy for expansion. For an organisation, it is very necessary to expand into foreign marketplaces to enlarge business opportunities, for that management system plays a very critical role.

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