Chinese MNCs - HUAWEI Technologies Limited - Case Study Example

Chinese MNCs-HUAWEI Technologies Limited Name: Institution: Date: Introduction Global market is gradually changing with drastic and steady macroeconomic environmental factor changes. Globalization and technology changes have been the key development and facilitators of global market changes. In this regard as Carr and the Commonwealth Secretariat (2004) noted, the global market has experienced a growing market base from the traditional domestic to the foreign markets across the globe. As such, this has led to the increased growth and development of multinational corporations to serve in these diverse and vast markets. Initially, the corporations were form Europe and USA that were the developed markets at the time. However, the recent past has experienced increased multinational organizations from the emerging markets such as Japan, Taiwan and most recently China. In this regard, unlike others in the global market, the Chinese companies have established a unique market approach and operational strategies on the global platform (Rosato, 2005). Thus, basing the argument on an evaluation of the Huawei Technologies electronic and technology Chinese based multinational corporations this essay offers a critical evaluation of its operational model. As such, it evaluates the unique models and the subsequent lessons that other multinational organisations and prospective multinational corporations can learn as a market competitive edge and success enhancement strategy. Discussion Organizational Structure The organizational structure is largely participative. In this regard, the ventures superior governing body is the shareholders meeting that formulate the overall organizational policies. Unlike other global multinational organizations that function under the leadership of respective directors in different functions, the organization has superior functional committees for each function such as the Human resource and Finance. The application of the committees instead of individual directors is aimed at ensuring representation of diverse market culture needs as well as improved strategic objectiveness (“HUAWEI”’ 2014, “Governance”). Further, the organization has respective functional business groups that form the basic structure component and are offered the required decision making powers and liberty in developing operational strategies to allow for increased innovation and participation in the organizational structure. The organizational management structure is as illustrated below. Organizational Values Organizational values are the fundamental principles and approaches through which an organization operates. In this regard, the developed principle and systems in an organization regulate and control the manner and strategies through which such respective organizations conduct their business activities in the market. In this regard, as Melé (2005) stated, organizational values and principles are the funding rational bases on which the respective objectives and market strategies are developed in the market. Therefore, the evaluation of an organizational values and operational principles is a major start point for the eventual justification and understanding of the developed and established principles in the market. Based on this review, an evaluation of the HUAWEI Technologies Limited values establish that the organization is based on the values and principles of continuous improvement, team work and openness and initiative. On one hand, the principle of continuous improvement has played a key role in supporting the organizational operations to expand in the domestic and the international market as well (“HUAWEI”, 2014, “Core Values”). Through this strategic approach, the organization has established a strategic research and development function that evaluates the consumer and market needs. In addition, the principle of team work advocates for employees involvement. This principle is based on the principle of the Guanxi Chinese culture. In this regard, the Guanxi culture advocates for increased corporation and relationships with the employees. Therefore, the organization application of the teamwork approach through increased employee participation in the decision making process has increased its overall innovativeness and attractiveness as a global employer in the ICT industry (Fahy, Farrelly & Quester, 2004). Thus, this has enabled it retain and recruit qualified and experienced employees in the global ICT industry. As such, the values and principles adopted by the organization have played a significant and vital role in increasing its global success and competitiveness as a multinational company. Management Organizational Culture Black (2003) defined an organizational culture as the approach through which organizational approaches are conducted and executed in the market. In this regard, an organizational culture outlines and dictates the manner of executing responsibilities as well as the attitude adopted by the respective organizational employees in the execution of their duties and the mandate. An organizational culture has a major implication and influence in the nature of relationships established between an organization and the external market stakeholders including other partners, the competition, the consumers as well as the industry regulators. An evaluation of the HUAWEI Technologies Company establishes that the organization applies a Guanxi organizational culture in the market. The Guanxi management culture is a characteristic of the Chinese market relationships. In this regard, the culture advocates for the establishment of trust and good working relationships between the organisations and their external stakeholders including the partners and the government. In order to succeed in the Chinese market, organisations have to adopt and apply this approach (Xin & Pearce, 1996). Consequently, the HUAWEI Company applied this strategic approach in its organizational operational culture. As such, this is evidenced in