The case analysis will characterize Haier and the industry they serve through global operations and strategic ventures. The analysis will include Haier’s timing of entry, location selection, and modes of entry, while leveraging the company’s differences between home and foreign countries. A further examination of Haier’s successful international expansion and balance of staying competitive in the home country.
Characteristics
Haier has become successful as a Chinese company by acquiring inept local business rivals. CEO Zhang Ruimin would acquire these strong market products will inferior leadership, that he could turn around and become prosperous (The Economist, 2013). The company’s competitive advantage for offering their machines to be delivered …show more content…
The home appliances segment includes two major divisions: major and small domestic appliances that are used within households (Statista, N.d.). A multi-billion dollar industry, the forecasted consumption is nearly $600 billion by 2020 with 700 million shipments of units by 2017 (Statista, N.d.).
Modes of entry Haier would be considered a late entrant; this mode of entry allows the advantage of the company to become a successful competitor. As a late entrant to the market, the linkage, leverage, and learning (LLL) advantages applies to Haier. The linkage for Haier to utilize joint ventures and acquisitions to link the gaps, the leverage to understand their customers’ needs and wants, learning is the motive for internationalization (Peng, 2006). Haier entered the U.S. market in 1999 due for a large demand for consumer appliances. Haier utilized a product differentiation strategy to create a positive image for the Chinese company, as people thought goods from China were low quality, or the country-of-origin effect (Peng, 2006). In April 1999, Haier built their manufacturing plant in South Carolina as part of their globalization strategy. The technological advances in the U.S. along with avoiding the eminent non-trade barriers becomes beneficial for the company (Zhang, …show more content…
Haier’s direct export allows the company to have a higher level of control through distribution channels (Jeannet & Hennessey, 2004). The direct exporting approach allows for quick and simple entry into international markets with low risk. Through foreign direct investment (FDI), the company can avoid tariffs and transportation costs, and government regulations for protectionism (Jeannet & Hennessey, 2004). Haier bought General Electric (GE) for $5.4 billion to increase competitiveness including healthcare and advance manufacturing technology (Flannery, 2016). The company also utilizes joint ventures (JV) to enter a country’s market. Haier (51%) and Fagor (49%) established an agreement for a joint venture for a refrigerator production factory in Wroclaw, Poland (PRNewswire, 2013). Poland is strategically the largest producer of household appliances that will enable research and development (R&D), production and marketing tactics within a specified territory. Alibaba invested nearly $365 million in connection with Haier to create a logistics joint venture. The network agreement allows for logistics across China to deliver and assemble household appliances (Mozur & Steger,
Characteristics
Haier has become successful as a Chinese company by acquiring inept local business rivals. CEO Zhang Ruimin would acquire these strong market products will inferior leadership, that he could turn around and become prosperous (The Economist, 2013). The company’s competitive advantage for offering their machines to be delivered …show more content…
The home appliances segment includes two major divisions: major and small domestic appliances that are used within households (Statista, N.d.). A multi-billion dollar industry, the forecasted consumption is nearly $600 billion by 2020 with 700 million shipments of units by 2017 (Statista, N.d.).
Modes of entry Haier would be considered a late entrant; this mode of entry allows the advantage of the company to become a successful competitor. As a late entrant to the market, the linkage, leverage, and learning (LLL) advantages applies to Haier. The linkage for Haier to utilize joint ventures and acquisitions to link the gaps, the leverage to understand their customers’ needs and wants, learning is the motive for internationalization (Peng, 2006). Haier entered the U.S. market in 1999 due for a large demand for consumer appliances. Haier utilized a product differentiation strategy to create a positive image for the Chinese company, as people thought goods from China were low quality, or the country-of-origin effect (Peng, 2006). In April 1999, Haier built their manufacturing plant in South Carolina as part of their globalization strategy. The technological advances in the U.S. along with avoiding the eminent non-trade barriers becomes beneficial for the company (Zhang, …show more content…
Haier’s direct export allows the company to have a higher level of control through distribution channels (Jeannet & Hennessey, 2004). The direct exporting approach allows for quick and simple entry into international markets with low risk. Through foreign direct investment (FDI), the company can avoid tariffs and transportation costs, and government regulations for protectionism (Jeannet & Hennessey, 2004). Haier bought General Electric (GE) for $5.4 billion to increase competitiveness including healthcare and advance manufacturing technology (Flannery, 2016). The company also utilizes joint ventures (JV) to enter a country’s market. Haier (51%) and Fagor (49%) established an agreement for a joint venture for a refrigerator production factory in Wroclaw, Poland (PRNewswire, 2013). Poland is strategically the largest producer of household appliances that will enable research and development (R&D), production and marketing tactics within a specified territory. Alibaba invested nearly $365 million in connection with Haier to create a logistics joint venture. The network agreement allows for logistics across China to deliver and assemble household appliances (Mozur & Steger,