Opportunities and Threats Associated with Globalisation - Huawei Technologies Company - Case Study Example

Opportunities and Threats associated with Globalisation Introduction The purpose of this research work is to examine the issues relating to the opportunities and threats experienced by multinational corporations (MNCs), due to globalisation with special focus on the case study of Huawei Technologies Company Limited (Huawei). The scope of this essay is to evaluate the effects of globalisation upon the growth of MNCs in emerging markets. The limitation of this study is that it pertains to a technology oriented organisation, namely, Huawei, which is limited to mobile phones and computer devices. There are several other organisations in the emerging markets, such as hospitality or service industries which are unrelated to electronic manufacturing. The world is undergoing unprecedented transformation due to the influence of international business. International economic interconnectedness has been promoted tremendously since the 1980s, due to the emerging markets. These include some of the fastest growing economies, such as those of India, Russia, Brazil, China and Russia. These economies boast of considerable market liberalisation, privatisation and industrialisation (Cavusgil, Rammal & Freeman 2011, p. 19). Furthermore, these nations have demonstrated a gradual transition from the stagnation that is the hallmark of developing nations. Effects of Globalisation Internalisation, in the context of multinational corporations (MNCs) demonstrated positive, as well as negative influences, such as perfecting markets and concentrating power. It has been conceded that the development of MNCs has been driven by innovation and not market power. The transition to the dynamic innovatory capacity of internal markets in conjunction with the perception that foreign direct investment constituted the internal substitute of a firm for the external dissemination of knowledge, served to change understanding regarding MNCs and the appropriate policy initiatives (Buckley, 2016, p. 75). In the year 1988, Huawei had been founded by an erstwhile officer of the People’s Liberation Army. He had invested US$4,000 in the venture, and over the years this company developed into an innovator from a mere replicator. Thereafter, it emerged as a global leader of the telecom sector. As of the year 2008, Huawei had applied for 1,737 patents, which was more than what had been filed by any other company in the world[Sch153]. Huawei Technologies Company Limited Huawei constitutes one of the largest suppliers of telecommunications equipment in the world. Regarding its sale of smartphones, an increase of 33% had been observed. The sale of smartphones by Huawei in the emerging markets of the world, including China, rendered it the fourth largest company of the world, about market share and global shipments, after Samsung, Apple and Lenovo-Motorola[Kuo15]. Despite the commonly held Occidental opinion that China’s culture of innovation is limited by political and cultural forces, the fact is that this country is the repository of redoubtable entrepreneurs. Several among the entrepreneurs of China possess innovation and leadership goals, and aspirations that are in consonance with the entrepreneurs of Europe and North America. Huawei, had made it clear, right from the very beginning that it aimed to transform itself into an international leader in the field of telecommunications. Thus, despite the high value accorded to ambition and success, Chinese employees concentrate less upon receiving personal credit, in comparison to their Western counterparts. Furthermore, they do not display reluctance to admit failure[Hen17]. As such, it had employed talented engineering graduates from the best of the universities of China. These employees had been provided with generous bonuses and salaries that were among the best in the industry. In addition, Huawei, had consistently invested a minimum of 10% of its sales in research and development projects to pose a meaningful challenge to its Western competitors. Thus, despite the high value accorded to ambition and success, Chinese employees concentrate less upon receiving personal credit, in comparison to their Western counterparts. Furthermore, they do not display reluctance to admit failure[Hen17]. By working with local operators in China, Huawei gained the expertise to undertake successful collaborations with governments and other partners for providing customised equipment for telecommunication purposes. Thereafter, Huawei developed this capacity to emerge as a significant partner of the largest telecom users in the major cities of China[Hen17]. In 2015, the number of employees of Huawei in Europe was around 3,000, and half of these individuals had been recruited locally. As such, Huawei Europe has been providing a comprehensive product portfolio and its advances in the handset sector has posed a serious and seemingly insurmountable challenge to Apple and Google’s Android operating systems. The Ascend has been projected by Huawei as the fastest and slenderest mobile device on the market[Sch153]. Internationalisation Strategy In 2009, Huawei