the good relationships exhibited between the organization and other ICT stakeholders in the market as well as the relationships with the Chinese government. Further, the organization has extended the Guanxi operational culture upon its expansion onto the global market. One of the strategic approaches through which it has retained this culture is through the adoption of CSR programs in the market to establish relationships and connections with the overall consumer base in the market. The application of this Guanxi approach has increased the overall brand image and reputation in the market that has served as its core and main driving force in the internationalization strategy and approach. Localization Practices An organizational localization approach is described as the approach through which organizations develop specific market oriented products in the market. In this regard, a localization approach is developed through the development of products and approaches that are specific and oriented towards particular market segmentation. This has been the case in the Chinese market approach by HUAWEI Technologies Company. In its development approach, the organization adopted a market oriented technology innovation approach. In this case, the organization established a market survey ad evaluation function concerned with the examination and evaluation of the respective market needs through its large research and development function staff who account for an average 45% of the Total workforce (Hitt, Ireland, & Hoskisson, 2008). In this regard, unlike other organisations in the technology market that applied the push demand strategy, the organization applied the pull market strategy. On one hand, a push market strategy is aimed at developing and establishing a product and then marketing it to the society. On the other hand, a market pull strategy is geared and developed through identifying consumer needs and thus using the market needs to develop a product aimed at meeting the needs in the society. The HUAWEI Technologies Company has over the years applied the pull market strategy in the Chinese market. Consequently, this increased a product market fit scenario that played a key and significant role in the development of a large and dominant market consumer base in the Chinese domestic market. Through the established market influence and control, the organization has gained a large dominant consumer market overall base in the local ICT industry. Initially prior to its development and expansion onto the global market, the organization sought to establish a local market base and dominance. This has been the scenario and approach adopted by a majority of the Chine organisations that seek to expand and solidifies their local market base and control prior to venturing onto the global market platform. Market Expansion Strategies An organizational decision and strategic resolution to venture and engage in the global market is based on a series of strategic resolutions and aspects in the market. On one hand, is the need to offset local competition and gain the merits of the expansive global market opportunities. Moreover, the rationale behind any globalization and internationalization strategy development is the need to increase shareholders value through increased overall return on investment and subsequently profit margins. In the execution of this strategy, there are a range of alternative approaches through which an organization can venture in the global market namely the direct and the indirect approaches. On one hand, Gruunig and Morschett (2012) stated that the direct approaches include a strategic approach through which organisations venture the foreign markets through owned subsidiaries. On the other hand, indirect approach is approaches such as through partnership and mergers with already existing organisations in the foreign markets. An evaluation of the HUAWEI technologies Company reveals that the organization applies the indirect internationalization strategies. As such, through the application of the Guanxi culture, the organization has expanded into the global market such as Asia and even USA through mergers with local organisations or through partnerships alliances with the existing local ICT organisations in the market. The application of this internationalization approach by the organization has benefited it through a range of avenues. On one hand, is the reduction of internationalization costs thus allowing for expansion to many markets at reduced expenditure. Moreover, the approach application ensures that the organization rides on the superior operational models in the market that the respective local organization possesses. This approach is informed by the overall Chinese market culture of ensuring localization and specific market focus on the respective international strategies where the distribution channels and systems adopted are unique and specific to the various market cultures and operations. Lessons Learnt Based on the evaluation on the operations of the HUAWEI Technologies Limited, it is apparent that a Chinese based multinational, the organization applies a series of unique market operational approaches a majority of which are motivated and largely influenced by the Chinese market cultures. In this regard, global organisations can learn from the system a series of the strategic approaches adopted. This section evaluates the lessons derived and their implications into the future. Culture Focus One of the fundamental focus through which the HUAWEI Technologies Limited operates is through the appreciation and the application of the Chinese culture in its operations. In particular, the organization applies the Guanxi culture. As Wilson and Brennan (2010) argued, the Guanxi approach involves the development of relationships and avenues for associations and partnerships in the market. Therefore, through the culture, there is increased understanding between an organization as the external stakeholders, an explanatory factor for the government support in Chinas HUAWEI