ENVIRONMENTAL ANALYSISOF

OMER AMINFRAZ AHMED

FAISAL SHAFIQUSMAN SHAFIQ

HUMERAZAHIDA KHAN

PRESENTED BY

LEARNING OBJECTIVES INTRODUCTION OF HUAWEI ENVIRONMENTAL ANALYSIS INTERNAL ENVIRONMENTAL ANALYSIS EXTERNAL ENVIRONMENT ANALYSIS CONCLUSION RECOMMENDATION APPENDIX REFERENCES

INTRODUCTION OF HUAWEI Huawei was founded in 1987 by Ren Zhengfei, a former engineer in the People's Liberation Army

Huawei is a global leader of ICT (information and communications technology) solutions

There telecom network equipment, IT products and solutions, and smart devices are used in 170 countries and regions

At the time of its establishment Huawei was focused on manufacturing phone switches, but has since expanded its business to include building telecommunications networks

Huawei ranked 285th on the Global Fortune 500 based on its revenue in 2013

In 2014, the company’s revenue reached approximately USD 46.5 billion

They invest over 10% of our annual sales revenue into R&D and more than 48% of their 170,000 employees engage in R&D

ENVIRONMENTAL ANALYSISINTERNAL ENVIRONMENTAL ANALYSIS EXTERNAL ENVIRONMENTAL ANALYSIS

RESOURCES

CAPABILITIES

CORE COMPETENCIES

VALUE CHAIN ANALYSIS

HUAWEI`S BUSINESS FUNDAMENTALS

POLITICAL

ECONOMICAL

SOCIOCULTURAL

TECHNOLOGICAL

LEGAL

RESOURCES, CAPABILITIES & CORE COMPETENCIESResources create organizational capabilities when group together and in turn, capabilities result in the core competencies of a firm, and these are the foundation of competitive advantage.

ORGANIZATIONAL RESOURCES PHYSICAL RESOURCES TECHNOLOGICAL RESOURCES HUMAN RESOURCESR&D

PRODUCTION

MARKETING

CUSTOMERS CARE

ADMINISTRATIONAnd So on…..

HEADQUARTERS IN SHENZHEN

6 RESEARCH LABORATORIES

SOFTWARE DEVELOPMENT CENTRE IN INDIA

VAST TECHNOLOGICAL RESOURCES

APPLIED IN 170 COUNTRIES

TOP INTERNATIONAL PATENT FILLING IN 2014

REOVER 170,000EMPLOYEES

ABOUT 60% HAD A MASTER'S OR PHD

MORE THAN 85%HAD A BACHELORS ORHIGHER DEGE

INTERNAL ENVIRONMENTAL ANALYSIS

INTERNAL ENVIRONMENTAL ANALYSISCAPABILITIES Capabilities exist when there are resources on hand that have been deliberately integrated to

achieve specific tasks

Huawei recruits employees of high caliber, with more than 85% of its employees having at least a bachelor’s degree and 60% having a master's or PhD

Thus, Huawei is able to come out with innovate products, hence holding an exceptionally high number of patents by Chinese standard.

In addition, coming from a military background, Ren Zhengfei's connection with the Chinese military helps create a “guanxi network” which is extremely helpful to Huawei

CORE COMPETENCIES

INTERNAL ENVIRONMENTAL ANALYSIS

Core competencies are capabilities that are a source of competitive advantage for a company over its rivals

Huawei's first competence is its R&D. Because of the inexpensive labor force in China

Huawei integrates its marketing people into its R&D team, thus the needs of telephone companies and service providers could be communicated through the marketers to the R&D department in the shortest time.

Another core competence which Huawei had is its close relationship with the Chinese military

INTERNAL ENVIRONMENTAL ANALYSISVALUE CHAIN ANALYSIS Using the value chain analysis, we will analyze which are Huawei's operations' segments that

create value and those that do not.

PRIMARY ACTIVITIES Marketing And Sales Inbound Logistics Outbound Logistics & Operations

SUPPORT ACTIVITIES Firm infrastructure Human resource management Service Technological development & Procurement

INTERNAL ENVIRONMENTAL ANALYSISHUAWEI`S BUSINESS FUNDAMENTALS

ACCOUNTING Huawei Technologies had annual revenue US$ 46,515 million in 2014, an increase of over 20%

year-on-year

Huawei's have an operating profit of US$ 34,205 million in 2014 Huawei is still generating profit

FINANCE Huawei's financial support from the state-owned Chinese Development Bank in the form of a

US$10 billion facility & US$600 million from the Export-Import Bank of China are both forms of long-term financing

INTERNAL ENVIRONMENTAL ANALYSISHUAWEI`S BUSINESS FUNDAMENTALS

FINANCIAL HIGHLIGHTS

EXTERNAL ENVIRONMENTAL ANALYSISPOLITICAL

Huawei's founder; Ren Zhengfei was from the Chinese military and this connection had created guanxi network which few competitors could match.

