Haier's Internationalisation Strategy and Management System

Competitive Strategy and Innovaation

COMPETITIVE STRATEGY AND INNOVATION: 1
Contents
Main features of Haier's internationalisation strategy since the early 1990s..........................................3
Haier's internationalisation strategy differ from the pattern of international development
typical of Western enterprises............................................................................................................4
Success of Haier's internationalisation strategy................................................................................6
Principal features of Haier's management system............................................................................9
Haier's principles and methods of management differ from those deployed by Western
companies...........................................................................................................................................10
References..........................................................................................................................................13

COMPETITIVE STRATEGY AND INNOVATION: 2
Answer to Q. 1
Main features of Haier's internationalisation strategy since the early 1990s
Since 1990, Haier has been featuring two key business strategies named as speed and
differentiation. International strategy has abled the Haier to win the consumers by satisfying
the customer needs as fast as possible. The company also strives to introduce brand new
products with different features to meet different demands of different consumers. For
example- President of U.S. asked Haier Company to design a refrigerator that has such
operation feature that the freezer has pull-out drawers for the US market. Haier was able to
execute with a prototype of micro-freezer in next 17 hours. This signifies firm`s speed
strategy (Andersen, Ahmad and Chan, 2014).
Apart from business strategy of speed, the company ardently resembles the business strategy
of differentiation in its operation. After visiting the rural area, employee discovered that rural
customers use their washing machines to wash both their clothes and vegetables. Sooner, the
company started such machines versatile enough to wash both vegetables as well as clothes
(Dodgson, 2018).
It is identified that Haier managed to be successful by incorporating seven different factors
such as customer service, operating efficiency, and speed to market, innovation, and product
quality in its operation. Haier was able to succeed in every area to become the fastest growing
company (Lok and He, 2017). To become successful in its business, the company maintained
good corporate culture, efficient business strategy, and OEC management-control system that
enforces work rules and discipline. The director of human resource management explained
the OEC acronym as O for overall, E stands for everything or everyone, C Stands for clear
and control (Boermans and Roelfsema, 2015).
Until 1984, Haier was facing the debt of about 1.47 million. Initially, Haier started to
manufacture only one product named refrigerator. Haier was only confined to Chinese

COMPETITIVE STRATEGY AND INNOVATION: 3
market. I kept focusing on producing such goods that would attain a good reputation in the
market. The organisation has been featured with Total Quality Management (TQM) and OEC
management control system. The company started featuring its strategies with diversification
and expansion of products after gaining experiences and reputation at the first stage. The
strategies of “activating shock fish” was introduced. It started expanding the product varieties
with 12 twelve new products in between 1992-1998.
After the introduction of E-commerce, Haier group strived to feature e-commerce in its
operations. Haier started from home appliances enterprises to set-up e-commerce. Haier
started finding the suppliers and individual consumers that establishes a purchasing platform
from B2B to B2B. By implementing this purchasing platform, it established a co-operative
relationship with suppliers and customers such as electronic B2B platform to track the order
status timely (Yang et al., 2016). Haier uses B2C platform that accomplish consumer with
music, consider the recommendation of professional shopping advices. Haier followed both
in its internationalisation strategy B2B and B2C that is traditionally called B2X. The
company started following this path B2X because of its potential demand in its users. Mainly
“X” is the potential demand for the company that helps them to identify potential customers
and the market.
Answer to Q. 2)
Haier's internationalisation strategy differ from the pattern of international
development typical of Western enterprises
The below discussion takes the opportunity to evaluate how internationalisation strategy of
Haier differs from other international patterns. Already, Haier has many rivals who are
almost equal in size. The critical success factors for electronic industry especially for
customers are affordable prices, value-added services, innovations (R&D) and high quality.
Industry players such as Whirlpool, GE Appliances, Electrolux, and Matsushita are all based

Competitive Strategy &
Innovation

Table of Contents
Introduction .....................................................................................................................................1
Case Study ......................................................................................................................................1
Discuss the main features of Haier's internationalisation strategy since 1990 and how it is
different from the pattern of internationalisation typical of western enterprises...................1
Assess how successful has Haier's internationalisation strategy has been and why..............3
Discuss what are the principal attribute of Haier's management system also how do they differ
from those traditionally deployed by Western companies.....................................................5
Conclusion.......................................................................................................................................7
References ......................................................................................................................................8

Introduction
The internationalisation strategy involves the detailed plan or strategy developed and
implemented in to smoothly carry out their business at the international level effectively. It helps
business organisation to easily expand their business at the international level through
minimising the risk. International strategy involves analysing and evaluating the international
market, availability of resources , determining international goals also evaluating the market
dynamics effectively. It helps enhancing the overall performance of the company. For this report
the Haier Group is taken into consideration. This report highlights main features of the
internationalisation strategy of the chosen company and how different from the western
enterprises. Also the effectiveness of the Haier's internationalisation strategy along with the
principle features of the company's management system and how they differ from the western
company is also highlighted in this report.
Case Study
Discuss the main features of Haier's internationalisation strategy since 1990 and how it is
different from the pattern of internationalisation typical of western enterprises
The Haier group is one of the top and biggest producer of the essential home appliances
from 1990, offering their services around the world effectively. Company was founded in 1984
offering wide range of home appliances services to their customers around the world effectively.
In the earlier development the company under the guidance of CEO, Zhang Ruimin mainly
focused on the refrigerator market mainly through the imported technology from the Germany.
The main focus of the company was to offer quality products and services to their target
customers in order to gain competitive advantage in the marketplace effectively. The company
mainly focused on enhancing their quality so as to achieve the international quality standards
which requires a essential reformulation and improvement in their process effectively. Zhang's
focused on customers services and his efforts of developing an after sales services network
helped him in 1990 through implementing a computerised services which allows them to
effectively monitored their customers. In the year 1990 , the company acquired 16 other Chinese
companies which lead them to enhance their services not only in the domestic appliances but also
in television, telecommunication tools also other consumers electronics products. The
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internationalisation strategy is the detailed planning which helps in the effectively carrying out
the business activity at the international level. The Haier company started focusing on their
internationalisation process between the 1992 and 1997, the company entered into company of
international markets such as
 In south East Asia, mainly in Indonesia, Philippines and Malaysia, company started their
business through the joint venture with the local companies allowing them to
manufacture and sell the refrigerator and air conditioners.
 In case of Us the company started offering the compact refrigerator to an importer,
allowing them to sell their products using their brand name.
 In the 1997 the company started exporting the appliances to countries like Germany,
Netherlands and Italy.
The internationalisation strategy adopted by the Haiers company allowed them to enhance their
performance in the international market effectively. One of the main feature of the Haier's
internationalisation strategy was its main focus on entering the international market and handling
the challenging and difficult markets effectively before handling the easy and less developed
countries. The main strategy followed by the company was to focus on entering the most
challenging market and also overcoming the most difficult process effectively. The company
started acquiring the small and medium sized industries of the others countries in order tro
expand their business in that particular market effectively. The CEO of the company earlier
stated that the main objective of the company's expansion to the international market is not to
enhance their profitability through exploiting their low manufacturing cost but to build strong
and effective brand image in the marketplace. In order to enhance their brand in the international
market the company focused on locally designed, locally made and locally sold approach which
makes them different from any other from the pattern of internationalisation strategy used by nay
other country or any other western enterprises. The CEO of the company stated that they have to
make the American realised that Haier is a localised US brand rather than feeling that it an
imported Chinese brand. Company's this internationalisation strategy made them different from
any other western enterprises and strategy used by them. The company's Locally designed,
locally made and locally sold approach includes three stages of development effectively which
are highlighted below:
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