Huawei Case Report

Executive Summary

The paper explores Huawei’s strategic components (strategic analysis, directions/objectives, formulation, implementation, and evaluation). The Chinese company was founded in 1987 and entered Singapore in 2011. Strategic analysis shows that the company offers budget-friendly products due to economies of scale, invests heavily in innovation and R&D, and provides outstanding customer services. It has opportunities in mobile data, foreign markets, and physical stores. However, its performance is affected by limited capital, trade barriers, and fierce competition. Based on strategic directions, Huawei believes technology should benefit every organisation, home, and individual to foster togetherness. Huawei deals with stakeholders throughout its operations, including customers, the board of directors, governments, employees, shareholders, and social media.

Stiff competition from Apple and Samsung and skewed consumer preferences have limited Huawei’s success in Singapore. Some strategies that Huawei should consider to improve its presence in Singapore include strengthening cost leadership, partnerships, localization, and vertical integration. Issues that can arise when implementing these strategies can be evaluated using the McKinsey 7S Model, as discussed in the case report. Also, changes in consumer demands and other trends underscore a need to evaluate strategy success, which can be accomplished using the balanced scorecard model. This case report also recommends ways to address the implementation issues.

Introduction

Today, companies face fierce competition due to technological advancements, changing customer expectancies, and globalisation. Competition has become more overwhelming, forcing businesses to think strategically and use strategic planning to make decisions (Durmaz & Düşün, 2016). Strategic decision-making is vital for company survival and success, especially in companies like Huawei. This paper explores Huawei’s strategic components (strategic analysis, directions/objectives, formulation, implementation, and evaluation).

Company Background

Huawei is a Chinese information and communication technology (ICT) firm specialising in telecommunications equipment. It offers services and consumer electronics, such as smartphones, wearables, tablets, PCs, and mobile broadband modems. Ren Zhengfei, a former Chinse soldier, started the company in 1987 in Shenzen (Forbes, 2023; Huawei, n.d.). It entered Singapore in 2011. Almost three decades later, the company developed into a global-leading provider of smart devices and ICT infrastructure. Huawei is dedicated to bringing digital to every home, organisation, and person for a wholly connected and intelligent world. The company boasts over 195,000 employees in at least 170 countries (Huawei, n.d.). With approximately 20 per cent market share, the company is China’s primary smartphone dealer and second after Samsung globally (Forbes, 2023). Despite its success, Huawei has faced difficulties penetrating the US market because of security concerns. Also, Google limited Huawei’s access to the Android apps and operating system after the Trump administration blacklisted it.

Strategic Analysis

The strategic analysis examines a company’s business environment within which it operates to shape strategic planning. This can be achieved through SWOT analysis which provides varying business scenarios that organisations can use to plan future undertakings after evaluating external and internal business environments (Taherdoost & Madanchian, 2021).

Strengths

The ability to offer highly competitive pricing is one of the company’s biggest strengths. Huawei relies heavily on its sizable and robust market to deliver budget-friendly devices and equipment compared to Apple and Samsung (Bush, 2019). The ability to offer cheaper products is also linked to Huawei’s second strength, commitment to R&D and innovation. Be it the first company to implement 5G or even the Internet of Things, Huawei remains an undisputed network communications pioneer. In 2017, Huawei received the “Best IoV Innovation” Award (SWOT & PESTLE.com, 2023). In 2021, the company increased its investment in innovation and research as part of its plan to sustain future developments (Huawei, n.d.). This keeps Huawei ahead of other tech companies.

Innovation and research have been instrumental in Huawei’s third strength, high quality and extensive products. Huawei provides relatively high-quality products. Also, Huawei has a broad product line, including signalling networks, smart nets, optical networks, 5G technology, and smartphones (Xi, 2021). Again, long-term R&D and innovation investment has made the company one of the largest patent holders globally (SWOT & PESTLE.com, 2023). The patented technologies offer substantial value to the information community.

Moreover, Huawei provides customers with excellent and fast services in over 170 countries (Xi, 2021). Huawei is known for its customer-first attitude, distinguishing itself from competitors. This approach helps Huawei develop products that meet customer needs.

Weaknesses

From a geographic perspective, weakness exists in North America. While the region is mature, it is a sizable and crucial background to Huawei’s rivals. The inability to enter the market is seen as a weakness, given that it highlights a lack of personnel to manage international business (Xi, 2021).

Another weakness is lack of capital. According to Bush (2019), Huawei has little capital, implying it must be careful when planning its business moves. The constrained budget means that the company cannot allocate sufficient resources for branding or marketing, which is essential in becoming a top-tier brand in consumers’ eyes ((Bush, 2019). This weakness coupled with the “Made in China” preconception contribute to the brand weakness.

