1.0 Introduction

Central to organisational effectiveness and competitive advantage is a strategy that outlines the collective actions and resources to steer its goals and objectives. As espoused by Feniser and Sadeh (2017), strategy defines the desirable brand for the company and is aimed at directing how it achieves its mission and vision in the future. Strategic thinking is also central to fostering success in the dynamic and competitive environment. Grant (2016) describes some of the key elements that characterise organisational strategy. These include consistent and long-term goals, a profound understanding of the dynamic and competitive environment, resources’ appraisal that is objective, and profound communication. Grant (2016) explains these characteristics from the two stories of Lady Gaga and Queen Elizabeth. In understanding the competitive advantage, for instance, ones should evaluate the political, economic, and social elements, among others, and how they impact the environment. These elements are vital, especially for firms that seek to explore foreign markets.

This report involves the internationalisation strategy for Haier Group. The key elements in the report are the main features of the company’s internationalisation strategy since the early 1990s and the difference from the western firms and the level of success of Haier’s internationalisation approach. Another element in the report involves the principal features of Haier’s management system and how they differ from the traditional deployed ones by western enterprises.

2.0 Overview of Haier Group Case

Haier’s transformation is atypical of the industrial growth and development in China. By 2015, the company had earned a global position that was elusive for most Chinese companies. Since its inception, Haier Group has transformed its strategy to become the leader in the appliance sector. As described by Grant (2016), the company is reputed for its innovativeness and product development. It has also established a strong presence in competitive and complex markets, including Japan, Europe, and North America, which have some of the leading technologies globally. The growth of Haier Group is profoundly reflected between 1984 to 2012 as demonstrated in figure 1. Zhang Ruimin, the firm’s chief executive officer (CEO), has developed strategies to foster the company’s growth throughout these years. For instance, in 1984, Haier built a strong presence within the home market through customer service and quality products. In 2005, the company transformed from product-driven to user-driven.

Haier Group Strategy Phases 1984-2015 (Grant, 2016).

Haier’s success can be attributed to its management strategy, innovation, and product development. Regardless of the company’s opaque structure in governance, its success is related to the CEO, Zhang Ruimin, who is the architect of the firm’s remarkable development. Zhang’s leadership qualities cover a wide range of elements, including building the brand, customer focus, and quality management. The company’s strategy has also been centred on embracing technology in its products and connectivity of the people. Another key element that characterises the company’s success is performance management, which is vital in promoting the employees’ competitiveness. The company has also embraced the use of information and communication technology (ICT), as reflected in its ‘Smart Living’ launched in 2014.

3.0 Features of Haier’s Internationalisation Strategy Since 1990s

Internationalisation has attracted global attention among scholars and organisations. According to Azuayi (2016), internationalisation is concerned with how organisations are engaged in global markets. In contemporary firms, the operations commence in the domestic market. However, a long-term plan should be drawn on how the business will become international. In Haier’s case, for instance, although the domestic market was centred on the US, it has increased its presence globally, regardless of the complexity in the area, such as Europe and Japan. The foundations for internationalisation differ with the organisation. While some pursue global presence due to insufficient domestic market, others are concerned with the multiple opportunities and economies of scale available in the foreign nations. The majority of the executives attempt other markets after success in the previous ones. Besides, internationalisation has been adopted by the majority of business executives as a cost-reduction strategy for the operations. This is demonstrated in companies that have overhead costs and may have excess costs reduced in other nations that have a low cost of living and deflated currencies.

Haier’s internationalisation strategy commenced in the 1990s. In the 1992-1997 period, the company penetrated various overseas markets, including South East Asia, the US, and Germany. The South-East Asia countries included Malaysia, the Philippines, and Indonesia. Haier achieved penetration through developing joint ventures with the local firms for the manufacture and selling of air conditioners and refrigerators. In the US, the company commenced the supply of compact refrigerators to Welbilt Appliances, an importer, for sale under the retailer’s brand, and later under Haier’s name. The wine coolers followed the compact refrigerators, and the transactions were focused on the vast chains, including Walmart. In Germany, Haier achieved high sales through its sales agent and distributor, Liebherr.

Haier’s expansion to global markets can be explained through the Uppsala model and the network approach. According to Whitelock (2002), the main elements in Uppsala’s model are organisations developing their activities in an incremental approach and over time and the development being centred on the psychic distance. Also, the concept of knowledge development is vital in enhancing the firm’s activities. In this model, psychic distance plays an essential role in the expansion. Notably, an organisation first penetrates areas that are close to it psychically before entering the distant ones. Haier first entered in South-East Asia, including the Philippines, Indonesia, and Malaysia before penetrating in the US. The time aspect was demonstrated in the later expansion to Italy, Netherlands, and Germany in 1997. The trend in the penetration commenced by Asia, which is closer to China compared to the US and Europe. Regardless of the technology in Germany, the penetration to the country was achieved by first using Liebherr as the sales agent.

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