Market Entry Essay

Value chain outline Business model restructuration Domestic market 1. Analysis 2. Factors of success 4. International expension strategy 1. Management method 2. Analysis 3. Factors of success 5. 6. Value creation Debate   Top quality products Adapted and productive management style Group capacity to restructure and timulate other companies Value chain analysis & good partnership Value Chain Outline Business model restructuration Domestic Market International expension strategy Value Creation Debate Value Chain Outline Business model restructuration International expension strategy Domestic Market 1984 1988 Zhang become Manager of Quingdao General Refrigiretor Factory Gold medal for product quality in national competition Value Creation 1989 1991 Chinese market face oversupply Diversification through aquisitions (eg, telecommunication, equipment†¦) Debate Raise the price and move to high quality strategy 1998 Operational restructuring Value Chain Outline Business model restructuration Domestic Market Diversification and internal reorganization ? 7 product divisions ? Glocal strategy: ? 4 Group-wide  « Development Divisions  » International expension strategy Value Creation Debate Value Chain Outline Business model restructuration Domestic Market International expension strategy Value Creation Debate Market share in 2004 Refrigerator Washing Machine Air conditioner 28% 18% 30% other ? ? ? By 2002, they accounted for 61% of industry profits. From 1989 to 1996, the number of refrigerators producers :100 to 20 3 Chinese manufacturers = 60% of the market ? Kelon is the main competitor Value Chain Outline ? Business model restructuration Domestic Market After the Chinese entry in WTO: ? new entrants (Electrolux, Siemens†¦) ? Refrigerator unit sales: 31% in 2002 vs 26% in 2001 ? Automatic washing machine: 38% in 2002 vs 31% in 2001. ? Before 2000: ? Core profit ? state-owned department stores ? In 2004: ? individual specialized shops/ private retail International expension strategy Value Creation Debate % Haier’s sales Domestic Chain International chain Licensed dealers Independent retail shops Government purchases. Management method Market responsiveness: focus on meeting customer needs Good after-sale service: offerings that Chinese customers was not accustomed (free replacement, warranty†¦) Distribution network: one single company (Haier logistics) serving the entire group, good network Be cautious: These points can be learnt, copied and imitated by multinationals International expension strategy Value Creation Debate Value Chain Outline ? ? Business model restructuration Domestic Market International expension strategy Value Creation Debate Key factor for international strategy Focus on market pressure: choose difficult market (eg. US, Europe)  « If we can succeed there we can succeed in easier market  » ? Look for hard challenges ? Focus on Human Resources assets ? Implement a  « local thinking  » ? Hire Local employees Value Chain Outline Business model restructuration Domestic Market International expension strategy Value Creation ? Since 1997: Willpower of a global expansion strategy (3third) ? Joint ventures ? Manufacturer of Liebherr (Germany): 8 top ranking ? 1999: Willpower of Haier to make a brand reputation overseas. Difference with the domestic rival Kelon ? Take example of the successful Japanese and Korean model. % of sales in the US an EU Export from China (% of total revenue) 1998 – 3% 2004 – 17% 1998 – 3% 2004 – 8,3% Overseas Made and Sold (% of total revenue) 2002 – 4,6% 2004 – 8,3% 70% of Haier overseas’ revenues come from developed markets Debate Value Chain Outline Business model restructuration Domestic Market.International expension strategy Value Creation Debate Focus on difficult (flat market) and highly competitive markets Penetrate the market with niche products Hire local people Make JV on five continents ? Benefit from existing networks. Pay close attention to market specifications Make  « response speed  » Satisfy customer needs Value Chain Outline Business model restructuration Domestic Market International expension strategy Value Creation Debate Growth leverage Restructuration Differentiation Know How After Sales Management Vision Market responsiveness Distribution Glocal Strategy Value Chain Outline ? ? Business model restructuration Domestic Market International expension strategy How would Haier evolve in order to gain more market share internationally and in their home market?