Opportunities

Huawei has a chance to enter and dominate the US, Singapore, and Indian markets since they represent untapped income streams (Bush, 2019). In Singapore, Huawei is seen as the “dark horse” due to stiff competition from Apple and Samsung (Chan, 2017). Huawei has a chance to enter and dominate these markets.

Huawei should also consider opening brick and mortar stores. Companies like Apple and Samsung have physical outlets that provide customers with alternative ways to buy devices and enhance their brand perception (Bush, 2019). By opening physical stores across the globe, Huawei would improve its sales numbers.

Additionally, the ongoing growth of mobile data also presents an opportunity for Huawei to expand its business. The demand for network infrastructure delivering greater bandwidth and capacity at affordable cost per bit is likely to drive investments in future products and technologies provided by vendors like Huawei.

Threats

The main threat to Huawei’s business is trade restrictions, such as those imposed by the US. In Singapore, the government limited Huawei’s involvement in 5G development (Rahman, 2020). These restrictions affect business performance. Most Chinese companies like Huawei are concentrated in developing economies with many uncertainties (Xei, 2021). This is a risk to business sustainability. Importantly, Huawei faces fierce competition from other tech giants, especially Apple and Samsung in Singapore.

Strategic Directions and Strategic Objectives

Vision, Mission, and Objectives

Unlike other companies, Huawei has fused its mission and vision into one statement. Huawei’s mission and vision “is to bring digital to every person, home, and organisation for a fully connected, intelligent world” (Huawei, 2023). Huawei strives to achieve its vision and mission through several strategic objectives that highlight its four pillars. These include:

• Providing ubiquitous connectivity to facilitate equal access to connections for everyone.
• Building digital platforms to enable all organisations and industries become efficient, vibrant, and agile (Notesmatic, 2019).
• Providing pervasive intelligence to promote business growth.
• Delivering personalized experiences to all, while respecting everyone’s unique character and allowing all people to realise their full potential.

Huawei’s mission, vision, and strategic objectives are easy to understand. From the vision and mission, Huawei communicates its identity as a digital company committed to proliferation and growth of modern technologies that benefit all people (Notesmatic, 2019). The mission/vision declares Huawei’s commitment to ensure all people reap the benefits of technology. This underscores a digital inclusion approach that recognises that digital technology should not be available to people who can pay for it (Notesmatic, 2019). It shows that Huawei believes technology can benefit every individual, organization, and home. The statement fosters togetherness.

The four strategic objectives articulate the approaches the brand will leverage to serve its customer segments. Besides ensuring people are connected, the company offers pervasive intelligence for business customers to grow faster (Notesmatic, 2019). It also strives to create digital platforms to improve productivity in industries and businesses. This shows that Huawei wants to help different customer groups achieve their full potential through digital technologies that provide personalised experiences and services.

Huawei’s strategic directions and objectives underscore two features: innovation and customer focus. While these aspects are crucial to the firm’s success, the company should consider revising its mission and vision statement to capture its market position by communication where it wants to be relative to rivals and market size.

Stakeholder Analysis

Huawei works closely with customers, governments, international organisations, NGOs, and international bodies to make digital technology’s social value far-reaching and expansive. Customers, shareholders, and board of directors have high power and high interest in the company operations (Wang, 2022). Customers make suggestions that directly or indirectly affect the firm’s business model or change its personnel requirements.

Huawei’s shareholders and board of directors are the main stakeholders due to high power, high urgency, and high legitimacy. They make decisions that determine personnel retention and future business directions (Wang, 2022). Governments set the legal framework for tech companies and can reject or approve Huawei’s trademark applications (Wang, 2022). Governments focus on administrative aspects.

Employees are important stakeholders. Although they cannot control Huawei’s interests or decision-making processes, they implement strategies to grow the business. Lastly, social media is crucial in business operations by accelerating information transmission (Wang, 2022). As stakeholders, social media interests have a high urgency degree but low legitimacy to shape the company’s operational strategy. Huawei also collaborates with NGOs and international bodies to ensure their operations are sustainable ad yield optimal value.

Strategic Formulation

Business-Level Strategies

According to Farida and Setiawan (2022), stiff competition in the business world requires companies to continuously find strategies and wats to gain a competitive advantage in their fields. Business-level strategies identified mechanisms businesses can use to compete. Huawei’s success in Singapore has been constrained by the presence of competing companies, particularly Samsung and Apple. Huawei should combine two business-level strategies to increase its dominance in Singapore.

