Huawei's-strategy.docx

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1、Huawei:CiscosChineseChallenger1. Globalmarketentrystrategies1.1 JointVenturesFormanyMNCsthatv/anttoexpandtheirglobaloperations,jointventuresprovetobethemostviablewaytoenterforeignmarkets,especiallyinemergingmarkets.Inmanyinstances,localgovernments(e.g.rChina)discourageorevenforbidwhollyownedventures

2、incertainindustries.Undersuchcircmstances,partnershipsareasecond-bestortemporarysolution.AsChinaMmarketgrew,mostofleadingglobaltelecomequipmentfirmsstartedoperationsinChinainthe1980sand1990s.Duetoownershiprestrictions,mostforeignfirmsenteredthemarketbysettingupjointventureswithlocalChlMSeComPanieS(l

3、ike.Motorola,Siemens,Nokia,Alcatel,1.ucentTechnologiesandEricsson).Huaweihasactivelysoughtcooperationwithrenownedforeigncorporationsinnumerousaspectsrangingfrommanagementpracticestoauditingtotechnologyresearch,aspartoftheirglobalizationprocess.Tepartnershipswithforeignfirmsareacrucialcomponentnensur

4、ingHuaweiproductcompetitivenessandorganizationalexcellence.Thecooperationalsoprovidesmuch-neededlegitimacyfortheChinesefirmsindevelopedmarkets.HuaweihadactivelyundertakenjointR&Dlaboratorieswithforeigncompanies,includingTexasInstrument,MotoralarIBM,Inteletc.ToHuawei,thesejointdevelopmenteffortswereu

5、sedasacomplementaryapproachtoenhancingItsinnovationcapabilities.SixmonthsaftersettingupitssubsidiaryintheUSrHuaweiwassuedbyCiscoforhavingallegedllyinfringedanumberofCisco,spatentsandcopyrights.Inthemidstofthelegalproceedings,numeroussalescontractsthatHUaWelWaStryingtoclsoewerekilled.InNovember2003,H

6、uaweienteredajointventurewith3CominChinaandJapan,calledHuawei3Com,inwhichHuaweihelda51%stake.1.2 WhollyownedsubsidiariesMultinationalcompaniesoftenprefertoenternewmarketswith100percentownership.Aswiththeotherentrymodes,fullownershipentryentailscertainbenefitstotheMNCbutalsocarriesrisks.Ciscoopenedit

7、sownsubsidiaryinChina,CiscoNetworkingTechnologyCo.1.tdandHuaweialsoenteredUSmarketbyopeningitsownsubsidiary.Buttheresultsareopposite,CiscosucceededandHuaweifailed.1.3 StrategicAlliancesTomoveintonewmarketsegments,Ciscoformedextensivestrategicalliances.Ciscousedtheseacquisitionsandstrategicalliancesa

8、sawaytoacmmodatetherapidmarketshiftsintheexplodingITsector.Tomeetglobaldemandforitsproducts,Cismadeallianceswithlocaloriginalequipmentmanufacturersanddistributors,butmaintainedacentralizedmanagementstructurebyregion.TheNetherlands,forexample,waschosenasCisco/sregionalheadquartertomanageitsEuropean,A

9、fricanandMiddleEasternmarkets.CiscosstrategyinChinawastofocusonrecruitingandtrainingemployeestoservicethehigh-endmarketsoftelecomserviceprovidersandenterprisemarkets.Insteadofformingjointventuresv/ithlocalpartners,CiscoopeneditsownsubsidiaryinChina,CiscoNetworkingTechnologyCo.1.tdztopromoteeducation

10、,demonstrationanddevelopmentofnetworktechnology.Recognizingthelarge,lowcostandskilledlaborforceinChina,CiSComadefurthercommitmentstoinvestinanewR&DcentreinShanghai.1.4 entrysequenceFortheglobalentrysequence,multinationalcompaniesoftenfirstlychoosetoenterthecountriesculturesimilarandregionclosetothem

11、selvseandthenentertheunfamilarmarket.Huawebeganconsideringinternationalexpansionin19%whenitlookedfordiversesourcesofgrowthbeyondtheChinesemarket.TbavoidheadtoheadcompetitionwithitsinternationalrivalssuchasCiscoand3Com,thecompanymadeitsinitialoverseasmoveinthemarketsofdevelopingcountries.WhenHuaweisu

12、cceeded,ittransferredtoenterthedevelopedcountries.Ciscoenteredtodevelopedcountriesandthentransferredtodevelopingcountries.2. Competitivestrategy2.1 Cost1.eadershipcompetitivestrategyIncostleadership,afirmsetsouttobecomethelowcostproducerinitsindustry.Thesourcesofcostadvantagevariedanddependonthestru

13、ctureofteindustry.Theymayincludethepursuitofeconomiesofscale,proprietarytechnology,preferentialaccesstorawmaterialsandotherfactors.Alowcostproducermustfindandexploitallsourcesofcostadvantage.Iftheachievedsellingpricecanatleastequal(ornear)theaverageforthemarket,thenthelowest-stproducerwill(intheory)

14、enjoythebestprofits.Occasionally,alow-costleaderwillalsodiscountitsproducttomaximizesales,particularlyifithasasignificantcostadvantageoverthecompetitionand,indoingso,itcanfurtherincreaseitsmarketshare.Huaweienteredthelow-endintenationalmarkets,supplyingroutersthatwere40%cheaperthatitscompetitorsin20

15、02.ItboastedtheannualrevenueofUS$6.7billionin2005,ofwhich60%camefrominternationalsalesandthecompanycametobeknownastheCiscoofChina.Besides,HuawelhassuccessfullyenhancedItsR&OoperationsbytakingadvantageoflowcostdevelopmentcombinedwithadvancedresearchandexpertiseinChina.HUaWeiycompetitiveadvantagecamen

16、otfromlow-costmanufacturing,butfromlow-costengineering.Withaninexpensiveandhighlyqualifiedresearchanddevelopmentworkforce,thecompanywasabletodelivercustomized,innovativesolutionstoglobalenterpriseslookingtoreducetheircapitalexpenditures.Huaweiinvestedaconsiderableamountofcapital(morethan10%ofannualrevenue)andhumanresources(30-4S%ofallemployeesworkwithinR&D)intoresearchanddevelopmentofnewproductsandtechnologies,sincethetelecomequipmentbusinessishighly