Examining Strategic Decisions of Asia-Pacific Companies

This report examines five Asia-Pacific companies namely, Toyota, Hitachi, Samsung, TECO and Huawei with a view to understanding the strategic decisions they make, their core capabilities, how they are structured and the role their respective governments play to keep them afloat in the cutthroat competitive environment.

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Executive summary
In the present operating environment, firms are forced to find solutions which can afford them a
sustainable competitive advantage. With many East-Asia countries registering economic growth
of between 5% and 8%, many western multinationals where economies have stagnated are
making a beehive to the Asia-Pacific for business. This report examines five Asia-Pacific
companies namely, Toyota, Hitachi, Samsung, TECO and Huawei with a view to understanding
the strategic decisions they make, their core capabilities, how they are structured and the role
their respective governments play to keep them afloat in the cutthroat competitive environment.

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TABLE OF CONTENTS
Executive summary.........................................................................................................................2
1.0 Introduction................................................................................................................................4
2.0 Toyota........................................................................................................................................4
2.1 Toyota Strategy......................................................................................................................5
2.1 Corporate Organization.........................................................................................................6
2.2 Core capabilities....................................................................................................................6
2.4 The Role of the Government.................................................................................................7
3.0 Hitachi Corporation...................................................................................................................7
3.1 Hitachi Business Strategy......................................................................................................8
3.2 Corporate organization..........................................................................................................8
3.3 Core capabilities....................................................................................................................8
3.4 The Role of the Government.................................................................................................9
4.0 Samsung Electronics..................................................................................................................9
4.1 Samsung strategy.................................................................................................................10
4.2 Corporate Organization.......................................................................................................10
4.3 Core capabilities..................................................................................................................11
4.4 The Role of the Government...............................................................................................11
5.0 TECO Corporation...................................................................................................................11
5.1 Company Strategy...............................................................................................................11

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5.2 Corporate Organization.......................................................................................................12
5.3 Core capabilities..................................................................................................................12
5.4 The role of the Government.................................................................................................12
6.0 Huawei Corporation.................................................................................................................13
6.1 Company strategy................................................................................................................13
6.2 Corporate organization........................................................................................................13
6.3 Core capabilities..................................................................................................................14
6.4 The role of government.......................................................................................................14
Conclusion.....................................................................................................................................15
References......................................................................................................................................16

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Asia Pacific Business
1.0 Introduction
The business operating environment in Asia-pacific and many other parts of the world
experiencing economic growth has become very competitive. Both home companies and
multinationals are jostling for market share and only the most innovative and adaptive companies
stay afloat. In this cutthroat competitive business environment, Samsung, Toyota, Hitachi, TECO
and Huawei business empires have emerged to be leaders in the region and abroad (Yan 2012).
Where many other businesses with just about the same business ideas succumbed, these
multinationals have not only managed to be market leaders in the Asia-Pacific region but are also
piling pressure on other global multinationals that have enjoyed unbridled growth for decades
without much competition (Song & Lee 2014).
To comprehend the reasons behind these companies success, this report explores the
strategic decisions the corporate structure, the core competencies and the role of the respective
governments have played in enabling the companies to succeed where others failed (Peng 2017).
2.0 Toyota
With total revenue of over 260 billion USD, Toyota is among the most successful vehicle
manufacturing company in the world. The company was established in 1937 and for a long time
only made vehicles and machinery for local consumption in Japan. After World War II the
company was mired in quality control mishaps that made their vehicles unpopular compared to
competitors such as Ford Motor Company (Weng, Wei & Fujimura 2012).

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However, the company addressed the quality issues and established their first assembly
outlet outside Japan in 1967 to respond to the growing demand for their vehicles in Australia.
Since then, Toyota has grown tremendously and has retail and assembly outlets in just about
every country globally (Rother 2010).
2.1 Toyota Strategy
Arguably, Toyota is still the World largest vehicle manufacturer. Latest news suggests
that Volkswagen is edging out Toyota to take the crown. In 2017 alone, Toyota sold over 10
million vehicles with the SUV brand of vehicles showing strong growth potential. To compete
aggressively Toyota employs the following strategies
Cost leadership strategy. In this strategy, Toyota uses advanced technological prowess to
mass produce their vehicles. The superior technology means that Toyota uses fewer resources
per unit produced and hence can be able to compete favorably with other companies on pricing
(Porter 2008).
On diversification strategy, Toyota has produces many types of vehicles to appeal to
different customers (Manden 2012). The company produces family cars, light trucks, vans, and
high-end luxury vehicles such as Lexus all targeting different customers. This is as opposed to
other manufacturers such as Audi or BMW who only focus on the luxury market segment (Heller
2011).
Using growth strategy, Toyota has globalized their operations and operates on many
countries which enable them to enjoy economies of scale and avoid market shocks associated
with operating on a local scale (Sanchez & Heene 2010).

