Mgt 406 Strategic Management Haier Case
The Alternative Strategy
Strategic planning is at the core of every business aiming at success in the increasingly competitive world of business. The approach by companies to strategic planning is the biggest challenge. Some companies have excelled while others have drowned. Haier Group is a good example of company that has utilized strategic planning in a superb way to give it global strength against competitors. The company deals in electronics. Currently, the company has over 18 design centers, 30 overseas manufacturing bases, 10 industrial parks, 19 product group categories, and 58,800 sales offices. This clearly shows the company’s commitment to success. Nevertheless, Haier Group has not found it easy in its business activities, which poses the question as to the alternative strategy for it and other like businesses in the ever-changing business world.
The industrial structure of the Household Appliances and Consumer Electronics business is more or less the same. Nine important segments form part of the structure namely products, consumers, manufacturing/operations, supply chain/distribution, sales/promotion, technology, warranty, and competition. A company in this industry has to ensure the segments are properly maintained through a sound strategic plan. For transnational corporations, the strategic plan has to be flexible to suit the circumstances of a given locality. Haier Group has demonstrated competence in its strategies over the years, which has placed it among the world’s top 100 brands. The company majors in household appliances and consumer electronics. Having started with three refrigerator products, the company today has 250 products in the market. This diversification gives it an advantage over competitors who offer a limited range of products. When some product lines are not performing, the strength of other products will balance the losses. On the other hand, the company has target consumers, which include college students, middle, high and low-income young people, baby boomers, and old people. The younger generation is particularly interested in electronics because their lives are too busy to run manually.
The company distributes its products through an elaborate channel, which begins at its individual stores then to leading retailers such as Home Depot and Wal-Mart. The distribution through such retail outlets ensures access to a wide range of customers. The company sells through stores and by online means. The latter makes life easier for customers who do not have to visit physical stores, some of which may be inaccessible. The company initially uses the internet, billboards and newspapers to advertise. It then resorts to TVs and mass media at enhanced stages. The company also updates its technology regularly in designing products. This guarantees efficiency in production. The market is diversified thereby giving the company a global presence. Currently, the company s present in America, Europe, Japan, and Southeast Asia. Haier Group products have sufficient warranty, which boosts customers’ confidence. It engaged A&E Factory Service to repair products under warranty in the American market, which so far is the largest.
The first alternative considered by management was for Haier America to introduce more of its existing product categories into the U.S. market. This could be achieved by building up national distribution centers to more effectively enforce the networks connected to chain stores and individual stores. Under the plan, Haier would import most of its products from Haier Group global manufacturing bases and offer U.S. customers more choices among its wide range of products within the company’s present product categories. Also Haier would need to