Haiers Research and Development Strategies - Case Study Example

Name Professor Course Date Strategic Analysis Introduction Haier is a multinational, Chinese company that is prominent for manufacturing electric products (Habish 36). It was founded in the year 1984, in Qingdao, China, as a small refrigerator company. However, the company’s strategies have seen it rise from a middle level firm, to a class of high-end companies. It is currently a high-end performer and a business giant in the electronic business, supplying more than 6.8% of the world’s home appliances (Habish 41). Strategy is the key force behind the success of this company. This essay carries out an exhaustive strategic analysis of Haier, which not only establishes the strong corners and weaknesses of the firm, but also compares it with other firms that enjoy the same status as Haier. Haier’s Research and Development Strategies Haier’s success is mainly a consequence of appropriate strategies (Hoolladay and Coombs 43). For any company to set up strong strategies, it must first of all carry out a comprehensive research, before deciding on which strategies to put down. Haier is not an exceptional, the company in developing a reliable research strategy, has established research team. This is responsible for carrying exploring different aspects of the company and advising the company appropriately. The firm has a research institute, which is packed with well experienced scientists and researchers. This is a crucial step towards ensuring quality (Hoolladay and Coombs 102). The principal research methodology is a departmental research, which allows the team to carry out independent researches for each department and write a separate report for the findings from each department’s research. Research ranges from documentaries, previous reports and findings of other companies and professionals, to a field study research to analyze different markets. At the initial stage, however, the company’s team of researchers looks for theoretical findings, which can help them to gain an understanding of the research topic. Theoretical findings are also significant, as guidance to the main research project. With theoretical knowledge, a research proposal can be drawn (Hoolladay and Coombs 113). While conducting the real research, the company uses a diversity of human resource from different fields, races and experiences. This helps to generate an excellent report, which incorporates the different set of ideas and findings of each of these groups, hence a platform for making informed decisions. Haier’s finest development strategy involves building a strong brand identity as well as penetrating new markets. They have a vision of being the world’s star player. The company is consumer sensitive and ensures that it carries out an extensive research of potential markets before trying to penetrate them. It goes does deep to understand the cultures and needs of all its target customers. This means that when it penetrates the markets, it sets in to fill any business gaps that existed. It also provides its customers with services that add value to what they initially received from other existing companies. Grabbing consumer loyalty is pivotal in creating a successful brand name (Hoolladay and Coombs 117). While entering new markets, the company usually seeks business partnership with indigenous companies, or other firms that have a satisfactory experience of their new target markets. In most cases, the Haier merges with such companies, and uses this opportunity to study their new markets, before making a decision to seek the full ownership of their partnerships. These are well calculated strategies; they help the company to save funds, which would have been used to market themselves, while entering the new markets. The strategies also help them to familiarize themselves with the new business environment before making key decisions. This stimulates them to hit their development goals. Comparison between Haier’s America, European and Indian Strategy Haier America, European and Asia, each have different strategies, which spearhead their success in their continents. However, being a united multinational company, they also have common strategies, aimed at achieving their goals and objectives. In all the three continents, the company has developed a well reputable brand name and a strong relationship with their customers. They have tethered their customer’s loyalty with superior service and professionalism. They ensure that they produce the best goods, which are not just of excellent quality, but also fairly priced. Their key strategies are aimed at providing services for all potential consumers, in spite of their race, color, or social class (Habish 88). This means that they design products to fit the needs of immediate customers, hence locking out their competitors. Haier international further uses a holistic method of human resource in all the three continents, which ensures that they employ a diversity of professionals with different experiences and backgrounds. The company exercises similar strategies in all its principal branches in an attempt to preserve their culture and operational philosophy. However, in order to win over continental market share, each branch in the three continents has a unique set of strategies that facilitate its success. Haier America, has is under pressure and stiff competition from new firms that are continuously entering the market, with a wide set of lucrative products. To curb this situation, the company will have to build itself a high profile. It strives to maintain its status, so that it can maintain American consumers, most of which identify with a certain social class. This company has a high status and tries to maintain it by producing highly technological products that beat those of their competitors. In the Asian world, status is not as weighty as in America. Religions like Buddhism have taught people to be humble; hence most of them will try to maintain a high profile. Haier Asia, hence in spite of producing excellent products, does not strategize at creating an exceptionally high and luxurious profile. Instead, it identifies with the Asians, and presents itself as a company that values quality, since human beings need the best products. This is identifying with the value for life, which most Asian religions emphasize, and a results, wins over the consumers. The European market is similar to the American market, with high competition and search for status. The company’s headquarters for Europe is in France. However, all other research offices are in other countries (Thompson 68). This ensures that they have a clear glimpse of the European market, which has been found challenging by other emerging companies. The company has also identified itself with the common culture of European nations, football, by sponsoring some games, hence marketing itself. A Comparison of the