This paper aims to critically analyze the environmental factors and strategic position of Huawei’s business. Thus, this paper conducts both internal and external analyses of Huawei’s business. The internal analysis discloses that the key strengths of Hauwei are strong brand image, R&D and talent management, operation in the global market (in 140 countries), and cheaper product prices (30% cheaper than competitors). The key weaknesses of Hauwei are poor reputation and innovation in comparison to leading competitors (like Apple and Samsung), striving for global leadership, less visionary to bring change and disruption ahead, and poor history or legacy in the global telecommunication industry. The external analysis reveals that political, economic, social, technological, legal, and environmental factors are forcing Hauwei to bring constant changes and development in its strategies and business operation that affect the business performance significantly.
Table of Contents
2.0 Huawei’s overview.
3.0 Internal analysis.
3.1 SWOT analysis.
3.2 VRIO analysis.
4.0 External analyses.
4.1 PESTLE Analysis.
4.2 Porter’s Five Forces analysis.
5.0 Identified issues for Huawei’s internal and external issues.
5.2 Internal issues.
5.2 External issues.
Appendix A: R&D spent by Huawei and its competitors.
Appendix B: Smartphones sold in the global market from 2007-2017.
Appendix C: sold by Huawei and its competitors.
Appendix D: Market share of Huawei and its competitors.
Businesses in every sector (including the telecom industry) need to adapt internal environmental factors with external environmental factors to gain sustainable competitive advantages. This paper analyses the business environments and strategic position of Huawei, a China-based telecom organization. This paper first gives an overview of Huawei. Then, this conducts an internal analysis of Huawei using SWOT and VRIO models. Next, this paper does an external analysis of Huawei applying PESTLE and Porter’s Five Forces model. Finally, this paper summarizes the key internal and external factors for Huawei.
2.0 Huawei’s overview
Huawei, founded in 1987, is a telecom company based in China. This is now the biggest is the biggest telephone equipment maker in China and the global leader of ICT solutions. It is now operating and offering telecom network equipment, smart devices, and IT products and solutions in more than 140 countries and regions. Huawei has about 170,000 skilled and experienced staff (where 45% works for its R&D departments) who are motivated and dedicated to its organizational goals. It is growing up steadily with revenue and profits. It gained $75103 million of revenue, $6842 million of operating profits, and $5335 million of net profits in 2016 (Huawei Annual Report, 2016).
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3.0 Internal analysis
3.1 SWOT analysis
|1. Huawei has a strong brand image and goodwill in 140 countries over the world. This is the biggest telephone equipment maker in China (SPI-Report, 2018).|
2. Effective R&D with skilled and experienced staff has given advantages over international competitors. Huawei has engaged 45% of its 170,000 staff in R&D, whereas it has invested 10% of total annual sales revenue into R&D (Truong, 2015).
3. Because of the low-costs workforce and cheap products, it has gained success in both local (China) and global markets (including the EU, and the US). Its products are typically 30% lower than its key competitors.
4. The support from China’s government has enabled Huawei to be successful in a robust and sizable anchor telecommunications market.
5. Huawei has shown massive improvement in developing countries (like Bangladesh) than developed countries. Effective leadership and management with staff motivation and discipline are giving huge success in developing countries.
|1. It has a poor reputation regarding the quality and durability of the product in comparison to leading competitors like Apple and Samsung (Stork, 2012).|
2. Putting China labels on products de-motivates many customers.
3. Huawei has failed to organize an organizational structure that has slowed staff performance and the decision-making process.
4. It has weaknesses in network infrastructure in delivering high capacity and bandwidth at cheaper costs.
5. It is striving for global leadership. It is less visionary and facing challenges to bring change and disruption ahead.
6. It has less geographic standpoint in global markets including North America in comparison to its competitor including Apple and Samsung.
7. It does not have a strong history or legacy in the global telecommunication history in comparison to its competitors including Alcatel-Lucent and Eriksson (Chua, 2016).
|1. Huawei can offer products at cheaper prices due to low labor and manufacturing costs in China.|
2. Huawei can bring more innovation and creativity to the design and development of its products.
3. It can invent and use smarter and unique technologies (Stork, 2012)
4. It has the opportunity to develop new markets and target a wider range of customer segments in the global market (Statista, 2018)
|1. The threats of Huawei come from its competitors including Samsung, Apple, Microsoft, Xiaomi, OPPO, and Nokia.|
2. Legal issues (like lawsuits with Cisco regarding source code, user manuals, patents, and copyrights) affect the reputation of Huawei.
3. Technological advancement along with wireless technology supply is forcing to invent new technologies to meet the customer changing demands (Chua, 2016).
4. As the power management system and network technologies release green-house gases, Huawei needs to take part in go green campaign to reduce global warming effects (Huawei Annual Report, 2016).
3.2 VRIO analysis
|Is valuable?||Yes. Huawei’s resources are valuable for its business strategies and bring comparative differentiation in the marketplaces. Intellectual resources are more essential than financial resources for Huawei. It is bringing huge changes in disruptive new technologies and artificial intelligence (focusing) on consumer future expectations) to create value in its resources and in the industry (Van and Hoogen, 2012).|
|Is rare?||Some of the products and resources (like patents and contents) are unique in the competitive market. The HUAWEI Mate 9 series has become an instant hit in the global markets (Huawei Annual Report, 2016). The talents used R&D practices in Huawei also rare in the competitive industry, whereas it used 45% of its total employees and 10% of its annual revenue for R&D. Only in 2014, it invested $6.6 billion for R&D (Truong, 2015).|
|Is it difficult to imitate?||Some resources and capabilities of Huawei are difficult to imitate. For example, 65% of Huawei’s staff have undergraduate degrees and 60% of talents have postgraduate degrees (Master’s or Ph.D.). It has become the leading ICT solutions provider by deploying Smart Grid Solution in 65 countries (Huawei Annual Report, 2016).|
|Is the organization organized around?||Yes. Huawei has now built 13 OpenLabs in the global market to collaborate with over 400 porters around the world. It has delivered 420 cloud data centers and more than 2 million virtual machines to ensure secure, reliable, and efficient services for 500 partners in 130 countries. It aims to apply 5G technologies to develop a global open and collaborative ecosystem. Thus, the organizational effectiveness shipped about 139 million smartphones in 2016 that was a 29% increase over 2015 (Huawei Annual Report, 2016)……..|