...Case Analysis On Haier – Management Control on a Tactical Level INTRODUCTION * Haier Group is China's largest white goods manufacturer and one of the world's fastest growing white goods companies. * The company started out as a nearly bankrupt refrigerator plant in Qingdao, China, equipped with a group of low skilled and undisciplined workers, low productivity, inferior product quality and a loss making business. * Its current CEO, Zhang Ruimin, first took over the company in 1984 and established corporate rules and culture, revamped business strategy and set up an incentive-based management control system. All of these transformed Haier into a global player in less than 2 decades. * This case study examines the establishment of Haier's management control system and how it was adapted into the company's internationalization strategies, how it motivated employees to reach high performance goals and how it structured the business units to obtain optimal operational efficiency. SWOT ANALYSIS Strengths * Haier enjoy a well-known brand name and high reputation for reliable quality and first-rate customer service. * Its strength also lies in its innovation in both production and management practice. * Haier was ranked fourth among the global white goods manufacturers in 2004. * The Group successfully carried out product diversification to expand its brand beyond refrigerators, adding washing machines, air conditioners, and other items to...
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...After successfully breaking the stereotype of “made in China” in the 90’s and establishing itself in the overseas market as a quality brand, Haier decided to venture into India in 2004 owing to the potential market share it could amass. T.K. Banerjee, appointed as president of the Indian operations, set out to acquire 20% of the white goods market over a 5 year period and to place Haier in the top three companies in the industry in 7 years. However, these targets were far from being reached after the specified time period. The key issue was that the estimated growth had not been achieved. And according to the case, there were numerous aspects that seemed to have contributed to it. Firstly, the market was already crammed. Production facilities were constantly being added, but the demand hadn’t caught up to the supply. Secondly, the tax structure was such that it added to the cost of the products, resulting in higher prices and hampering industry growth. Thirdly, the escalating price wars kept the profit margins to a minimum. Big players, such as LG and Samsung, were keeping prices low to retain their market share while hardly making a profit. Lastly, sub-standard infrastructure contributed to making much of the rural market inaccessible. Poor condition of the roads and the delayed execution of rural electrification programmes contributed to holding up potential market demand. Besides the above mentioned reasons, there are three other aspects that the writer has failed...
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...Haier Case Study 1. Discuss the primary reasons why Haier moves from a single and dominant business strategy to a diversified strategy. The single and dominant business strategy, which denote relatively low levels of diversification, more fully diversified firms are classified into related and unrelated categories. A firm is related through its diversification when there are several links between its business units; for example, units may share products or services, technologies, or distribution channels. The more links among businesses, the more constrained is the relatedness of diversification. Unrelateness refers to the absence of direct links between businesses. 참고 : http://wenku.baidu.com/view/6a080e260722192e4536f624 2. A.Describe how Haier uses activity sharing and the transfer of core competencies to create value. (related diversification strategy) Haier uses both related and unrelated diversification strategies. Haier catapulted in the last two decades producing consumer products that are sold in similar fashion. They all shared distribution channels, outbound logistics, and sales forces. Haier was able to develop core competencies through effective activity sharing of primary activities resulting in a superb competitive advantage, ultimately creating value. CEO Zhang Ruimin realized that using both strategies’ can work in Haier’s favor with the ultimate goal of getting name recognition globally. His related diversification strategy used both operational...
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...INDEX |Contents |Page Numbers | | | | |EXECUTIVE SUMMARY |2 – 4 | |CERTIFICATE FROM MIMA | | |CERTIFICATE FROM COMPANY | | |ACKNOWLEDGEMENT |5 | |COMPANY PROFILE |6 – 10 | |INDUSTRY PROFILE |11 - 16 | |RESEARCH PROBLEM AND ITS BACKGROUND |17 – 19 | |OBJECTIVES, HYPOTHESIS AND SCOPE |20 – 22 | |RESEARCH METHODOLOGY ...
