Analysis of the Issue of Haier U.S Expansion in the American Market

Running head: HAIER U.S EXPANSION
HAIER U.S EXPANSION
Name of the student
Name of the university
Author note

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Executive summary
The aim of the report is to analyse the issue of Haier U. S expansion the American market. This
report has been divided into eight distinct parts. The initial part of the report deals with the core
and distinctive competencies of the company. This analysis has been completed through the use
of Porters five forces model and the SWOT model. The last part of the report deals with the
analysis of the scope of the market in the KSA. This report is presentation of the analysis of the
company within the context of America and the global market.

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Table of Contents
Introduction......................................................................................................................................4
Summary of the case........................................................................................................................4
Strengths..........................................................................................................................................9
Large market share......................................................................................................................9
Trusted brand...............................................................................................................................9
Weakness.........................................................................................................................................9
Dependence on china...................................................................................................................9
Dependent on government subsidies...........................................................................................9
Opportunities.................................................................................................................................10
Joint venture...............................................................................................................................10
Wide range of products..............................................................................................................10
Threats...........................................................................................................................................10
Large number of competitors:...................................................................................................10
Rising wages:.............................................................................................................................10
Conclusion.....................................................................................................................................10
References and bibliography.........................................................................................................12

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The Haier Group: U.S. Expansion
Introduction
The aim of the report is to analyse the given case study and answer the following
question with an aim to understand the issue from a holistic perspective. This paper is divided
into right parts and each of them is dealing with issues related to the case study. This is the
analysis for the global expansion of the company, Haier.
Summary of the case
1. The Chinese home appliances company, the Haier group is the manufacturer of the
consumer electronics ad home appliance. This company being founded in 1984 shares the aim of
spreading beyond the boundary of China. When it started it was a company that was owned by
the government and mostly dealt with household products. However the company aims to
expand d beyond china and it focuses on major diversification of products to have larger target
market. Selecting their core competencies, the company has decided to go for
internationalisation. This internationalisation process required the company to utilise their core
competencies to target the small market niches that are ignored by the large competitors of the
market. However in doing so, the company faced with certain challenges and some of them are
associated with placing itself in the market and building their brand recognition in U.S. It also
has goals related to achieving quality services and creating a solid base for the customer that can
separate it from the rest of the competitors. Through this process, the company faces one of the

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major challenges making its mark in the market that can provide it a competitive advantage than
the rest of the companies in the U.S home appliances market.
2. Core competence is one of the key factors of an organizational set-up. These are the
strengths of the company that forms the foundation of company (Armstrong et al. 2015). Some
of the core competencies of the Haier Group are their specialisation in refrigeration making and
cooling (Yang 2018). However this company in its effort to expand beyond China has made use
of some of their competencies of refrigeration and cooling to other home appliances products.
Another important core competency of the company is their design (Pallas 2016). The Haier
group was distinct form the Haier America in its core competency of design; it would to design
everything from manufacturing to final sale (Dietrich et al. 2017). Hence it can be said that the
Haier group has some core competencies than the Haier America. Hence it is to be said that the
Haier America had the core competencies of making refrigerator, freezers, coolers and room air-
conditioners.
3. One of the distinctive competencies of the Haier group is their specialization in home
appliances. Their distinctive competency is their “innovation driven” programme which is
constantly driven by the urge and quest for innovation and adding new options to the old
experience of their products (Li et al, 2017). However it is important to note that the Haier
America does not have much market for the home appliances and it is mostly concentrated
around the sell of refrigerator, coolers and air conditions. This is distinctive form the point of
view of their design in manufacturing their refrigerators products. Even though it is not to rule
out that the Haier America has similar innovative approach in terms of their products and with
time it is expected to grow onto a different level.

