INTRODUCTION requirements, with respect to its western competitors.What

INTRODUCTION FrancescaBackground in BriefHuawei’s mission and current goals can only be understood by taking into consideration the company’s history.The firm was founded by a 44 years-old ex-military, Ren Zhengfei, back in 1987 with an initial capital of 21,000 CNY. Historically, this means that this company was established a few years after the new open-door policy put in action by Deng Xiaoping in 1978. This company was responsible, together with Lenovo and Haier for the economic empowerment of China.At the very beginning, its mission was to provide consulting and operations advices to chinese or international companies.The value that allowed the company to grow and become successful was the commitment to work hard to reach the desired objectives. Since the very beginning, the founder was very committed to achieve an international success but, as for many other chinese companies, it was impossible to be impactful in the global value chain as they were lacking capital and technological requirements, with respect to its western competitors.What makes Huawei different, and more successful, compared to other chinese companies is the fact that, it made a consistent investment at the beginning of the new millennium to establish its image worldwide and to acquire the technological knowledge of IBM, spending over 150 million USD.Mission As for what allowed this company to grow dramatically and to reach the current level of revenues of more than 60 billions of USD, Ren Zhengfei affirmed that all revolves around its philosophy of customer centricity, dedication, and perseverance. The Organization TodayAs of today, Huawei Technologies Co. Ltd. operates in providing networking and telecommunication products, the company also offers business consulting in technological issues, network integration and global delivery services.The firm is now growing astonishingly rapidly and, as of 2015, it had 170,000 employees around the world, with almost the half of them focusing on the R&D branch of operations, which now has 16 centers of research around the world.The use of Huawei’s products has become extremely widespread around the world, being used by two third of the world’s population, as the company is present in more than 170 countries.It is very interesting to analyse the very peculiar ownership and management structure of this company. As a matter of fact, they have 3 CEOs with rotating decision-making power, moreover almost the totality of its shares are owned by employees, which guarantee great commitment of the latter in achieving the astonishing results in terms of growth the company is obtaining.Goals and ObjectivesThe current main objective of Huawei is to improve the market penetration in Western countries, especially North America, where it still has not reached the diffusion that it has in Asia or in Western Europe.StakeholdersThe company really cares about stakeholders engagement, it works very closely with them and also has a Stakeholder Engagement Management Process in order to further engage them in meetings, events and projects.The key stakeholders for Huawei are:Customers/consumers: which have the need to be listened and taken into consideration in the company’s decision in terms of new products launched. As a matter of facts, the company’s website offers the possibility to provide suggestions for the creations of new productsEmployees: as major stakeholders of the company, employees are very motivated to achieve great results for the company and, because of that, they demand managers to elaborate winning growth strategies for the firmSuppliers:  the company has very strict requirements on who can be a suppliers, based on sustainability. There is a strict cooperation and dialogue between Huawei and its suppliersGovernments: Huawei is committed in helping the Government to develop a favourable policy environments for the diffusion of technologies and ICT.NGOs and Communities: the firm has implemented a program in supporting the Sustainable Development Goals of the UN, based on the fact that they firmly believe that the use of technology would cover a substantial role in meeting the standards set by the United Nations for 2030. Overall, this company is engaging in a number of projects belonging to the CSR field.http://www-file.huawei.com/-/media/CORPORATE/PDF/News/2015%20Huawei%20sustainability%20report.pdf?la=enTable 1: Organizational stakeholdersStakeholder GroupGroup Demands/ AttributesProduct MarketCapital Market….Organizational ….EXTERNAL ANALYSISGeneral Environment JennyPolitical Segment:China government has various political legislation that affects Huawei’s external strategic environment. The Chinese government’s policies, starting in 2002, encourage domestic companies to expand their