This relationship had helped Huawei secure big contract orders with the military during its early years

China government has various political legislations that affect Huawei's external strategic environment

For Huawei, the Chinese business political environment is very serene for growth

In the recent past, the government has introduced reforms aimed at offering an environment that favors business growth

EXTERNAL ENVIRONMENTAL ANALYSISECONOMICIAL Huawei was the largest telecom equipment manufacturer in China with annual revenue of

US$46,515 million in 2014, and a net profit of US$4498 million. At the same time, its market capitalization was estimated to be up to US$30.5 billion

An organization would want to operate in an economy that provides the highest possibility of good returns and growth. Huawei Technologies is not an exception in this case

To start with, the growth potential of an economy is very important factor to consider in external strategy

As a multinational, it has a strong economic background that enables it to effectively compete globally without expecting major challenges from other similar multinationals

EXTERNAL ENVIRONMENTAL ANALYSISSOCIOCULTURAL Despite Huawei's efforts to fit into the United States' culture, Huawei still met with difficulties

when it first started operating in Plano, Texas in 2001. Huawei's employees had difficulty adapting to the Texas accent and their local culture

Due to Ren Zhengfei's military background, he had instilled military style training for new employees and his employees were urged to learn from the behavior of wolves. He wants Huawei's marketing department to be aggressive, just like a pack of wolves

The organization looks at factors such as the distribution of wealth, mobility in terms of social factors, the education and schooling available in the country, trends of lifestyle, time usage and leisure, work attitudes, family and relationships, fashion, tastes, preferences, interests in development, religious tastes, cultural aspects, values and norms

Huawei Technologies prides in the social factors provided by the people of China

EXTERNAL ENVIRONMENTAL ANALYSISTECHNOLOGICAL Huawei had the foresight to venture early and invested heavily in the third-generation (3G) mobile

communications technology

Huawei formed a 3G research joint venture with Japan's NEC and Matsushita and entered the mobile handset market in early 2004 to familiarize itself with the 3G industry in future

Currently Huawei is working on 5G (5th Generation) ICT technological advancement as confirmed from some of its internal resources

The government of China has been very concerned about its technology. In fact, it has taken very serious steps towards transforming the level of technology by investing highly in universities and colleges. This fact offers a very great opportunity for Huawei's growth

EXTERNAL ENVIRONMENTAL ANALYSISLEGAL 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

By the time Cisco dropped its lawsuit in July 2004; many sales contracts which Huawei was pitching for were lost

To make matter worse, a Huawei's employee was caught taking photographs of high-tech equipment from Fujitsu in a trade show in Chicago in June 2004

Being based in China, Huawei is able to manufacture and offer products at a lower price

A low-cost workforce, Huawei spends less in R&D but achieve comparable results with foreign technology companies who spend more

Being a Chinese company, Huawei will be view in a different light compared to other companies from other countries

The perception was that Chinese vendors were mainly relying on western engineering methods and were turning the higher margins and complex products into standard commodities

Having already facing difficulties entering the United States market, Huawei can present itself better in the United States by collaborating with some of the United States companies

Huawei delivers reliable equipment’s, quality service & continues its product development, it will pose a formidable opponent to foreign companies

Huawei have to be wary of competition from companies from low-cost countries where they pose a direct threat

Discovering such great potential in China’s market size, foreign companies started to see advantages in entering China; however, their entry was restricted due to government policy. Therefore, the threat to entry is low

CONCLUSION STRENGTHS WEAKNESSES

OPPORTUNITIES THREATS

RECOMMENDATIONSFOR

INCREASED MARKET POWER

OVERCOMING ENTRY BARRIERS

INCREASED DIVERSIFICATION

LEARNING AND DEVELOPING NEW CAPABILITIES

REFERENCES Wikipedia (Huawei Technologies Co.)

http://en.wikipedia.org/wiki/Huawei

Official Huawei corporate report.

http://www.huawei.com/en/about-huawei/corporate-info/financial/index.htm

Official Huawei annual report 2014.

http://www.huawei.com/en/about-huawei/corporate-info/annual-report/2014/img/huawei

_annual_report_2014_en.pdf

Financial Highlights about Huawei.

huawei.com/en/about-huawei/corporate-info/financial/index.htm

From Huawei official Mr. Khurram Shahzad (Senior Functional Specialist).

From Huawei official Mr. Fraz Khan (Head of Marketing Huawei mobiles)

THE END

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