Conduct own intensive study of both strategic approaches and strategies of a com

Question

Conduct own intensive study of both strategic approaches and strategies of a company, "Haier," through the attached file in this module, Google, CWU library online database, and its webpage http://www.haier.com/ (Links to an external site.)Links to an external site.. You should also check AMAZON.com to find information about products, pricing, and customer satisfaction. Your study will allow you to find Haier's strategies, strategic approaches, product policies, pricing, advantages or disadvantages, your suggestions, and etc. This intensive study will worth a lot for this part, ok?

(1) Make a good report of Haier's strategies, strategic approaches, advantages or disadvantages, your suggestions, and etc. Make this report as if you will submit to your boss who really wants to have it to make strategic planning, ok? This is a free writing assignment while you should write sufficiently!

Being creative and strategic is always welcome in my class!!!! Showing your own ideas based on own experiences or examples of other companies are also welcome in my class!!!

Explanation / Answer

Introduction

            Technology has evolved over the years, and every business has tried to ride the wave of technological advancement to earn profits. Globalization has been possible because of technology, and it has opened up new markets for businesses to tap into. The last few decades have seen the rise of several innovative companies, which have elevated customer and user experience to the next level. The most notable among them are Haier and Amazon. Haier has always been ahead of the curve when it comes to gauging consumer insights and envisioning a future business opportunity. Amazon also followed on similar lines and created a consumer shopping experience, which is better than any of its competitors. Haier had understood the potential of digitization and online content availability before anyone else. Therefore, they forayed into electronic equipment business, which became popular everywhere. Amazon recently has joined the race with its Kindle Fire, which is an evolution of the basic e-reader. Hence, this is one space where both the companies are competing with one another. Both the companies have their own set of competitive advantage and expertise to win over the other, which will be discussed in detail in the following sections.

Haier

            Michael Porter has developed a useful framework for the analysis of industry and companies, which helps to understand the drivers of growth and profit for the companies, named five forces model for competitive advantage of firms(Grundy, 2006). Haier can be subjected to such analysis to understand its competitive advantage.

Bargaining Power of Supplier

            Bargaining power of suppliers is the attribute which defines the strength of the suppliers of a company and the extent by which they are inevitable for a company. Haier only designs its products and the hardware is manufactured by its suppliers. Electronics and digital equipment, the domain where Haier competes, is a dynamic one, and there is a constant change in capability. Therefore, Haier constantly innovates so that its suppliers can never become a necessity and wield a strong bargaining power to increase the costs for Haier.

Bargaining Power of buyers

            Bargaining power of Haier’s buyers can be considered moderate since they have the option to switch to other android products. However, it has to be kept in mind that no other player in the industry provides quality products as Haier. The performance and impeccability of Haier products lend an amazing user experience. Hence, this also helps Haier to demand premium pricing and higher margins.

Competitive Rivalry

            The competitive rivalry can be considered to be high in the electronic devices segment since there is lot of players. However, the segment in which Haier operates is premium and high end where there are hardly any operators. Moreover, Haier has always been ahead of the curve so it never had to think about competitive rivalry.

Threat of Substitution

            Haier has always tried to be innovative and entered the market when there was no other player providing similar product or service. Moreover, since it has always focused on quality for differentiation,substitution has been a small threat for Haier. However, with innovators such as Amazon things have changed, and Haier needs to prepare itself for the threat.

Threat of New Entry

            Technology and digital media have been an evolving industry wherein there are several small players who innovate and create threat for established players such as Haier. Therefore, it can be said that there is no big entry barrier for companies to enter the market of digitalization. However, matching the quality and service of Haier might be a challenge for the new players.

Amazon

            Amazon kindle is competing with Haier iPads by offering cheaper products with lot of features. Amazon has strategically placed its product in a different market segment. It tried to capture Haier customers who use iPads for their day to day use. Porter’s five force analysis provides the thorough analysis of market position of Amazon.

Bargaining Power of Supplier

Bargaining power of suppliers is associated with supplier numbers, switching cost and availability of substitutes. Kindle requires suppliers for its networking technology, screen, and publications. E-Ink is the leader in display technology who also supplies to other companies. There are many network providers in the industry, which reduce their bargaining power. Amazon also maintains good relationship with the publishers, which make overall supplier power at medium level.

Bargaining Power of Buyers

Buyer power is very high in the industry as they have many options available to choose from. Switching cost is high which reduces their power. Buying the products is a costly affair, which prohibits users from frequent switching. There is very small market for digital reading, and availability of other mediums provides high buying power to customers.

Competitive Rivalry

E-book industry is in its nascent stage. There are very few players who compete in the market. Amazon has entered the market early, and it is providing the products at a comparatively lower price. Variations in prices are significantly high. Sony and other competitors are selling their products at cheaper rates than Amazon, but Haier offers very high quality product at a high price.

Threat of Substitution

Laptops, notebooks, and books are the main substitutes of Kindle. These products have superior display quality which makes them the first choice for their users. Users generally do not prefer to spend $250 for a specific purpose product, but Amazon has tried to offer more options to users by providing various links on the Kindle along with the network. Amazon bears the network charges and also provides the free books subscription to its users.

Threat of New Entry

Manufacturing process of Kindle is not very complex except its screen. Initial development cost does not require a lot of investment, which makes the entry barrier weaker. However, companies will have to face challenge to get deals from publishers to use their publications. Amazon uses special electronic display manufactured by E-Ink Corporation and has the wide network of publishers who use Amazon platform to reach out to more readers.

Conclusion

            The paper has analyzed the competitive advantage of both Haier and Amazon. The new initiatives of Amazon makes it a direct competitor of Haier. Moreover, the analysis proves that while Haier puts quality and differentiation as its value proposition, Amazon is trying to leverage cost leadership as its competitive advantage. It is going to be an interesting battle to see since Amazon till now had been innovating and competing with offline stores, which are slow movers, but Haier is itself an innovator with deep pockets. Therefore, Amazon needs to develop a winning product in the form of Kindle Fire in order to capture market share from Haier, which is an already established player.

References

Grundy, T. (2006). Rethinking and reinventing Michael Porter’s five forces model. Strategic Change, 15(5), 213–229. doi:10.1002/jsc.764

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