Haier group growth factors

strong leadership and corporate culture:

Zhang Ruimin managed to embed his firm's philosophy objectives into his employees
by constructing a rigid quality control system and construct trustful company he also
introduced many new management practices one of the noticeable practices was the
after sale service. All the R&D investments were to enhance customer satisfaction
.moreover the company allows its customers to send their ideas about the products
and provide awards for those opinions. Zhang improved his company by his
continuous innovation and he always aimed to motivate workers.
Effective utilization of government resources:
It’s unique that such success happened with strong government intervention, Zhang
makes good utilization with the government resources that lead to good relationship
between them.
Collective enterprise and the government:
The collective enterprise exist in between state and private ownership it operate
within a vague system of governance they don't get any technological fund or help
from the government . Its assets and gained profits are not owned by the government
but it belongs to employees &public investors and there's no taxes imposed on it by
the government. Collective enterprises are somehow liberated from government
regulations that's imposed on other state-owned enterprises they have the ability to
use accumulated tax system rather than income tax system. Haier Company was under
municipal government which is an advantage to it as Zhang was a former government
administrator that qualify him to know how to deal with municipal government and to
achieve success. The strategy of municipal government is to be involved in the
decisions of any company which make close relationship between managers and
government.
The collective enterprise and the industrial policy:
Zhang believed that people who operate in mixed economy must have 3 eyes on the
market, employees and government policy. after the central government's policy of
economic liberalization and opening to the outside world Haier started to grow .at that
time the government announced in the statement of policy that collective enterprises
would be motivated as a way to find a solution for unemployment and scarce
resources .collective enterprises at that time had the priority to get raw materials,
water and electricity the huge domestic market was considered an advantage for Haier
as they got to benefit from economies of scale and cost advantage before they
stepping into foreign markets.
Learning by benchmarking and rapid innovation:
Haier learned from others experiences &the global business leaders in the industry
and Zhang himself has learned by reading a lot of management books produced by
other Japanese companies he also learned from the Japanese organizational model and
in the 90s he created business department system that was used by very known
Japanese companies and he continued reengineering the business .Haier developed his
company and learned through partnerships with international companies for example
he coordinated with German’s libherr for refrigerators
Challenges:
The global strategy:
1-China's reputation of low quality products.
2-Huge competition in each sector.
3- Low financial resources that they have to divide it on sectors.
4-Technological advancements in global companies.

Technological innovation:
Haier always aimed and wished to rank when it comes to the appliance marker. And
because Haier is in the developing countries so they acquire advanced technology
from the developed ones.

Diversification vs. specification:

They followed a process from highly related, to moderately related, to non-related.
Diversification may either be a pro or a con. And they always believed that the higher
degree of relation, the better performance.
Haier then decided to outsource more non-core businesses when they faced the
transformation from electronics manufacturer to electronics innovator.

The management resources:

Haier then started to combine internationalization and diversification together and
both required huge inputs of capital and human resources.

The government intervention factor:

Haier took the political risk as another concern because of the unstable political
.relations between China and the USA
The bigger Haier became, the more independent it from the local government.

The ownership structure:

Ownership of Haier is collective; between private and government die to many
mergers between Haier and other establishments. There was many negotiations
regarding the dependency of Haier but there is no clear thing that define obviously the
situation of Haier.