Executive Summary Of Huawei Business Plan Analysis Essay.

In this report  business project,you are you are required to prepare an executive summary which offers a synopsis of your business plan. 

Company Profile and Product Description

This research paper begins with a brief description of the company profile of Huawei with their corporate profile and descriptions of the products and their geographical coverage. This is followed by an in depth description of the retail offline business of Huawei, which is a recent business endeavour of the company. An analysis of the customer segment and market competition have been conducted in the report. The theoretical models like SWOT and PESTLE have been implemented for making the analysis of the business level competition of Huawei. This is followed by a discussion of the market penetration strategy whereby the Marketing Mix analysis have also been conducted. Lastly, after an overview and evaluation of the HRM policies of the company, a detailed conclusion have also been provided in the report.

Business Description of Huawei

Huawei Technologies Co. Ltd is a multinational networking organisation whose operations are based on telecommunications equipment production and marketing. The operations of the company is based outside of China. The business headquarters of the company is in Shenzhen, Guangdong. The company is considered as the biggest manufacturer of telecommunications equipment all over the world.

The organisation was founded by Ren Zhengfei who is an ex-military officer. The company was launched with an initial mission of providing consultation as well as operation related services to the enterprises in China as well as outside China. As per the information provided by Xia and Gan (2017), the basic employee strength of the organisation is 140000. 46% employees of the company are appointed for research and development, the leading in the world. The R&D domain of the company has its operations spread across Pakistan, Sweden, Russia, Turkey, Ireland and other countries as well. The services of Huawei are offered to 140 countries in all.

Retail Business description

The company also shares the market reputation of being a mobile handset manufacturer. The company is destined to develop a segmentation of their operations by introducing their offline retail channel. They are planning to develop 100 exclusive experience zones in collaboration with the retail business partners. The retail ‘business of the company is initially planning to benefit the sales of the flagship devices in China. However, by the end of 20202, the company is planning to increase the number of its exclusive experience zones to 1000 (Zhang, Luo & Zhu, 2018). In order to enhance its retail chain the company have joined hands with Croma to make their Mate 20 Pro available across all the Croma stores in the important Metro cities. The offline expansion of Huawei is a disruptive innovation strategy and they are planning to replicate this retail business strategy in all of their major markets. Huawei’s sub-brand Honor has already implemented the offline retail sales strategy and now maintains dual channels (offline and online) for enhancing its sales experience (Zhang, Luo & Zhu, 2018). The retail operations plan is emphatically targeted to the Indian market. The organisation is planning to implement their $100 million investment plan for the Indian market where they are planning to implement the retail strategy with full force. 

Description of Huawei's Retail Offline Business

Market Size

The organisation focuses on 6 primary customer segment categories for their offline as well as online sale channels. The customer segmentation survey conducted by the Customer Experience Transformation Centre of the company analyses that the “one size fits all” customer experience strategy cannot suffice the needs of the telecommunication industry which is facing disruptive innovation every day (Sun, Ding & Zhou, 2016). Based on the innovative developments, the needs of the customers are also alternating. Based on the motivation of owing a mobile device or any similar gadget (pertaining to the product category of Huawei), Huawei have differentiated the customers in to 6 main categories.

The first category is business focused who use their mobile phones for business purposes, basically. They seek reliable voice network quality as well as prompt customer care. The second category of customers are value chasers. The product prices influences their purchasing behaviours. They demand all major features in their devices but at a competitive price. The third customer category is family focused. These people use phones for the purpose of communication only. They need screen clarity for making high quality video calls and spontaneous voice network service. Another criteria of such customers is big batter life in the phones (Lu, 2016).  The fourth category of “entertainer” constitutes an important customer group. They are heavy mobile users and heavy data downloaders. They use the phones and other gadgets mainly for streaming videos and playing games. However, they are generally college going youth, who have limited disposable income. Hence, they also demand high tech and durable devices at a pocket friendly price.

The second last category defines the socialiser, who mainly surfs social networking sites in their mobile devices. They install large number of mobile applications and requires good hardware support. They also need reliable data support. The last category is that of the heavy user. They consumer large data volume. Their prime criteria is the data speed. They need comprehensive 4G data support from their phones without buffering.

 

Graph 1: Factors probing customers to change brand

(Source: Bakator & Petrovi?, 2016))

The target customer market of Huawei have gone through a huge change in the last 10 years. The cell phone and related gadgets industry have seen an increment from 24 million to 182 million in last 15 years.

