Mg 495 - Haier Case Analysis

The Haier Group

A case report prepared for

MG 495 Business Policy

(Spring II 2011)

April 3, 2011

The Haier Group

I. INTRODUCTION

A. EXECUTIVE SUMMARY

1. This case analysis studies the globalization projects of one of the most successful companies in China, Haier, and a small appliance company. The case analysis focuses on Haier's plans in the U.S. market to establish itself as a major brand. The case also gives information about the competition in the U.S. consumer appliance market and its structure, and the strategies adopted by Haier to overcome the obstacles.

The problems faced by Haier in the high-end market in the U.S. consumer appliance industry and future prospects of the company in the US market are also discussed. The case also provides information on the Chinese consumer appliances market (ICMR , 2003).

Zhang Ruimin, CEO of the Haier Group, announced in November 2004 that the main goal of the company was to continuously increase the volume of products sold in the United States, and to modify the company's products to meet American demand. Although Haier had a good reputation in "white goods", whereas "brown goods" the brand was still relatively new in the United States and the company faced a number of long-term decisions in order to build an American presence. Some of the decisions included (1) how to integrate itself with the locality and build brand recognition, (2) how to create the products that could meet American needs, (3) how to achieve the cost control needed to maintain its price advantage, and (4) how to continuously improve its services to build the trust of local customers. The main problem to be resolved for Haier was how to differentiate itself from General Electric, Whirlpool, Maytag, and Electrolux in white goods and from Sony, Panasonic, Philips, and LG in brown goods and thus achieve a winning competitive advantage in the U.S. market (Lu, Mockler, & Gartenfeld, 2010).

2. A solution to the problems would be to create customers: find a way to make their products better than their competition in order to have the competitive advantage. Find a way to lower costs on productions while focusing on maintaining its price advantage in the market.

Another solution is to continue to improve upon their customer service and build trust amongst its American customers. Haier's could create a better marketing network than its competition