Haier Group: Strategies and Corporate Social Responsibility

This report analyzes Haier Group's strategies, process and layout types, corporate social responsibility policies, and approach to quality. The report discusses the company's expansion into different parts of the world, its vision and mission, and its subsidiaries. It also examines the company's approach to quality and the increasing use of processing technology in white goods. The report concludes with an analysis of Haier's corporate social responsibility policies and its concentric circle model of CSR.

STRATEGIC AND OPERATIONS MANAGEMENT –
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Contents
Introduction......................................................................................................................................3
Company Background.................................................................................................................3
Process Type and Layout Type........................................................................................................4
Haier Group’s Corporate Social Responsibility Policies.................................................................6
Concentric Circle Model of Corporate Social Responsibility.....................................................7
Haier’s Approach to Quality............................................................................................................9
Role of Technology in Haier White Goods...................................................................................10
Conclusion.....................................................................................................................................12
Bibliography..................................................................................................................................13

Introduction
Company Background
Haier Group Corporation is an electronics and home appliances company that is based in China.
The company was founded 34 years ago in 1984. The company has its headquarters in Qingdao,
Shandong, China and designs, develops, manufactures and sells mobile phones, air conditioners,
microwave ovens, washing machines, refrigerators, televisions, computers, etc. Apart from these
products, the company also deals in commercial heating and cooling systems. GE Consumer &
Industrial, Fisher & Paykel, Haier Electronics Group, Hotpoint America and Qingdao Haier are
the subsidiaries run the Haier Group Corporation in different parts of the world. The company
was listed as the world’s largest market share holder in the white goods market in 2014.
The company started expanding its business into different parts of the world since 1096 when it
opened up a production facility in Indonesia and Philippines and Malaysia in 1997 while the
company failed to enter the Thai market because of the completion that it faced from the local
electronic companies. The company expanded its business operations to the United States in
2000 by opening a production facility in Camden, South California in 2000. The company
reached worldwide revenue of $7 billon while the revenue from America reached USD $200
million.
The vision and mission of the company is to be industry leader and users’ first choice, as well as
being the obvious competitive solution provider and the employees of the company believe that
the user is always right. Therefore, they try to fulfill the expectations of their users by offering
quality as well as variety.
The objective of this report is to get a deeper insight into the company and to analyses its
strategies. The report contrasts the process types and layout types that the company employs for
its white goods and for its real estate industry division and assesses the Corporate Social
Responsibility of the company. The report also discusses the company’s approach to quality.

Apart from a strategic analysis, the report also contains an insight into the increasing use of
processing technology in white goods and how it can be beneficial for the company.
Process Type and Layout Type
As discussed above, Haier is a multinational company that has diversified its business to a great
extent. Not only does the company deal in white goods but has also expanded its business
operations in the real estate industry. Because of the increasing customer demands, in the field of
real estate and property, the company has developed Haier House. Haier House has five product
lines i.e. intelligent residential property, commercial property, industrial property, property of
regimen and Haier Yungu. Haier Real Estate, at present, has started expanding its business in
many other countries by building smart cities and homes. It aims at providing users with more
than a house, but a house full of wisdom by focusing on technology (Haierhouse, 2018). U-
Home, which is an innovation of the company, allows users to use internet and technology to
connect their devices with their information sensing systems and keep in touch with the situation
of their home at any point of time.
On the other hand, the company has a huge list of electronic appliances that it sells to its
customers all around the world. Clearly, the company has diversified itself into a lot of
businesses that require different processes and layouts for becoming more efficient and
strategically competitive. The processes and layouts of white goods and real estate subsidiaries
of the company are discussed below:
The real estate division of the company, also known as Haier House, performs a wide range of
processes. These processes are discussed below:
- Research & Development
- Manufacturing/Construction
- Human resource management
- Sales & Marketing
- Finances
- Site Acquisition
- Lease Administration

For all these processes, the layout is simple and the company is most likely to implement a
functional layout structure, which will arrange its hierarchical positions on the basis of the
functions to be performed. The reason for implementing a simple organizational layout, which is
based upon the functions that are performed by Haier Real Estate division, is that the company is
relatively new and has started its business operations mainly in China. Therefore, its functions
and geographical locations are quite limited and there is no need of implementing a complex
layout for managing business processes of the division. One of the major advantages of a
functional structure for Haier Real Estate is that the division will be divided into different
departments on the basis of the activities that are to be performed. This would be beneficial in
increasing the quality of work and accomplishing targets in much lesser time. Further, it would
also help managers in becoming more efficient at managing others and would prevent
duplication of efforts in the company (Gleeson, 2018).
(ORGANIZATION STRUCTURE FOR HAIER REAL ESTATE)

On the other hand, for the white goods division, there are a huge number of processes that the
company is required to perform. These processes range from managing finances, marketing and
advertising, human resource management, research and development, manufacturing,
distribution, customer care, etc. Further, there is a huge list of products that the company deals
in, such as refrigerators, televisions, etc. and all of these products have to be managed
differently. Being a multinational company, Haier also has to consider all those geographical
locations where it has its business operations and design a structure that would help it in
managing its overseas operations as well. As a result, a matrix organizational structure would
suit the company when it comes to the business of white goods because of so many products,
functions and geographical locations involved. Further, a matrix organiastional structure would
enable the company to adapt to the complex business environment rapidly and increase the
efficiency with which information is exchanged within individual departments (Management
Square, 2017).
(ORGANIZATION STRUCTURE FOR HAIER WHITE GOODS DIVISION)

Haier Group’s Corporate Social Responsibility Policies
Corporate Social Responsibility is a concept that has surfaced in the past few decades. It is a
concept whereby business organizations incorporate social and environmental concerns in their
business operations, processes and strategies (Schwartz, 2017). The customers, as well as other
stakeholders, have become very conscious about their environment and have started expecting
business organizations to share their concern for the environment by adopting practices that
would keep a check on the harmful effect that business processes can have on the environment
(Lindgreen & Swaen, 2010).
Like any other international company, Haier is also concerned about the environment in which
the company operates and shares the interest of its stakeholders of sustainable development.
Being the largest home appliance company, Haier is keen on public charities and also
streamlines its processes to minimize its impact on the environment. To analyze the corporate
social responsibility of the company, the concentric circle model of CSR has been used below:
Concentric Circle Model of Corporate Social Responsibility
The concentric circle model is used to assess the corporate social responsibility of a company as
it is has a wide scope of responsibilities. The biggest advantage of this model is that it integrates
all of the responsibilities in a way that they all share a central core of being socially responsible
(Ross, 2014). The responsibilities mentioned in the concentric circle method are economic, legal,
ethical and philanthropic.

The first and the basic corporate social responsibility of a company is economic responsibility,
which means that a company has to make profit so that it can offer return on investment to its
stakeholders. Further, according to this model, the economic responsibility is not just limited to
wealth-creation, but also extends to improve the economic condition of the country in which a
company operates. Economic CSR includes raising a nation’s standard of living, providing jobs
and decent wages to the workforce, fair pricing, eliminate poverty and much more (Geva, 2008).
Haier has definitely been fulfilling its economic CSR as it has been expanding its operations to
multiple countries and offering job opportunities to millions of people. Not only is the company
generating wealth for different nations and its stakeholders, but is also offering handsome wages
to its consumers. Further, the company also has adopted a competitive pricing strategy by
offering its products at a price that is lower than the rival companies (Bhasin, 2017).
The second corporate social responsibility in the model is legal responsibility, which emphasizes
a company to follow all the laws and responsibilities of the country in which it operates and to
give good reasons for one’s actions. The company shares the legal concern of the government of
different countries and follows all the legal guidelines that it is expected to. The company has
published on its official website that it would support all programs and activities that are
mentioned under the Schedule VII of the Companies Act, 2013 in India (Haier, 2018).
Furthermore, the company also implements strict workplace policies that would assure safety of
its employees and prevent any kind of discrimination.

The third circle in the concentric circle model represents ethical corporate social responsibilities,
which are standards or norms that a business is expected to fulfill by its stakeholders and the
society, even though they are not codified legally. Ethical responsibility is the commitment with
which a company works towards the betterment of the society and its stakeholders by
contributing to greater stability, prosperity and sustainability. Haier is one multinational
company that has fulfilled its ethical corporate social responsibility by completely dedicating
itself towards the betterment of the society. The company once launched activities that were
aimed at delivering needed materials to areas that had been struck by disasters. The company has
been trying its best to raise the global environment protection consciousness by holding a series
of public activities, such as launching the “Earth Hour” with WWF (Haier, 2018).
The last circle in the concentric circle model represents philanthropic responsibilities of a
company. Philanthropic responsibilities are the ones that are related to the contribution that a
company makes towards humanitarian and social causes. These causes are generally considered
to be separate from the line of a company’s business. Haier has left no stone unturned to fulfill
philanthropic responsibilities as well. The company has been investing large amount of its profits
for social causes. For example, Haier started investing in the Project Hope since 1995 and by the
end of 2016, the company had already invested 92 million Yuan into the project, which helped in
establishing 246 schools over 26 provinces. Even in Australia, the company has funded the
association of breast cancer (Haier, 2018).
From the above analysis, it can be clearly stated that Haier is a company that understands the
importance of fulfilling its corporate social responsibilities, which can be judged from the fact
that it was awarded with “Community Contribution Award”. It is a company that goes out of its
way to help all its stakeholders and invest in social causes which are not even related to its
business operations or line of processes. It is also because of the company’s corporate social
responsibility strategies that it has reached such heights of success on a global scale and has a
large pool of loyal customers.

