(Doc) Assignment on Competitive Strategy

Running head: COMPETITIVE STRATEGY
COMPETITIVE STRATEGY
Name of the student
Name of the university
Author note

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Answer to Question 1
Large volumes of standardized model
According to Schmidt, Spann and Zeithammer (2014) large volume of products in the
international market is considered to be one of the strategic step that enables the company to
make a proper market penetration. Psychologically if the consumers get abundant products they
will start think that the company is big enough and manufactures quality products. This is also
similar to the case of Haier. As far as the Haier is concerned it can be stated that the company
initiated a strategy of exporting more products in the international market so that they could gain
a brand recognition profoundly in the international market.
Joint ventures
As a matter of fact, the joint venture strategy is quite effective in order to penetrate the
international market. In this context, Haier also followed the same policy while establishing its
market in the South-East Asia. According to Giacomarra and Bono (2015) the joint venture
strategy is resembled with the volatile and not so big market. Therefore, the multi-national
companies did not want to take any risk by entering the market directly. As far as the South –
East Asian market is concerned the pressure and dominance of the local companies were always
there that perturbed the market expansion of the foreign companies. As a result of that Haier
opted for the joint venture strategy in order to make its market occupation safe. In fact, it can be
argued that the joint venture strategy reduces the market research efforts for the multinational
companies. Henceforth, Haier chose joint venture strategy for entering into the South-East Asian
market.

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Foreign direct investment
According to Grilli and Murtinu (2014) it can be asserted that the foreign direct
investment strategy puts emphasis on the direct market penetration strategy with full force. There
are several features of the direct investment strategy in terms of enter the market with full force,
making an effective market research and facing severe challenges from the competitors. In this
regard, Haier was responsible to enter in the European market with a purpose establish a better
brand image in the market. It was in 1997 that Haier started exporting its products to various
European countries such as Germany, the Netherlands and Italy. It was also associated with the
direct export techniques where in Germany the company achieved a significant sales. The motive
behind using the direct investment and export services was that the European market was highly
lucrative and the existing brands were big enough to capitalize the market. Therefore,
possibilities of joint venture would never bring success for Haier in Europe and the company
went for direct investment.
Indirect export
However, the nature of the US market was quite different than the Europeans.
Apparently, it can be argued that the direct investment strategy will be effective to enter into the
US market due to its volume and high competitiveness (Ranet al., 2016). Despite of all the
considering factors Haier did not choose the direct exporting strategy in US because there was
already a series of companies existed in the US market. Therefore, indirect investment was
seemed to be the best option for Haier. In this context, the retail companies played a significant
role such as Walmart and it created a better opportunity for Haier to enter into the US market
effectively.

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Creating localised brand name
As a matter of fact, the US market is also characterized by its fluctuating behaviors of the
consumers. The US customers are very keen to know about the origin of the companies and they
prefer to buy products from the local companies only. The situation of US market was not
different even in the 1990s. As a result, it compelled Haier to incorporate some strategies to
penetrate the US market quiet effectively. Therefore, the management included the approach of
“locally designed, locally made and locally sold” strategy in order to expand its market
internationally. The first process was related to seeding where Haier intended to develop a brand
value and brand recognition in the international market. It was also included the local distributors
and sales agents to expand the business effectively. This step is followed by the rooting process
where Haier tried to establish its manufacturing plants in the foreign market. After that the
harvesting process dealt with the R&D facilities that is associated with a full grown market
penetration for the company.
Answer to question 2
In implementing suitable internationalization strategy Haier Company focuses on
implementing effective international business growth strategies that can facilitate the
organization in attaining advantages of cost-reductions, improvement in product quality, increase
consumer preferences and increase competitive leverage(Bouyoucef and Chung 2015). However,
it has been analyzed from comparing the internationalization strategies of Haier and that of the
western organizations that there are certain differences in their strategy implementation process.
The company has realized the difference between the strategies between their and western
organizations’ globalization approaches based on the consumer behavior and difference in

