Haier’s Strategy Analysis
Company current situation
Haier Group is the No.1 brand of large-size household appliances in the world. So far, Haier has established 25 manufacturing bases, 10 R&D centers, and 19 overseas trade branches. The company has more than 70,000 employees all over the world. During six consecutive years, Haier’s brand value amounted to $14 billion in 2010 and is ranked as the No.1 of the “top 500 Chinese brands”. Haier is also named as “the most valuable Chinese brand” on September 9th, 2011, which is its 10th consecutive years at the top of the ranking. The range of Haier's products covers almost all the household appliance segmentations, including refrigerator, air conditioner, washing machine, TV, water heater, computer, mobile phone, etc. Company strategy development history
1. Brand building phase (1984-1991): In this period of time, Haier Group focused on only one product- refrigerator. 2. Diversification Development phase (1991-1998): During this period of time, Haier has diversified from one product to a variety of products through acquisition of stagnant companies. Haier’s belief was to develop and expand itself in the shortest time with minimum cost. 3. International strategy phase (1998-2005): Haier sold its products in great volume to major economic regional markets in the world. They built its own overseas distribution network and after-sales service network and became a rapid-growth company with sound reputation and recognition. 4. Global brand building strategy phase (2005- ): The global strategy focused on creating localized Haier brand in different countries and become a global brand. Porter’s “Five Forces Model”
1. Threat of new entrants
Admittedly, there are relatively low barriers to entry in Chinese household appliances industry because potential entrants have low risks to access to this industry. Objectively, because of a huge market demand in China, more and more enterprises are attracted to access to this field. The policy of “household appliances going to the countryside” will encourage even more companies to reach the market. Nevertheless, even though the barriers to entry are low, new entrants are difficult to have further developments because of capital and technological limitations. The household appliance industry in China growth rapidly but still is a low level industry so that new entrants are commonly has a small economics of scale, which cannot threaten Haier’s leading position. The biggest threaten to Haier is the entry of multinational corporations, such as Daikin. Their competitive advantages are not technology and products, but capital. They gradually took away market share from Haier and became potential competitors of Haier Group. 2. Rivalry among existing competitors
The household appliances enterprises are rising sharply because of loose policy and maturing markets. In China, main competitors of Haier are Midea, Gree, and Hisense. In Global market, the main competitors of Haier are HP, GE, Samsung and Seimens. The strongest competitors of Haier is Midea, which gets a great achievement in air-conditions and refrigerators markets in recent years. After acquired Little Swan Company Limited, Chinese white goods market formed a five giants competition pattern (Haier, Midea, gree, HisenseKelon, Changhong). Haier occupied the first place temporarily with its high recognition in domestic and foreign markets. However, after acquiring Little Swan, Midea has been trying to take the throne of Haier. In the field of washing machine, there are three giant local enterprises share the market: Haier, Little Swan and Royalstar. At present, the last two companies were both required by Midea so that only Haier and Midea now share the market. As for air conditioning field, the original 3 giant competition pattern (Gree, Midea and Haier) have not changed much. Midea surpassed Haier and became the NO.2 brand in this field. Based on the analysis above,...
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