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Haier strategy development report

Prudence K. Magezi
Latest posts by Prudence K. Magezi(see all)

    Haier's strategy development report used various frameworks including Pestle, Swot, Porter's five forces, BCG, and Resources & Capabilities to assess its current strategic position and recommend appropriate strategies for further development in the global context. According to the findings, the company is faced with a number of challenges including the China-USA trade war, rising labor costs, oversupply, and market saturation in China among others. Unless Haier acts to mitigate such arising threats, it will find itself losing market share and future growth opportunities in key markets and product segments.
     

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    Strategic development report of Haier Case Study


    Key Learning Outcomes

    By the end of the case, students should be able to:

    • Use strategic business concepts and theories including Pestle, Swot, Porter's five forces, BCG, and Resources & Capabilities to assess a company's strategic position 
    • Analyze a company's environment; challenges, and opportunities that can impact its growth and implement recommendations accordingly
    • Understand the concept of strategy, what it is, and how to apply it to a real- life company

    1.0 INTRODUCTION


    Haier Group is a Chinese multinational provider of home appliances and consumer electronics. Founded in 1984 in Qingdao, Shandong province (China), it currently manufacturers and retails major appliances such as refrigerators, microwave ovens, water heaters, cooking appliances, dishwashers, washing machines, vacuum cleaners, under brand names such as GE Monogram, Hotpoint, Elba, Sanyo, Fisher and Paykel and Aqua (Annual Report 2017; Euromonitor 2018). With production plants covering every region in the world including 54 factories in China, Haier commands the largest market share in major household appliances globally with a 10.5% share of the global sales volume (Statista 2018; Euromonitor 2018). The company’s global revenue for the year 2017 was RMB159 billion, a year on year increase of 38% from the previous year while net profit has doubled since 2013, to RMB6.93 billion in 2017 as shown in figures 2 & 3 (Annual Report 2017; Statista 2018).

    The rationale for choosing Haier

    Haier has been on an acquisition spree in the last 5-7 years acquiring a diversified mix of brand portfolios including Fisher & Payel (New Zealand), Aqua & Sanyo (Japan), GE Appliances (USA), and more recently buying Candy S.p.A (Italy). In a highly commoditized industry, Haier decided to buy its way to the top but so are Chinese rivals such as Midea. This strategy has been working but with competition intensifying in addition to the impact of political, social, and technological trends, Haier needs to embark on new future directions as will be discussed. 

    Background to the problem

    In order to critically evaluate the issues leading to the need for strategic intervention, this report will use frameworks such as Pestle, Swot, Porter's five forces, BCG, and Resources & Capabilities analysis to inform and recommend to Haier an appropriate strategy for further development in the global context.
     

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