Scope of Competitive Rivalry

The market size of Huawei’s cell phones have become considerably large in the last few years as an outcome introduction of more affordable devices. All leading companies are competing over advance technology in the communication sector and attempting to offer their products with innovative features at a most competitive price. However, equivalent market competition is making the product prices almost equal. That is why the marketers are needing new and innovative promotional strategies to gain ground in the new and existing customer bases (Kim & Chao, 2018). The price similarity is allowing the buyers to concentrate on the feature facility that the individual products are offering. The company is facing market competition in their emerging markets like South East Asia and Europe from major mobile phone brands like Samsung, Oneplus, Xiaomi, ZTE, Oppo and Apple and so on. The main aspects of competitive rivalry among these brands are following:

• Cost of cell phones: the consumers want better technologies at a lower cost.
• Bundle functions in a single device including email, texting and internet services
• Improvement of new technology: demand for better camera and better sound quality of speakers 

Customer Segmentation and Market Competition Analysis

Stage in Life Cycle 

The organisation is in a mature life cycle stage of the cell phone industry. All the potential customer are already availing the products of the industry. The growth as well as profitability of the cell phone customers of the company depends up on their capability to attract the new customers. Hereby, it requires mention that the company can attract new customers by improving the quality of the cell phones and providing significant customer service support. This will successfully attract new customers because technological disruption would not be able to attract customers alone (Steenkamp, 2017). This is a commonplace development that every company is attempting to accomplish. Instead, the organisation needs to develop value added services lie providing prompt customer service and opening as many service centres as possible. They can also develop the technology in the context of providing better data security, a field that is not researched in detail. The two major ways by means of which the cell phone companies would be able to attract the buyers are as follows:

• Service: making the cell phones readily available in both offline as well as online markets will enable the customers to get to know about the products in detail. The company also needs to reduce the service fee. This will attract large number of customers also.
• Innovative style of the phones: New designs of mobile phones and development of the appearance like slim body, full screen, embedded speakers or pop up cameras   will attract buyers to pay higher than competitive prices for the mobile phones and other products of Huawei (Lee & Shin, 2018).

SWOT and PEST analysis

SWOT Analysis

Strengths

Automation of the production line helps in bringing consistency in product quality. This also allows the company to scale up and scale down their productions based on the demands of the market. They also have a highly skilled workforce. Their major strengths also incorporates the Research and development domain where the company invest major percentage of their human capital and economic resources. The company also enjoys the benefits of a string brand portfolio and strong distribution network, which will allow the organisation to proficiently set up their offline supply and distribution chains.

Weaknesses

As analysed by Fu, Sun and Ghauri (2018), Huawei have poor demand forecasting capacity. This is why the company is forced to keep their inventory strength very high calling for increased investments. There are other gaps in the product lines also because of which the consumers of Huawei suffers from lack of choice. The attrition rate of the company’s supply network is also high.  The profitability ratio and Net Contribution % of Huawei are below the industry average.

Opportunities

The stability of the free cash flow in product development allows the company to innovate and invest in adjacent product development also. This is how, Guo et al. (2018), feels that they can create market diversification also. This would open several opportunities for the company over various product categories.

Theoretical Models Used for Analysis

Threats

One major barrier as well as a threat for the company is the growing strengths of the local distributors. In case if the company needs to pay higher than competitive margins to the distributors they would lose out on revenue. Rise in the pay level in major markets like China can pose serious pressure on the offline retaining domain of the company.

PEST analysis

Political Factors

The occurrences of the Chinese political domain has a great deal of influence on the sales and distribution of the company in the country. For evidence, at the time of the political promotional campaigns and meetings of the National congress, the stock prices of most of the leading companies fall drastically. However positive support is also available from the organisation that ensures sufficient practical training and development of the engineering students, increasing the competitiveness among the local labour force. This helps the company to gain cheap labour force in the country (Drahokoupil et al. 2017). The Chinese government also gives incentives to the domestic companies to allow maximum local manufacturing. 

Economic Factors

For the offline sales, the company is largely dependent on the Indian market outside China and the European market outside Asia. Additionally, the competing companies of Huawei like Apple have high end resource reservoirs whereas, Huawei is still struggling to enhance its capital. Further, the VAT in telecommunications sector is high in most countries because of which the operating cost of company is bound to increase.

Socio-Cultural Factors

The rise in population in China is strengthening the target market of the company. However, because the smart phones market in China is trending now, Huawei will face market competition from many market entrants.

Technological Factors

The high modernisation trend in China is giving rise to the usage of high end digital products. However, in the midst of the market competition, the indigenous product brands of China is going to get unprecedented preference from the government in terms of corporate tax and other allied factors.

Considerable part of Huawei’s leap from a regional Chinese market player to a global leader with sales ventures in the major markets like Europe and America has to do with the astute policy of brand partnership. In order to enter the North American market, the company is emphasising on the merger and acquisitions strategy.  They established a partnership with 3Com, the global leader of networking solutions. This partnership will significantly foster the offline retailing of the company. The networking company is liable for the selling and rebranding of the products of Huawei in the local markets (Joo, Oh & Lee, 2016). The strong distribution networks of Huawei will be compounded by the local knowledge of 3Com to develop the most efficient distribution network.

