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Friday, 30 May 2014 14:37

Haier Group Featured

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 Haier Group

 Haier Group is a home appliance and consumer electronic manufacturing company (Haeir Group, 2013). The company has it’s headquarter in China and distributed its product in different countries of the world. The company has the largest market share in the world’s domestic appliance market.

 Haier’s Resources

One of the key resources that the Haier Group possesses is finances. The home appliance manufacturer has recorded good financial performance in the past years. In 2012, the group earned revenues of over US $25.8 billion and profits of over US $ 1.42 billion (Haeir Group, 2013). Financial resources are essential to the growth of a company. They enable a company to finance growth projects without depending on expensive sources of capital. Availability of financial resources also enables an organization to finance activities such as marketing, research and development.

Another key resource for the Haier Group is a wide variety of products. The group manufactures and distributes a wide range of home appliances including refrigerators, freezers, television sets, air conditioners, dishwashers, washing machines, and small appliances (Haeir Group, 2013). The company also manufactures and distributes commercial air conditioners and medical equipment. The wide variety of products enables the group to reach a wide market thus generating more revenue and reducing the risk of depending on one product. It also enables the company the ability to satisfy multiple needs of the customer under one roof.

 Haier’s Capabilities

Innovation is one Haier’s capabilities. Haier provides innovative solutions to the home appliances needs of customers. The group has five research and development centers around the world. The group has also established partnership with research institutions, universities, and suppliers with the aim of creating an innovative ecosystem. The company has established a network of over 1.2 million scientists and engineers to drive its innovation (Haeir Group, 2013). In 2012, Haier Group had over 13,952 patent applications. The group also appeared in the Boston Consulting Group’s list of “World’s 50 Most Innovative Companies”, in 2012.Customer service is also a significant capability for the Haier Group.

The company’s commercial ecosystem is founded on an interactive and delivery platform that seeks to enhance customer satisfaction. The company provides delivery and installation services to users by leveraging its service, logistic and marketing networks (Haeir Group, 2013). Providing quality services to customers is a vital capability as it enables the company to create customer loyalty.Another capability that is visible in Haier Group is effective management.

Haier group has developed an innovative win-win models that seek to align customers goals with employees goals (Haeir Group, 2013). The management structure allows employees to generate value for users. Haier Group inverted pyramid and flat organizational structure has led to empowerment of employees and creation of a dynamic workforce. Haier’s management model has attracted attention from famous business schools and its case has been included in collections of business schools for purposes of teaching and research.

 Distinctiveness of Haier’s Capabilities

The ability to mobilize financial resource is not a distinctive capability. Many companies, within the same industry, have also recorded good financial performance and, therefore, are capable of raising finances (Bryson, Ackermann & Eden, 2007). In addition, even companies that have experienced poor financial performance can raise finances through other avenues such a loans. The ability to deliver a variety of products is also not distinct.  There are numerous other manufacturers that produce a wide range of home appliances.Innovation is a distinctive capability because it is difficult for other companies to replicate what Haier Group is doing.

The company has established partnerships and a complex network of researchers and engineers in order to drive its innovation needs. It is difficult for another organization to replicate this strategy (Bryson, Ackermann, & Eden, 2007).  In addition, innovation is not just about research and development. It is a culture that is developed through the interaction of multiple organizational factors such as leadership, employee empowerment, learning and availability of resources. This makes it difficult for other companies to achieve a similar kind of innovation.  

Effective customer service is also a distinctive capability. Haier’s has managed to create an effective customer service system by developing effective marketing, delivery and installation systems. It is difficult for another company to recreate such a system. Similarly, customer service is also a culture. It is created through the interaction of multiple organizational factors (Bryson, Ackermann & Eden, 2007). Since other organizations cannot replicate all factors that exist in Haier, they cannot recreate the same customer service approach. Effective management is also a distinctive capability as it founded on unique aspects of the organization. This makes it difficult for competing firms to replicate this capability.

