Haier Case Study

We chose Broad Differentiator as the basic strategy for our company. Through this strategy, our company will attempt to differentiate our product line in several distinct dimensions. By providing products that are vastly superior and unique from our competitors and pricing the products affordably, we can gain customers’ loyalty and awareness.

Establishing strategic alliances, such as Myer, Itochu Corporation, Inchcape BHD, wishlist.com). This created new distribution channels, new intellect resource base and new markets.

Having ability to use resources across more effectively (transfer of human capital, utilising group’s plants, facilities and services) that would lead to creating various synergies and benefit from economies of scope.

Our team decided to choose the “Broad Differentiation” strategy as the basic strategy for our company. We will attempt to differentiate our product line in several distinct dimensions. By providing products that are vastly superior and unique from our competitors and pricing the products with an affordable price, we can gain something that is beneficial for the company in the future, which is customers’ loyalty and awareness. We may change or modify our strategy for the next round depending how it performs against our competitors.

·The shifts in buyer demographics can alter the competition by forcing adjustments in the customer service, or bringing different sales and promotion approaches into play.

What are the pros and cons of such an approach from the perspective of various stakeholders?

Focusing on one area instead of trying to offer too many products is becoming a more effective way to market. Companies will start finding niches and then position themselves as the definitive source of information for specific products and services (Gunelius, 2010). When marketing too many products it is easy to dilute the market as well as the benefits of each product. When features overlap consumers not only get confused as to the differences but ultimately pick the cheaper one. So the costs to market the higher priced items become a waste. Focusing on fewer products allows for a more valuable product and therefore more effective marketing techniques.

Diversification is entering the new markets with new products and different from those in which the firm is currently engaged in. It is helpful to divide diversification into ‘related’ diversification and ‘unrelated’ diversification. Related diversification is when a business adds or expands its existing product markets. The company starts manufacturing a new product or through new market related to its business activity. For example, a phone company that adds or expands its wireless products or services by purchasing another wireless company is engaging in related diversification. Under related diversification, companies want to make easier the consumption of its products by producing complementing goods or offering complementing services. In a related diversification the resulting combined business should able to improve return on investment (ROI) because of increased revenues, decrease costs and reduced investment.

As technology advances, lots of products are flooded into the market. These products range from simple easy-to-use toys to fairly-ease-to-play video games. The need to understand the use of these products is essential and this explains the need for the use of manuals. What then is a manual? A manual is a documentation which is written with the intention of helping users of a particular product in knowing how best to use it (Online Technical Writing: User Guides). To further serve the increasing number of customers for product broughFt about the explosion of online annuals. If online manuals are supposed to help users of a product rather than confuse them, then the online manual of Haier operating system, which is available at HYPERLINK "http://www.gnu.org/software/make/manual/make.html#Eval-Function" http://www.manualowl.com/m/Haier/D200/Manual/178026 needs exploring.

Related product diversification: the non-vertically integrated diversified firm’s largest single business contributes to less than 70% of total revenue while its largest group of related business contribute over 70% of total revenue.

Haier has had the advantages of operating in a very large and fast growing home base which contributed to its rapid growth. Since its foundation, focusing on higher production quality and meeting customer needs to the fullest extend, along with formulating an international expansion strategy; Haier became a dominant player in the global appliances market.

There are also some risks for each strategy. Upholding cost leadership can be risky because of the requirement of frequent capital investment to sustain cost advantage, then cost surges narrow price differentials and diminish ability to compete with other’s brand royalty. Differentiation strategy has some threats, such as imitation decreases alleged differentiation, buyers need for differentiation falls. Meanwhile, the risks for focus or niche strategy are the differences in preferred products or services between the strategic market and target as a whole narrows, the cost discrepancy between wide ranged competitors and the focused firms broadens to eradicate the cost advantages of allocating a narrow target or to offset the

The basis of China's advantage is low-cost labour (Zeng and Williamson 2007, 27). Haier is take advantage of the cost advantage to provide high technology, choice and customised and specialty products at low price (Zeng and Williamson 2007, 55). Using cost innovation, Haier gained brand awareness in the US by making compact refrigerators and wine chillers to the mass market (Jain, Malik and Cruickshank 2006, 21).

1. Summary statement of the problem: The Haier Group was a strong electrical appliance maker based in China. Their stated goal from CEO Zhang Ruimin was to become a truly international company, and not just a low cost supplier to Western companies. The problem was how Haier was going to differentiate its brand from the already established brands such as GE, Whirlpool, Maytag and others. This was at a time where there was a very high saturation rate of home appliances already.

Haier’s strategy is product innovation combined with supply chain innovation. The firm is the number-one white-goods producer in China and has achieved