Analysis of International Expansion - Haier Group

This article analyzes the international expansion of Haier Group, a Chinese company that has shown huge development in the past 26 years of its operations. The article discusses the strategies implemented by Haier, the differences between Chinese and Western organizations, and the main factor related to Haier's international strategy.

Running head: ANALYSIS OF INTERNATIONAL EXPANSION
ANALYSIS OF INTERNATIONAL EXPANSION
Name of the Student
Name of the University
Author Note

1ANALYSIS OF INTERNATIONAL EXPANSION
Answer to Question 1
Haier Group was established in the year 1984 as Chinese company which was owned
by the government with the name of Qingdao Refrigerator Co. Ltd. The company started its
operations in the industry with the manufacture of refrigerators and the technology that was
used for production was imported from Germany. The company has thereby shown huge
development in the past 26 years of its operations. The development of the company was
mainly based on the development of the new products and the investments that were made by
the company in technical research. The company presently has its operations in various
industries in the world (Andreeva and Kianto 2016). Haier has also acquired the topmost
position in various segments in the entire world. The different segments in which Haier has
been able to create the topmost position include, refrigerators in the United States, washing
machines in Iran and the air conditioners in Cyprus. The company has been successful in the
various segments of its operations with the help of the process by which it aims at
familiarizing with various brands and providing tough competition to the established brands
all over the world (Chen, Delmas and Lieberman 2015). The corporate strategy that has been
implemented by the Haier Group has been mainly driven the huge international growth of the
company in the market. The international growth of Haier has been facilitated with the help
of recognition and the awareness of the brand in the industry. This also helps the company to
meet the needs and the demands of the domestic and the international customers. This
process has been helpful in increasing the shares of the company in the market (Cohen and
Amorós 2014). The major source of the competitive advantage that has been created by Haier
in the market are consumer electronics. The name of the company is associated with the
innovative products that it offers to the customers all over the world. The company is thereby
capable of creating a huge competitive advantage in the domestic market. The research and
development based activities of Haier is of high levels. The company however demands

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better conditions in the countries where it operates for the purpose of conducting high quality
research (Durand, Grant and Madsen 2017). The company has however encountered huge
competition on the local levels due to which it made huge investments for the purpose of
starting its operations in the international areas. The major reason behind the
internationalization of the companies is based on the various factors like the reduction of the
costs, manufacturing of high quality products and the enhanced preferences of the customers.
Haier has been able to enhance the name of its brand and improve the quality of the products
by entering the foreign areas of operations (Engert, Rauter and Baumgartner 2016). The
company has also been successful in building a name for its brand after its entry in the
various international markets. The differences that existed between the domestic and the
foreign markets of Haier was very well understood by the company during the course of its
operations. The sources of the competitive advantage have however not been same between
the domestic and the international companies (Frynas and Mellahi 2015). The company has
been able to understand the target market in a successful manner which has further led to
increase in the revenues of Haier all over the world. The entry modes that have been chosen
by Haier in various areas of its operations is different. The modes of entry used for the
purpose of global expansion have been quite different from each other. The late entry of
Haier in the global competition has increased the difficulties of the company to enter the
various areas in the world (Hill, Jones and Schilling 2014). The major factor that led to the
success of the international strategy of Haier was based on the usage of the internal strengths
for gaining the competitive position in the market. The success of the international strategy of
Haier has thereby led to the leading position of the company in the industry. The company
has been able to become the domestic leader within a short period of time. The ways by
which Haier has modified the strategies in different areas of its operations has also been a
major reason behind the immense success that has been gained by the company (Hubbard,

