Competitive Strategy and Innovation

This report discusses the main features of Haier's internationalization strategy since the early 1990s and how it differs from the pattern of international development typical of Western enterprises. It also evaluates the success of Haier's internationalization strategy and its relationship with innovation.

Competitive Strategy And
Innovation

Table of Contents
INTRODUCTION...........................................................................................................................1
CASE A...........................................................................................................................................1
1. Main features of Haier's internationalization strategy since early 1990s and how does it
differ from the pattern of international development typical of Western enterprises?...............1
2. How successful has Haier's internationalization strategy been and why?..............................3
............................................................................................................................................................

INTRODUCTION
A competitive strategy defined as a long term plan of action here an organisation devises
for accomplishing all the competitive advantages over its competitors after analysing the strength
as well as weakness of the latter and comparing them to its own. These strategy related with the
innovation because for launch new products & services require to apply new competitive
strategy to get success. Innovation is a procedure where consisting of different activities to
disclose new ways to do things. Through this procedure create bigger opportunities and are
critical for the survival, economic growth and success of an organisation. This report based on
the case A of Haier group is a multinational home appliances and consumer electronics
organisation. The company situated in Qingdao, china and design & produces products like
refrigerator, microwave ovens and many others. In this report consist of main features of the
internalization strategy of 1990 and changes in western enterprises. Along with analysis success
of strategy and principal features of Haier management system.
CASE A
1. Main features of Haier's internationalization strategy since early 1990s and how does it differ
from the pattern of international development typical of Western enterprises?
Contemporary strategy evaluation select by manager with the concepts, framework and
techniques required to make better strategic decisions (Bouncken And et.al ., 2019. ). These
strategies endeavours to be both rigours and relevant. Internationalization strategy is defined as
distributed subsidiaries act independently and conduct as if they were belonging from local
organisation with lesser connection from the parent organisation. These strategy leads as high
level of selection to the local business environment. There are defined different features of
internationalisation strategy since the early 1990s. During the 1990s, Haier taken 16 other
Chinese companies with the outcomes that it became a supplier not only a wide network of
domestic appliances but also televisions, telecom equipments and other consumer electronic
products. Entered a number of overseas market: From the starting of 1992 to 1997 Haier set up a
number of joint ventures mainly in Asian market to analysis existing business systems. Directly export: The company take decision to manufacturer in China and export to other
countries to save re-establishing cost and slowly cover all over the market effectively.

 Divided product development strategy: As per the development market has been divided
into different segments but company apply demographic age segments where categorised
by age such as 18-25, 25-30, 28-40 and 40-55 to target various customer based as per the
preferences and expending. Acquiring small and relevant field companies: Haier started its enlargement to other
nations by slowly capturing small scale enterprises who were already doing well in the
particular market area (Chen and Liu, 2019). Repositioned itself from low price brand to middle range in market: Due to coming
different changes company change their pricing policies that based on low to middle class
people to enhance the profitability of the business.
 Set up subsidiaries in various industries: The company open new subsidiaries into
different enterprises after collect information and it is profitable for the business.
The company has been following different strategy at different stages which is started
from 1984 to 2015 and as per the changes apply changes in products and related strategy. In the
year of 1984 Haier follow brand building strategy where presence within the Chinese market by
quality and customer services. In 1991, apply diversification strategy in which company adopt
other Chinese industries to increase product network. After that apply internationalization
strategy in 1998 to enter 19 other national market and sustain as the world's largest domestic
appliance company in regards of units of results. Due to coming changes in modern enterprises
company apply global brand strategy in 2005 where transformation from a product driven to a
consumer driven as per the demand mode. Globalization utilise global resources to develop
organisation in regard of localized mainstream brands. After that in 2012 apply the networking
strategy where networked enterprise strategy personify, a border free enterprise, manager free
management and a scale free supply chain (Cornett, Erhemjamts and Tehranian, 2019). These
strategies are changing as per the international development of Western enterprises. All the
features are different from international development because when organization enhance its
operations into other countries so apply different types of strategies.
As the Western enterprises utilise the economy of scale to allow themselves for apply
changes to make large volume of standardized items for selling in the global market such as in
the case of Merloni and Indesit of Italy. Haier has been preparing different plans of bringing out
joint ventures with existing local firms so tat they can make and sell products together for case in

