Huawei Company Analysis - Case Study Example

Name Tutor Course Date Huawei Company Analysis Business Summary of Huawei Huawei is a Chinese-based company and its owners are entirely the staff of the company. Huawei has penetrated over 100 countries, as its market. It is based in Shenzhen in China (BNamericas 1). Huawei began its business operations, humbly, by selling telephone switches that were imported and then it took the initiative to start manufacturing the product. It grew fast and rapidly through focusing on China’s rural regions that were not exploited by the larger companies (Brian 138). Huawei operates in three segments that include carrier network, consumer business and Enterprise Business (Huawei Technologies Co., Ltd 2014). Now, Huawei is the largest telecom dealer in the Chinese market. It was limited to exploiting foreign markets but started by penetrating developing nations in Asia (Brian 138) . Later on, it started paying attention to developed nations in the USA, Netherlands and United Kingdom (Brian 138). It has operations in Latin America with main offices established in Chile, Peru, Venezuela and Brazil (BNamericas 1). Its main services include E2E Network planning/evolution, Business and Network and customer experience management (Huawei Technologies Ltd 1). Its solutions include Go-greener that is an environmental solution advocating for environment conversation by avoiding environmental pollution. Another solution is known as Broader + smarter solutions. The company’s products include Radio Access, Network energy, Application and software, sever, Data Communication and Transport Network (Huawei Technologies Ltd 1). To be specific, the company’s devices and solutions are found in 170 regions and or countries. It accumulated annual sales revenue amounting to USD39.6 billion in the year 2013. Huawei became 285th on the award known as Global Fortune 500. In the corporate governance section, the company is said to have the Shareholders’ Meeting as the highest authority in Huawei (Huawei Technologies Ltd 1). It makes major decisions on the most important issues of Huawei such as capital increment, distribution of profits, appointment of the Board of Directors and the Supervisory Board. Huawei Company also has more than 70,000 solutions, and product research and development employees, and these comprise over 45% of the total employees in the whole world. There are about 16 R & D centers in countries like German, United States of America, Sweden, France, Russia, India, China and Italy. Huawei Company was established in the year 1987 (Huawei Technologies Ltd 1). Huawei growth has been evident from a small company valued at USD 5680 to a worldwide company that has sales volume of more than USD 39 billion. Finally, its financial statements are audited by KPMG (Huawei Technologies Ltd 1). Management The Board of directors (BOD) makes decisions on corporate strategy and management. BOD oversees and guides overall business activities or rather operations (Huawei Technologies Ltd 1). It also makes the most important decisions on major strategic ongoing in Huawei. The BOD came up with the Human Resources Committee, Finance Committee, the audit committee and the strategy and development committee. On the other hand, the Supervisory Board oversees Huawei’s operational and financial performance. It also monitors the fulfillment of the duties of the BOD members, as well as, the senior management and the BOD operations standardization (Huawei Technologies Ltd 1). The Company uses or rather utilizes CEO rotation system under BOD leadership. The acting and rotating CEO is always in charge of company development and survival. The Company is audited by KPMG since the year 2000. KPMG audits all Huawei’s annual financial reports in adherence to the various accounting standards and procedures (Huawei Technologies Ltd 1). Source: http://www.huawei.com/en/about-huawei/corporate-info/corporate-governance/index.htm Culture (Mission and Values) Source: http://www.huawei.com/en/about-huawei/corporate-info/core-values/index.htm Core Values of Huawei It serves customers first since their wants and needs are the forces pushing Huawei’s development. Huawei continuously creates long-term worth for consumers or customers through responsive behavior to their requirements and needs. Huawei earns customer respect through trust, thus, eventually building a strong foundation of trust. Employees are rewarded accordingly and their contributions are respected. Huawei is also a company geared towards continuous improvement through active listening to customer requirements. If a customer, for instance, never liked a certain feature, he or she can give feedback to the customer support where the issue is put into record for review in one way or another (Huawei Technologies Ltd 