First, Huawei should reinforce its cost leadership strategy. Evidence suggests that cost leadership offers a more resilient way to cope with competition (Islami et al., 2020). As such, Huawei should invest more on innovation and R&D to reduce the cost of its service and product offerings. This strategy can help Huawei expand its market share in Singapore. However, the cost leadership approach should not compromise the quality of products/services offered. In order to strengthen the cost leadership strategy, Huawei should focus on the interests of Singapore consumers to ensure the products meet the desired quality and features (Chan, 2017). The company should develop meaningful technologies that are budget-friendly to enhance user experiences. Quality is one of the reasons Huawei falls behind Samsung and Apple in Singapore.

Notably, the company should combine the cost leadership approach with a partnership strategy. International companies partner with local firms for several reasons, including learning/obtaining new capabilities, gaining access to specific markets, reducing political and financial risk, and gaining a competitive edge (Bingöl & Begeç, 2020). Huawei can implement this strategy by forming strategic alliances with local firms in Singapore to take advantage of their market knowledge and expertise. This could help the company strengthen its presence and broaden customer base in Singapore.

Corporate-Level Strategy

Although there are numerous corporate-level strategies that Huawei can implement in Singapore, vertical integration offers a unique way to grow the business. Vertical integration defines a corporate-level strategy through which companies streamline their operations by owning various production stages instead of depending on external suppliers or contractors. This approach is preferred because it reduces transaction costs stemming from external market uncertainties, improves specialisation, minimises the risk of price fluctuation, and contributes to optimal allocation of business resources (Sun et al., 2019). The benefits improve corporate value and production efficiency.

Huawei can implement this strategy by acquiring a distributor, producer, vendor, supplier, or a related company in the same sector. This way, Huawei can gain access to specialised knowledge to produce high-quality products to compete with Samsung and Apple. Besides, the strategy improves supply chain flexibilities, making it easy to address consumer demands. However, Huawei should ensure challenges like unbalanced throughput, increased capital needs, and reduced governance flexibility (Buzzell, 1983) do not outweigh the benefits.

International-Level Strategy

Huawei is a global company with a presence in different countries, including Singapore. In Singapore, consumers have a skewed preference for specific models and brand, which is based on different features (Chan, 2017). For instance, people often believe that a product that everyone is using is good. This means that Huawei must consider an international strategy that Singapore consumers can support. The localisation strategy is the best fit in this case. In order to implement this strategy, Huawei must undertake a comprehensive market research to understand consumer preferences in terms of quality, features, and prices. Once the information is verified, the company should customise the products/services to match the need of the local market. This strategy can improve Huawei’s compliance with cultural norms and government regulations while at the same time meeting the preferences and demands of Singaporean clients. Localisation is a bridge to new and competitive markets because it improves consumer satisfaction and experiences (George, 2022). It also enhances brand loyalty.

Key Strategic Implementation Issues

McKinsey 7S Model provides a holistic framework through which organisations can evaluate their effectiveness. It considers internal elements like structure, strategy, skills, systems, shared values, style, and staff. These elements are interlinked and determine a venture’s effectiveness.

Strategy

Strategy underpins a well-formulated plan that enables an organisation to design an action plan to achieve sustainability in line with the guiding values and mission (Odeh, 2021). Huawei’s strategy seeks to expand its business to global markets and expand its product line through R&D. However, fierce competition, regulatory restrictions, geopolitical tensions, affect Huawei’s ability to execute its strategy (Peng & Zhang, 2021).

Structure

Structure focuses on company organisation in terms of command, leadership, responsibility, and accountability (Odeh, 2021). Studies have shown that Huawei has a flexible structure that meets international standards. Nonetheless, the rotational CEO system makes it challenging to cope with changing customer preferences and market demands (Peng & Zhang, 2021).

Skills

Skills underline a company’s capabilities and competencies that allow workers to perform optimally and accomplish espoused goals (Odeh, 2021). Huawei has skilled and satisfied workforce (Li & Zheng, 2021). However, retaining top talent is challenging due to competition from companies in the same industry and other sectors.

Shared Values

Shared values include mission, objectives, and vision. These elements form the foundation of sustainable operations (Odeh, 2021). Although Huawei has shared valued focused on customer service, innovation, and quality, it faces challenges upholding them because the alleged involvement in data privacy concerns and espionage (Lecher & Brandom, 2019).

Systems

Systems include technical infrastructure that facilitates decision-making and workflow in an organisation (Odeh, 2021). Huawei’s systems, such as logistics and procurement rely heavily on technology. Security concerns and US sanctions have disrupted Huawei’s supply chain systems, especially the supply of semi-conductors (Supplyframe, n.d.).

Staff

Staff includes human resources (employees and the management). Huawei has thousands of skilled employees but lacks staff with an international perspective to address diverse needs of global markets (Xi, 2021). Employee diversification is also a concern in international outlets.