Market Penetration Strategy and Marketing Mix Analysis

The company also launched a joint venture with Symantec, which is a popular local networking company. This joint partnership was launched in the year 2012. This company was later acquired by Huawei. This acquisition created massive brand awareness of the company in the global market. These two ventures helped the company to enter in to local area networking for distribution and sales emboldened with strong brand reputation.

Branding 

The Asian telecommunications brand sector that have left their mark in the battle against the western brands share a same denominator: a strong commitment to branding by their boardrooms and senior management. In order to develop a strong global brand fame, the company should be rotating a higher number of market oriented personnel in the position of the CEO that than traditional financial and organisational experts. They also need more managers with global knowledge, regardless of nationality or ethnic background.

The organisation has already begun the appointment of people with more diverse cultural and international business experience in the managerial as well as the mid-managerial roles for their international operations. In order to diversify their senior managerial bodies, the company should also start appointing high profile western executives.

Product

Te product line of the company started with phone switches and it later earned contract of developing telecommunication network for military. The company also incorporated GSM based products in their supply line and currently their most prolific sales is in the domain of mobile phones, and other gadgets like laptops (Xuesong, 2016). 

Place

The services of Huawei are available online in 140 countries. The company also have a presence in five largest telecommunications market of the world. The company have employed 60000 international staff including the managerial positions so that they can efficiently conduct market distribution in the foreign sales domain. The organisation also have a vast research and development facility that is spread across 21 institutes in different countries like China, Canada, Germany, Turkey, Russia and so on. They have also engaged in to joint ventures with the local authorities of USA whereby they provide dividends in exchange of using the products from Huawei.

Price

The company have decided to implement a product pricing strategy for some of the most proficient markets. As Lee and Shin (2018), feels, this policy depends highly on the corporate brands strategy of the company since Huawei have launched numerous products at variable prices.

Promotions

On its international platform, Huawei have employed a veteran British based advertising company for guiding in the establishment of the distribution network in European regions. The company uses modes like magazines as well as newspapers for making promotions about the products.

HRM Policies of Huawei

HRM strategy

The company needs to suspend their ongoing internal recruitment plan for the domestic market. They should currently employ fresh graduates with backgrounds of foreign universities. The company needs to prefer candidates having outstanding experience in the domain of public cloud, video surveillance, IT, AI and data governance and so on. However, by employing fresh graduates instead of experienced employees they can manage their operational cost. Keeping their operational costs low, the company can increase their sales parity. For extending their service to 30 more countries the company will need 30% international workforce.

Conclusion

Huawei Technologies Co. Ltd is a multinational telecommunications organisation. The basic strength of employees is 140000. However, there is acute need of employment of a global workforce. The retail ‘business of the company is initially planning to benefit the sales of the flagship devices in China. The offline expansion of Huawei is a disruptive innovation strategy and they are planning to replicate this retail business strategy in all of their major markets. Huawei’s sub-brand Honor has already implemented the offline retail sales strategy and now maintains dual channels (offline and online) for enhancing its sales experience. The market size of the company is also evaluated in context to application of the offline marketing techniques. Based on the motivation of owing a mobile device or any similar gadget (pertaining to the product category of Huawei), Huawei have differentiated the customers in to 6 main categories. These are business focused, value chasers, family focused, socialiser as well as heavy data users. The skilled workforce is the greatest strength of the company. However, the product line of the organisation is thin which do not offer the customers with enough choices. The company needs to develop discrete strategies for market penetration for US and European market. They need to adopt the strategies of merger and acquisition for development of a prolific distribution network. The HRM strategy should be directed to employ graduates of foreign universities who have local marketing knowledge 

Reference List

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Cao, X. (2017). Marketing Strategies of Chinese Mobile Phone MNCs in the European Market:-A Case Study of Huawei.

Drahokoupil, J., McCaleb, A., Pawlicki, P., & Szunomár, Á. (2017). Huawei in Europe: strategic integration of local capabilities in a global production network.

Fu, X., Sun, Z., & Ghauri, P. N. (2018). Reverse knowledge acquisition in emerging market MNEs: The experiences of Huawei and ZTE. Journal of Business Research, 93, 202-215.

Guo, L., Zhang, M. Y., Dodgson, M., Gann, D., & Cai, H. (2018). Seizing windows of opportunity by using technology-building and market-seeking strategies in tandem: Huawei’s sustained catch-up in the global market. Asia Pacific Journal of Management, 1-31.

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