Haier's Internationalization Strategy: Influencing Organizational Strategy

This study discusses Haier's internationalization strategy and its influence on organizational growth. It explores the main features of Haier's strategy since the 1990s, the differences between Haier's strategy and Western enterprises, and the success of Haier's international strategy. The study highlights key factors contributing to Haier's success and its unique approach to international development.

Running Head: INFLUENCING ORGANIZATIONAL STRATEGY
Influencing Organizational Strategy
Name of the Student:
Name of the University:
Author Note:

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Introduction
The study will be discussed on the influencing organizational strategy of the Haier. The
study will provide a clear idea regarding the internationalization strategy that the company is
following as well as modifying from the year 1990. The company follow different internalization
strategy pattern for the development of western enterprise. Haier adopted different strategy to
compete with the both Chinese companies as well as the other companies who are already there in
the global market. Therefore, it is somewhat important for the organization to adopt and change
accordingly. The change in the strategy of the company is taking place from the 1990 as they want
to globalize their product in the market.
1. What are the main features of Haier’s Internationalization strategy since the 1990s?
Answer: In the year 1984, the Haier group was established and it kept on growing for the last 20
years. The company is based on China and it is mark as the fastest growing Chinese company in
respect to the household appliance company, compare to the other Chinese brand. The company
face a lot of trouble when China entered the WTO (Haier.net 2019).
The company with the new technology adopted the Ansoff Matrix in the international
market. They introduce existing product in the new market as well as new product in the existing
market. This helps the organization to grow in the market and to earn large sum of money from the
international along with the local market. This strategy played quite well in the favour of the brand
and help them to enter other market with the popular image that they already gained from the
European market (Wang et al. 2016).

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Fig. 1: Ansoff Matrix of Haier
(Source: Created by Author)
In Ansoff Matrix, there are four parameters which need to be taken care by the organisation
namely,
 Market Penetration: The market penetration is considered as the sale of any product or
service in a specific market and it can be measured with the help of quantity of sales. The
good is already present in that market.
In case of Haier, the company mainly deals with the home appliances and electronic goods.
There are many companies who deals with this type of product but the company is able to
penetrate the international market with the help of innovation and new technologies to
produce goods and services (Phillips and Moutinho 2018).
 Market Development: The market development is considered as the growth of the
existing product in the new market. This is generally done by the company to expand the
business. This help the company to capture the market.

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In case of Haier, the company is a Chinese company but they expand their business in the
international market. This helps in the market development as new competitors are entering
in the market as well as expanding in it.
 Product Development: The product development is considered as the introduction of new
product in an existing market which provide additional benefit to the customers. The
modification of existing product can also be considered as the product development.
In case of Haier, they introduce cell phone in the market along with the boilers and small
home appliances which will provide benefit to the customers. This is done to expand the
market in an international level. The company also introduced freezer which help them to
earn profit from the market (Phillips and Moutinho 2018).
 Diversification: This is the introduction of new products in the new market. This will help
the organization to earn profit and capture huge market share from the new market.
In case of Haier, they introduce cell phone in the cell phone industry and that is new for the
company as they mainly deals in the home appliances. Therefore, it can be considered as
the diversification of the company in the international market.
Haier also adopted the strategy of BCG Matrix in the international market as they mainly
deals with the electronics along with the home appliances. The BCG Matrix consists of four area
namely (Vogel 2016),
 Cash Cows: In the refrigerator industry Haier possess the cash cow as they sale their
product over 100 countries all around the world competing with various competitors. The
company still earn profit by investing little effort in the refrigerator market. The market
growth rate is low with respect to the relative high market share.

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 Stars: The star of the Haier is considered the deep freezers as the sale is much higher
compare to the other products produce by the brand. In this case, the market growth is high
with respect to the high market share.
 Question Marks: The cell phone that Haier produce is considered as a question mark as
Haier is uncertain about the development about it. The growth rate in the market is high but
the market share of the product is low.
 Dogs: Boilers as well as small household appliances are considered as the dogs as they are
able to generate revenue for Haier till now. The market growth is low along with the low
market share.
Fig. 2: BCG Matrix
(Source: Created by Author)
This helps Haier to grow as well as to expand in the international market and to earn huge
amount of profit from the market, which ultimately help them to capture new market areas as well
in the future.
2. How does Haier’s internationalization strategy differ from the pattern of international
development typical of Western enterprises?

