Understanding and Leading Changes in Business: Haier Group

This report provides a detailed analysis of change management and leadership within the Haier Group, a multinational consumer electronics and home appliance company based in Hong Kong. The report begins with an introduction outlining the scope and objectives, followed by an audit of the company's business environment using PESTEL and Porter's Five Forces analyses. It then examines opportunities and threats, and the impact of change on the organization's strategy and operations, including the use of a TOWS matrix. The report further explores the impact of change on leadership, team behavior, and individuals, utilizing Force Field Analysis, and discusses measures to reduce negative impacts. Stakeholder analysis and the application of Kotter's 8-Step Model and Lewin's Model are also explored. The report concludes with a discussion of the advantages and disadvantages of different leadership approaches in the context of the Haier organization, offering insights into the challenges and strategies for managing change effectively. The report highlights the importance of adapting to internal and external drivers of change, such as technological advancements and market dynamics, to maintain competitiveness and achieve long-term success.

Running Head: Leading and Understanding Changes in Business
Understanding and Leading Change
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Leading and Understanding Changes in Business 1
Contents
Introduction......................................................................................................................................2
Audit of Company’s Business Environment...................................................................................2
PESTEL.......................................................................................................................................2
Porter 5 Force Analysis...............................................................................................................4
Opportunities and Threats Analysis.............................................................................................4
Impact and effects of change the organisation’s strategy and operations.......................................4
TOWS..........................................................................................................................................5
Impact of Change on leadership, team behaviour and individuals..................................................6
Force Field Analysis....................................................................................................................7
Measures taken to reduce negative impacts of change on business behaviour...............................8
Stakeholder Analysis...................................................................................................................9
Kotter 8 Steps Model.................................................................................................................10
Lewin’s Model...........................................................................................................................10
Forces for change and their influence on leadership decision-making in the Haier Organization 11
Advantages and disadvantages of different leadership approaches...............................................12
Conclusion.....................................................................................................................................13
References......................................................................................................................................14

Leading and Understanding Changes in Business 2
Introduction
The scope of this report is to explain the reader with the evidence about the leadership and
change management strategies in the Hong Kong based organization Haier. The company is a
part of Haier Group Corporations and is a multinational consumer electronic and home appliance
goods industry present in the environment of China. The organization designs, manufacture,
develop and sell the products in the worldwide market (Haier.net 2020). The company works to
become first choice of people in the worldwide environment and become the best solution
provider as well. The below mentioned report highlight the information about the change
management strategies of the business. The internal and external drivers of change for the
organization are defined in the paper along with the evaluation of change management in the
organization. Change in a constant part of business that helps them to remain competitive in the
environment. More detailed analysis about the organization Haier and its change management is
mentioned below:
Audit of Company’s Business Environment
PESTEL
Political: the political environment of the nation is strong as it is a part of the most powerful
nation that is China. The political environment of Hong Kong is supported by the functioning of
the Chinese political system. The nation has created strong bond with the sovereign nations and
highly support the trading activities. It can be said that the political environment of the country is
strong that provide benefits to the companies to sustain their business functions and grow with
facing hurdles. The state enjoy stable political environment and there is presence of freedom
among people to perform the decisions as well (Ambler, et. al., 2016).
Economic: the economic environment of the nation elaborates that people have stability in their
living standards and purchasing power among them is optimum which makes them purchase
products in the business environment. The GDP of the country is supported by world class
infrastructure and the governmental support to initiate suitable activities for the people in the
environment. There is presence of free market economy in the nation and low tax rate due to

Leading and Understanding Changes in Business 3
which export and import activities are high progressive in the nation. The economic value of the
nation is strong due to which they are capable of dealing with several environment problems like
Coronavirus. The country in which Hong Kong lies used the resources to build a special hospital
for infected patient within 7 days. This shows the strength of the nation to deal with critical
issues. The Hong Kong Dollar is also legally issued by several famous international commercial
banks. The GDP growth rate of the country in year 2017 was 3.8% (Trading Economics 2020).
Social: the social factors of the country states that major portion of the population are Chinese
people residing in the nation. There is high population in the nation that increases the level of
consumer spending. People prefer living with their long and extended families rather than living
alone. Status symbol of the people is also a major factor for them that increase their purchasing
power. The country has several poverty reduction programs that help in making the economy
better. The company performs actions in the business environment while considering the needs
and demands of local Chinese people at large. There is presence of high degree of cultural and
regional and religious activities in the environment of Hong Kong (Lee, So, and Yok-Shiu 2017).
Technological: the people and companies present in the nation extensively make use of
technology aspects to grow. Technological competence is a part of social factors of the nation
because high population of the country make use of it on a regular basis. The technology
industry helps the people in the country to develop start-ups, introduce innovative ideas, and
capture them as well. China is the hub where high trading market is present. Therefore, this
country also gets the advantage to invest more on technological infrastructure and provide
benefits to people in the environment. The innovative and technology industry of Hong Kong
keeps on upgrading on a regular basis so as to provide excellent connectivity to the people
worldwide. Through this connection, the companies get to present themselves in the worldwide
environment. Technology is an attractive feature in the nation (Singh, Sethuraman, and Lam
2017).
Environmental: talking about the ecology of the nation, it should be noted that the climate in the
nation is seasonal due to alternating of the wind direction between the winter and summer. The
geology of the country is stable that improves the living of the people in the Hong Kong
environment. The environment is pleasant in the country however; the major problem in the
nation is marine life as it is getting degraded on a regular basis that is affecting the life of the