3ANALYSIS OF INTERNATIONAL EXPANSION
Rice and Galvin 2014). This has thereby led to the successful operations of the company in
the international and the domestic markets.
Answer to Question 2
The strategies that are implemented by the Western based organizations and the
Chinese companies are quite different from each other. The companies are thereby able to
distinguish their ways of operating from each other. The organizations of the Western
countries like Australia have different operational styles as compared to the companies in the
emerging countries like China. The globalisation in the business environment has led to the
organizations to seek for opportunities of growth in the various international areas. The
companies are investing large amounts on the expansion based policies (Meyer, Neck and
Meeks 2017). The allocation of the resources in various areas has also played an important
role in the successful operations of the various multinational or the global organizations. The
process of internationalization of the organizations in the global environment has happened
quite fast and the companies have been successful in attracting the customers from various
parts of the world. The process of the internationalisation and the other activities of the
company have however been quite different in case of the Chinese and the Western
organizations (Michael, Storey and Thomas 2017). The Chinese organizations have been
quite successful in the international operations for the last few years. A company like Haier
has been able to gain huge success in the international operations in spite of the late entry into
the competition. The company has been able to create its competitive advantage in the market
with the help of the various innovative products that have been manufactured by them in the
market. China has been attractive area for the international expansion of the firms (Morschett,
Schramm-Klein and Zentes 2015). However, in the recent business environment the Chinese
companies are able to expand their operations and make significant investments in various
countries which also includes the various developed countries of the world. Haier has been

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able to set an example for the other Chinese organizations by creating an excellent position in
the market. The unique internationalization process that has been implemented by the
company has been the major reason behind its success in the various markets. The company
has used different strategies for entering the different markets in the world (Popkova et al.
2015). This is quite different from the types of strategies that have been used by the different
Western organizations to operate in the market in a successful manner. The Chinese
organizations are thereby able to operate in a successful manner in the international
environment with the help of their unique strategies. The globalisation of the Chinese
organizations have increased the competition in the market for the Western companies
(Sakas, Vlachos and Nasiopoulos 2014). The major factor that has been helpful in the
operations of the Chinese organizations in the global market has been the strategies that are
implemented in the different areas of its operations in the market. The growth rate of Haier
has shown the speed with which the international organizations are growing in the industry.
The Chinese companies have been showing huge rates of expansion in the current
environment of business. The global ambitions of the company have been fuelled with the
help of the ways of operating of Haier in the global environment (Shah et al. 2015). The
strategies of the Chinese companies are becoming much more sophisticated than before. The
companies have thereby been provided with the different types of challenges that have
thereby led to the increase in the competition between the Chinese and the Western
companies in the market. Haier has thereby been able to gain a lot from the highly growing
market of the international operations (Simon, Fischbach and Schoder 2014).
Answer to Question 3
The main factor that is related to the international strategy of Haier is based on the
successful branding of the products that are manufactured by the company. The company had
started its operations with the help of a small store. However, the organization had been able

5ANALYSIS OF INTERNATIONAL EXPANSION
to show huge growth in different fields with the help of various strategies that have been
implemented in the years of its operations. The company had started its branding strategy in
the year 1985 (Slater 2015). Haier thereby designed products that were of high quality and
was able to attract huge number of customers from all over the world. The loyal customers
and the company itself was quite proud to provide tough competition to the established global
organizations in the industry. The vision of the company was communicated to the other
members of the company in the year 1990. Haier also started making major acquisitions in
the market during this time (Bromiley et al. 2015). The company thereby started increasing
the portfolio of the products and brand name was quite famous all over China within this
period of time. The next part of the strategy implemented by Haier was based on the increase
in investments in the international expansion based activities. The company focussed on
changing the strategies that it wished to use in the international markets (Punt and Handling
editor: Emory Anderson 2015). The products were localized and manufacturing based
process was also changes so that the brand can be given a local feel. The company has also
been able to expand in a successful manner in developed markets of Europe and the United
States as well. The products of the company have been made available in the various
upmarket stores in the United States. The research and development based activities of the
company have been given huge importance (Gumerov et al. 2015). The company has started
investing huge amounts in the research facilities in the aim of creating more innovative types
of products for the global customers. Haier and the various subsidiary companies have been
providing a wide range of the innovative products which have led to the increase in the
customer base of the company. The extensive research based activities have actually made
way for the innovation in the company (Punt and Handling editor: Emory Anderson 2015).
The recent innovation that has been implemented by Haier has been named as the “Safe
Care” technology. The technology is mainly used for the purpose of monitoring the wiring of