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Answer: There Haier’s internationalization strategy differs from that of the international
development typical of Western enterprise in many aspects, which help them to grow in the global
market and gain popularity so that they can earn large amount of profit from the market and capture
the maximum global market share. The point of differences is:
The company have given emphasis on building enterprise culture. The company adopted
Hofstede Cultural Model, which help the organization to grow and gain popularity (Chen 2017).
The model mainly deals with six parameters namely,
 Individualism vs. Collectivism: In this model individualism refers to the individual
goals and on the contrary collectivism refers to organizational goals.
In case of Haier, the individual goals as well as company goals are achieve in a timely
manner which ultimately help the organization to grow and sustain in the international
market even after being a Chinese company.
 Masculinity vs. Femininity: In this model this is refer to the culture which is there in
the organisation which is the key factor for the company to grow in the market.
In case of Haier, the organisational culture is much higher than that of the other brands.
The company also hires the local people from the market where they are willing to
expand their business. This ultimately help the organisation to grow and to earn profit
from the market as they are able to understand the needs and wants of the market.
 Uncertainty Avoidance: Here the company deals with the uncertain or sudden issue
that might raise in the process as future is unknown to everyone. Therefore, an effective
management need to be there in the organisation.
In case of Haier, the company is quite efficient to prepare a plan for the uncertain or
sudden events that are unavoidable in nature. The management is well structure to
manage if any uncertainty arises in the process.

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 Long vs. Short Term Orientation: The long term orientation help the organisation to
deal with the issues that might occur in the future. On the contrary, short term
orientation enables the organization to deal with the issue that raise in the present
situation.
In case of Haier, the company possess an effective management who are train and
possess the skills top deal with the long term as well as the short term issues that might
arise in front of the company.
 Indulgence vs. Restraint: In this model indulgence refers to the society which shows
gratification which shows basic and natural drives along with enjoying life and having
fun. On the contrary restraint refers to the supressed gratification which is showcase by
the society.
In case of Haier, they are able to manage this section quite effectively and efficiently,
which help them to grow in the international market. This also attract employees
towards the company as they mainly follow the indulgence process.
 Power Distance: This shows that the power is distributed unequally in the society as
well as in the organisation. The inequality need to be handled by the organisation so that
there is no discrimination in the organisation.
Fig. 3: Hofstede Cultural Model

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(Source: Created by Author)
The company also establish the management system which is according to the international
standard which help them to know the international market in a better way and identify as well as
analyse the local market (Deng, Yang, Wang and Doyle 2017). Haier group have successfully
implemented PESTLE Model, which helps to grow in the market. The factors which Haier took
care of are namely,
 Political: Haier is able to solve the political disputes in the country regarding the
expansion of the business in the international market. The management of the company
is so efficient that they did not face any sort of political disputes while entering the
international market. This help the organisation to grow and expand in the market
(Glowik 2016).
 Economic: Haier is economically strong as compare to the other Chinese brand. This is
due to the new technology that the company use and the new methods that have been
implemented to earn huge sum of money from the market.
 Social: In this aspect Haier possess the social hold in the market as they are able to
introduce the products according to the needs and wants of the customers. This help
them to gain a social image and popularity in the international market.
 Technological: Haier is technologically advance compare to the other Chinese brands,
this help them to grow in the international market to earn huge amount of profit from the
market (Glowik 2016).
 Legal: The Company is able to solve the legal disputes that have arisen in the market
while they are entering the international market. This help the organisation to grow and
to earn popularity in the international as well as national market.

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 Environmental: Haier’s products are environment friendly in nature. This is also a
reason for the popularity of the customers to enter the international market and to gain
popularity in the process.
Fig. 4: PESTLE Model
(Source: Created by Author)
3. How successful has Haier’s international strategy been and why?
Answer: The key success factors which help the Haier to gain popularity as well as profit from the
market and there are six key factors which the company follow to internationalize the brand in the
global market are namely, product diversification along with the product innovation; marketing
initiatives; innovative human resource management system; the company trained as well as
attracted along with that retain the talent which help them to gain popularity in the global market
and motivate them along with that strong strategic integration along with the organizational
learning management (Grant 2016).
According to the market demand and supply of the company build their strategy so that
resources be it tangible or intangible should be used in such a way that it helps the organization to
gain maximum result by investing less amount of resources (Zhang, Wang, Feng and Cheng 2019).

