Case Study 4: Haeir Group Haier Group is Chinas largest home-appliance maker, and CEO Zhang has ambitious goals for the company. Whereas the United States has General Electric, Germany has Mercedes-Benz, and Japan has Sony, China has yet to produce a comparable global competitor. Zhang is hoping to change that. Haier enjoys enviable prestige in China (a survey of young, fashionable Chienese ranked Haeir as the countrys third most popular brand behind Shanghai Volkswagen and Motorola, with Cola-Cola fourth), but Zhang isnt satisfied. He wants to gain worldwide recognition, build the company into China s first global brand, and be listed on the Fortune Global 500. The Haier Group started as the Qingdao Refrigerator Company. When Zhang took charge of the government-controlled company in 1984., his first deed as CEO was to take a hammer and smash 76 refrigerators because of their poor quality. Why? To drive home the point that product quality was going to improve. At that time, the company had only one product and 800 workers. Today over 30,000 employees make some 13,000 products in 86 different categories, from air conditioners to mobile phones to vacuums and more. And those products are now known around the world for quality and innovation. The Haier Group exports its products to more than 160 countries and regions and has established more than 40,000 global sales outlets. Its annual revenues are closing in on $9 billion. Although Haier is the number one domestic appliance producer in China, it ranks fifth in global appliance sales behind General Electric, Whirlpool, Electrolux, and Siemens. An important division for the Haier Group is Haier America, its U.S. sales and marketing arm. From its headquarters in New York to its state-of-art refrigerator manufacturing facility in South Carolina, Haier America is committed to establishing itself as a powerful U.S. brand known for original products. For instance, one of those products is its popular frog-shaped television console, which also doubles as a nightlight and asks kids to answer math problems before switching itself on. The Haier Ribbit has been so popular that at least one retailer is asking for variations using other popular cartoon characters. Haier America CEO Michael Jemal is working on the licensing deals to make it happen. He says, Were the new kid on the block, so we have to ask them (the customers) what they want. If we dont have it, we have to build it. Other popular products include its compact refrigerator, wine cooler, and office refrigerator. Zhang is considered by many to be Chinas leading corporate executive. In November 2002, he became the first businessman ever elected to the Chinese Communist Partys Central Committee, a major political triumph for the 54-year old with an MBA from Chinas University of Science and Technology. Zhang has been described as a very charismatic business leader and not just in the Chinese perspective. Hes emerging as a global business leader. Zhangs plans for pushing his company higher and higher rests on his ability to exploit Haiers resources and capabilities as the company relentlessly pursues its goal of becoming a global brand. Questions What resources and capabilities does the Haier Group appear to have? Are any of these capabilities distinctive? Explain. What will it take to make its capabilities distinctive? What strengths and weaknesses does the Haier Group appear to have? How could it prevent its strengths from becoming weaknesses? What approach to internal analysis would you suggest that CEO Zhang Ruimin use in assessing his organizations strengths and weaknesses? Why? What do you think of Zhangs goals for his company? What must the company do to exploit its resources and capabilities in order to reach these goals?