 What it takes to make Capabilities Distinct

Capabilities are made distinct by linking them to unique aspects within the organization (Bryson, Ackermann & Eden, 2007). Distinct capabilities are capabilities that cannot be replicated easily by competitors. They give an organization a competitive advantage. Linking capabilities to unique organizational aspects make it difficult for other organization to replicate these capabilities. One of the unique aspects of an organization is the organizational culture (Bryson, Ackermann & Eden, 2007). Organizational culture refers to a set of values, traditions and beliefs that influence the behavior of an organization.

It represents the normal way of doing things within an organization. Organizational culture is generated through interaction of multiple organizational factors such as organizational values, organizational policies, leadership, skills and motivation of employees, the organizational structure, organizational history and many other factors. Each organization has a unique culture that differentiates it from other organization. Entrenching capabilities into the culture of an organization makes it extremely difficult for other companies to replicate these capabilities.

This is because it is impossible for other organization to recreate the culture of Haier.Distinctiveness can also be created by linking capabilities in order to create a unique pattern (Bryson, Ackermann & Eden, 2007). A capability may not be unique. For instance, the ability to provide a variety of products is not a distinctive capability. However, Haier can achieve distinctiveness by linking this capability with other capabilities such as availability of finances, innovation, effective management, customer service. While the ability to provide a variety of products is not distinct, providing a variety of innovative products through effective customer management system may create distinctiveness. Similarly, while the ability to mobilize financial resources is not unique, this capability used to reinforce other capabilities such as innovation, customer service, and management leading to the development of unique pattern.

 Haier Strengths and Weaknesses

Strengths are factors within an organization that present advantages to the organization (Thompson, 20120. Haier has several areas of strength including strong financial base, a large scale of operation, a wide range of products, innovation, effective customer services, and effective management. Weaknesses refer to factors within an organization that present disadvantages to the organization. Haeir weaknesses include a large scale of operation and lack of specialization.Haier has a large scale of operation as the firm distributes its product globally. This characteristic of the organization can be considered as strength as it enables the company to reach a wide market (Thompson, 2012). It also enables the company to minimize the impact of geographic specific risks.

A large scale of operation also gives the company advantages of the economy of scale. However, a large scale of operation can also be considered as weakness as it presents several disadvantages. One of the disadvantages is reduced flexibility. The process of making and implementing decision is slow in such a large organization making it least responsive to changes in the external factors.Delivering a wide range of products is also an area of strength as it enables the group to have multiple revenue streams thus increasing revenues and reducing risks. It also enables the organization to enhance customer experiences by meeting multiple needs (Thompson, 2012).

This characteristic can also be a source of weakness as it leads to lack of specialization. Companies that do not specialize limit their capacity to develop distinctiveness because they divide their attention and resource over so many products and processes. Focusing on a few areas and product enables an organization to concentrate its skills and resources thus delivering additional value to customers.Haier can prevent its strengths from becoming weakness by aligning the strength with opportunities (Thompson, 2012).

Opportunities are factors outside the organization that present advantages to the organization. Haier can use its strengths to take advantage of opportunities thus creating benefits for the company. Haier can also prevent its strengths from becoming weaknesses by using these strengths to overcome threats. Threats are factors outside the organization that present disadvantage to the organization. Haier can avoid losses by using its strength to overcome threats. For instance, the group can use it large scale operation to overcome threats of political and economic instability in some of its geographical markets.     

 Approach to Internal Analysis

Zhang should use the resource based view model to analyze its internal analysis ((Bryson, Ackermann & Eden, 2007). The resource based view model analyzes the internal environment by examining the organization tangible resources, intangible resources, and core competencies or capabilities. Zhang goals for the company are to deliver value and options to customers, increase market share, increase shareholder’s return, and create the best working environment for employees. The companies need to establish strategies and tactics that will exploit its resources and capabilities in order to realize these goals.  


Bryson J. Ackermann F. & Eden C. (2007). Implementing the Resource Based View Strategy. Public Administration Review.

Haeir Group (2013). About Haeir. November 7, 2013. http://www.haier.com/ae/header/201110/t20111027_111715.shtml

Thompson S. (2010). Building Competitive Advantage. November 7, 2013. http://www.swlearning.com/pdfs/chapter/0324226217_1.PDF


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