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...1. What unique resources and competencies contributed to Haier's success in China? Which of these resources and competencies enabled Haier to expand globally? The most crucial unique resource and non-location bound firm specific advantage was the CEO’s, Zhang Ruimin’s ability in getting workers to understand that Haier’s commitment to quality was unlike anything seen at other Chinese companies. Tacit know how deriving from his management skills, as well as explicit (or upstream) knowledge from “observing, digesting and imitating” operations and production of well established German companies, and importing foreign technology and design from Japan and Italy made it possible for Haier to establish a strong position in China. In order to acquire physical resources such as land and industrial plants for expansion, financial resources were raised from the capital market by issuing shares on the Shanghai Stock Exchange. The raised capital was strategically used for buying up those firms that had markets and good products but bad management. Then Zheng introduced his proven management and quality control principles to turn these firms around and merge them with Haier.” However, after such great-scale expansions, it became crucial to reorganize business units to achieve greater efficiency. This need was realized by the CEO who decreased the number of the numerous service departments that came with each acquired company, into four independently operating profit centers. Downstream...
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...Haier Case Introduction We will answer the group’s assigned question in two main parts; evaluating in the first instance the factors that led to the establishment of Haier’s competitive advantage in China over time followed by an analysis of the sustainability of the current position. Haier’s Competitive Advantage It is our view that the Haier company, under the leadership of founder and CEO Zhang Ruimin established a strong position in the Chinese market with respect to its competition. The company achieved this through a continuous evolution of a multi faceted strategy. Focusing firstly on on product quality and building a brand reputation, then adding in exemplary customer service followed by access to the remotest locations in China coupled with product localizations; the company was able to drive a continuous evolution of its value proposition. In parallel its focus on efficiency of production and operations drove cost advantages as it leveraged process improvements, economies of scale and scope. In the next section we outline the analysis of the sources of competitive advantage. Summary of Value Stick An essential element of the success of Haier in gaining and maintaining its competitive advantage was a deliberate and continuous approach to improving both cost and value drivers in its business. Each of the elements shown in the Value Stick comparison below were built on in key phases over time. Figure 1 - Value Stick Comparison Figure 1 - Value Stick...
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...CHAPTER I INTRODUCTION Haier Group is the world’s 4th largest white goods manufacturer. It was founded in 1984 with the headquarter in Qingdao, Shandong Province, PRC. Under the leadership of Chairman and Chief Executive Officer (CEO) - Mr. Zhang Ruimin, Haier manufacturers home appliances in over 15100 varieties of different specifications under 96 categories. There have over 100 countries that selling Haier products around the globe. According to the Haier Group official website, Haier now has over 240 subsidiaries companies, over 110 design centers, plants and trading companies and over 50,000 employees throughout the world. Besides doing home appliances business, Haier’s also focused on technology research, manufacturing, trade and financial services. Eventually, the global revenue of Haier for 2005 was RMB 103.4 billion. 1.1 Ownership of The Company According to Financial times, as far as transforming moments in a CEO’s Career, Mr. Zhang Ruimin is the chairman of the Board of Directors and CEO of Haier Group. Mr. Zhang’s current goal is to further enhance Haier’s leadership in Chinese and global markets and strengthen the reputation of Haier’s brand worldwide. In 1984, Zhang Ruimin was appointed as the director of the Qingdao Refrigerator Factory, a small, ailing collectively-owned factory in the Shandong province of China. Under his leadership and unique management philosophy, the company has since grown to become the Haier Group as now to be the China...
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...TARUN KHANNA INGRID VARGAS Haier: Taking a Chinese Company Global Only by entering the international market can we know what our competition is doing, can we raise our competitive edge. Otherwise, we’ll lose the China market to foreigners. — Zhang Ruimin, 19961 All success relies on one thing in overseas markets—creating a localized brand name. We have to make Americans feel that Haier is a localized U.S. brand instead of an imported Chinese brand. — Zhang Ruimin, 20032 On December 26, 2004, Haier Group, ranked China’s number-one company by the Asian Wall Street Journal,3 celebrated its 20th anniversary with annual sales topping RMB 100 billion.a (See Exhibit 1 for Haier revenue growth.) Starting with a defunct refrigerator factory in Qingdao, Shandong province, founder and CEO Zhang Ruimin built Haier into China’s largest home appliance maker.b Globally, Haier ranked third in white goods revenues, and was the second-largest refrigerator manufacturer (with about 6% of the global market) behind Whirlpool and ahead of Electrolux, Kenmore, and GE.4 Zhang pledged to make Haier the world’s best-selling refrigerator brand by...
