Presentation on theme: "Strategic Audit of Haier Group"— Presentation transcript:
1 Strategic Audit of Haier Group Pronounce High erCase 24Strategic Management MGMT 436Group 5
2 Current Situation (Jw Hayes) Current Performance 2001 to 2004Organized into 6 Divisions:Haier ChinaHaier EuropeHaier AmericaHaier Middle EastHaier SpainHaier New Zealand(L., and Hunger 24-2)
3 Top 100 Most recognized Worldwide Brand Name 20 Year Old Company from ChinaProduce Home Electrical Appliances18 Design Centers10 Industrial Parks30 Overseas factories and manufacturing bases58,800 Sales offices96 Product Group Categories To include :Refrigerators, Washing Machines, Air Conditioners, Cell phones, TV’s(Jw Hayes)(L., and Hunger 24-1)
4 4th in Global Sales revenue for White goods in 2004 (Jw Hayes)2004 Global Sales $12 Billion4th in Global Sales revenue for White goods in 200421% Market Share China overall Appliances34% Market Share China Major Home appliances14% Market Share China small electronic appliancesWhite goods are major home appliances refrigerator, stove, washing machines Brown goods are TV’s radios, DVD VCR’s(L., and Hunger 24-16)
5 B. Strategic Posture Mission Objectives (Jw Hayes)B. Strategic PostureMissionTo improve the quality of life, focusing on customers' needsObjectivesHaier 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)
6 Policies Expand Brand Recognition (Jw Hayes)PoliciesExpand Brand RecognitionOffer Niche products while expanding diverse product lineMaintain strict cost control to keep product prices competitiveContinue quick development programs and fast production updatesMaintain strong distribution network and supply chain relationships(L., and Hunger )
7 Three Stage Growth Plan StrategiesThree Stage Growth PlanBrand Name Strategy7 years built strong brand name in Refrigerator productsthru Total Quality control SystemProducts known for quality and innovationDiversified Development Strategy6 years to diversify product catalogueBy ,000 products in 86 categoriesL., and Hunger )
8 Going Multinational Strategy First move into Southeast Asia Second expand into United States in 1990’sEuropean entrance in 2001Japan expansion in 20022005 Haier has 62 distributors and30,000 retail outlets worldwideEventual GoalTo be listed among Fortune 500 Successful CompaniesL., and Hunger
9 2. Corporate Governance Board of Directors (Jw Hayes) Name Title Age Zhang RuiminChairman and Chief Executive Officer61Yang MianmianPresident and Director65Chai YongsenExecutive Vice President and Executive Director44Cui ShaohuaVice President and Executive Director49Song ChunguangVice President, Sales Director of Pegasus Qingdao, Deputy General Manager of Pegasus Qingdao and Executive Director43Liang Haishan40Cao ChunhuaVice President, General Manager of Washing Machine Division and Executive Director38(Bloomberg, 2011)
10 OTHER BOARD MEMBERS ON BOARD MEMBERS (Jw Hayes)OTHER BOARD MEMBERS ON BOARD MEMBERSName (Connections)Primary CompanyAgeWu KesongHaier Group Company56Kin Kau Lam MarkNeo Telemedia LimitedWu YinongHaier Electronics Group Co., Ltd.44Hoi Wing Fung HenryGlobal Energy Resources International Group Limited51(Bloomberg, 2011)
11 Pearson College Div, 2009. 24-1-24-26. Print. (Jw Hayes)Bloomberg, Initials. (2011, May 10). Industrial conglomerates. Retrieved fromHaier: about us. (2011, May 10). Retrieved fromL., Thomas, and David Hunger. Strategic Management and Business Policy: Achieving Sustainability.Pearson College Div, Print.
12 III. External Environment (EFAS table) (John Lerch) A. Natural EnvironmentWeather factors associated with shipping overseas (T)Long shipping times (T)B. Societal EnvironmentEconomicLower production costs in China (O)United States market is the largest in the world (O)
13 Technological Political-Legal Socio-cultural (John Lerch)TechnologicalRapid growth in electronics market (O)High initial costs for producing products with more features than (T)Political-LegalHigh cost of competitors duties by manufacturing overseas and selling in the U.S. (T)Socio-culturalDesire for new electronics in U.S. market (O)
14 C. Task Environment Rivalry high in the U.S. (T) (John Lerch)C. Task EnvironmentRivalry high in the U.S. (T)Able to expand product lines through partnerships (O)
16 IV. Internal Environment (John Taylor) Corporate StructureStarted 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 CultureModify 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 volumeof products sold in the U.S & modify products to meet U.S. demands
17 (John Taylor)C. Corporate Resources1. Marketinga. 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)
18 (John Taylor)2. Financea. 85% of company orders came from top 10 Chain stores in U.S. and Europe (S)b. Average annual growth rate of 78% from (S)c. Ranked 4th in major appliance sales worldwideat the end of (S)3. R&Da. Sluggish new technology development (W)b. Needs to develop technology for “smart appliances” (W)
19 4. Operationsa. Reached a strategic cooperation agreement with COSCO in , 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)
21 V. Analysis of Strategic Factors (John Lerch) Situational Analysis (SWOT)StrengthsPromotions by outside advertisements (magazines, trade publications, etc)85% of orders came from top 10 chain stores in U.S. and EuropeRanked 4th in major appliance sales in 2004Agreement with Cosco in 2004Strong distribution network and good relations with chain and individual storesWeaknessesTV AdvertisingSluggish new technology developmentNeed to develop “smart appliance” technologyOpportunitiesIntroduction of products to U.S. market at lower costInternational PartnershipsThreatsCompetition in U.S. marketLower response rate for stocking certain products and overstockingHigh initial investment to manufacturer products with more features than competitors
22 V. Analysis of Strategic Factors (John Taylor) B. Review of Current Mission and Objectives1. 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.
24 VI. Strategic Alternatives and Recommended Strategy (Shavera) A. Strategic Alternatives 1. Stability Strategy: Pause/Proceed with caution. a. Pros: Enables the company to focus on new marketstrategies, 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.
25 a. Pros: Enables the company to more quickly capture and respond to 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.
26 B. Recommended Strategy Recommend 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.(Shavera)
27 (Shavera)Wheelen, T & Hunger, J. (2010). Strategic Management and Business Policy. 12th Ed. Prentice Hall.
28 (Travis)VII. ImplementationA. 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.
29 (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.
30 VIII. Evaluation and Control (Nick)VIII. Evaluation and Control