6ANALYSIS OF INTERNATIONAL EXPANSION
the various electrical components. The technology was introduced by the company in the year
2002. The research and development based activities that have been performed by the
concerned department has helped in the successful development of various software that are
required for the products of Haier (Bromiley et al. 2015). The company has also been able to
earn more than 6000 patents due to the innovative technologies that have been implemented
by Haier. The designs and the products that are manufactured by Haier have been supplied to
the various countries with the help of the global network that has been formed by Haier. The
company has implemented various strategies for the implementation in the difficult markets.
The organization has always aimed at concentrating on the domestic markets before the
products are taken to the global areas of operations of Haier (Simon, Fischbach and Schoder
2014). The major categories of products that are under the focus of Haier are, the
refrigerators, the air conditioners, the washing machines. The company also has a significant
division of electronics. The organization has also adopted the unique strategies for the
purpose of entering the international markets like, Europe and the United States. The
company thereby aims at creating its position in the developed markets for the purpose of the
objectives and goals. The appliances that are offered by Haier are based on the strong designs
and high quality (Sakas, Vlachos and Nasiopoulos 2014). The international strategy that has
been implemented by Haier is thereby based on the ways by which the company can create its
successful position in the market. The focus that has been placed by Haier on the process of
building a strong brand for the company has thereby been able to bring the company back
from bankruptcy state and further create its position in the market as well (Simon, Fischbach
and Schoder 2014). The company has been successful in holding the topmost position in the
market in spite of the high competition levels that have been faced by the company in the
industry. The growth rate that has been experienced by Haier was around 68% from the year
1984 to the year 2005. The company also has more than 40% of the entire shares of the

7ANALYSIS OF INTERNATIONAL EXPANSION
Chinese market (Morschett, Schramm-Klein and Zentes 2015). The economic slowdown that
had occurred in the year 2008 was also not able to affect the huge growth that was shown by
Haier. The company has mainly built its success on the basis of the successful branding of the
products for the purpose of creating a successful position in the industry. The international
strategy of the company is also based on the effective process of branding of the products that
are offered by the organization. The strength of the brand of Haier was increased in the
domestic market (Michael, Storey and Thomas 2017). The strong domestic brand of the
company was helpful for its entry in the various international areas. The innovativeness of the
products is another way by which the company has been successful in creating a share in the
market. The strong brands are able to create different position in the market with the help of
the high quality products and the marketing based activities. Haier has thereby been able to
create its share in the market with the help of various marketing strategies that have been
used in the course of its operations (Hubbard, Rice and Galvin 2014).
Answer to Question 4
The company has an effective system of management which has been helpful in the
creation of its position in the industry. The management system of Haier has been termed as
the OEC type, where O stands for overall, E stands for everyone and C stands for control.
The system of management of the company is mainly based on the ways by which the
company attempts keeping a check on the quality of the products in an effective manner. The
daily routine has been set by the company based on the ways by which the products are
checked and their quality is ensured by the managers (Frynas and Mellahi 2015). The system
of the management of Haier is further based on the sustainability of the operations and the
ways by which the company aims at operating in the environment. The sustainable methods
that are used by the company have been able to provide the maximum amount of cost
effectiveness to the company. This has been helpful for taking out Haier from the stage of

8ANALYSIS OF INTERNATIONAL EXPANSION
bankruptcy that has been experienced by the company in the start of its operations in the
industry (Sakas, Vlachos and Nasiopoulos 2014).
The methods of the management that is used by Haier is quite different from those
which were used by the other Western companies in the industry. The management system of
Haier is focussed solely on the quality of the products. On the other hand, the management
and the culture of the Western companies is focussed mainly on the employees and the entire
process of the company. The Western culture of the companies is much more open as
compared to the culture that is followed in the Chinese companies. The Western companies
are mainly based on the welfare of the employees and the ways by which they can be
provided with comforts (Punt and Handling editor: Emory Anderson 2015). The culture in the
Chinese companies is not highly based on the welfare of the employees. The employees are
just a part of the entire operations of the Chinese companies. The Western companies are
easily able to adapt to the culture of the countries where the operations are started. The
Chinese companies however take some time to settle down in the culture of the new place
where the operations have been started (Morschett, Schramm-Klein and Zentes 2015). The
major factor that is helps the Chinese companies to provide tough competition to the Western
organizations is the ways by which the employees are committed towards the company and
the quality of the products that are provided at low prices.

9ANALYSIS OF INTERNATIONAL EXPANSION
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