(Doc) Assignment on Competitive Strategy

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

1COMPETITIVE STRATEGY
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.

2COMPETITIVE STRATEGY
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.

3COMPETITIVE STRATEGY
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