9INFLUENCING ORGANIZATIONAL STRATEGY
The company follow the VRIO framework in their business model which means the
company give value to the resources use so they use less amount of resources to meet the demand
of the customers. The resources are somewhat rare for the company so they use minimal amount of
resources to meet the want of the customers. The resources which are being use by the company is
inimitability in nature so the resources cannot be copied by the company from the other company.
The organization as well as human resource along with the management system is prepared by the
company to improve, strengthen and utilize the resources that are being use by the company which
helps to grow in the market (Zámborský and Turner 2017).
According to the value chain management the company is able to add value to their product
as they have made their brand local in the market. This help them to grow as a brand even in the
global market. If the company lacks in the value chain management then it would have been
impossible for the brand to gain popularity in the global market (Bai, X., 2016).
Fig. 5: VRIO Framework
(Source: Created by Author)
According to Porter’s value chain model the five parameters namely, inbound logistics,
operation, outbound logistics as well as marketing and sales along with the service have rightly
address by the organization, which help them to enter in the global market along with that help

10INFLUENCING ORGANIZATIONAL STRATEGY
them to grow in the market (Müller 2018). The company ultimately end up gaining popularity in
the market and huge amount of profit from it. The supportive activity was also rightly identified by
the company which possess purchasing, human resource management as well as technological
development along with the infrastructure (Rugman, Nguyen and Wei 2016).
Fig. 6: Porter’s Value Chain
(Source: Created by Author)
4. In what ways do Haier’s principles and methods of management differ from those deployed by
Western companies? What lessons might be drawn:
(a) By other Chinese enterprises, and
Answer: The Chinese enterprise wants to enter the global market but they lack in doing so as the
Chinese companies initially takes the easy way and then cannot compete in the difficult situation.
This means the company initially enter the market but they do not focus on the expansion of the
company and unlike Haier they do not localize their company in the global market which is one of
the main reason for the main reason that the other Chinese company is unable to survive in the
international market. On the other hand, Haier initially enter the difficult market to gain the
popularity in the market which later helped them to grow and to sustain in the international market.
The internationalization also become possible for the company in the European market which is
considered to be the important market for any company who is trying to global their brand (Wan,

11INFLUENCING ORGANIZATIONAL STRATEGY
Williamson and Yin 2019). The Haier also hired the local talents which enable them to know the
market condition in the international market and added advantage to the sustainability of the
organization.
The customers are more into the new and innovative appliances which will reduce their
labour and Haier is able to address the issue in a correct way which help them to grow and gain
popularity between the buyers in the global market (Lin, Su and Higgins 2016).
Haier also adopted Porter’s Diamond Model, which the other Chinese company did not
adopted to expand in the international market (Yang 2015). As these model help the company to
frame
 Strategy, Structure and Rivalry: The strategy of Haier is earn popularity in the
international market so that they can enter the other market as well with the help of the
popularity that is being gain in the process. The structure of the company is done
accordingly so that it can be effective in nature. There are other Chinese company who
are dealing in the same industry are the rivals of the company.
 Demand Conditions: The demand of the products that Haier is selling is quite high due
to the quality of the product. The after sale service that the company is providing to the
customers. This ultimately help them to grow in the market and to earn large sum of
money from the market.
 Supporting Company: Haier provide customer care service which provide additional
service to the customers. This ultimately attract the customers to purchase the product
from Haier. The company also provides other supports to the customers which attract
them towards the organisation.
 Factors: The expansion of the Company mainly depends on the favourable factors
which provide an opportunity to expand in the international market. The favourable

12INFLUENCING ORGANIZATIONAL STRATEGY
factors help the company to grow in the market to earn popularity which will help them
to enter the outside market as well and help them to sustain in that market.
Fig. 7: Porter’s Diamond Model
(Source: Created by Author)
(b) By Western enterprises?
Answer: The Western enterprise provide a neck to neck competition to the Haier but unable to beat
them as they are the ones who displays an effective market strategy and also the only Chinese
company who initially enter the international market to gain popularity so that they can enter the
other market as well with the popularity (Baker 2019). The Western enterprise possess the local
talent but they are restricted to the local talents only whereas Haier not only rely on the local talents
but also enable the local talent to work with the foreign talent as well (Rosca, Agarwal and Schlegel
2019).
To compete with the Western company Haier adopted McKinsey 7’s Model, this help the
company to adopt strategy accordingly (Kamau, Senaji, Eng and Nzioki 2019),
 Structure: The Company has effectively structured the business model, which gave them
an added advantage to expand in the international market.

