Case Study 4: Haeir Group Haier Group is China’s largest home-appliance maker, and CEO Zhang has ambitious goals for th

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Case Study 4: Haeir Group

Haier Group is China’s largest home-appliance maker, and CEO Zhang
has ambitious goals for the company. Whereas the United States has
General Electric, Germany has Mercedes-Benz, and Japan has Sony,
China has yet to produce a comparable global competitor. Zhang is
hoping to change that. Haier enjoys enviable prestige in China (a
survey of “young, fashionable” Chienese ranked Haeir as the
country’s third most popular brand behind Shanghai Volkswagen and
Motorola, with Cola-Cola fourth), but Zhang isn’t satisfied. He
wants to gain worldwide recognition, build the company into China
‘s first global brand, and be listed on the Fortune Global
500.

The Haier Group started as the Qingdao Refrigerator Company. When
Zhang took charge of the government-controlled company in 1984.,
his first deed as CEO was to take a hammer and smash 76
refrigerators because of their poor quality. Why? To drive home the
point that product quality was going to improve. At that time, the
company had only one product and 800 workers. Today over 30,000
employees make some 13,000 products in 86 different categories,
from air conditioners to mobile phones to vacuums and more. And
those products are now known around the world for quality and
innovation. The Haier Group exports its products to more than 160
countries and regions and has established more than 40,000 global
sales outlets. Its annual revenues are closing in on $9 billion.
Although Haier is the number one domestic appliance producer in
China, it ranks fifth in global appliance sales behind General
Electric, Whirlpool, Electrolux, and Siemens.

An important division for the Haier Group is Haier America, its
U.S. sales and marketing arm. From its headquarters in New York to
its state-of-art refrigerator manufacturing facility in South
Carolina, Haier America is committed to establishing itself as a
powerful U.S. brand known for original products. For instance, one
of those products is its popular frog-shaped television console,
which also doubles as a nightlight and asks kids to answer math
problems before switching itself on. The Haier Ribbit has been so
popular that at least one retailer is asking for variations using
other popular cartoon characters. Haier America CEO Michael Jemal
is working on the licensing deals to make it happen. He says,
“We’re the new kid on the block, so we have to ask them (the
customers) what they want. If we don’t have it, we have to build
it.” Other popular products include its compact refrigerator, wine
cooler, and office refrigerator.

Zhang is considered by many to be China’s leading corporate
executive. In November 2002, he became the first businessman ever
elected to the Chinese Communist Party’s Central Committee, a major
political triumph for the 54-year old with an MBA from China’s
University of Science and Technology. Zhang has been described as
“a very charismatic business leader and not just in the Chinese
perspective. He’s emerging as a global business leader.” Zhang’s
plans for pushing his company “higher and higher” rests on his
ability to exploit Haier’s resources and capabilities as the
company relentlessly pursues its goal of becoming a global
brand.


Questions

What resources and capabilities does the Haier Group appear to
have? Are any of these capabilities distinctive? Explain. What will
it take to make its capabilities distinctive?

What strengths and weaknesses does the Haier Group appear to have?
How could it prevent its strengths from becoming weaknesses?

What approach to internal analysis would you suggest that CEO Zhang
Ruimin use in assessing his organization’s strengths and
weaknesses? Why?

What do you think of Zhang’s goals for his company? What must the
company do to exploit its resources and capabilities in order to
reach these goals?