international influence to obtain external resources, meet overcapacity production to reach heightened economies of scale and to expand technological advancements (Chris Peterson, 2016). The Chinese government’s effort to build an industry value chain through fostering the Chinese indigenous third-generation mobile communications standard time division–synchronous code division multiple access (Mingzhi & Kai, 2015). As a multinational, the company has to adhere to all these regulations and ensure that no strategy is set without full consideration of the government legislation. (Huawei Europe, 2017).Economic Segment:Sales of information technology and telecommunications products and services across the globe are expected to increase by 3.8% as the year progressed, in accordance with current European IT Observatory predictions. (EITO, 2015).  Figure 1 shows the growth of global ICT spending in the period 2012-2016. Smartphone sales as yet solid, with 10% year over year increase in penetration (Statista, 2018).  The growth of smartphone usage signals to an opportunity for all telecom sectors., including network equipment/infrastructure companies, wireless and wireline/broadband carriers, and device manufactures. Figure 1: Global ICT Spending Source: EITO (December 15, 2015) International ICT market growth stronger than expected. Retrieved from: https://www.eito.com/press/Press-Releases-2015/International-ICT-market-growth-stronger-than-expectedTurns out that “made in China” is not so cheap anymore as labor costs have risen rapidly in the country’s vast manufacturing sector. Average time-based compensations hit $3.6 in 2016, spiking 64% from 2011 (Trading Economics, 2018). That is more than five times hourly assembling compensation in India (William Zhu, 2016). The wage increment has meant higher expense for organizations with sequential construction system in China. Socio-cultural Segment:1.3 billion of the Chinese citizens can access the internet and do their work online, shopping, studying and this to greater extent will boost the Huawei industry since they will get to sell much of their products to the promising prospective customers. Huawei as an organization within the Chinese territory prides itself since China provides almost the social-cultural factors that are of necessity for their expansion globally (Peng & Nunes, 2007).The United States is a market where consumers do not change their preferences according to the price cut, consumers go for brand value which is almost invisible in the US. Being a product of China is also a major factor for consumers reluctance to buy Huawei as Chinese goods are considered to be cheap low-quality non-durable products (Michael Diliberto, 2014). Technological Segment:According to the Deloitte Industry Outlook 2017, the rise of data-hungry apps could push the carriers to switch to 5G technology. The promise of 5G – greater efficiency, more speed, and reduced latency which will be essential to supporting connected things in the future.In 2016, deployment of 4.5G networks became a trend in the industry. Huawei’s 4.5G Evolution concept will help carriers further maximize the value of legacy networks and support them in the evolution towards 5G (Huawei, 2016). In 2017, Huawei has been expanding and is the clear leader in 5G R (Forbes, 2017). Legal Segment:Huawei was sued by Cisco in the United States six months after setting up a subsidiary. It had allegedly infringed a number of Cisco’s copyrights and patents, and Cisco was seeking damages in the lawsuit (Computer World, 2003). In 2012, the U.S. House Intelligence Committee released a report urging U.S. telecommunications companies not to do business with Huawei and ZTE because it said potential Chinese state influence on the companies posed a security threat (Reuters, 2013).  Environmental Segment:As the consumption of electronics products has increased the management of new type of waste, electronic waste (e-waste, WEEE), has become a global concern. Countries in the European Union are creating 17kg e-waste per capita annually and developing markets such as China and India are currently creating 1kg e-waste per capita a year (Pia Tanskanen, 2012). The amounts are expected to be rising in the future, and the joint disposal of e-waste together with municipal waste cannot continue (Chancerel & Rotter, 2009). The trend has been in the electronics industry to remove the potentially hazardous materials from the products so that there is smaller risk of contamination even if the improper recycling practices take place. Industry Environment: CandaceBargaining Power of Suppliers…Bargaining Power of Buyers…Threat of Entry…Threats from Substitute Products:..Industry Rivalry..Competitor Analysis LaurenLooking at the market for smartphone’s in China, there is high rivalry among competing firms. Even