13INFLUENCING ORGANIZATIONAL STRATEGY
 Style: The business style is simple and effective in nature. This help the company to
sustain in the market with big competitors.
 Strategy: Haier have adopted an effective strategy which help them to attract the
customers in the market and to earn huge amount of profit. They first entered the
international market to gain popularity and then they entered the small market with the
help of that popularity.
 Staff: Haier believe in cross-culture so they hire the locals as well. This help them to
understand the market needs and wants.
 Skills: The Company provide skills to the employees which help them to improve their
performance along with the company’s, which ultimately lead them to earn profit from
the market.
 System: The system of the company is transparent in nature which help organisation to
grow in the market and attract more number of customers. This also attracts the
employees towards the company as well.
Haier is able to enter in those market as well where many Western companies in the same
sector is unable to enter. As the Haier first enter the global market and gain popularity with the
localization and comparatively low price (Aharoni 2018).
This is how Haier is able to penetrate the different market and gain popularity all around the
globe. In recent times, consumers are more inclined towards Haier than the other brand as they
provide quality product in low price which mainly attract the customers to purchased the product of
the Haier. The company provide a neck to neck competition to the other Western company as well
due to wide range of product as well as competitive pricing (Aharoni 2018).
5. What recommendations would you make for Haier’s continuing success as a global leader in the
appliance industry?

14INFLUENCING ORGANIZATIONAL STRATEGY
Answer: Haier as a company is way more successful than any other company who deals with the
home appliances. This make the company superior in the market globally, but there are brands who
are now emerging in the market. It can be expected that there will be a cut throat competition which
is going to emerge in the near future. The company need to invest in the research as well as
development section so that they can come up with the new ideas as well as the innovation with the
help of the advance technology, so that they can retain their position in the market (Frynas, Mol
and Mellahi 2018).
With the emergence of the new competition global market has become a perfectly
competitive market, which enable small as well as medium size along with the big companies to
enter and exit the market. Therefore, Haier need to adopt ADKAR Model in an effective way which
will help the company to become (Schermerhorn Jr et al. 2019):
 Aware of the change: The Company should be aware of the changes that is taking
place in the market and should change accordingly.
 Desire to participate: Haier should desire to participate in the change so as to sustain in
the market.
 Knowledge about the change: Haier should accumulate all the knowledge about the
change that is going to take place
 Ability to the company: The Company should possess the ability to accept the change
that is going to take place in the market.
 Implement the change: Haier should be able to adopt the change and implement as
soon as possible to achieve profit from the market.
The company need to hire more number of local talents as they are the ones who will help
them to identify and analyse the market segmentation in a proper way and also Haier will be able to

15INFLUENCING ORGANIZATIONAL STRATEGY
implement Porter’s Five Forces Model, which will help them to possess the knowledge about the
market along with that (Song, Wang and Zhu 2018)
 Bargaining power of the buyers: Haier should look into the bargaining power of the
buyers which will help them to grow in the market and to earn huge amount of profit
from the market if the bargaining power of the buyer is low.
 Bargaining power of the supplier: Haier should possess the high bargaining power to
sustain in the market. If the bargaining power of supplier is high then the company will
earn less profit from the market.
 Threats/ barriers: The Company should address the treats that are there in the market
so that they do not face any sort of trouble in the near future.
 Competition with the rival: Haier should adopt an effective plan to compete with the
rivals who are there in the market. If they can do so they can also eliminate the rival
company from the market.
 Competition from substitute: There are many substitute for the brand so Haier need to
address the substitute proper in order to earn profit from the market.
This are the few recommendations which Haier must look into as this will ultimately help
them to grow in the market and enable them to earn profit from the market. As a company it is
important to look into all the aspects which might help them to grow in the market and gain
popularity. This will automatically help them to become more successful in the near future and do
well to earn huge amount of profit as well as attract a greater number of customers from the market
towards their brand.

16INFLUENCING ORGANIZATIONAL STRATEGY
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