1). Openness and initiative is another core value of Huawei through pursuance of customer- centric innovations through consultation in an open way. Integrity is the most valuable asset of Huawei and it is achieved through keeping of promises and winning customer’s trust. This is achieved through processing of warranties on time, review of customer feedback, after sale services like repairs and device exchanges and continuous provision of customer friendly devices (Huawei Technologies Ltd 1). Finally, Teamwork is the last core value of Huawei where the employees, management and internal teams work together at all times. There are always cross-cultural collaborations that involve clear inter-departmental cooperation (Huawei Technologies Ltd 1). As part of the Chinese culture as a whole, Huawei has also adopted the Guanxi culture in its operations (Hoskisson etal 8). In this case, Guanxi refers to close bonded relationships between partners or members of a team where each party feels the obligation to offer assistance to the other party (Hoskisson etal 8). Close relationships in a corporation or rather company is an important aspect that helps an organization to navigate and maneuver through hard times, low season of the business and during calamities. It is also an important culture with relation to being innovative through joining hands in research and development. Huawei has gone a heard to implement the Guanxi culture in the United States of America as the company started doing business in America in 2001 (Hoskisson etal 8). The Guanxi culture has seen Huawei through tough times by enhancing innovativeness where in 2008 alone Huawei filed 1,737 patents for its business. Again, it is the largest phone network gadgets manufacturer in Chinese market. Additionally, it is the second phone network gadget manufacturer in global markets obtaining the second position after Sweden’s Erickson AB (Hoskisson etal 8). Employee Benefits Huawei employees have benefited from remuneration policy since the 90’s (Liu 119). The remuneration or rather compensation of managers is always changing. There are long-term incentives associated with working with Huawei through strategies such as knowledge capitalization where company employees can access company stocks despite the fact that the company is not listed. The stock option of the employees is normally adjusted with regard to responsibility, talent, attitude at work, risk recognition and contribution (Liu 119). In addition, in Huawei there is performance related remuneration where pay is sometimes result oriented resulting to ensuring the best workers are well remunerated in comparison to low performing employees. In return, the employees are able to improve their productivity and skills (experience) through setting targets, communicating, and coaching and performance appraisal (Liu 119). Employees in Huawei also benefit from development and training systems where each employee is entitled to learn one or the other courses to add up on his skill as well as experience (Liu 119). The company provides dual career development road to the staff. One can choose an appropriate career course according to one’s talent, career plan and characteristics at the company’s cost (Liu 119). Employee safety, health and benefits are at the top of the management’s consideration (Huawei Technologies Ltd 1). There are risk assessments that are remunerated, safety measures and precautions are normally observed and insurance policies are offered against any harm to the employees in one way or the other (Huawei Technologies Ltd 1). The company also took the effort to restructure Huawei’s Human Resource model from function-based to employee centric 3- pillar platform enabling the staff to advance better and faster. According to the company’s website the company provides employee benefits that offer a safety umbrella to all employees globally. There is mandatory insurance for all Huawei’s employees from commercial personal accident insurance, life insurance, medical insurance, illness insurance to medical rescue plans for special circumstances. Huawei is also in compliance with regulations and laws of the government. It is against forced labor, child labor and any form of employee discrimination. It has set up a workforce diversity management system that overlooks the well being of each and every employee. Employee attributes Huawei recruitment strategy searches for talent in the telecommunication area (Chelangat 35). Therefore, to be an employee in Huawei you have to display talent oriented skills that shows one’s passion and dedication in handling telecommunication gadgets (Chelangat 35). This can also be attributed to one’s experience in the past and career qualifications that show the talent in that person or rather employee to be specific. Huawei