Huawei\'s environment and TOWS matrix analysis PDF

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UNIVERSITY OF BEDFORDSHIRE

FOREIGN TRADE UNIVERSITY

SCHOOL OF BUSINESS

HO CHI MINH CITY CAMPUS

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MID-MODULE ASSIGNMENT Module: Strategy & Innovation Code: BSS029-2 FINAL TERM ASSIGNMENT

Student: TRẦN TRẦN NGỌC GIA HÂN Student ID: 2045519219 Cohort: K58BF-C Semester: I Academic year: 2020-2021 Head teacher: LỮ THỊ THÚY VÂN.

FOR EXAMINERS ONLY

Grade (in number): ……………….. Grade (in words): ……………….. Examiner 1 (Signature & Full name)

………………..

Submission date: 10th, October 2021 Student’s signature:

Examiner 2 (Signature & Full name)

……………….. Ho Chi Minh City, October 2021

UNIVERSITY OF BEDFORDSHIRE

FOREIGN TRADE UNIVERSITY

SCHOOL OF BUSINESS

HO CHI MINH CITY CAMPUS

----------***----------

----------***----------

MID-MODULE ASSIGNMENT

Module: Strategy & Innovation Code: BSS029-2

FINAL TERM ASSIGNMENT

Student’s full name: TRẦN NGỌC GIA HÂN Student ID: 2045519219 Cohort: K58BF-C Semester: I Academic year: 2021-2022 Lecturer: NGUYEN THI THAO QUYNH

Ho Chi Minh City, October 2021

2

STATEMENT OF AUTHORSHIP Except where reference is made in the text of the mid-module assignment, this assignment contains no material published elsewhere or extracted in whole or in part from an assignment which I have submitted or qualified for or been awarded another degree or diploma.

No other person’s work has been used without due acknowledgements in the mid-module assignment.

This mid-module assignment has not been submitted for the evaluation of any other modules or the award of any degree or diploma in other tertiary institutions.

Ho Chi Minh City, October 2021

Tran Ngoc Gia Han

Table of Contents I.

Introduction – Huawei Technologies Co., Ltd. .................................................................. 5

II. The analysis of external and internal environment of Huawei ........................................... 6 1.

2.

III.

External Environment..................................................................................................... 6 1.1.

PESTLE ..................................................................................................................6

1.2.

Huawei’s bargaining power of supplier in Porter’5 forces ..................................... 6

Internal Environment...................................................................................................... 7 1.1.

Resources and Competency theory ......................................................................... 7

1.2.

Huawei’s Competency Framework......................................................................... 8

Huawei’s TOWS matrix ............................................................................................... 10

1.

Opportunities ................................................................................................................10

2.

Threats .......................................................................................................................... 10

3.

Strengths: ...................................................................................................................... 11

4.

Weaknesses: ................................................................................................................. 11

The individual reflection .........................................................................................................14 References ............................................................................................................................... 16

4

I.

Introduction – Huawei Technologies Co., Ltd. Nham Chinh Phi, CEO President of Huawei Technologies Co., Ltd, once said: “ If you want a position? Don't mind playing the supporting roles, to get the main role". In the eyes of the business circle of technology, Huawei is built from a culture of discipline, diligent research and a "wolf" business style, this identify perhaps partly come from the executives' visions and management points of view. In early 2015, Huawei initiated a seemingly endless stream of competition with companies like Samsung and Apple. Huawei was founded in 1987 with the goal of concentrating on the development of information and technology. Their R&D is among the strongest in the world, with more than 100.000 patents till 2020, 11.152 of which are U.S. patents. This is one of the primary reasons why Huawei is so influential of alteration. Huawei is a significant provider of ICT infrastructure and smart products around the world. They are devoted to bringing digital to every person, home, and company for a fully connected, intelligent world, with integrated solutions across four core areas – telecom networks, IT, smart devices, and cloud services. (Huawei Fact Sheet). At Huawei, customer needs are at the center of innovation. They put a lot of money and effort into basic research, focusing on technical achievements that advance the world. In this paper, the study explores HUAWEI's external and internal environment based on analysis from using internal and external analysis, SWOT analysis/TOWS matrix, to generate strategic option.

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II. The analysis of external and internal environment of Huawei 1. External Environment 1.1. PESTLE: PESTEL Analysis is a strategic framework used to evaluate the external environment of a business by breaking down the opportunities and threats into Political, Economic, Social, Technological, Environmental and Legal factors (Strategy Resources, 2019). It can’t be denied that Huawei’s political is appreciated but complicated, they are supported by China Government but faced frictions with Western Government or can say the intensively imbroglio of the USA-China trade war. Since then, legal factors have also been affected when the business law of China benefited Huawei but it is banned some Western countries. The social factor is also an aspect worth mentioning, besides the fact that technology is the trend of the future, the technology called 'made in China' is causing the concern for many people. Notwithstanding, Huawei's remarkable point is the technology factor. As a leader in patents and highquality smartphone production, Huawei now owns the exclusive rights to 5G technology and the outstanding development of AI. Combined with other factors of PESTEL, it can be said that the external environment of Huawei has many fluctuations, but it still has a basis and many other strengths to overcome.