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By employing strategic alliances, the company has shares in many other vehicle
manufacturing companies such as Isuzu, Suzuki, Nissan, and Yamaha. Toyota uses its networks
with these companies to expand its market penetration (Szczesny 2010).
2.1 Corporate Organization
Before the year 2013, Toyota only embraced the Hierarchical organizational structure.
With this arrangement, all the major decisions regarding company growth and products rested
with the company CEO in Tokyo Japan. All business units had to inform the headquarters before
committing to business decisions. This made decision making slow and response to market
trends very sluggish (Bekiris 2013).
However, the company has now embarked on a matrix organization structure. This is
based on geographical location, products, and operations. The company still maintains the
hierarchy but more decisions are made by heads of business units. The company has 8 regional
divisions and four product divisions which include the Lexus division, Toyota a division, Toyota
b, and the Engine supply unit (Rother 2010).
2.2 Core capabilities
According to the resource-based view theory, core competencies of an organization are
scarce, difficult to replicate and difficult to transfer. With this in mind, Toyota has a pool of
highly trained and specialized staff who decide the strategy of the firm. Toyota also has a very
robust research and development unit that leads to innovative solutions such as their patented
hybrid technology (Motohashi 2015).

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Toyota also boasts superior manufacturing ability with 75% global reach. The company
also spearheads the industry changing Just-in-Time (JIT) also referred to as the Toyota
Production System which ensures no wastage during production. Other core capabilities include
strong global marketing networks and numerous capital investments (Weng, Wei & Fujimura,
2012; Manden 2012).
2.4 The Role of the Government
The Japanese government strongly backs the company. In many instances, the
government extends help to the company in terms of financial assistance and tax concessions.
The government has lately been at the forefront of reducing the value of the Yen since the
expensive currency makes it hard for the vehicles to compete on pricing (Szczesny 2010).
3.0 Hitachi Corporation
Founded in 1917 and listed as a company in 1920, Hitachi corporation is a company that
has defied many existential odds since its formation to become one of the market leaders in the
manufacture of machinery, electrical components, and semiconductors across the world
(Bowonder & Miyake 2008).
3.1 Hitachi Business Strategy
To remain competitive in the face of fierce competition from other multinationals such as
IBM, Samsung and a host of other emerging Chinese companies, Hitachi has differentiated itself
by pursuing superior quality. Their products last longer and are very popular among their
customers (Porter 2008).

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Hitachi is also pursuing a growth strategy with the focus on globalization. The company
has subsidiaries and wholly controlled marketing networks across the globe. Further, Hitachi is
also aligning its products to market needs to be able to anticipate future demands. Lastly, Hitachi
has diversified their products to take advantage of different markets. While many of its
competitors like IBM focus only on ICT, Hitachi manufactures home appliances, machinery and
has lately ventured in the water supply (Hitachi 2010).
3.2 Corporate organization
Currently, Hitachi has 34,900 employees. The company embraces a functional
organization structure with the head being the CEO. Line managers in charge of sales, finances,
human resources, customer care, research and development, and operations report to the CEO or
the regional division managers who in turn reports to the CEO (Lei & Slocum 2013).
3.3 Core capabilities
The company has is one of the most adaptive organizations and has been able to use its
remain competitive. Hitachi currently has a strong research and development team. It has 33
research centers in Europe, Asia, and the USA. The company is renowned for its innovation
being the major supplier of semiconductors to some of the largest corporate particularly in the
energy sector (Nobre 2012).

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3.4 The Role of the Government
The role of the government in Hitachi case cannot be gainsaid. In multiple occasions, the
government has bailed out the corporation from near collapse, first in the late 1940s and again in
the 1980s when it faced recession. The government also builds networks and opportunities in
other countries which Hitachi exploits. That is besides being a direct customer of their products
(Hitachi 2010).
4.0 Samsung Electronics
Founded in the late 1930s as a trading company in South Korea, Samsung has become a
master at adaptability and diversification. The company ventured into textile business,
construction, chemical production and later electronics. Samsung split into 4 strategic business
units in the late 1980s and of those divisions, the electronics division has been the most
successful by far. It has become the biggest corporation in South Korea and contributes
immensely to the Country's foreign exchange (Jurevicius 2018).
4.1 Samsung strategy
The company has pursued a diversification strategy since its inception. Besides
electronics, Samsung also does construction, medical equipment and develops aviation
technology (Reuters 2016).
To maintain a sustainable competitive advantage, Samsung also pursues a growth
strategy. Currently, the company is the largest smartphone maker having subdued Nokia in 2012.

