Strategic Audit of Haier Group
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Strategic Audit of Haier Group. Case 24 Strategic Management MGMT 436 Group 5 . Current Situation (Jw Hayes). Current Performance 2001 to 2004. Organized into 6 Divisions: Haier China Haier Europe Haier America Haier Middle East Haier Spain Haier New Zealand.

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Strategic Audit of Haier Group

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Strategic audit of haier group

Strategic Audit of Haier Group

Case 24

Strategic Management MGMT 436

Group 5


Strategic audit of haier group

Current Situation (Jw Hayes)

  • CurrentPerformance 2001 to 2004

Organized into 6 Divisions:

Haier China

Haier Europe

Haier America

Haier Middle East

Haier Spain

Haier New Zealand

(L., and Hunger 24-2)


Strategic audit of haier group

Top 100 Most recognized Worldwide Brand Name

20 Year Old Company from China

Produce Home Electrical Appliances

18 Design Centers

10 Industrial Parks

30 Overseas factories and manufacturing bases

58,800 Sales offices

96 Product Group Categories To include :

Refrigerators, Washing Machines, Air Conditioners, Cell phones, TV’s

(Jw Hayes)

(L., and Hunger 24-1)


Strategic audit of haier group

(Jw Hayes)

2004 Global Sales $12 Billion

4th in Global Sales revenue for White goods in 2004

21% Market Share China overall Appliances

34% Market Share China Major Home appliances

14% Market Share China small electronic appliances

(L., and Hunger 24-16)


Strategic audit of haier group

(Jw Hayes)

  • B. Strategic Posture

  • Mission

    • To improve the quality of life, focusing on customers' needs

  • Objectives

    • Haier strives to create innovative and affordable quality products, to deliver sincere, delightful and caring services, in order to satisfy different customers

("Haier: about us," 2011)


Strategic audit of haier group

(Jw Hayes)

  • Policies

  • Expand Brand Recognition

  • Offer Niche products while expanding diverse product line

  • Maintain strict cost control to keep product prices competitive

  • Continue quick development programs and fast production updates

  • Maintain strong distribution network and supply chain relationships

(L., and Hunger 24-1-26)


Strategic audit of haier group

  • Strategies

Three Stage Growth Plan

  • Brand Name Strategy

  • 7 years built strong brand name in Refrigerator products

  • thru Total Quality control System

  • Products known for quality and innovation

  • Diversified Development Strategy

  • 6 years to diversify product catalogue

  • By 2004 13,000 products in 86 categories

L., and Hunger 24-23-24)


Strategic audit of haier group

  • Going Multinational Strategy

  • First move into Southeast Asia

  • Second expand into United States in 1990’s

  • European entrance in 2001

  • Japan expansion in 2002

  • 2005 Haier has 62 distributors and

  • 30,000 retail outlets worldwide

  • Eventual Goal

  • To be listed among Fortune 500 Successful Companies

L., and Hunger 24-23-24


Strategic audit of haier group

(Jw Hayes)

2. Corporate Governance

Board of Directors

(Bloomberg, 2011)


Strategic audit of haier group

(Jw Hayes)

OTHER BOARD MEMBERS ON BOARD MEMBERS

(Bloomberg, 2011)


Strategic audit of haier group

(Jw Hayes)

Bloomberg, Initials. (2011, May 10). Industrial conglomerates. Retrieved from http://investing.businessweek.com/research/stocks/private/board.asp?privcapId=29621318

Haier: about us. (2011, May 10). Retrieved from http://www.haiereurope.com/en/haier-mission

L., Thomas, and David Hunger. Strategic Management and Business Policy: Achieving Sustainability.

Pearson College Div, 2009. 24-1-24-26. Print.


Strategic audit of haier group

III. External Environment (EFAS table) (John Lerch)

A.Natural Environment

  • Weather factors associated with shipping overseas (T)

  • Long shipping times (T)

B. Societal Environment

Economic

  • Lower production costs in China (O)

  • United States market is the largest in the world (O)


Strategic audit of haier group

(John Lerch)

Technological

  • Rapid growth in electronics market (O)

  • High initial costs for producing products with more features than (T)

Political-Legal

  • High cost of competitors duties by manufacturing overseas and selling in the U.S. (T)

Socio-cultural

  • Desire for new electronics in U.S. market (O)


Strategic audit of haier group

(John Lerch)

C. Task Environment

  • Rivalry high in the U.S. (T)

  • Able to expand product lines through partnerships (O)


Strategic audit of haier group

III. EFAS Table(John Lerch)


Strategic audit of haier group

IV. Internal Environment (John Taylor)

  • Corporate Structure

    • Started out in 1984 as a government owned enterprise.

