Haier Group’s competitive position in China
Haier Group has established its brand to be the largest home appliance maker in China with a 30 percent market share of the country’s white goods market in 2004 which demonstrates its competitive edge over the other brands. This has been achieved through delivery of high quality brands and reliable service compared to the competitor’s second-hard brands which come with poor service. Haier Group has also succeeded in creating a large scale brand hence becoming a first-class brand in the Chinese market. (Palepu, Khanna & Vargas, 2006)
In addition, Haier Group has become a market leader across all its brands while using diversification, export strategies as well as low prices in price wars with small firms that are subsidized by the Chinese government. (Palepu et al, 2006, p. 5) The brand is also positioned to appeals to the Chinese values and cultures by investing in research and producing new brands annually. This is also enhanced through innovation, rapid response to market changes, efficient distribution as well as superior after-sales service which differentiate the brand hence being more competitive. (Palepu et al, 2006, p. 7). Haier is primarily using a low cost differentiator strategy as they are providing their products at a lower cost similar to some existing companies. However, they are providing superior quality services which are not always present in the other competing companies in the Chinese market.
The basis of Haier Group’s international strategy
Haier Group’s international strategy aims at establishing a reputation in the international market. This is based on the organization’s focus on difficult segments upon entry into the international market enhancing high standards’ setting and achievement before approaching the easier markets. In addition, the strategy is based on a market entry approach that targets niche markets and application of low pricing. This helps the brand in competing for the lower priced goods’ markets avoiding a head-on competition with established brands. The entry strategy is then followed by introduction of regular goods to penetrate the market relying on local employees’ market knowledge. Finally, the international strategy is also based on innovation and speedy response that favors rapid development of products to meet customers’ needs; a process that is enhanced by the organization’s horizontal structure. (Palepu et al, 2006, p. 10). They are currently focusing on coming up with specific strategies meant for assisting them in competing in the global market. There low cost strategy will assist them in competing with the other competitors in the international arena. In addition they are also providing superior quality services, which make it more lucrative. The customers are getting both cheaper products and also good service at the same time.
Major Challenges ahead
Some of the challenges that lie ahead for Haier include the increasing competition from foreign firms entering the Chinese market due to market liberalization as WTO require countries to open their markets to foreign firms. There is also increasing competition from multinationals that are already established in China and are using economies of scale to increase their market share. In addition, international market presents a challenge due to diverse customers’ values and cultures that have to be addressed as well as the global economic difficulties that will challenge sales. (Palepu et al, 2006, p. 15). For surviving better in the international market, they should carry out a PESTLE analysis. In the political sense, they have to analyse the situation of the political arena and whether it will be favourable in the future or not. Then we must focus on the economic phase and then forecast what the economic outlook will be like as well as its current scenario. In the social phase, we must find out how the social dynamics fit in with the overall objectives of the company and whether they will be able to achieve their goals or not. In the technological arena, they are already quite advanced and at par with their competitors. The Legal phases of their company is also quite favourable and so is their environment in which they are operating.
References
- Palepu, K., Khanna, T. & Vargas, I. (2006). Haier: Taking a Chinese Company Global.
Boston: Harvard Business School Publishers.
