SWOT Analyis of Huawei | Business Teacher
According to Qing & Ba, Zehou & Qing (2016), Huawei is known throughout the world for its dynamic properties in the electronics sector. This brand awareness has been driven further by the organisation’s strategic marketing (Lu, 2016). Additionally, Huawei is growing tremendously compared to other tech companies (Xia & Gan, 2017). Xuesong (2016) notes that Huawei’s products are relatively cheaper compared to those of competitors like Samsung and Apple, and hence, their affordable draws numerous consumers. Besides, the firm is innovative and has come up with many differentiated products in the market (Lu, 2016); differentiated products increase value to consumers, which increases customer satisfaction. Finally, Huawei’s strategic collaboration with global partners such as Google and IBM (International Business Machine Corporation) (Cao, 2017), increase the organisation’s access to important resources and markets, which will contribute to sustainability in the long run.
Lopez & Zhang (2017) affirm that insufficient capital budget limits the ability of Huawei Company to compete internationally. Fighting competition is expensive and needs a lot of capital investment. Additionally, Huawei products are cheap; people perceive expensive products to be quality and original. For example; many people have higher confidence in Apple products compared to Huawei products because the former’s products are more expensive (Arora, 2015). Furthermore, in a study to evaluate the success of sports marketing in the Chinese market, Lu (2016) found out that one of the hindrances to successful marketing lies in the fact that many consumers in China believe that Huawei products are inferior. However, the organisation has attempted to solve this problem by creating high-end devices, which are of superior quality. Moreover, the use of Messi, a prolific footballer, in the recent marketing campaign increases Huawei’s products credibility. Regardless, another weakness facing the organisation is that the brand is mainly known in China, while its global presence is being hindered by numerous and well-established firms (Lu, 2016). By using an international footballer in marketing, the company aims to increase its global presence. Finally, Huawei is highly affected by high employee turnover which puts business continuity at risk (Cao, 2017).
China is relatively labour-intensive given its large population (Arora, 2015). This offers Huawei an opportunity to cut down on production and operational cost, which, in turn, generates higher profit margins. The resulting low cost of production also ensures that the firm can increase the quality of its products without compromising on its margins, which will position it competitively in the global market. Moreover, the Chinese Government supports local manufacturers by giving them incentives to produce goods for export (Xuesong, 2016). Huawei has an opportunity to benefit from these government incentives to produce products that are competitive in the global markets. According to Xuesong (2016), incentives stimulate output and facilitate growth. Moreover, Chinese manufacturers prefer majoring in e-commerce for business sales than constructing brick and mortar stores (Xia & Gan, 2017). However, competitors such as Samsung sell their products both physically and online, which diversifies their source of income. Therefore, Huawei should also consider setting up physical stores both in China and its global markets.
Lopez & Zhang (2017) point out that there is stiff competition in the mobile devices manufacturing sector from both established and new firms. Products like Xiaomi and ZTE target the same market as Huawei and are competitively priced. Additionally, import tariffs in China are relatively low compared to other countries, which this gives foreign entities an opportunity to import competing products. Competing locally with international brands is challenging because the international products might dominate the market because they are often well-known (Lopez & Zhang, 2017). Moreover, the ease with which Huawei penetrates international markets is hindered by the different regulations that exist in various countries (Lopez, 2017). Some countries are immensely strict on foreigners to promote local industries. Finally, Chinese products are often synonymous with low quality (Akdeniz & Kara, 2014). While this perception does not apply to all products, this image has continued to affect Huawei’s penetration in the international markets. Regardless, most Chinese organisations (Akdeniz & Kara, 2014), such as Huawei, have embarked on developing quality products, which will improve the perception about Made in China.