Haier

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MANAGING PERFORMANCE AT HAIER (A)

Group E2

Problem Statement
How to improve Haier’s performance management system and make it adaptable or applicable in other regions of the world?

Environmental Analysis (PESTC)
Political: In 2006 company exported to 160 countries valuing to $ 1.7 billion, however they have not established their manufacturing base outside the China. While venturing to different geographies they would be exposed to different labour and wage laws. Different political setups in terms of laws and regulations would impact the performance management system of the Haier. Cultural: Commonalities that can be characterised between Chinese culture and management practices at Haier are money, penalties, individuals, competition, openness, quantitative approach, instantaneous evaluation, competitive bidding, arithmetic evaluation rules and anti nepotism. However the cultural setup in different geographies of world is different than Haier’s. Japanese culture is if measured on the scale of 5 for difference in cultural values would rate at 4. Team work, qualitative approach, discretionary power to managers, non monetary awards and punishment and fixed wages are the characteristics of Japanese management culture. American culture would rate at 3 on scale of 5 for difference in culture. American culture reflects pretty similar traits as of new Chinese culture; however, there are prominent differences too. Teamwork, qualitative and quantitative approach etc are prevalent in American culture South Asian countries (Taiwan, Hong Kong, Singapore, Malaysia, Thailand, and Indonesia) share common culture tradition as of China. Economical: Due to globalisation, companies have their offices and employees spread across the globe. World has opened for the trade and commerce. Opportunities are greatly enhanced. Companies are exploiting resources available across the geographies. Dynamics in terms of volume of sales, selling speed, market share and business development has changed. Performance management system needs to be attuned to the prevailing economic factors in the world. Technological: Technological advancement, innovation and creativity have become need for survival and growth. Electronic appliances market is highly competitive with large number of established players. Haier group ranked number 5 on the global ranking amongst Large Kitchen Appliances players in 2007.

SWOT analysis of Haier
Strengths * High emphasis on quality * Unique performance management system * Source of national pride * 86 different products with 1300 specifications * High on innovation and creativity * International technological alliances and joint ventures * Innovative human resource management practices * High performance work environment| Weaknesses * Highly individualistic work environment * System being followed in China cannot be adapted globally| Opportunities * Advantage in the domestic market * Increasing demand for kitchen appliances * Niche targeting| Threats * High competition * Low quality and price image|

SWOT analysis of Performance management system at Haier
Strengths * Principles integrated Japanese management philosophy, American innovation and traditional Chinese culture * Internal marketing structure * OEC guiding principle- laid groundwork * Training- Haier University * Greater responsibility to managers * Race track Model to increase competition * MMC- highly individualistic and quantitative * Footprint method- Motivation * Weekly evaluation for managers * Publishing performance results| Weaknesses * Methods like Yellow footprint, hospitalized characterization can be embarrassing for low performers which ultimately lead to de motivation * Low team synergies * Could result in low knowledge base development * Make system highly competitive internally.| Opportunities * Haier management principles and culture is less distant to American culture....
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