though the market is saturated, smartphone companies are still aggressive in trying to steal market share from their competitors (Tao, 2017). As competition continues, all top smartphone players need to maintain or increase their marketing activities to stay on top. However, in the global market, Huawei is competing against Apple and Samsung. In the past year, both companies have experienced a decline in market share with the three Chinese companies all growing (Sun, 2017). Even with the increase in global market share, all Chinese companies are still struggling to penetrate the American market. China’s MarketIn China’s smartphone market, Huawei’s main competitors are Oppo, Vivo and Xiamei. Looking at figure 2, it is evident that Huawei has the largest market share, but their competitors are very close. Oppo and Vivo have prioritized rural China, setting up a huge network of brick-and-mortar stores that get their devices out to consumers who might not yet have access to the internet (Cendrowski, 2017). Oppo, which was founded in 2001, is a subsidiary of privately held BBK Electronics, which also controls the smartphone brand Vivo. Oppo made its name selling cheaper phones in rural China and focuses on selling to younger consumers. With their current strategy of mainly selling at physical stores rather than online, customers are now visiting retail stores more often to experience the products or seek after-sales services (Wang, 2016). Local stores are also more motivated to promote OPPO’s products. The company pays the most competitive commission rate to sales people, compared with the industry average of 10% to 15% of the phones’ price tags (Wang, 2016).Looking at Oppo’s sister brand, Vivo, they have focused more on offering phones with special features that tap into specific social behaviour. For example, the focal point in their smartphones is the camera, which is a major selling point in China due to the recent obsession with selfies. They have also differentiated themselves through marketing and celebrity endorsements. Vivo reached a sponsorship deal with FIFA to become the official smartphone brand of the 2018 and 2022 FIFA World Cups and currently has a sponsorship deal with the NBA in China which has propelled the brand (Cendrowski, 2017).Lastly, founded in 2010, Xiamei calls itself an “Internet services company” and sees its future more broadly as an e-commerce company for a whole variety of products, and aspires to be the center of connected home (Yuan, 2017). However, smartphones are one of their core products, and they have quickly gained market share thanks to its innovative business model to sell top-of-the-line products at almost bill-of-material prices (Yuan, 2017). Also, by having their operating system, MIUI available to download on other Android phones, Xiaomi increases the accessibility of its apps and content to reach more users (Yuan, 2017). They have also been able to control the cost of the phones,by not owning any physical stores and only selling exclusively from its online store in the first four years of the company’s operations (Yuan, 2017). OppoVivoXiameiFuture ObjectivesWill start selling phones in Japan Focus on connected homesCurrent StrategySponsorshipsSelling in storeSponsorshipsSelling online and in storeSelling onlineCapabilitiesFigure 2: Domestic Players in China’s Smartphone MarketSource: https://www.statista.com/chart/9267/china-smartphone-shipments/Global MarketIn 2017, Huawei has broken out of the pack, and is currently in second place in sales market share as a smartphone maker in the world and the first Chinese phone maker with a substantial global footprint (Keefer, 2017). Looking  at the global market in figure 3, Huawei has to compete with huge players such as Apple and Samsung. With Apple’s most recent release of the iPhone X, it’s difficult for Huawei’s diversified portfolio of products to compete with the iPhone’s quality. Especially when comparing to the global market, Apple and Samsung have a cult following with extreme brand loyalty. Huawei would benefit from fewer products and rebranding to break into the US market. So, while Huawei’s market share has overall increased, none of their models have broke into the top ten rankings (Richardson, 2017. This again is due to a multiple product portfolio that currently lacks a true hero device (Richardson, 2017). While having a diverse portfolio allows Huawei to fight on multiple fronts, it does little to build overall brand recognition. Figure 3: Global Smartphone MarketSource: https://www.usatoday.com/story/money/markets/2017/07/04/a-foolish-take-the-worlds-top-5-smartphone-makers/103211180/CURRENT SITUATION: FrancescaHuawei has switched from being the provider of cheap cell phones compared to other Telecommunications Companies’ products, to become a real and valid