Haier’s Approach to Quality
Haier is one of the most successful multinational business organizations of today. The company
which was founded in the 1930s has experienced a lot of ups and downs in its growth timeline.
Haier has almost reached bankruptcy in the early 1980s when Zhang bought it back to life. In the
1980s the demand for appliances had started to slow down and the Western companies had
started eyeing the emerging Chinese market where the demand for appliances was increasing.
During that time, the Chinese manufacturers were not being able to meet the demands of the
local customers in terms of quality and standards and western manufacturers wanted to make use
of their inabilities. The Chinese manufacturers limited the scope of Western expansion by
dropping the products of their prices drastically, which made it impossible for the foreign
manufacturers to stand in the price war. It was during those times that Zhang was able to predict
the rise of a middle class in China that would demand high quality products, especially
refrigerators.
The company’s approach to quality started when Zhang took out 76 faulty refrigerators out of
400 refrigerators and asked his employees to smash them to ground in the middle of a street,
even when he could have sold them. Later, the company joined hands with a German company
and got its hands on advanced technology, which paved the way for the company to manufacture
quality products (mgmt.au.dk, 2016). Since then, the company has been using a lot of total
quality management techniques to keep a check on the quality of its products. The company
adheres to the laws and regulations, such as the Consumer Product Safety Act, Material Safety
Act, etc. to ensure safety of its products. Further, the company also collects data from customers
who have experienced accidents related to Haier products and works on those complaints to
improve quality of their products (Corporate-rebels, 2018).
Quality has been deeply rooted into the operational strategies of the company. The company has
implemented a system where the employees are awarded on the basis of quality of their work. A
red card is considered to be a reward whereas a yellow card is considered to be a penalty. As of
today, the company has used pricing strategies and quality management systems to gain a
competitive edge in the market. By pricing its products at a competitive price, the company is

able to maintain the quality of its products using higher quality raw material and establish itself
in the market as a company that deals in superior quality products. As of today, the company
uses modern technology to offer high quality products to its customers that no other competitor
can. In China itself, the company allows its customers to customize each product that they want
to purchase. Therefore, the company has used multiple pricing and positioning strategies to
establish a positive brand image in the market, which is associated with high quality products
(Fischer et al., 2015).
Role of Technology in Haier White Goods
Technology has been one of the biggest gifts of science to our generation and has reached its
pinnacle in the present decade. From internet to information systems, each and every
technological innovation has been made life easier for the human beings and incorporating
technology with white goods has further eased a number of day-to-day tasks (Voestalpine, 2017).
The use of white goods can be made simpler by fitting them with smart technology systems that
can gather, analyze and process data to provide useful information to the users over the internet.
Fitting white goods with information collection systems will allow users to connect their devices
with white goods using an internet connection and obtain information about their devices, such
as model number, data of purchase, upcoming services, battery status, faults, etc. By using
technology to establish a connection between white goods and information devices, Haier can
enable its customers to get information about faults in case their product is not functioning
properly and file a complaint in case their product fails to function properly (Allan, 2006). If
such information is available to the users, it would not just improve the quality of the goods but
will also enable the customers to use their products in a better way, without having to contact
customer care executives from time to time. Therefore, such a system of data processing
technology, internet, white goods and information devices will allow customers to exercise a
better control on their white good and have a better experience.
Using technology for obtaining data from a washing machine can be really helpful to a lot of
users that like to keep in touch with their goods and are in love with them. The data that can be
obtained from a washing machine can be:

- Time since switched on
- Washing duration
- Load capacity and load filled inside
- Estimated time remaining for the wash to complete
- Total washing cycles completed till date
- Service due
- Detergent level
- Stats on water temperature and water level in the machine
- Notification (sound & vibration) on completion of washing
- Temperature levels
- Humidity levels
- Turbidity levels
- CO2 emission levels (Mathas, 2014)
Using a washing machine can be complicated for many people but with so much data available,
it can become a child’s play. Further, commercial washing machine business can benefit from all
this data as it can become easier for them to streamline their operations and keep a track of their
washing machines and sales. Collecting all this information can also enable them to predict the
usage of their washing machines, which can be a huge plus point from a business point of view.
Therefore, incorporating data processing technology with white goods has become imperative
today and companies dealing in white goods should use technology to gain a competitive edge
over their competitors.
Conclusion
Haier is a company that has seen a lot of ups and downs since its foundation in the early 1930s.
Haier has experienced some amazing leaders in its times who have worked exceptionally hard to
establish Haier as a brand that offers quality products throughout its life, which has helped the
company in becoming what it is today. Apart from achieving success in the market through
competitive strategies and excessive use of modern day technology, the company has also
fulfilled its Corporate Social Responsibility by donating for social causes and by working for the

betterment of its stakeholders. Therefore, when it comes to operations and strategy management,
the story of Haier is no less than a success story.

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