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In the smartphone market, many original equipment manufacturers (OEMs) which Samsung is
part and parcel produce near-marching gadgets with very similar capabilities (Jurevicius 2018).
Samsung has embraced a product differentiation strategy by equipping their smartphones
with higher quality displays, an intuitive interface called TouchWiz and an application store
which other OEMs cannot match Samsung has also followed a merger and acquisition strategy.
The company merged with Sony to manufacture display screens and later acquired Sony's share
when they parted ways (Peng 2017).
4.2 Corporate Organization
Samsung prescribes to the divisional organizational structure. The company has over
320,000 employees spread across the globe. It also has over 210 subsidiaries across the world.
All the employees work under 3 main divisions namely, the Information, communication and a
mobile division which manages the mobile phones (Bekiris 2013).
The second division is called consumer electronics and is in charge of consumer
electronic devices such as televisions, fridges, cookers, air conditioners among other home
appliances. Lastly, the company has a device solution compartment which deals with all
challenges involved after the sale of the smartphone. The division tackles challenges like phone
recalls and quality issues (Song & Lee 2014).
4.3 Core capabilities
Samsung core capabilities include highly skilled staff who are behind numerous new
products. The company also boasts superior technology compared to other OEMs. They, for
instance, introduce a foldable smartphone in the near future. In addition, Samsung also has a

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vibrant research and development division. Lastly, the company is very innovative and has
showcased its market-changing solutions on many occasions (Jurevicius 2018).
4.4 The Role of the Government
The South Korean government is very supportive of Samsung and has created an
enabling environment where the company can thrive both at home and away. The government
has provided the company with financial assistance and offered tax breaks to encourage growth
(Song & Lee 2014).
5.0 TECO Corporation
Established in 1956 the Taiwanese company established itself by producing high-quality
motors that fit a wide range of uses. The company diversified and began light machinery
production and later ventured into the home appliances market (Motohashi 2015).
5.1 Company Strategy
The company commands over 7% of market share in the electric motor section and is
gaining momentum in the home appliances market. The growth strategy is evident where the
company has ventured to the Middle-East and the US markets. The company also pursues an
acquisition strategy having bought Westinghouse Company in the USA. TECO has also merged
with Tai-an Electric Company to expand their operations. To gain a foothold in the USA the
company has established a strategic alliance with CTC. Lastly, the company is pursuing a
product diversification strategy to widen its market (Yan 2012).

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5.2 Corporate Organization
TECO is still a relatively small company when compared to behemoths like Samsung or
Sony. For this reason, the company has a functional organization structure where the people are
grouped according to the functions they deliver to the company. The company has a President
who is the overall decision maker. Some roles such as finance are merged to be headed by the
vice president. The company has a board to who the president answerable. Other functions
include the sales, human resource, customer care department and the research and development
department (Bekiris 2013).
5.3 Core capabilities
The company is very adaptive to the changing business environment. TECO also boasts
very innovative staff as evidenced by the products they release to the market. The company has
an able research and development section and recently announced a breakthrough in the
production of high capacity turbines.
5.4 The role of the Government
The government has created an enabling business environment where entrepreneurial
ventures such as TECO can blossom and thrive. The government is also encouraging production
by offering tax breaks. Finally, the government protects the company from competing products
in the market by imposing tariffs to competition (Lei & Slocum 2013).

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6.0 Huawei Corporation
The company was established in 1957 as a trading entity mainly dealing with electrical
sales. However, the company ventured into the manufacture of communication equipment and
installation company. The company decided to enter the lucrative smartphone market and has
become one of the leading manufacturers with a presence in 140 countries (Yan 2012).
6.1 Company strategy
The company has employed a number of strategies to be competitive in the market. One
strategy is cost leadership. In this strategy, the company manufactures phones at low prices and
competes on the pricing front by supplying cheap but feature rich devices (Sanchez & Heene
2010).
The company also employs expansion strategies that have enabled it to venture in over
140 countries. Huawei embraces specialization strategy where it only deals with
telecommunication equipment. Moreover, the company follows an advertising strategy to inform
potential buyers of the latest devices. Finally, the company follows a rapid production strategy
where it can mass produce many product models to enjoy economies of scale (Motohashi 2015).
6.2 Corporate organization
With over 140,000 employees Huawei certainly has a huge workforce. The company also
has 166 executives headed by a CEO. The company has a divisional organization structure
comprising of functional divisions, geographic divisions and the research division. Operating in
Europe, Asia, and the Middle-East, Huawei has a very expansive research division and 45% of

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its employees work in the research and development section. All divisional heads answer to
executives who in turn answer to the CEO (Bekiris 2013).
6.3 Core capabilities
The company has an elaborate research and development which is keen on developing
new solutions to the customers. The company also has an increasing number of patents which
can be explored to generate revenue in future through licensing. In addition, the company has
innovative staff who are at the forefront in delivering smart solutions to their customers.
6.4 The role of government
The Chinese government has enforced crippling policies such as the great firewall that is
unfriendly to Western Companies. Huawei gets to benefit from reduced competition. In addition,
the government is currently engaged in trade wars with the USA which has resulted in high
tariffs for imports. This means that Huawei has an advantage on the price front as customers
choose affordable devices (Yan 2012).

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Conclusion
This paper inquires the strategies that five Asia-Pacific Businesses namely, Toyota, Hitachi,
Samsung, TECO, and Huawei make to sustain a competitive advantage. The paper has explored
the structural composition of the companies as well as their core capabilities. The paper
concludes by examining the role that governments play and how they affect these multinationals.

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