alternative to companies as Apple or Samsung. The current business strategy is to change their own market position, not only by increasing the quality and technological features their product have, but also by incrementing the level of advertisement they release.As a matter of fact, the brand’s name is becoming pretty well-known especially in the European Market, when we can observe an unprecedented rise in sales.The company is very fastly closing the competition gap that it has with the giant competitors of the mobile phones industry.CURRENT STRATEGIES: MargaretBusiness level strategy:…Corporate level strategy:…International Strategy:..Cooperative Strategies:STRATEGIC CHALLENGES: MargaretDue to Huawei’s decision to limit the production of its inexpensive and low cost smartphones in 2017, Ken Hu, the chief executive of Huawei, stated that the company’s revenue growth has decreased by almost half from 32% in 2016 to 15% in 2017 (Hollander, 2018). In addition, Huawei worked hard to overcome its reputation as manufacturing equipment used to spy within the American telecommunications network (Woo, S., Strumpf, D., & Morris, B, 2018). Tensions and suspicions involving Huawei also increased for the U.S. as it wanted further clarification about the company’s connection with the Chinese Communist Party as it was noted that Huawei constantly switched its top executives among state-owned industries (The Economist, 2012) and that its founder and CEO, Ren Zhengfei, was a member of the Communist Party back in 1978 (Perry, 2013). Therefore, Huawei must address the following strategic challenges in order to strengthen its trust among consumers and to heighten its growth for future years.         Security Uncertainties within its Carrier NetworkWith its known connections with the Communist Chinese government, a 2012 report conducted by the U.S. House intelligence committee claimed that companies should avoid interactions with Huawei as it posed “significant security concerns” (Chong, n.d.).  Huawei has also been banned from establishing its network infrastructure and from selling mobile devices in the U.S. market due to the fear of espionage and its threats to national security until January 2018. At this time, AT declined a deal with Huawei regarding the distribution of the “Mate 10 Pro Smartphone” in the U.S. due to security concerns and later retracted and accepted the deal under unknown circumstances despite heavy disapproval by the U.S. Senate and House Intelligence committees (Kharpal, 2018).         Low Brand Awareness within Some International MarketsAlthough Huawei managed to increase its smartphone sales by 32% with 139 million sold while raising its revenue also by 32% to a total of $75.1 billion, Huawei’s net profit advanced by only 0.4% (Sin, 2017). This can be attributed to the fact that Huawei encounters difficulties with establishing brand awareness with individuals outside of its Chinese market such as the U.K. where the company recognition is still developing (Bold, 2017). Consumers feel reluctant to select a product from an unknown company when there are more popular and credible options available in the marketplace. In addition, Huawei was previously a network infrastructure and supplier of B2B telecommunications solutions and, therefore, did not engage in the production of mobile devices (Chong, n.d.). However, with joint partnerships with Pantone-Greenery, AT&T, and Microsoft’s Cloud Services, Huawei managed to rank 88th on the Forbes list of Most Valuable Brands of 2017 with increasing recognition from consumers worldwide (Huawei, 2017). Furthermore, the company’s top consumer executive, Richard Yu, stated that Huawei is set to “build up a high-end and premium brand image” by working to “improve the company’s brand awareness” through aggressive word-of-mouth marketing (Strumpf, 2017).         Questionable R&D ProcessesIt was discovered that Huawei imitated many Cisco Systems, Motorola, and Fujitsu products through reverse engineering because it does not count as intellectual property theft and is allowed under the Chinese law (Chong, n.d.). In addition, it was reported that Huawei used improper technology acquisition to rapidly heighten the development of its products and was later ordered to “withdraw its products from the market “and alter sections of its “source codes, interfaces, and manuals” (Chong). However, now Huawei is transforming from a follower into a creator of new innovative products by showcasing its super-thin Ascend smartphones, waterproof handsets, consistent broadband connections on fast bullet trains, and strong Wi-Fi services available on planes and has even earned the title as the “world’s number one applicant for international patents in terms of the number of filings according to the World Intellectual Property Organization” in 2014 (Chong).