is known to scoop talent using media advertisements, getting referrals from other companies and individuals, and then, they organize interviews to see the talent in the selected individuals (Chelangat 35). Talent spotting is the major attribute used in Huawei and it is closely checked against motivation of personalities to pursue unselfish goals. Curiosity in an employee, and which, can lead to obtaining new information, experience and or feedback (Araoz 1). Another attribute associated with talent is determination of an individual to pursue difficult targets that already seem untouchable and finally, engagement of an individual where one is able to gather information and influence other individuals in a team through positive communication and negotiations (Araoz 1). Analysis of the profit and loss statement The Revenue accumulated in 2013 was higher than that accumulated in 2012 rising to CNY million 239,025 from CNY million 220.198 (Huawei Technologies Co. Ltd. 1). This marks an increase in the number of sales showing that the products and services sold were higher in 2013 compared to 2012. This shows an improvement in the operation of the company and the growth of Huawei as a business company. This leads to a remarkable increase in gross profit from CNY million 87,686 to 98,020 in the year 2013 (Huawei Technologies Co. Ltd. 1). There is also a noticeable increase in cost of sales that can be termed as normal due to the increased number of sales in 2013. Looking at the research and development expenses, they were higher in 2013 when compared to 2012 marking an increase in research and development in the year 2013 meaning the company focused on research and development in order to be satisfactory to the client’s requirements. In contrast with research and development, the operating expenses in 2013 were lower from CNY 1386 to 723 million showing that the company had worked on reducing the cost of operations meaning it did better in production planning and lean management which are effective methods of cost reduction. This sums up the notable increase in profits of 2013 that had risen to 21,003 from CNY million 15,624 (Huawei Technologies Co. Ltd. 1). Analysis of the balance sheet There is a notable increase in Non-current assets in 2013 at CNY million 44,688 from CNY million 40,538. This represents a growth in the Huawei’s businesses (Huawei Technologies Co. Ltd. 1). They add up to the growth of total assets to CNY million 231, 532 from CNY million 210,006, in 2012. This is a remarkable increase in the value of Huawei in terms of assets in a year’s time. This is in uniform with the increase in total equity of the company from CNY million 75,024 in 2012 to 86266 CNY million in 2013 (Huawei Technologies Co. Ltd. 1). Total liabilities also increased from 134, 982 CNY million to 145, 266 CNY million in 2013. However, this is not in a higher rate than for the assets column. This creates the balance for Huawei giving it room for expansion rather than being dissolved (Huawei Technologies Co. Ltd. 1). Financial ratios The liquidity ratios are as follow; the current ratio is at 23.31 which is a positive value showing that the company is solvent and in a position to maintain a liquidity position through covering its short term liabilities using its current assets within an year, thus, it’s achieved by dividing the current assets by current liabilities. The quick ratio is at 21.20 representing the same; that Huawei company is able to cover its short term debt with quick assets that are easily transferrable into cash readily. They are calculated by dividing quick assets by the current liabilities. In this case, Huawei is in a good position to cover its short term debt using quick assets at the rate of 21.20. Finally, the cash ratio is at 14.42. These ratios represent the solvent state of Huawei Company by measuring its liquidity by dividing all cash equivalents plus cash by the current liabilities showing that Huawei can cover its current liabilities with its cash equivalent assets and cash (Dow Jones & Company, 1). Works cited Araoz Fernandez C. 21st Century Talent Spotting. Harvard Business Review. 2014.Html [accessed on 29th Dec 2014) BNamericas. Huawei Technologies Co. ltd. Hughes Networks Systems. 1996-2014. [Accessed on 29th Dec 2014] Chelangat Janet. strategies used by Huawei technologies (k) co,ltd in recruiting employees. University of Nairobi. 2011.Print Dow Jones & Company, Inc. The Wall Street Journal. The Huawei Technology Co. Ltd. A Hoskisson Robert, Ireland Duane R. Hitt Michael. Strategic Management: Concepts and Cases: Competitiveness and Globalization. USA: Cengage learning. 2012. print Huawei Technologies Co., Ltd. Consolidated Financial Statements Summary and Notes. Huawei. 1998-. 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