Style

Style involves attitude and tone set by the executive towards work. Huawei has a centralised leadership approach. This makes it challenging to adapt to global markets and stay up-to-date with consumer preferences.

Strategic Evaluation

Businesses must evaluate their strategies to ensure they achieve the desired outcomes. The proposed strategies, cost leadership, partnership, vertical integration, and localisation strive to increase Huawei’s customer base, sales, and reputation in Singapore. The success of these strategies can be evaluated using the balanced scorecard model, which considers the following perspectives.

Consumer Perspective

The balanced scorecard requires managers to translate the firm’s mission into specific measures in order to reflect factors that matter to clients. In this case, Huawei should measure how Singaporean consumers see the company in terms of time taken to meet their needs and perceptions about product quality, service, performance, and cost (Hegazy et al., 2022). Successful implementation of the strategies should lead to increased customer partnerships sales, and on-time delivery.

Internal Business Perspective

Although customer-based measures are crucial, they should be converted into indicators of what a firm must accomplish internally to meet consumer expectations. Excellent consumer performance stems from decisions, actions, and processes occurring within an organization (Hegazy et al., 2022). Here, Huawei can measure the success of the strategies by measuring changes in product quality, cycle time, and productivity. Improvements in these aspects show the strategies are successful.

Learning Perspective

The proposed strategies emphasise the need for Huawei to learn local needs and preferences. Balanced scorecard stresses the need for continual improvements in existing processes and products and demonstrates the ability to introduce new products. Here, success is shown by technology leadership, increase in the ratio of products sold, and a reduction in time taken to introduce new, quality products compared to competitors (Hegazy et al., 2022).

Financial Perspective

Financial performance determines whether the implemented strategies improve the company’s bottom line (Hegazy et al., 2022). As such, Huawei should track changes in profitability, shareholder value, and sales growth to see if the strategies are effective. Other success indicators include growth in quarterly sales and increased return on equity and market share.

Recommendations

1. Huawei must embrace human resource management practices that maximize employee abilities through strategic steps that enhance workforce performance and enable the company to actualize its goals (Ekhsan et al., 2022). The company should make the employees feel valued through competitive compensation plans, provide clear growth opportunities, keep workers engaged, and provide lifestyle-enhancement benefits to improve retention (Fuscaldo, 2023). Besides, the organization should provide training opportunities to equip workers with skills and knowledge needed to cope with changing consumer demands in international markets like Singapore. It is also crucial to promote a culture that values workplace inclusion and diversity.
2. In order to address data security and espionage concerns, Huawei needs to reinforce its Privacy Protection and Cyber Security policy. This can be achieved by ensuring workers receive regular training on data protection and other compliance measures to create awareness (Huawei, n.d.). Besides, the company must go the extra mile to comply with applicable regulations and policies in the countries it operates as well as international standards governing the telecommunications sector. This way, Huawei can build trust and a loyal customer base.
3. Huawei should collaborate with governments, industry partners, and customers to address privacy and cybersecurity threats. Adherence to ethical principles can help remove the trade restrictions imposed on the company by the US. Huawei acknowledges the relevance of organising enablement exams and training on privacy protection and cyber security for its employees and managers (Huawei, n.d.). Thus, it should take disciplinary actions against violators.
4. Another concern highlighted earlier relates to leadership shortcomings. While the rotational chairperson system is important in eliminating the risk of personal decision-making or control (Peng & Zhang, 2021), Huawei should consider a dentralised leadership approach where employees contribute to strategic decisions since they are better positioned to address consumer needs. A decentralized approach helps deliver optimal value within a short sustainable lead time while simultaneously improving workplace flow (Sharma, 2023).

Conclusion and Future Prospects

Ren Zhengfei founded Huawei in 1987. Since then the company has undergone tremendous growth, employing over 195,000 staff in at least 170 countries, including Singapore. Huawei operates in a competitive market where it faces stiff rivalry from Samsung and Apple. It enjoys several strengths, such as competitive pricing, quality products, R&D, and excellent customer services. The company has opportunities to dominate the US, India, and Singapore markets, although it faces competition and trade restriction threats. Huawei as a valuable strategic direction that underpins its commitment to ensuring everyone benefits from digital technologies. In order to improve its dominance in Singapore, Huawei should consider several strategies, including localisation, vertical integration, cost leadership, and local partnerships. Huawei’s commitment to digital inclusion, R&D, and innovation shows it has a future in Singapore and other international markets. However, it must address the challenges identified earlier to build trust and a loyal customer base.

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Appendices

Appendix 1: Huawei SWOT Analysis

Appendix 2: Huawei’s stakeholder matrix