Leading and Understanding Changes in Business 4
people living in Hong Kong (Lai, and Cheng 2016). The biggest environmental problem that
Hong Kong people are currently facing is Coronavirus. The government of the nation is taking
measures to quarantine the cruise coming from China, thus, protecting the damage to some
extent.
Legal: the foundation of the Hong Kong legal environment was created strong due to which it is
still continuing effectively. It should be noted that strong foundation in the trading activities
increases the effectively of trade events of the company. The free trade market is highly
competitive and court system ensures that the disputes are effectively handled and all the parties
are satisfied with the decree of courts. The civil penal court, tribunal court etc. provides justified
decisions to the people in the business environment.
Porter 5 Force Analysis
Below mentioned is the industry analysis for the organization Haier. The company prevails in the
consumer goods and electronics industry working worldwide.
Basis Power Analysis
Industry Rivalry High  Many big firms with high
impact working in industry
Buyers power High  Low switching cost and
high quality of information
Suppliers power Moderate  Large number of suppliers
present in industry
Substitution Low  Less or nil substitution
available
New entrants Low  Large capital requirement
Opportunities and Threats Analysis
Opportunities: export rose by almost 10.7% in the electronic industry in HK in 2018 which
signifies that the market is growing and providing better scope of profitability to other companies
like Haier. The nation is world’s largest exporter in given industry. The external and internal
environmental analysis helped in understanding that the biggest opportunity held with the
organization Haier is the brand reputation of the company and high purchasing power of people

Leading and Understanding Changes in Business 5
(HKDC Research 2019). The income capacity of people motivates them to purchase the
electronic and other appliances in the environment and initiate sales for the organization. Based
on the PESTEL analysis, it should be noted that stable government and strong economy makes a
good combination for a large scale organization like Haier to invest in the nation and grow
effectively. Customers prefer buying new and innovative products as soon as they are introduced
in the market.
Threat: the threat of the organization is depleting environmental conditions and high degree of
competition prevailing in the industry. The company has a differentiated brand image in the
market but still there is high competition that takes the revenue of the company away (WU
2018). Changing environmental impact due to use of such goods is the biggest threat for the
organization based on PESTEL analysis.
Impact and effects of change the organisation’s strategy and operations
Considering the changes explained in above segment of the report, it should be noted that the
company need to change the business strategies in such a way that it improves the quality of
goods produced. Further, the company also needs to make use BCG matrix for the business so as
to evaluate the star, question, cash cow and dog product. Segregation of products on the basis of
this analysis will help the organization to improve other products as well. The environmental
changes are acting in both favour and against the organization as it is providing them opportunity
and increasing competition at the same time.
Changing strategies can have a number of positive impact on the company success and its
business life cycle as it helps the business to perform more effectively while reclaiming its
former growth rates (Helfat and Martin, 2015). The two key change management undertake by
the Haier includes technological development and logistics improvement that help upon its
corporate strategy and operations. Considering technological development, Haier entered the
business through a collaboration with the Strauss Group, an Israeli technological enterprise,
which provided the technology while Haier concentrated on marketing, distribution and service.
This not just benefit Haier to have intensive collaboration with the customers, however, with
innovators around the globe as well the rivals and directly strengthening the company strategy
and operations.

Leading and Understanding Changes in Business 6
Furthermore, as the digital revolution gained traction, the CEO of the company i.e. Mr. Zhange
realised that if Haier was to lead in the industry, there is need to break free from traditional
organisation structures and adopt open innovation central to company business strategy (Ye,
2015). With introduction of market mechanism into its R&D processes, Haier also able to create
a flow of disruptive new technology with integration to organisation operations so as to
transform them into commercial products. In addition, the company research and development
centre is also highly integrated to Haier different divisions and operational area and for the Haier,
the fundamental notion of company open innovation is that “the world is our R&D centre”,
simplifying, refers to the zero-distance sustainable innovation in relation with global users and
innovation resources (haier.net, 2019).
In relation with the logistics improvement, it results in operations improvement for Haier with
management of logistics area considering zero-defect focus, resulting in short delivery times and
less working capital. Haier also established Haier Logistics as their own TPL provider company
that later on become an individual TPL company supporting logistics services to other
enterprises as well (haier, 2013).
TOWS
Strength:
 Brand image
 High purchasing
power of buyer in HK
 Stable economy
 Good market share
(8.50 billion in HK)
Weaknesses:
 Weak distribution
network
 Seasonal sales
Opportunities:
 Market size to capture
 Growth in small
appliance market
 High disposable
income
Strength Opportunity
Strategy: (Maxi-Maxi)
 As the company holds
supreme brand image
so implementation of
diversification
strategy would help
the business to grow
(Bogers, Hadar, and
Bilberg 2016)
Weakness Opportunity
Strategy: (Maxi-Min)
 Development of
international presence
would provide regular
sales to business
 Focusing of premium
and lower level
segment differently
would enhance
organization’s