    • In 2004 was organized into Haier China, Europe, America, Middle East, Spain and New Zealand Divisions.

    • In 1999 established a Design Center in Boston, a marketing center in New York, and a Manufacturing facility in S.C.

  • Corporate Culture

    • Modify products to meet American Had built a reputation at home

    • (China) for quality, innovation, and customer service.

    • The main goal of the company was to continuously increase the volume

    • of products sold in the U.S & modify products to meet U.S. demands


Strategic audit of haier group

(John Taylor)

C. Corporate Resources

1. Marketing

a. Introduced its Two Brothers logo into the U.S. market to boost its brand image. (W)

b. Promoted mostly by outdoor advertisement, airports, magazines, heavily in trade publications, and on the internet. Outdated website. (S)

c. Little TV advertising, company sponsored sports teams and low brand awareness. (W)


Strategic audit of haier group

(John Taylor)

2. Finance

a. 85% of company orders came from top 10 Chain stores in U.S. and Europe (S)

b. Average annual growth rate of 78% from 1984-2001. (S)

c. Ranked 4th in major appliance sales worldwide

at the end of 2004. (S)

  • 3. R&D

  • a. Sluggish new technology development (W)

  • b. Needs to develop technology for “smart appliances” (W)


Strategic audit of haier group

  • 4. Operations

  • a. Reached a strategic cooperation agreement with COSCO in 2004, to help explore business opportunities worldwide. (S)

  • b. Strong distribution network and good relations with both chain and individual stores. (S)

  • c. H.A. Has lack of U.S. distribution centers and limited exhibition space of standard products compared to major competitors. (W)

(John Taylor)


Strategic audit of haier group

(John Taylor)


Strategic audit of haier group

V. Analysis of Strategic Factors(John Lerch)

  • Situational Analysis (SWOT)

    • Strengths

      • Promotions by outside advertisements (magazines, trade publications, etc)

      • 85% of orders came from top 10 chain stores in U.S. and Europe

      • Ranked 4th in major appliance sales in 2004

      • Agreement with Cosco in 2004

      • Strong distribution network and good relations with chain and individual stores

    • Weaknesses

      • TV Advertising

      • Sluggish new technology development

      • Need to develop “smart appliance” technology

    • Opportunities

      • Introduction of products to U.S. market at lower cost

      • International Partnerships

    • Threats

      • Competition in U.S. market

      • Lower response rate for stocking certain products and overstocking

      • High initial investment to manufacturer products with more features than competitors


Strategic audit of haier group

V. Analysis of Strategic Factors (John Taylor)

B. Review of Current Mission and Objectives

1. Needs to build brand recognition and enhance its brand image.

2. Expand U.S. facilities to allow for in country manufacturing of company products.

3. Introduce a wider range of products into the U.S. market.


Strategic audit of haier group

V. SFAS Table(John Lerch)


Strategic audit of haier group

VI. Strategic Alternatives and Recommended Strategy(Shavera)

A. Strategic Alternatives1. Stability Strategy: Pause/Proceed with caution.a. Pros: Enables the company to focus on new market

strategies, and consider focusing on its core products.b. Cons: Possible loss of market share.

2. Growth Strategy: Horizontal Growth Strategy.

Target niche markets in the U.S. by developing a wider range of products and services to satisfy their needs.


Strategic audit of haier group

a. Pros: Enables the company to more quickly capture and respond to local trends and increase competitiveness

(Wheelen & Hunger, 2010).b. Cons: Aggressive competition

(Shavera)

3. Retrenchment Strategy: Sell Out/Divestment Strategy.a. Pros: Allows the company to exit out of markets like the personal computers that are struggling and unprofitable.b. Cons: Loss of market share and a decrease in profits.


Strategic audit of haier group

(Shavera)

B. Recommended StrategyRecommend alternative # 2 which is the Horizontal Growth Strategy. Haier Company needs to focus on niche markets in the U.S. to satisfy those customers’ wants and needs. The concentration should not be on diversification, but rather building a strong brand name and image in the U.S.


Strategic audit of haier group

(Shavera)

Wheelen, T & Hunger, J. (2010). Strategic Management and Business Policy. 12th Ed. Prentice Hall.


Strategic audit of haier group

(Travis)

VII. Implementation

A. Competition for Haier is all over the place. Finding something like a new hit product that will make them stick out over all the rest will benefit the company highly. However they need to be careful to spend their money in the right areas and make sure it doesn’t go to waste ending in a overall bankrupt.


Strategic audit of haier group

(Travis)

B. Haier needs to improve its stocking abilities by using technology to their advantage. They seem to lack in keeping popular items on hand and ready to ship. Using technology will help them keep up with what sells out the quickest in various locations.


Strategic audit of haier group

(Nick)

VIII. Evaluation and Control


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