1.2. Huawei’s bargaining power of supplier in Porter’5 forces There is a serious global chip shortage since the Covid-19 pandemic and for a variety of reasons, semiconductor shortages are having a far-reaching impact on a wide variety industry. Therefore, in terms of the overall market, suppliers in the electronics - technology industry are dominating. 6

Like Apple, Huawei designs its own operating system for smartphones, since that cannot produce chips itself, TSMC is the semiconductor manufacturer that supplies Kirin chips for Huawei. Regarding Huawei, after being hit by US sanctions, it is no longer allowed to cooperate with US technology companies, as well as semiconductor manufacturers using US technology. At the more seriously result, it cannot hire TSMC to produce Kirin chips for its smartphones. Bad news for Huawei, American intellectual property and chipmaking technology are exclusive, whether it's Qualcomm, Samsung, or Sony, they use it. Therefore, Huawei has almost no option to buy important chips. So through, it can be seen that suppliers are the most difficult problem for Huawei, proving that the ability to negotiate and force prices of suppliers on this company is extremely strong. According to some reports, in Jan 2021, Huawei has completed the construction of its first chip factory in Wuhan city. If operated successfully, Huawei will be able to both design and manufacture its own chips, like Samsung or Apple. This may be Huawei's last hope to be able to continue to exist in the smartphone market. But until then, the weight of finding the right sourcing and alternatives to chips will still be enormous.

2. Internal Environment 1.1. Resources and Competency theory Possessing the understand of macro and industry environment alone is not sufficiency to successfully plan strategies. Every business needs to have a number of tangible resources such as financial resources, human resources, factories, machinery,... and also intangible resources such as human asset, relationships, reputation with customers or the government. So what are these resources of the business?

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Resources referred the inputs or assets that a business owns and can exploit for economic purposes (F. David, 1998). And the capability is the capacity of a firm to perform some activity proficiently. 1.2. Huawei’s Competency Framework There is a competent tool that can combine research and analysis of Huawei's resources and capabilities, called The Competency Framework (competence is the ability to use combined resources purposefully to achieve a desired goal), which includes fours components: Threshold Resources: Organizational, physical, technological: has created a Corporate Sustainable Development (CSD) Committee for the Huawei Group; hold research and software centres and Silicon Valley located in China and overseas. In Jan 2021, Huawei has completed the construction of its first chip factory in Wuhan. Threshold Competences: CSD is responsible for helping Huawei's business units set and work toward sustainability goals; gradually become autonomous in the semiconductor manufacturing sector. Distinctive Resources: Human resources, technological assets, financial resources and reputation: More than 85% of its workforce had a bachelors or higher degree, and about 60% had a master’s or PhD; has 100.000 patents under its name; possess 188.000 (2018) employees and low-cost labor; is the major suppliers for equipment for the China Telecom and own a large customer base in China, one of whom is the major telecom companies. In the second quarter of 2020, Huawei had 42% of the Chinese smartphone market, up 14% year on year.

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Distinctive (core) Competences: Huawei advocates openness, collaboration, and shared success (Huawei Fact Sheet, 2021). Only through strengthening collaboration with others, focusing on the interests of customers and partners, and pursuing success for everyone can a company thrive in the long run. They are extending the value of information and communications technology in service of a more robust and symbiotic industrial ecosystem via collaborative innovation with their customers, partners, and peers. Huawei is also engaging with industry partners to develop new technologies in areas like as cloud computing,

software-defined

networking

(SDN),

network

functions

virtualization (NFV), and 5G. (Huawei Fact Sheet, 2021) Huawei established joint R&D labs with international firms including as IBM, Microsoft, Texas Instruments, and Intel, concentrating on various telecom techniques. Huawei's innovative skills were supplemented by these cooperative development initiatives. (Analysis of Huawei and its Core Competencies) Huawei has maintained a strong working connection with China's military. This tight relationship enables Huawei to build a network that few other rivals can match, allowing Huawei to get large contract orders and major financial loans from state institutions in its early years. Huawei’s products low price as compare to its competitors. In summary, Huawei would need to maintain and expanse these core competencies in the long run to have a sustainable competitive advantage.

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III. Huawei’s TOWS matrix The so-called SWOT analysis is a situation analysis of the internal and external competitive environment and competitive conditions that collects all kinds of major internal strengths, weaknesses, external opportunities and threats that are closely related to the research object, lists them in the form of a matrix, and then uses the system analysis idea to match the variables.

1. Opportunities •

Huawei’s supported by China Government and business law of this country.

•

Being a distinguished technological brand needs a solid marketing strategy, which is crucial to the company's overall strategy. It should focus more on a marketing plan to boost its brand image and capitalize on its industrial size.