Leading and Understanding Changes in Business 7
 Development of
branded products for
premium people
would help in
achieving growth in
appliance market
position
Threats:
 Competition
 Environmental impact
 Only selective
products are saleable
as only few products
are seem to be
desirable by
customers
Strength Threat Strategy:
(Maxi-Maxi)
 Development of
extensive products
Weakness Threat Strategy:
 Should increase
online brand presence
Impact of Change on leadership, team behaviour and individuals
 Individual: It should be noted that with the change in leadership feature, the team
behaviour and individual behaviour changes subsequently. It should be noted that the
change management facilities demanded the organization to be stricter yet flexible at the
same time then only they would be able to control the quality standards of their products.
Resulting in which, it can be said that the team and individual behaviour appeared to the
organization a negative manner. Resistance to change can be said as the clear outcome of
the change management activities implemented in the organization (Bujor, Rusu, and
Avasilcai 2016).
 Team Behaviour: Looking at change management from the perspective of team and
employees, it should be noted that this feature makes the employees to work hard to
initially understand the change, and then try to implement it by changing their regular
working practices which require more time and efforts in the business environment.
Therefore, employees resist to change in the business environment of Haier. The negative
team behaviour towards the change acted as an impact of change management in the
environment Haier. The individuals of the company were unable to understand the
reasons of increasing the quality standards of the manufactured products even when they

Leading and Understanding Changes in Business 8
were leading in the Hong Kong environment. Disputes were also raised between the
teams that were satisfied and dissatisfied with the change management process in
business environment.
 Leadership: In the perspective of leadership, the change management would make the
organization to use differential leadership strategies to increase its effectiveness. Basic
leadership strategies cannot casually implement change in the business. Therefore, the
business needs to transform participative strategies into transformational leadership
strategies. Further, considering terms of individual, it should be noted that the
organization need to change the behaviour of employees so that they could adopt the
change without facing resistance, however, resistance to change is one of result of change
management in the business. Lastly, as team behaviour, the management need to be more
cooperative with the employees to conduct the changes in business. Either the team
would show complete support to the change or it would exactly oppose to the proposal of
change. These are impact of change management objective in the Haier business
environment.

Leading and Understanding Changes in Business 9
Force Field Analysis
Step 1: Proposal for Change
 The company should practice the resources of technological advancement to improve the
quality of the production and enhancement of the logistics and distribution process.
 Improvement in distribution and production chain
Step 2: Identification of Forces for Change
 Need of new product by customer
 Low maintenance cost
 Betterment of resources
 Improved production speed (Zand 2015)
Step 3: Identification of Forces against Change
 Disruption
Improvement in
product and
supply chain
quality
Betterment of resources

Leading and Understanding Changes in Business 10
 Cost
 Environmental impact
 Staff unable to handle technology
 Loss of staff overtime
Step 4: Assign Scores
Based on this analysis, it should be noted that the organization would take total 10 weeks to work
in favour of the change forces and 11 weeks to eliminate the forces that work against the staff.
Step 5: Analyse and Apply
It should be concluded that the company should adopt the described change in the business
environment of Haier so as to positively upraise productivity of the organization (Shrivastava,
Shrivastava, and Ramasamy 2017).
Measures taken to reduce negative impacts of change on business
behaviour
Initiate Communication: in order to improve the negative impact of change management from
the business environment, it is important for the organization to initially change the leadership
strategies and then initiate effective communication in the business environment.
Communication would help the company to understand the problems faced by the employees in
implementing change in the business and resolving their queries effectively. Communication
strategy would also increase the understanding of the employees towards the objectives of
change that the business wants to implement with the help of employees.
Initiate Flexibility and Innovation: further, change can be eliminated from the business
environment by introducing innovation and flexibility. It should be noted that the flexibility
aspect would help the employees to try out different methods through which they could help the
organization to achieve their decision in the business situation. Flexibility aspect would also
make the environment comfortable for the employees to work and express their views and
opinion to the top level management in the workplace environment. Innovation aspect would

Leading and Understanding Changes in Business 11
help the organization to find out innovative ways through which they could easily implement
desired change management practices in the business environment.
Introducing Training Programs: the introduction of training program would effectively help the
organization train the employees who do not have adequate capability to implement change in
the business environment. It should be noted that this type of capability would help the
organization to train the employees and make them understand the need and importance of
change in the business environment.
Stakeholder Analysis
Governments
Investors
Customers
Competitors
Employees
Managers
Low Interest, Low Power
Suppliers
High Power, High Interest
High Interest, Low Power
High Power, Low Interest
ManagementMedia
Distributors
P
o
w
er