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culture of these nations (Deng et al. 2017). It is evidenced that such difference in the
international strategy implementation is because of the gap between these countries
environments particularly based on consumer behavior. Such competitive advantage source
within the domestic market might not be same s in the western market. The target market and
their demands are also different based on which companies in Western and Chinese market take
different strategic decision (Lattemann et al. 2017).
The internationalization strategies of the Western organizations are different than that of
Haier because of differences in their value systems, religions, languages along with cultures.
There are certain examples that explains the differences in the internationalization strategies
implemented by Chinese companies like Haier than that of the Western companies (Marchand
2018). Few examples of such different international strategies are explained below:
 Whirlpool is a US based company and its internalization strategy is not similar than that
of Haier which is a China based organization. Whirlpool employs different market entry
mode strategies that includes acquisitions, joint ventures and direct exporting. Moreover,
its brand building strategy is distinct from Haieras it acquired different renowned brands
globally in order to attain recognizable position in the foreign market (Wang et al. 2016).
On the other hand, Haier’s company internationalization strategy is focused on making
product developments for building its brand name.
 Electrolux is Swedish organization that uses localization strategy for internationalization
and focused on offering products based on the consumer preference in its host nations. It
also focuses on analyzing the global trends within societies. On the other hand, Haier
focused on attaining high technological expertise in order to modify its product offerings
based on its consumer needs in the international market (Xiaojun, Bo and

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Qingyang2015). This is deemed to enhance brand recognition, loyalty and distribution
channels.
Cultural factors of different nations all around the world is also considered as the major
reason for which the internationalization approaches used by Western organizations are different
from Chinese companies. The international strategies developed by Haier is based on its
corporate culture that is rooted with the Chinese traditional culture. Due to differences in culture
it can be said that Haier operates in international market considering that the organizations
existing in US follows leisure culture and in European nations leisure is inviolable(Xiaojun, Bo
and Qingyang2015). However, in its domestic country China, there is a business culture of
“serious work”. Moreover, the individualism and collectivism culture also serve as the major
conflict among the Western and Eastern countries internationalization strategies.
Another factor that impacts the ways in which western companies and Chinese companies
like Haier develops its international strategies is relied on innovation culture and government
policies followed in these nations. It is evidenced that such difference in the international
strategy implementation is because of the gap between these countries environments particularly
based on consumer behavior. Such competitive advantage source within the domestic market
might not be same as in the western market. It is observed that Western companies like
Whirlpool do not have to take into consideration the government policies in its
internationalization decisions as these policies are not observed to be present strongly in western
nations (Lattemann et al. 2017). However, there are stringent government policies for the
businesses operating in China because of which the companies operating in the nation has to
develop its international expansion strategy based on the country’s global regulatory framework.
Moreover, exporting market entry strategy is greatly followed in Chinese companies such as

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Haier as this model does involve any direct investment or active company presence globally.
However, western nations are observed to follow internationalization strategies those are
different from Haier. In this strategy, subsidiaries establishment or foreign direct investment
serves as a major internationalization strategy for Western companies as they focus on attaining
overseas assets and position its brand name through establishing their subsidiaries.
Answer to question 3
The initial internationalization strategy that was adhered by the organization was based
on the haphazard market entry operations in different overseas markets in between 1992 and
1997 (Grant 2016). The sudden internationalization strategy of the organization has helped the
same in enhancing the operations of the business in supporting their objectives of expansion.
Haier established joint ventures with different organizations in Indonesia, Philippines, and
Malaysia in order to facilitate market entry. On the other hand, Haier supplied compact
refrigerators to Welbilt Appliances in the US markets (Eggers, Hansen and Davis 2012). The
subtle market entry mode that was utilized by the concerned organization was based on the
concept of seeding their propositions in the different markets and thereby gathers feedbacks from
the customers (Grant 2016). The feedbacks from the customers helped the organization in
developing the products as per the needs of the clients. Haier exported its products to Liebherr
for enhancing their sales in Germany and Netherlands. The wide distribution of the products in
19 nations and the feedbacks that were gathered by the organization through the process has
helped the same in strengthening the forces of the R&D departments of the business.
The internationalization strategy of the organization was focused on seeding their product
deliverables in the different nations through active collaborations with different ventures in the