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...A Profile of Haier Group Founded in 1984, the Haier Group has been dedicated to innovation and creating a world famous brand over the past 26 years. Originally a small collective plant on the verge of bankruptcy, it has now grown into an international group which has more than 70,000 employees around the globe and realizes a turnover of 135.7 billion yuan in 2010. Haier has risen to be the world's No.1 brand of consumer appliances. In addition, it was selected as one of the world's Top 10 innovative companies issued by USA Newsweek's website. Haier aims to create a world famous brand in the age of the Internet, which features satisfying the personalized needs of users in a short time. What such a business needs is large-scale customization rather than massive production. Taking this opportunity provided by the Internet, Haier addressed this challenge and actively explored and practiced the "Win-win Mode of Individual-Goal Combination". Through "Inverted Triangle" organizational innovation and "End to End" ZZJYT construction, it realized the transformation from "selling products" to "selling services" and fostered differentiated and sustainable competitive advantages. Trend-leading R&D advantages ---- The Haier's patent applications total over 10,000- ranking first among Chinese home appliance firms. Haier takes the lead to make breakthroughs in international standards. It participated in the drafting of 51 international standards, 27 of which have been issued and implemented...
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...THE IMPACT OF GLOBALIZATION ON HAIER Name: Institution: Date of submission: THE IMPACT OF GLOBALIZATION ON HAIER Introduction People across the world have been interacting with other cultures in numerous ways, many of them for economic reasons. Integrating the insights of the past, one could envisage that it was difficult initially for people to communicate and do business together. However, these obstacles still subsist even in today in international business. Despite that, our world has become undoubtedly smaller in the last decades, cultural and geographical contexts still take place in shaping different societies and their methods of relations. The term globalization is the method of international incorporation arising from the exchange of worldviews, products, ideas, and other aspects of culture. There are several factors generating interdependence of economic and cultural activities which include telecommunications and transport infrastructure. Most recently, due to the industrial revolution and innovation in the transportation and communication, the units of international interaction resulted into multinational corporations who were finding materials, labor, and clients outside their own. It can be realized that multinational corporations are agents of globalization. Haier Group Company has10 industrial parks world wide and 22 other plants overseas and has been impacted by the global world. The reality of this branches from the fact that it has many subsidiaries...
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...| | Type | Public (SEHK: 1169 SSE: 600690) OTC Pink: HRELF | Industry | Home appliances Consumer electronics | Founded | 1984 (Qingdao, People's Republic of China) Adopted current name in 1992 | Headquarters | Qingdao, People's Republic of China | Key people | Zhang Ruimin: Chairman and CEO Yang Mianmian: President Wu Kesong: Vice-Chairman | Products | Major appliances Small appliances Commercial heating and cooling systems Consumer electronics | Revenue | CNY 150.9 billion (2012) | Employees | 80,000 | Subsidiaries | Haier Electronics Group Co. (SEHK: 1169) Qingdao Haier Co. | Website | www.haier.com | About Haier History of the haier The origins of Haier date back long before the actual founding of the company. In the 1920s, a refrigerator factory was built in Qingdao to supply the Chinese market. After the 1949 establishment of the People's Republic of China, this factory was then taken over and turned into a state owned enterprise. Zhang Ruimin and the corporate revival By the 1980s, the factory had debt of over CNY¥1.4 million and suffered from dilapidated infrastructure, poor management, and lack of quality controls, resulting from the planned economic system and relevant policies. Production had slowed, rarely surpassing 80 refrigerators a month, and the factory was close to bankruptcy. The Qingdao government hired a young assistant city-manager, Zhang Ruimin, responsible for a number of city owned appliance companies. Zhang was appointed the managing director...