Technologies emerged as the second largest manufacturer of equipment, employed for telecommunications, in the world. With regard to sales, it achieved the topmost position in the world among telecommunications companies. This transpired in the year 2012[Gro15]. With its base in Shenzhen in China, Huawei produces routers, switches and other telecommunications equipment. Its major competitors are the US company Cisco and Ericsson of Switzerland. From its humble beginnings as a manufacturer of low end equipment, Huawei has developed into an international brand that produces high quality telecommunications equipment. Around 68% of its total sales revenue is from other countries[Sto152]. The internationalisation strategy model of Huawei is characterised by the following: first, an international supply chain, which enabled this company to achieve internationalisation. This supply chain has internationally recognised products, research and development of small civilian switch, research and development of large scale commercial operations switch, and the procurement of material at Chinese oriented markets. Second, Huawei has adopted an internationalisation management system. Third, with a decade of experience in international market development, Huawei has established a redoubtable international market system. Fourth, this company has always accorded considerable importance to research and development[Bai161]. It has stressed upon independent research and development by adopting an open strategy for enabling it to keep abreast of the contemporary and relevant technology. Opportunities Huawei Technologies Company Limited has a work-life balance strategy in place, which ensures substantial productivity, and better time management skills for completing tasks. In addition, it facilitates the greater availability of flexibility and time in balancing family life and work. Nevertheless, contemporary employees are in favour of a comfortable and happy life, and not just success at work. Therefore, it is crucial for Huawei to implement a strategy of work-life balance that is akin to some of the successful employee assistance programmes of other nations[Zhu14]. Moreover, Huawei has several advantages. For instance, it has been producing low-end equipment in high volumes. Moreover, it has replaced Lucent Technologies Inc. and Nortel, with respect to revenue for optical networking devices at the international level. To its credit, Huawei is second only to the French multinational Alcatel SA. Recently, Huawei had been preferred above Siemens AG of Germany and France’s Alcatel for undertaking the upgradation of Etisalat’s network, the United Arab Emirates carrier[Rho04]. With respect to Europe, Huawei is an active participant in more than 50% of the 4G telecommunications networks. In addition, it has attained the position of a strong competitor in the mobile phones sector. This company has a revenue of US$32 billion and 140,000 employees, and its customers are spread across 140 nations. Huawei invests heavily in research and development, and it has forayed into new markets successfully by employing the stratagem of low pricing. For instance, in Europe, its products cost 30% less than the market average[Sto152]. Huawei had adopted the strategy of forging ahead on its own, with emphasis upon self-development, instead of forming partnerships with foreign companies. As of 2005, 48% of its employees had been deployed in research and development. Huawei focused upon 3G and GSM technologies and made substantial investments in them. This company had employed highly qualified personnel, with 60% having a Masters or Doctoral degree. Huawei’s massive investment in research and development reaped rich dividends for this company and proved to be central to is growth and innovativeness[Sto152]. The advent of digital technology into the region of telecommunications has enabled the transition to international standards from highly localised equipment. The suppliers of telecommunications equipment migrated to a complete service model. With regard to North America, the major competitors of this sector were Alcatel, Lucent and Nortel. In the context of China, Huawei garnered the maximum market share by the year 2005[Sto152]. Threats As of the year 2015, Huawei had a revenue of US$60.1 billion, and it has strengthened its values via employee ownership and bonus-driven management framework. In the initial stages, this company’s strategy had been to focus upon rural townships that were at a great distance from the areas of power and multinational interest. Huawei had noticed that local operators, hotels and factories were in urgent need of customised networking apparatus and central office switches that could function under the trying local conditions, such as rodent ravages upon cables and inferior transmission[Hen17]. During its early years, Huawei’s attempts to obtain loans from banks or the government proved to be futile. As a result, its earliest research and development initiatives had to concentrate upon providing customised and cost-effective solutions to its local customers. Gradually things changed and Huawei found it possible to make the required investments to deal with