Research and Development Strategies of HTC, Newell, Haier and New Balance HTC, Newell, Haier and New Balance are all old companies. They have been in their various industries for long periods and by now, they have mastered the art and science of being market players. The companies have strong research and development strategies that are far much bigger than those of their competitors. They all want to be key world players in the market, and control the largest percentage of the world’s market. It is undisputable that these companies have developed a close and personal relationship with their customers, and are always working towards maintaining these relationships, while seeking to recruit additional customers. The most common and salient feature of their success is customer loyalty. They have established a wide base of loyal consumers, who identify themselves with companies from a personal perspective. This is a strategy that can win a customer forever. However, each of these companies runs its own strategies in ensuring that it competes effectively in the market. HTC competes with its opponents by manufacturing a wide range of products, at close interval. This ensures that they have a constant flow of new products in the market, which have different features. The main aim of this strategy is to produce goods that satisfy all their consumers’ needs. By providing a diversity of products, it is assumed that all customer will be identify a product that will solve their problems. Haier, on the other hand, uses its brand name to penetrate markets and associate its products with the cultures and traditions of their target groups. This has the effect of giving their consumers a sense of pride and feeling that they own the company. The passion that results from this is the winning strategy for Haier. It also uses fair prices to lure customers to their products. Unlike Haier, New Balance produces fairly expensive products, compared to its competitors. The idea behind their strategy is to appear superior and of a higher social class than the rest of its competitors. Adidas, Puma, and Nike are among the company’s leading opponents; however, because of the high status that New Balance has created, it has a competitive advantage, since it lures all high-end sports people and the top, rich cream of consumers, who seek to be associated with a high class. The company also sponsors cardinal sports, and in some cases, it gives free products to the participants of the sponsored games. This is another method of marketing, while at the same time winning consumer loyalty (Hoskisson, et.al. 109). Newell’s strategy is similar to that of New Balance. Newell specializes in offering luxuries to the high-end social class of consumers. The company provides services that guarantee comfort and relaxation. This makes many consumers eager to use their services so that they can have a taste of their services, and in the process, they win over the market. Relations of HTC, Newell, New Balance and Haier with the Retailers of Their Products These four companies, in an attempt to achieve their visions of being crucial global players, not only maintain a strong relationship with their consumers, but also their retailers. These retailers are also their customers and play the greatest role of educating the final consumers (Thompson 74). They are in direct contact with customers, and hence possess significant influence on consumers. These companies, therefore, maintain stable business relations with their retailers, to ensure that they work together in achieving both their goals, and the goals of their retailers. HTC mainly focuses in rewarding their retailers fairly and encouraging them to open more outlets. While entering new markets, the company, usually rewards retailers who open many outlets. In some cases, the company organizes competitions between retailers, in order to encourage them to open additional branches and sell many products. In so doing, their retailers market these products so in an attempt to sell them and win the competition. Haier is known for offering quality remunerations and high discounts to successful who retailers, who exhibit the ability to grow their network of outlets and improve their sales. Newell and New Balance also employ the same strategies. Newell usually offers a free family package to loyal customers randomly, hence ensuring a healthy relation with them. Strengths and Opportunities that Haier has to Help Meet its Vision Haier’s 1/3 vision is a realistic one. The company has set of key strengths, which if well bred, may make it possible for the company to achieve this vision. The main opportunity of the company has been a strong strategy (Hoskisson, et.al. 107). Haier is known globally for establishing powerful business strategies. This has been evident form inception, 1984, to date. Haier has been able to rise through different stages of growth, from a middle level refrigerator firm, to a global and one of the largest multinationals in the world. The diagram below shows how the company has strategically grown over the year. The diagram is a step by step representation of the company’s strategy, starting by a brand building, to the present globalization strategy, where it is mainly concerned with winning over the global market. Figure 1Retrieved from:http://image.haier.com/en/about_haier/haier_strategy/201108/W020111027427863408426.jpg Apart from calculated strategy, the firm already has a reputable brand identity. In order to achieve its vision; it should capitalize on such opportunities, and use them to attract customers. It can use the already reputable brand name in one region to create a virtuous name with a new region, hence attracting consumers. The company also has financial advantage over most of its competitors. It can capitalize on this chance to acquire more branches, and enter into new partnerships across the globe, in an attempt to its wins to new grounds (Thompson, 77). These are strategies to apply both within and outside domestic borders. The management can set up a well calculated strategy, to identify successful companies, across the globe, which share in the Haier’s visions. Haier should then take the initiative to study these new markets, before deciding on the process they would use to acquire these firms. With their financial leverage, they can also invest heavily in research, with the facilitation of their research institute, to develop new products that are customer friendly; through intensive research programs, they can identify common characteristics of all their competitors, and hence develop products with a high degree of differentiation, and a unique identity. This will be a powerful step towards attracting customers. They can also rely on funds to invest in intensive marketing projects, and well analyzed CSR programs, in an attempt to add value to their brand, all customers are seeking added value. Three Year CSR