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...Ans 1. Haier entered into India to take its internationalistation plans forward and spread its footprint in the developing world. It seemed a logical step since the second most populated country was showing rapid economic growth similar the scene when Haier achieved success in China. Favorable market conditions: I. 8.3% GDP growth in 2003-04 and similar expectations in subsequent years. II. Rising disposable income. III. Relatively low entry barriers in white goods market. IV. Growth of home appliance sector at a rate between 11-14% annually for the period between 2000-04. Growth expectation of > 20 % for 2005-10. V. Low penetration in home electronics. The biggest category color TV stood at 21.3% and refrigerators at 16.!% only. Haier wanted to become a top 3 appliance brand of the expanding Indian economy in seven years and to garner 20% of India’s white goods market in five years. Also there were plans to set up a factory specifically for making refrigerators ( also to be used as a R&D center) and another color TV factory. Ans 2. Haier’s entry strategy • Developed a local sales network, launched media campaigns, acquired a manufacturing facility and rolled out products that were thought to be appealing to local market. • For the first couple years low end goods were sourced from local manufacturers and high end goods were directly imported. Like importing handsets, split ACs and high end TV models like plasma and flat screen from China and assembling color TV...
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...opportunity to compete against established, slow moving companies there by being more customer-focused than they are. To win over those customers we have two approaches—speed and differentiation. — Zhang Ruimin, CEO Haier Group1 The Haier Group was one of China’s most accomplished and important companies, with estimated global sales in 2007 of $16 billion. Founded in 1984 as the Qingdao Refrigerator Company, the original company was a collectively owned enterprise in the same northeast coastal municipality that produced the popular Tsingtao beer. Haier became a conglomerate electrical home appliance and consumer electronic products company. Its core business was white goods—refrigerators and freezers, ranges, and microwave ovens, dishwashers, and washing machines and dryers—and room air conditioners. Later, it diversified into mobile telephones, television receivers, personal computers, and even financial services and pharmaceuticals. Overall it produced 96 different product lines comprising 15,100 different product specifications. It employed over 35,000 people worldwide. Haier was one of the world’s seven biggest home appliance makers—along with LG (Goldstar) Group and Matsushita headquartered in Asia; Whirlpool and GE in America; and Electrolux and Bosch-Siemens in Europe. Haier was widely regarded as China’s “Most...
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...(for) HOME APPLIANCES & CONSUMER ELECTRONICS / WHITE GOODS Submitted by: Teofilo, Reymark P. 2009104355 As partial fulfillment of the requirements of EMG166 – Section T Strategic Planning & Management 3 Quarter SY 2014 – 2015 EXECUTIVE SUMMARY Haier in the Philippines are Corporation that the Filipinos embraced. It is a Home Appliances that gives comfort to the people that offers quality products. It is value for money, where normal people are looking for not like other competitors usually focuses only on their products. Haier is a corporation that brings life to your home. The corporation is still new to the market so it will be the focus of the strategy. Since the corporation is young compared to its competitors but they are different among their competitors having a variety of Home Appliance aside from having electronic gadgets. They aim to satisfy the needs and wants of their consumers that make them different among their competitors. Haier faces challenges and problems on how to penetrate since they only have one branch. They lack promotion that can help them to gain consumers and have the share in the market. With the help of the strategic plan one of the ways on how Haier will grow the market is that their marketing efforts should widened and strengthened. Along with the plan is the changing of the structure for the organization and marketing strategies to make their mark and to innovate their line of Home Appliances. 2...
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...Recommendations for Change at Red Star An Analysis of the Haier Group (A) Case As Haier Group looks to Acquire Red Star, Zhang Ruimin must consider the strategy for change that he must implement. While the changes that need to be made may be obvious on the surface, the method he chooses to invoke change is critical to the initiative’s success. Zhang faces an organization that has suffered years of poor management, where no motivation exists throughout the business. Careful consideration of the circumstances at Red Star must be analyzed before employing Theory E, Theory O, or a synthesis of the two. The most effective conclusion to the method of change to be used as Haier Group acquires Red Star is a synthesis between Theories E and O; specifically, a focus on cultural change using a very programmatic plan. To be successful in his change effort at Red Star, Zhang must first consider what has worked well for him in the past. He has been through several campaigns for change while at the helm of Haier Group, originally known as Qingdao General Refrigerator Factory. His first effort started in 1984, on his first day at QGRF. Zhang chose to lead the organization because he saw it as a challenge. The company was suffering from poor quality and increased competition. Zhang saw the potential for a star in the industry and knew he was the right person for the challenge. The changes he made were both structural (Theory E) and cultural (Theory O) in nature. After...
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