•

According to expectations, the video industry will be worth a billion dollars, the digital revolution will be worth a trillion dollars, and the Internet of Things sector will expand tenfold. Huawei has a significant layout advantage in the world's network infrastructure, and it can be argued that the company's future development route is based on advancement. (Know your competencies and control points)

2. Threats •

Among its competitors are Apple, Xiaomi, Samsung, and a great number of firms in the smartphone industry, pose a significant threat to the company.

•

Regulatory Pressures: Political tensions and the continuing trade war between China and the United States are putting a strain on Huawei's global operations. Other important markets, such as Canada, the United Kingdom, and Japan, had to be competed with. As a result, Huawei's international business would be severely impacted.

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•

Considering Huawei is a Chinese corporation, it will be seen differently than other companies from other countries. As an end, in order to be regarded a big global player, Huawei would have to go above and beyond.

3. Strengths: •

Huawei has a robust R&D team, CSD Committee and high-quality workers, giving it a competitive advantage. Every year, it invests 10% of its annual sales in research and development (R&D).

•

Own a large customer base in China: major telecom companies and China Telecom; gradually become autonomous in the semiconductor manufacturing sector.

•

Because Huawei is a R&D business, 5G technology, artificial intelligence (AI) and ICT present potential for the company to expand; develop new technologies in areas like as cloud computing, software-defined networking (SDN), network functions virtualization (NFV), and 5G, focusing on different telecom techniques.

•

Huawei’s products low price as compare to its competitors. More than that, one of its most valuable advantages is the combination of outstanding quality and affordable price in its products.

•

Relationship enables Huawei to create a network which few other competitors could rival and which helps Huawei to secure big contract orders.

•

Huawei is the second-largest smartphone manufacturer after Samsung, with 14.6

percent

of

the

worldwide

market

(IDC, 2021).

It’s

worth

mentioning that Huawei leads the market in its native country – China.

4. Weaknesses: •

In the UK, its mobile vendor market share is 8.36 percent, which is low when compared to Apple's 51.57 percent and Samsung's 28.27 percent, and in Canada, it has a 6.86 percent market share (Stat Counter, 2021). According to 11

the statistics, Huawei has been losing market share in several nations over the previous few years, ever since the trade war started. •

Many folks assume of Huawei as a company that sells low-cost technology and services. It hasn't been able to create a brand image that can compete with Apple and Samsung. In fact, many buyers consider its items to be substandard. Besides, the brand suffers from a lack of promotion, and as a result, it is a weak brand.

•

Cooperation with US technology firms and semiconductor manufacturers employing US technology is no longer permitted. In the worst result, it is unable to engage TSMC to build Kirin processors for its devices.

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Strengths S1:

Weaknesses

High

quality

human W1:

resources

Low

market

share

in

worldwide

S2: Potential of leading in W2: Weak brand technology (5G, AI, telecom W3: Depend on US technology techniques)

firms

and

S3: Low product price

manufacturers

semiconductor

S4: R&D concentration Opportunities

SO

O1:

S1+O1+O3: dominate the 5G W1+O3+O2:

Government

supported O2:

WO

technology Marketing

development

restore

foreign

market share

S3+O2: expand product image W3+O3: accelerate the process of and segment

putting the chip factory into

O3: The world's network

operation

infrastructure Threats T1: Competitors

ST S1+S2+T1:

T2: Regulatory pressure power by the trade war US- greater China T3:

and

WT

makes

the

full W2+T3: takes more effort of

technology

for product quality to get over the

performance

than barrier

competitors Chinese

prejudice

W3+T2:

product S3+S2+T3: keeps improving production product quality with reasonable cost

TOWS Matrix of Huawei

13

requires

rapid

self-

The individual reflection Teamwork in a university environment is considered a measure of each person's adaptability, leadership talent or potential gifted. However, many people still have problems with it. I'm an extrovert myself, love interacting and sharing work with people, though in this course, there were some minor frictions between members about the delivered product (presentation slide). Regardless, the issue was resolved, but I discovered that each individual has a unique personality and perception that is critical to be respected and reconciled. Besides, I learned how to run a team effectively with Master Plan and skilled the Canva tool in simple design. The process of researching and writing my assignment as well as this course provided me a valuable opportunity to not just learn about a specific topic in strategy and environment analysis but to develop a unique contribution to that topic. I admit that students who have attended this major must have a mindset or interest in sales and administration. Students who have pursued this major must have some love or attitude in sales and administration, in my opinion. However, after a semester of study in this course, I understood that passion isn't enough; business can't succeed without preparing. Richard P. Rumelt, the author of Good Strategy Bad Strategy: The Difference and Why It Matters written in his book that “It is hard to show your skill as a sailor when there is no wind.”. Likewise, the knowledge of this subject is the wind, combined with personal experience will become a great tool for the birth of a business, "like a lever that magnifies force". Before approaching it, I think the business that seize opportunity more quickly will be more likely ...