its operational in the middle east and other equipments Asian continent. On the other side, it
appear when compare the strategy of internationalization for Haier and the Western enterprises is
the way it produce the safely procedure of branding itself in a foreign land as opposed them.
Such as, when company start their operations in United States so supplied compact coolers to
welbilt appliances limited who has also been responding as an importer firm and sell it for using
the particular brand in case of importer. Additionally, it unleashed its brand and enhanced the
particular product lines to sale out of wine coolers and so forth.
2. How successful has Haier's internationalization strategy been and why?
The success of internalization strategy of the Haier group because of the these strategies
in the Haier group has had a big success. The company had been established as an industrial park
overseas some in the USA and the middle East. The connection has over fifty thousand sales
agents internationally and makes export to one hundred and sixty and above states of America
are now concentrating their efforts on understanding this strategy (Danso and et.al ., 2019). In
context of Haier when the domestic electronic appliance market become more competitive and
less profitable in nature as foreign brands flooding into china's marketplace. In respective
situation it is very much important and understandable for Chinese companies to think globally.
By using the Dawar and Frost's survival strategy that helps to position themselves in the
international marketplace as it offers the profound theoretical approach to analyse or evaluate
the Haier's internalization while exporting the products and services to remain competitive in
marketplace. By the beginning of the 21st century the domestic appliance industry dominated by
the large no. of multinational firms whose operations spanned in most continents of the whole
world such as Electro lux, Whirlpool, LG and Samsung. The major strategy of respective
organisation before the early 1990s is Brand building strategy that helps to build presence within
the Chinese market through the quality and customer service. For an organisation it is very much
important to expand their market in other countries to remain competitive in the marketplace. In
context of Haier's in 1996 and 1997 they opened their production facilities in the market of
Indonesia and Philippines respectively and they failed to attempt to enter into market of
Thailand's domestic market due to the presence of local companies. In the year 1998 they adopt
the internalization strategy as they enter into the 19 other national markets to become the world's
biggest domestic appliance company in the terms of units of output (Giménez, Madrid-Guijarro
and Duréndez, 2019). The major significance of respective strategy of internalization when the

Zhang Ruimin appointed as an General manager of the Quigdao refrigerator factory in the year
1984 which is a cooperative enterprise. The major concern in front of respective organisation is
that to improve the design and process technology. The major strategy in that situation is change
in organisational culture and quality standard practices. By following the order of Zhand they
destroy the defective refrigerators from the production line and smashed its pieces. The efforts of
company for quality management assisted by the ISO9001 authentication so that they can
maintain the quality of products in to the international marketplace. Achievement of the
international quality standards a total reformation and up gradation in process (Gomes and
Romão, 2019). While adopting the internalization strategy they majorly focus on improving the
customer service by building a strong after sale service network were helped in 1990 by
establishing computerized service centre to keep track on the consumers self interest. By using
respective strategy in the organisation company can be able to improve their quality by strong
fuelled demand in between the 1984 and 1989 and revenue climbed from the 3.5 million to 410
billion yuan. So internalization strategy not only proved beneficial in improving the quality of
products but also improve the culture of organisation that is one of most important attribute for
organisation to improve the profitability within the organisation.
The another major strategy in front of organisation which is Global brand strategy that
helps to transform from the product driven to the user driven demand mode. By using respective
strategy organisation can be utilized the global resources by creating the localized mainstream
brands in marketplace (Guo, 2019). In 2015 Haier began investing the way of integration of
internet of things into their devices so that they can reach at large no. of consumer base in
positive manner. By collaborating with the Stanford Artificial intelligence laboratory they found
three main barriers in adaptation of the smart home technology, lack in unified protocols and
passive services with incomplete solutions. In that time the Haier's core competency resides in
the large appliance sector not in the small electronic sector. By using Cogobuy's ecosystem and
supply chain they can be able to merge the portfolio of components. By using respective strategy
organisation they become technologically advance and able to introduce in their smart appliances
across the various products lines in major appliance industry such as air, water, clothes, security,
voice control and information.
The another major strategy is networking strategy and its significance which includes the
border free enterprise, manager free management and scale free supply chain. By using

respective strategy from 2015 they can be able to transform a traditional enterprise
manufacturing household appliances to a platform oriented to incubator makes in the whole
society to become an internet company (Martin-Rios and Ciobanu, 2019). It aimed to break the
self closed system of traditional enterprise to acknowledge the consumers needs and demands to
reach at global market place. By using respective strategy Haier can be able to conduct the
subversive explorations in strategy, organisation, employees, users, compensation and many
more.
So by using respective strategies and tactics organisation can be able to reach at large no.
of consumer base as it is the requirement of today's competitive world. With the help of
internalization strategy which proved very much beneficial for organisation as it operates in
major part of the world by using their distinctive products and their features.