operations. In this regard, organizations can learn on the need to apply the Guanxi operational culture in their operations. As such, through the system application the organisations would establish a market culture of trust and relationships. Consequently, this would increase overall market reputations and image in the society. Kapferer (2008) discussed on the role of brand equity and image in boasting the overall organizational market spread. In its analysis, the evaluation established that through increased relationships and brand image development, organisations increased their overall market positions thus promoting expansion and development opportunities in the global market. Therefore, this essay evaluation establishes that through increased Guanxi culture application, organisations can increase and exert their overall market success rates. Domestic Market Role One of the key focuses of the HUAWEI Company strategies is the concentration on the domestic market. As discussed in the organizational analysis, it is evident that the organization initially focused on developing and expanding influence and control in the local domestic market. Moreover, over the years, the organization has gradually increased its focus in retaining the domestic market despite expansion onto the global market platform. Hellwig, Mukherji and Tsyvinski (2006) discussed on the concept and role of a domestic market to multinational organizations. In this regard, the evaluation sought to establish if indeed the domestic market plays a role in enhancing organizational global market success. As such, the evaluation established on the strategic role of sustaining a stable domestic market base by the multinational organisations. In this case, the ability by the organization to overcome international competition is through the strategic revenue capital base in its domestic market in Chinas ICT industry. Therefore, this evaluation essay asserts that it is imperative for organisations in the global market to strive to retain a strong domestic presence. In this regard, the retention of such a strong domestic base ensures that such multinational organisations acquire a strong competitive base in their local domestic markets. The adoption of these approaches could offer the organisations a strong brand name and reputation to ride on. The global market increased IT application has expanded the information search platform. Therefore, consumer in the international markets searches information on the performance of the foreign brand s on their respective domestic markets to develop purchase and buying decisions. As such, the adoption of strong domestic brand significance would ensure increased global market success opportunities for multinational organisations as evidenced by the HUAWEI Company case study. Internationalization Costs As already discussed, multinational organisations have a wide range of internationalization options to choose from namely the direct and indirect approaches respectively. In this regard, one of the adopted approaches by the HUAWEI Company is the indirect approach. On its part, the key justification and rationale for the adoption and the application of the strategy is the low expansion costs. In this regard, a study as developed by Lu and Beamish (2001) can be adopted as an evidence of this argument. The study analysis evidences that through increased adoption of the indirect internationalization approaches, organization reduce on the internationalization costs. In this regard, the evaluation established that through the application and use of the existing partners structures enables the organisations reduce on the initial expansion capital investment. Therefore, through this strategic approach, organisations should consider the alternative indirect approach to venture in the market. As such, this evaluation essay argues that with the application of the culture focus as recommended above both in the internal domestic and external markets, the organisations would establish a reliable platform on which the indirect internationalization approach could be applied (Sapienza, Autio, George & Zahra, 2006). Consequently, this would in turn reduce the overall internationalization costs. Thus, this would in turn ensure increased internationalization in the global market. Conclusion In summary, this essay offers the strategic evaluation of the multinational organisations operations in the global market. In this regard, recognizing the overall implications and role played by China as an emerging globalised economy, the essay develops a unique focus on multinationals emanating from the country. In this regard, it adopts the HUAWEI Technologies limited, a global leader in the ICT industry. In its analysis, the evaluation established the participatory and involvement management structure as well as the adopted Guanxi culture in the organizational operations. Moreover, the evaluation essay established the indirect internationalization strategies as well as the overall domestic market focus over the decades. As such, the evaluation essay lists the lessons on role of domestic market concentration by multinational, the merits of Guanxi culture in business as well as reduced internationalization costs focuses as the key lessons that multinational organizations can derive. In summary, this essay concludes that the application of the discussed stricture, values and culture by Chinese MNCs for a key component of their overall strategic success aspects. References Black, R. J. (2003). Organisational culture: Creating the influence needed for strategic success. United States: Dissertation.com. Carr, M., & Commonwealth Secretariat. (2004). Chains of fortune: Linking women producers and workers with global markets. London: Commonwealth Secretariat. Fahy, J., Farrelly, F., & Quester, P. (2004). Competitive advantage through sponsorship: A conceptual model and research propositions. European Journal of Marketing, 38(8), 1013-1030 Grünig, R., & Morschett, D. (2012). 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