1. Strategic Audit of Haier Group Case 24 Strategic Management MGMT 436 Group 5

2. Current Situation (Jw Hayes) A.Current Performance 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)

3. 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 (L., and Hunger 24-1) (Jw Hayes)

4. 2004 Global Sales $12 Billion 4 th 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) (Jw Hayes)

5. 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) (Jw Hayes)

6.  Policies (Jw Hayes)  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)

7.  Strategies  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 Three Stage Growth Plan L., and Hunger 24-23-24)

8.  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

9. 2. Corporate Governance A.Board of Directors NameTitleAge Zhang RuiminChairman and Chief Executive Officer61 Yang MianmianPresident and Director65 Chai YongsenExecutive Vice President and Executive Director44 Cui ShaohuaVice President and Executive Director49 Song Chunguang Vice President, Sales Director of Pegasus Qingdao, Deputy General Manager of Pegasus Qingdao and Executive Director 43 Liang HaishanVice President and Executive Director40 Cao Chunhua Vice President, General Manager of Washing Machine Division and Executive Director 38 (Bloomberg, 2011) (Jw Hayes)

10. Name (Connections)Primary CompanyAge Wu KesongHaier Group Company56 Kin Kau Lam MarkNeo Telemedia Limited56 Wu YinongHaier Electronics Group Co., Ltd.44 Hoi Wing Fung Henry Global Energy Resources International Group Limited 51 OTHER BOARD MEMBERS ON BOARD MEMBERS (Bloomberg, 2011) (Jw Hayes)

11. L., Thomas, and David Hunger. Strategic Management and Business Policy: Achieving Sustainability. Pearson College Div, 2009. 24-1-24-26. Print. Haier: about us. (2011, May 10). Retrieved from http://www.haiereurope.com/en/haier-mission http://www.haiereurope.com/en/haier-mission Bloomberg, Initials. (2011, May 10). Industrial conglomerates. Retrieved from http://investing.businessweek.com/research/stocks/private/ board.asp?privca pId=29621318 http://investing.businessweek.com/research/stocks/private/ board.asp?privca pId=29621318 (Jw Hayes)

12. III. External Environment (EFAS table) (John Lerch) A. Natural Environment  Weather factors associated with shipping overseas (T)  Long shipping times (T) Economic B. Societal Environment  Lower production costs in China (O)  United States market is the largest in the world (O)

13.  Rapid growth in electronics market (O)  High initial costs for producing products with more features than (T) Technological 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) (John Lerch)

14.  Rivalry high in the U.S. (T)  Able to expand product lines through partnerships (O) C. Task Environment (John Lerch)

15. III. EFAS Table(John Lerch)

16. 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 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.

17. a. Pros: Enables the company to more quickly capture and respond to local trends and increase competitiveness (Wheelen & Hunger, 2010). b. Cons: Aggressive competition 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. (Shavera)

18. 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)

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