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4. The Porter’s five forces model is designed to provide a detailed analysis of the
probable competition in the market (Fahy 2015). It deals with five important parameters for the
analysis, namely: the threat of the new entry on the market, suppler power, buyer power, threat
of substitution and the rivalry in the market. Considering the situation of Haier America, it could
be argued that the home appliance and consumer electronics market is one of the most
competitive markets (Kotler et al. 2015). There are large number of competitors in the U.S
market like Whirlpool, Midea, Samsung and LG who poses similar threats to the company.
Hence it is important to analyze the market threats and opportunities of the same in context of
Haier America.
 Low bargaining power of the consumers: in terms of the consumers buying power is
substantially higher because consumers have large number of choices. Since it is
determined by the availability of products in the market and the cost associated with it,
buyers in America for supplies like consumer electronics and home appliances are high
(Wang et al. 2016). However it is not to rule out the fact that customers will be
constrained by the loyalty to the brand and the quality of products they offer. Hence
Haier America enjoys larger share in the home appliances sell.
 Low bargaining power of the suppliers: in case of the bargaining power of the
suppliers, Haier will be having an upper hand since thus manufacturers have over 10%
global market share and it has the capacity to drive down the prices of the suppliers. It is
to be argued that due to the presence of the global reputation of the brand, it has an
advantage in the America’s market.
 Low threats of new entrants: according to the author, there are high chances of threat
for industries which have enough capital, product differentiation and access to enough

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distribution channels that a particular company enters the market. In case of Haier there
are lesser chances of new entrants because other companies do not have enough product
differentiation and wide range of variety for home appliances and consumer electronics
market like Haier.
 Rivals and competition: competitions between rivals are determined by few factors like
higher quality, lower price, exit barriers, firm concentration ratios. For Haier it is
important to note that the company enjoys higher trust of the customers since home
appliances and electronics products do not have much differentiation in terms of their
quality and price and for consumers, this has become a regular purchase from the
supermarket. Hence rivalries between the competitors for the same range of products are
lower in case of Haier.
 Medium threats of substitution: This refers to the process of complete substitution of
the product in the market or the availability of better products belonging to the similar
category at a lower price. In case of Haier it is important to note that subsituition for
products like refrigerators, washing machines or air conditions are less in number in
comparison to the other products. Since the company already enjoys good brand image
and a global image, it is faced with lesser chances of threat from substitution.
5. It is important to note that the company has been successful in entering the U.S market due to
the reasons of their global reputation it enjoys in the market (Fill 2016). It is also to be noted
that the company has made attempt to integrate the market and made several diversification of
product categories to create a mark in the market. Haier group has become one of the global
brands in 2004. This has helped the company to create a global image for the company in the
international market and this is one of the reasons which have made the process of

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internationalization in the U.S market easier. Another reason for their successful entry into the
U.S market is basically for the reason that they have used their core competency of design to
target the market in U.S. This competency of design has helped the company create the small
market niches in U.S and this low cost advantage of the company in the new market has made it
more successful. In terms of quality, it also establishes one of the low cost and high quality
products in the market. Hence it could be summed up by saying that the company’s global
reputation has also helped it to create easy success for itself in U.S.
6. It is imperative to note that Haier can successfully become one of the prime niche marketers
and take the position of Whirlpool: however what are required is the right strategy and their
application. It is important to note there are certain set of strategies that to be followed in order to
take the position. It is also to be noted that Whirlpool has gone ahead in terms of its competitors
in the American market due to the following factors (Bashir et al. 2017). These are: the company
should start expanding in the new market through the joint venture. The company should expand
initially with a partner and it can take over the ownership in the later years. This helps to develop
trust among the customers. Secondly, the Haier should be focused on using the advanced
technology with companies who already has an established market. The company should
rethink their management style with a differentiation strategy that focuses on building strong
alliances.
7. Market segmentation is the process of classifying the target market and categorizing the
products according to the demands of the customers (Ben-Jacob 2017). It is to be noted that the
company’s primary aim is to assure quality and price. Haier has always concentrated on its core
competencies and it has primarily focused on the sell of refrigerators as the primary market