its needs. This enabled Huawei to surmount impediments to entry that had exerted a malevolent influence upon the private companies of China[Hen17]. In fact, the local bureaucracy was convinced to the extent that it regarded Huawei as a critical entity for promoting public-private partnership. Despite its monumental successes, Huawei has been beset with several difficulties. For instance, it has faced several intellectual property (IP) issues. In 2011, the US Government investigated Huawei for breaching IP rights laws[Cue16]. Moreover, employees who lack self-control could find it difficult to adjust to the flexible work schedules. Therefore, there could be some impact upon the performance of the organisation. Furthermore, Huawei believes in being highly competitive, tends to overlook the wishes of the employees and apparently generates a negative milieu[Zhu14]. It cannot be denied that Huawei has achieved tremendous competitiveness in the entire market. All the same, the high suicide rate among its personnel, demands serious attention. It is essential to address the potential human resources (HR) issues. Theoretically, HR internal gaps are affective and have behavioural gaps; and negative emotions, low satisfaction, and inflexible conduct are instances of this. Consequently, it is crucial to execute work-life balance strategy in a timely manner[Zhu14]. Success of Huawei International Managers in Foreign Settings Self-Orientation It consists of the expatriate’s self-esteem, self-confidence and mental wellbeing. These promote success in foreign postings (Aswathappa, 2005, p. 214). An international manger from Huawei should adhere to the above qualities, so that success can be achieved in the foreign countries. Others-Orientation It denotes the extent of the expatriate’s concern regarding host country colleagues and interaction with them. This consists of relationship development and willingness to communicate, and it enhances cooperation from host nation individuals (Aswathappa, 2005, p. 214). Managers from Huawei should develop qualities of communication and relationship development with the host nationals. Perceptual Ability This connotes expatriate capacity to empathise with host country nationals, and is central to managing them (Aswathappa, 2005, p. 214). International managers of Huawei should develop skills to empathise with the host country people. Cultural Toughness This denotes expatriate ability to acclimatise to a specific posting. The necessary adjustments involved, depend upon the country of posting. For instance, Indians regard US and UK postings as comfortable foreign postings (Aswathappa, 2005, p. 214). Capacity to adapt to a specific host country culture enables Huawei managers to achieve success in their projects. Conclusion This work critically analyses the threats and opportunities, experienced by Huawei, an MNC from an emerging market, namely China, due to globalisation. Initially, Huawei had adhered to the business model of dumping cheap and unbranded mobile phones across the world. With the passage of time, this company discarded this ill-advised strategy and emerged as a globally recognised brand that posed a serious challenge to Apple and Samsung. The growth of Huawei has been phenomenal, and it has acquired the status of the third largest international smartphone brand, with a major market share. Nevertheless, due to behavioural problems, Huawei’s personnel envisaged serious problems, and this had led to several suicide attempts. To contend with this problem, Huawei should properly implement work-life strategy that is akin to some of the successful employee programmes of other nations. In this regard, it has to take cognisance of its human rights issues. Furthermore, it should not engage in the infringement of the IP rights of other companies. Moreover, Huawei has been apprehensive of the keen competition in the international market. The latter has made Huawei fearful of transforming its organisational culture and remaining committed to a company policy that has the likelihood of impeding its development. As such, Huawei adopted some of the critical features of China’s Cultural Revolution[Hen17], including constant struggle and self-criticism, and diverted them towards competition. Furthermore, it has adopted contemporary social values to promote innovation. Self-orientation, others orientation, perceptual ability, and cultural toughness are the traits that ensure success to Huawei’s international managers in other nations. In addition, international managers can achieve success in their global operations by examining and suitably adopting the innovative strategies of Huawei, which has emerged as a successful global organisation. Reference List Aswathappa, A 2005, International Business, 2nd edn, Tata McGraw-Hill Education, New Delhi, India. Sch153: , (Schaffmeister, 2015, p. 54), Kuo15: , (Kuo, 2015), Hen17: , (Hensmans, 2017, p. 27), Hen17: , (Hensmans, 2017, p. 28), Gro15: , (Grosse, 2015, p. 152), Sto152: , (Storey & Nyathi, 2015, p. 85), Bai161: , (Bai, 2016, p. 1107), Zhu14: , (Zhu & Kangyin, 2014, p. 286), Rho04: , (Rhoads & Hutzler, 2004, p. A 1), Cue16: , (Cuervo-Cazurra, et al., 2016, p. 111), Read More