Strategic Plan for Haier A successful CSR strategic plan should incorporate the interests of all its principal stakeholders (Lui 70). These include their customers, shareholders, their staff, local communities and ecology, in terms of the environmental effects of their businesses. A decent CSR plan, therefore, helps both stakeholders and management to increase their value in terms of both corporate and social aspects. This CSR three year plan for Haier will focus on five main areas: Shareholders Other financiers Distributors and Retailers Final Consumers Local communities’ welfare The strategic plan aims at improving both internal and external relations, as well adding value to all aspects of the company. The major goals of the plan will be: Establish stable relations with the financiers and shareholders Develop a strong bond between the company and its distributors Add value to consumers products Work towards products that will be energy saving to the customers Maintaining employment at a stable rate Maintaining the environment by reducing the amount of gases used during manufacture, which have a negative effect on the ozone layer Vision statement: Our vision is to be a global chief market player in the electronics and home appliances industry, by keeping the customers interest at heart, and constantly adding value to our products, without forgetting to give quality, and safety a priority. Haier, as company, recognizes that its success is as a result of the joint effort among all its stakeholders, who are, the final consumer, the distributor and retailer, the ecological environment, the shareholder, the local community, and the government, at large (Lui 73). It hence intends to develop close, useful relations with all its stakeholders, and work towards ensuring satisfaction of each one of them. Figure 2: The diagram below shows that the company's success is a result of all the five stakeholders shown. The company is at the center, and the stakeholders surrounding it are the finest key players that influence its success. In the process of creating a reputable brand identity, and lure new customers, the company will carry out a three year CSR strategy implementation project at a cost of $ 68 million. Priority Area Year 2012-2013 Year 2013-2014 Year 2014-2015 Total Budget Shareholders and other financiers -Sell to shares to them at 0.7% less than the normal price. -Develop relations with other potential financiers -Organize recreation activities for shareholders to appreciate their efforts in the company and to encourage them to invest more funds in the company. -Organize a shareholder’s competition, aimed at rewarding the best shareholders, in each investment bracket. -Carry out a three year reflective analysis of the shareholders. Budget $ 8.1 1.6 3.6 $ 13.3 Budget $ 2.50 $ 4.7 $ 3.0 $ 10.2 Local Community -Develop interpersonal relations at ground level. -Organize recreation activities to identify and promote talents of the local communities. -Establish an education trust fund to help children from needy families. -Establish committees and commissions at the local level, which will critically analyze the performance of the company at ground level and make significant suggestions. -Hold a free repair session, which will be aimed at repairing home appliances of the company’s customers, for free. -Establish an identity for local communities to identify with, hence showing their loyalty to the company Budget $ 1.1 $ 1.3 $ 3.4 $ 5.8 Staff -Research on, how to improve the performance of employees. -Recruit new employees from across the globe. -Conduct several retraining seminars to empower employees with knowledge and professional skills. -Establish a staff motivation department, which will be responsible for designing projects aimed at stimulating the performance of the employees. -Increase the remuneration of each employee by 12%. -Ceremony to reward the most improved employees and stimulate production among all the other employees. Budget $ 14.3 8.4 $ 4.6 $ 27.3 Final Consumers -Conduct a market research on final consumers. -Set up regional competitions to encourage consumers to buy the company’s goods. -Conduct research on the company’s quality, and how to improve it. -Work towards providing better products to the consumer. -Design and implement the production of compressor-free refrigerators. -Offer discounts on some products. Budget $ 11.7 Total Budget $ 68.3 Justification for the CSR Strategy The above strategy is a master plan that will ensure the company adds value to all its products, as well as stakeholders. It will develop a healthy relation between the company and all the identified stakeholders, who play a significant role in the performance of the company. Selling to them shares by 0.7% less than the normal price will increase their dividends, hence helping them to realize their core motivational factor of investment. The company will organize competitions and recreational activities, including celebrations for all its stakeholders in an attempt to develop personal relations with them. This will create mutual trust, hence loyalty between them. The company will also recruit staff, to add on its pool of knowledge, hence guaranteeing quality production, due to diverse ideas. A series of researches in most of the fields will be necessary to elevate their performance, and facilitate in informed decision making process. Conclusion Strategic analysis is one of the main, significant activities that companies should engage in (Hoskisson, et.al. 118). It is allows them to criticize their actions and reconsider making fundamental changes in the firm, which can be useful in spearheading the company’s success. Haier, being a multinational, company has an upper hand over many of its opponents who are still struggling to make a name (Habish 107). It is hence vital for the company’s management to take well calculated measures that will see the firm achieve its goals, of the best quality, and global key player. Works Cited Binder, Martin. Corporate Social Responsibility Management as a Strategic Instrument for Creating Competitive Advantage. New York: GRIN Verlag Publishing, 2010. Print. Habish, Andre. Corporate Social Responsibility Across Europe. Berlin: Springer Publishing Limited, 2005. Print. Haier Strategic Growth Image. Retrieved from http://image.haier.com/en/about_haier/haier_strategy/201108/W02011102742786340842 6.jpg Hoolladay, Sherry and Coombs Timothy. Managing Social responsibility: A community Approach. New York: John Wiley & Sons publishing limited, 2011. Print. Hoskisson, Robert, et. al. Strategic Management: Competitiveness and Globalization: Cases. Hong Kong: John Wiley and Sons Publishers, 2011. Print. Lui Ling. China’s Industrial Policies and the Global Business Revolution: The Domestic Appliance Business, 2005. Print. Thompson, Frank M. Strategic Management: Awareness and Change. London: Cengage Publishers, 2010. Print. Read More