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segmentation even though it is exploring new opportunities in the automobile sector (Haier
Appliances, 2019). Haier’s rationale for choosing the American market due to the fact that
America has a large number of target consumers for the refrigerators (Geappliances.com 2019).
This would help the company to have larger consumer base by targeting the primary demands of
the consumers. It is also trying to establish their market in the country in sectors of home
appliances. However the primary market segmentation remains concentrated in the refrigerator
industry.
8. The SWOT analysis is conducted to find out the strength, weakness of the chosen
company and the weakness and the future opportunities within the given context (Phadermrod
2019). The SWOT analysis of the Haier group in the kingdom of Saudi Arabia explains that
there are certain inherent strengths and weakness of the firms.
Strengths
Large market share: It is one of the largest markets of the country with a higher
market share. It is difficult for other firms of the market to penetrate the Saudi Arabian market
with similar market share.
Trusted brand: according to the estimation it is one of the most trusted brands of the
country and it also enjoys higher customer loyally than other brands. Customers largely
depended on this brand for their source of home appliances.
Weakness

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Dependence on china: This Company to a large extent is dependent on China and most
of the volumes of sales are centered on China. Hence it is yet to develop larger share of sells in
the Saudi market.
Dependent on government subsidies: within the context of china it is dependent on
their government subsidies however in case of SA it is independent of the subsidy which is a
constraint for the company in specific situations.
Opportunities
Joint venture: In order to have higher sale in the Saudi Arabian market, the company
will have higher chances if it can start new joint ventures since there are already established
companies in the market.
Wide range of products: Haier group has large varieties if products and it is one their
advantage since it provides them a competitive edge to have larger customer base.
Threats
Large number of competitors: Haier group in KSA faces the threat of large number
of competitors. For example, there are LG electronics, Samsung electronics, Whirlpool, Godrej
who are well established in the market and enjoy larger share in the market. Hence it constitute a
strong competition in the market for the similar range of products.
Rising wages: rising wages in the KSA constitutes one of the threats for the market and
it becomes difficult to maintain uniform revenues since the market risk and volatile nature tends
to impact the company.

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Conclusion
This paper was an analysis of the factors affecting the expansion of the Haier group
beyond the home country. This made an attempt to look into the issue of the core and distinctive
competencies that the company poses; it also looked in the market threats and opportunities that
the company has. It has been observed from the above discussion that the company has a global
market share and it enjoys higher customer’s trust in terms of their products of home appliances
and consumer electronics. It has further changes of success in the American market however
what is required is the strategic management of the issues of the company to have wider
customer base.

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References and bibliography
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introduction.
Bashir, M. and Verma, R., 2017. Why business model innovation is the new competitive
advantage. IUP Journal of Business Strategy, 14(1), p.7.
Ben-Jacob, T., 2016. The Haier Group: Improvement Upon Success. European Scientific
Journal, ESJ, 12(1), p.11.
Dietrich, T., Rundle-Thiele, S. and Kubacki, K., 2017. Segmentation in Social Marketing.
Springer Singapore:.
Fahy, J. and Jobber, D., 2015. Foundations of marketing.
Fill, C. and Turnbull, S.L., 2016. Marketing communications: brands, experiences and
participation. Pearson.
Geappliances.com. (2019). Our Company | GE Appliances. [online] Available at:
https://www.geappliances.com/our-company/ [Accessed 4 Mar. 2019].
Haier Appliances. (2019). Haier Air Conditioners, Compact Kitchen Appliances & Laundry.
[online] Available at: https://www.haierappliances.com/ [Accessed 4 Mar. 2019].
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expanding. In Multinational Management (pp. 55-74). Springer, Cham.

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Phadermrod, B., Crowder, R.M. and Wills, G.B., 2019. Importance-performance analysis based
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Wang, J., Cheng, L., Jia, G., Zhang, R. and Yao, J., 2016. Haier Group—Interactive Design and
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