INTERNATIONAL MANAGMENT STRATEGY OF HUAWEI
Internationalization of companies revolves around the risks and profits of different market entry modes, however, Internationalization benefits cannot materialized without an action plan or strategy for achieving the given organizational objectives. Without a suitable strategy or plan, any international assignment is bound to be unsuccessful. Huawei for example adopt Porter’s model of international management strategy. The five forces model was developed by Michael E. Porter (1979) to help companies assess the nature of an industry’s competitiveness and develop corporate strategies accordingly. The framework allows a business to identify and analyze the important forces that determine the profitability
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The threat of substitute is high if the substitute provides a cost-effective trade-off compared to the original product Martinez and Wolverton, 2009).
Bargaining Power of Buyers
When buyers have the power to affect prices in an industry, it becomes an important factor to consider for a company. Buyers tend to have power over an industry if they are important to the company, this may be if the industry is such that buyers either buy in bulk, or can easily switch to another supplier (Martin, 2014).
PORTER’S FRAMEWORK AND HUAWEI
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Majority of its revenue came from Africa, Southern Asia and Middle East. These regions are representative for the economic performance of EMs during the past few years.
Revenue of Huawei in 2016 totaled CNY521,574 million, representing an increase of 32.0% year-on-year. Net profit grew by 0.4% year-on-year to CNY37,052 million. There are several reasons behind this: As the consumer business grew rapidly and contributed a larger share to total revenue, the company's gross profit margin dropped by 1.4 percentage points from 2015; also as the company increased investment in building its consumer brand and consumer sales channels, total operating expenses as a percentage of revenue rose by 1.1 percentage points relative to 2015 (Annual report,
In addition, the bargaining power of the sources of inputs is high. The switching costs from one supplier to another are high because there are not many substitutes for the particular input for metal products. Besides, the number of suppliers who produce raw metals is small. The threat of substitute is high. There are many different kinds of substitutes for metal product company. These companies may also produce a large variety of product like Slade Company. Therefore, the substitute is low for this market. Only companies that produce high quality are able to not be substituted by the others.
Threat of Substitutes: Substitution, price-to-performance, and altering costs are all factors that determine the threat of substitutes. Bob’s app informs individuals about products, services, hours, classes, and much more. Gold’s Gym is a corporate fitness facility that created an app to record progress and report health statistics. Gold’s idea differs from Bob’s which decreases the threat of substitution.
Threat of substitutes in market as best quality is not always a priority for some customers as they are price sensitive.
iii. Bargaining Power of Buyers The bargaining power of buyers is high due to the low switching costs and the availability of substitute products. iv. Threat of Substitutes
Availability of Substitutes – If the raw material that’s needed for manufacturing can be replaced with alternatives, the supplier power is low.
A substitute performs the same or a similar function as a product by a different mean. They belong to a completely different industry. High threat of substitutes impacts industry profitability negatively.
In a world of free trade, growing competition and accessibility to foreign markets, the need for methodical market analysis and assumptions is steadily rising in today’s business environment. It is just a normal way of thinking to primarily intent to eliminate the financial before entering a new and foreign market. This suggests that enterprises have to develop an overall strategy for their business in order to gain competitive advantage and consequently market share. With the words of Michael E. Porter, professor at Harvard University and leading authority on competitive strategy, this desirable market success is indirectly linked to the individual structure of a market. The unique structure of a single market influences the strategic behaviour and the development of a competitive strategy within a firm. The competitive strategy finally decides whether a company performs successfully on the market or not. Referring to this interpretation of business success, M. E. Porter established his five forces framework that enables directives to gather useful information about the business environment and the competitive forces in industries.
We all know that comapanies go international for many reasons but always typical goal is comapny growth and expantions. When a company searches for new interesting markets abroad and also hires international employees, using well designed international strategy can for sure expand business on foreign markets. Internalization strategy of companies is now possible because is no problem to manage business by phone or e-mail. There is also no problem to travel by plane from Europe to Asia in few hours what was not possible in past.
Over the last 30 years the world has seen drastic changes in the Chinese way of making business. Nowadays, China has opened its businesses to the rest of the world, especially America and Europe (Teagarden & Cai, 2009). As a result, their economy has increased and the evolution of the companies have changed to be from closed doors to be international and multinational (Teagarden & Cai, 2009). This essay will analyze, first of all, how some Chinese companies have had success abroad, looking at the strategy that they applied to expand and to improve their products. Furthermore, this essay will show examples of successful Chinese firms, such as Lenovo and TCL Group, and how they achieve it.
This essay will analyse Tata Motor Company and its motive for internationalization and include the background information on the company then it will go on to consider the definition of theories as well as applying them to the Company. The paper will focus on theories which are Dunning Eclectic paradigm; Learning Theories and Porter Diamond .Tata Motors Company is one of the largest automobile companies in India with a 42 billion organization. Further the product range of automobiles, information and technology is varied and covers almost all the segment of the car market as per the Tata Motors (2014).The research shows (Business Leadership Management (BLM), 2013) the motive for internationalization is due to its acquisition and its ease the
(T) • Threats to substitute products or services – Threats of alternative products or services is considered greater, other means of transportation may turn out to being less expensive.
This paper provides the relevant knowledge of international business to examine and analyse the key issues for Huawei in its business and the international market place. Firstly, a brief introduction of Huawei will be given and its main drivers in emerging markets will be presented under the theory of foreign direct investment (FDI) before showing its entry mode. Then, there will be a discussion about the core external environmental issues that Huawei underwent when it operated its business in emerging markets: India and South Africa. Next, it looks forward to justifying the key opportunities and challenges when it moves in to India and South Africa. After that, Huawei’s international business operations with the evaluation of its company structure as well as control mechanisms will be specified. This part includes a section that how human resources management (HRM) impact its international business operations. At the end, the suggestions of external environmental issues need to be coped with in the future will show before drawing a conclusion.
Buyer power within the industry is low as substitute products are not easily accessible, unless the customer decides to negotiate with the providers.
The other side of the matter is excessive adherence to preferred suppliers neglecting the advantages competitive pricing. Competitive pricing could pave the way for reducing the price of the end product. This is what the evaluation of the T5 agreement now suggests.
"While practically everybody today is a potential mobile phone customer, everybody is simultaneously different in terms of usage, needs, lifestyles, and individual preferences," explains Nokia's Media Relations Manager, Keith Nowak. Understanding those differences requires that Nokia conduct ongoing research among different consumer groups throughout the world. The approach is reflected in the company's business strategy: