Heire Case
Case Analysis
Haier: Management Control on a Tactical Level
john brown
In the case of the Haier Group, we consider the issue of the corporation’s management control system and examine whether it is sufficient to complement the company’s globalization efforts.
Background
The Haier Group was founded in 1984 in Qingdao, China, but the corporation’s origin can be traced to the 1920s when a refrigerator factory was built to supply the Chinese market. The factory was taken over after the People’s Republic of China was established in 1949 and became a state-owned enterprise (SOE). The company’s product line has grown to include a full range of consumer appliances – refrigerators, freezers, washing machines, air conditioners, televisions, mobile phones and personal computers. More recently it has entered into the service industry, including financial and other service businesses.
Now considered a leading Chinese multinational enterprise, ranked the number one major appliance brand in the world with a 7.8% retail volume share in 2011[1], the company’s brand recognition today differs significantly from the small collective factory on the verge of bankruptcy that was taken over by CEO Zhang Ruimin in 1984. At that time, the company was a loss-maker, with a group of low-skilled and unproductive workers producing an inferior quality product. China had already begun to adopt a market economy and Ruimin’s challenge was rescue the company from it’s financial trouble and management disorder. Over the course of twenty years, Ruimin developed Haier into the globally recognized leader it is today, in four stages: restructuring and brand-building (1984-1991). Ruimin established trust between management and staff, established and enforced employee rules and regulations, and imposed strict management control on product quality and after-sales service. diversification (1991-1998). Ruimin merged with failing state
Haier: Management Control on a Tactical Level
john brown
In the case of the Haier Group, we consider the issue of the corporation’s management control system and examine whether it is sufficient to complement the company’s globalization efforts.
Background
The Haier Group was founded in 1984 in Qingdao, China, but the corporation’s origin can be traced to the 1920s when a refrigerator factory was built to supply the Chinese market. The factory was taken over after the People’s Republic of China was established in 1949 and became a state-owned enterprise (SOE). The company’s product line has grown to include a full range of consumer appliances – refrigerators, freezers, washing machines, air conditioners, televisions, mobile phones and personal computers. More recently it has entered into the service industry, including financial and other service businesses.
Now considered a leading Chinese multinational enterprise, ranked the number one major appliance brand in the world with a 7.8% retail volume share in 2011[1], the company’s brand recognition today differs significantly from the small collective factory on the verge of bankruptcy that was taken over by CEO Zhang Ruimin in 1984. At that time, the company was a loss-maker, with a group of low-skilled and unproductive workers producing an inferior quality product. China had already begun to adopt a market economy and Ruimin’s challenge was rescue the company from it’s financial trouble and management disorder. Over the course of twenty years, Ruimin developed Haier into the globally recognized leader it is today, in four stages: restructuring and brand-building (1984-1991). Ruimin established trust between management and staff, established and enforced employee rules and regulations, and imposed strict management control on product quality and after-sales service. diversification (1991-1998). Ruimin merged with failing state
Bibliography: Chen, Faxiang, 2006, Knowledge Management in Chinese Corporations. http://www.cfses.com/06confchina/documents/Final_Papers/Paper_ChenFaxiang_Knowledge_Management_In_Chinese_Corporations.pdf Lave, J. & Werger, E., 1991, Situated Learning: Legitimate Peripheral Participation. Cambridge University Press. Meyer, Marshall W. and Lu, Xiaohui, Managing Indefinite Boundaries: The Strategy and Strucure of a Chinese Business Firm, Management and Organization Review 1:1 pp 57-86. Woetzel, Jonathan, 2012, What’s Next for China?, McKinsey Insights China, http://www.mckinsey.com/insights/asia-pacific/whats_next_for_china Yoshihara, Hideki and Ou-Yang, Ta Hua, Market Economy Model of Chinese Management: Case of Haier. http://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/dp131.PDF ----------------------- [1] http://www.prnewswire.com/news-releases/haier-ranked-the-1-global-major-appliances-brand-for-3rd-consecutive-year--euromonitor-135722313.html [2] http://online.barrons.com/article/SB50001424053111903882904577478993057727490.html