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economies. It has helped the organization in understanding the demand faced by the same in the
different economies. Boso, Cadogan and Story (2013) stated that the internationalization
strategy of the organization must include the knowledge of the demands of the customers which
will be helping the ventures in expanding their operations likely. Therefore, the collaborative
‘Seeding’ strategy that was utilized by Haier in the initial phases of the internationalization
strategy has helped the same in understanding the demand for the commodities that are proposed
by the same. On the other hand, the concerned organization also took steps to facilitating the
growth of the market shares of the same while operating in the diverse economies. The different
aspects of change in the organizational operations and the product development are based on the
identification of the needs of the customers. The feedbacks that were gathered by the
organization during the implementation of the internationalization strategy have helped the same
in undertaking the safe expansion of the operations as per the objectives. Theodosiou, Kehagias
and Katsikea (2012) stated that the identification of the demands of the customers and thereby
strengthening the R&D department of organizations helps the same in undertaking continuous
innovation in the processes of the venture. Haier established a smooth functioning R&D
department, which developed [products as per the needs of the customers (Grant 2016). The
strategy helped the organization in designing the growth process in a much feasible manner,
which helped the same in maintaining the suste4nance in competitive market structures.
Sinkovics, Sinkovics and “Bryan” Jean (2013) stated that the key elements of change in the
organizational operations are based on the identification of the different needs of the customers.
In this connection, the R&D department of Haier helped the same in understanding the needs of
the customers. It has helped the organization in undertaking feasible modifications as per the
needs of the customers.

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The success of the internationalization strategy of Haier is based on the identification of
the sustenance of the business operations while operating in competitive markets. Success of
business operations are based on the identification of the needs of the customers while operating
in diverse international markets (Chan et al. 2012). The concerned organization not only took
steps to identify the specific demand patterns of the customers but also took the initiative of
developing products and services as per the requirements of the custome4rs. It has helped the
business in maintaining their standards of sustenance in the international markets.
Answer to question 4
The Haier group comprises of Qingdao Haier Company Ltd listed in Shanghai and Haier
Electronics Group Company Ltd listed in Hong Kong. However, the group faces a opaque
governance structure, which has provided absolute power in the hands of Zhang Ruimin. the
major part of the governance that was undertaken by the CEO of the organization was based on
quality management, customer focus, brand building and new product development (Grant
2016). The different developments in the organizational structure helped the CEO in maintaining
the efficacy of the function as per the expectations of the customers (Estampe et al. 2013).
However, with time the CEO shifted the priorities of the organization to customer oriented
functioning. It has helped the same in gaining repute in distinct market structures (Chung 2012).
The key elements of change that was undertaken by the management in the systems of the
business operation were based on the identification of the diverse needs of the customers and the
manner in which they might be fulfilled. Different changes in the organizational performance
are based on the analysis of the internal and external competencies that are faced by the same.
On the other hand, Urde, Baumgarth and Merrilees (2013) stated that the identification of the
customer needs of the business assists the same in enhancing the product development stages.

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Haier undertook different strategies in order to enhance the operations of the same while
operating in the diverse international bindings. On the other hand, the customer oriented
functioning of the business has added to the competitive advantage of the same.
The advancement in the communication mediums fascinated Ruimin and thereby the
implementation of the communication mediums in the organization structure and the
decentralization of the decision making systems. The changes in the structure and the functioning
of the business added to the efficacy of the workforce while operating on diverse alternatives
available to the management (Peiris, Akoorie and Sinha 2012). The most important difference
that exists between the Haier’s management structure and that of the western companies are
based on the orientation. Haier is a customer oriented organization, which aimed at fulfilling the
needs of the customers through identification of the needs of the same (Urde, Baumgarth and
Merrilees 2013). However, the Western companies are aimed at enhancing the ROI (Return On
Investment), which affected the product offerings of the same. The key changes that were
undertaken by the Western organization was based on the profit making motive. However, Haier
undertook strategies in order to enhance the experience of the customers through the utilization
of the product offerings of the business. It has helped the business in undertaking steps for the
smooth functioning of the business operations as per the needs of the customers.
Lechner and Gudmundsson (2014) stated that the R&D department of organizations
assists the same in undertaking continuous innovation in the processes and deliverables as per the
identification of the needs of the customers. Haier established a strong R&D department, which
developed products as per the demand faced by the organization while expanding in the overseas
markets. the major point of difference between the Western Companies and Haier is that the
concerned organization employed its long term objectives f undertaking the business sustenance

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through satisfaction of the customers (Ripollés and Blesa 2012). On the other hand, the Western
companies aimed at maximizing their profit margins without considering the requirements of the
customers. The long term objective of Haier has helped the business in undertaking its steady
sustenance while operating in diverse international markets. Hagen et al. (2012) stated that the
customers oriented approach of organizations helps in enhancing the operations of the same
while undertaking business in the international markets.

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