Q1. Discuss the key performance indicators for Huaweis transformation into a global brand, by addressing the value created by the brand both for its consumers and its investors. What lies under the success of this brand? Explain.

CASE STUDY: HUAWEI Huawei has to be the poster child for Chinese tech firms that have become internationally successful. In a remarkably short time, Huawei has expanded phenomenally from a small electronics manufacturer to a global tech leader that is instantly associated with innovative high-tech products. Although Huawei as a brand is more popular because of its mobile phones, it has a major presence in cloud services and AI. Today, Huawei's products and solutions are installed in more than 170 countries around the world, and it serves more than a third of the world's population. Employing more than 180,000 people around the world, Huawei is the third-biggest global manufacturer of routers, switches and other telecommunications equipment based on market share. In super-competitive smart phone race where it is more popularly known, it has become a dominant player, taking the big global giants like Apple and Samsung: according to an International Data Corporation report, in the third quarter of 2018. Samsung's global market share was 18.9%, Huawei's was 13.4% and Apple's was 11.8%. Additionally, the International Data Corporation reported that although the worldwide smartphone market showed a continued decline in the first quarter of 2019 , Huawei was the only one of the top three manufacturers to increase its sales volume. From a Rural Component Provider to a Tech Giant Huawei Technologies was established in 1987 in Shenzhen, China as a suburban/rural marketing agent for a Hong Kong- based phone company. Between 1996 and 1998, Huawei expanded into the metropolitan areas of China as the urban city population grew. The country's increasing global dominance and its emergence as the world's second-largest economy provided Huawei with a solid platform to launch into international markets. As Huawei started off primarily as a business-to-business (B2B) company, many of its business customers were telephone and internet operators that used Huawei's technology under their brand. Some estimates say that by 2030 China's urban population alone will be around one billion and its cities will have over one million inhabitants each by 2025 . Large cities require hi-tech communication networks, and Huawei has grown tremendously by serving this need in China. This allowed the company to harness the lessons it has learned and scale economies in preparation for a successful global entry. Huawei has three core distinct business groups: 1. The Carrier Network Business Group, which provides wireless networks, fixed networks, global services and carrier software. 2. The Enterprise Business Group, which provides services related to data centers and storage products ( a perfect complement of the first group) 3. The Consumer Business Group, which looks after the company's mobile phone and smartphone segments. Building a Brand with a Global Mindset Huawei's personal handset business has steadily built its expertise and brand image to become one of the top global mobile phone manufacturers. In 2008, it was already reported to be the third highest manufacturer of phone sets, yet its brand still not well known. However, since then, Huawei has started move up the value chain. By 2012, Huawei was manufacturing and shipping more than 90% of its consumer mobile phones under its own brand. This created conflicts with some business partners - telephone and Internet operators- and they stopped 2 doing business with Huawei, but this did not deter the company from branding its own phones. The decision to promote its own brand proved good for Huawei, for consumer popularity of other brands like Sony- Erickson, Nokia, Blackberry and HTC was declining, which opened new opportunities in the consumer retail market. Huawei's more affordable smartphones quickly became popular in markets like India, Indonesia, Taiwan and many countries in Africa. Huawei is looking to strengthen its position in the European markets by introducing a smartphone with new camera features and a lower price than those from Samsung and Apple. Huawei's Consumer Business group became the third-largest smartphone manufacturer in 2017, commanding 10% of the total global market. Soon after, Huawei displaced Apple to become the world's second -largest smartphone manufacturer and further cemented its place in the first quarter of 2019. According to the International Data Corporation's Worldwide Quarterly Mobile Phone Tracker report, Huawei's shipment increased from 39.3 million phones in Q1 of 2018 to 59.1 million shipments to Q1 of 2019. Huawei has taken a people-led approach to its international marketing organization and global expansion efforts, encouraging a culture of global outlook. A key belief of the company's founder, Ren Zhengfei, is that if a company has global ambitions, it needs to ensure that its people can think with a global mindset. The company is known for creating an integrative work culture by bringing different parts of the world together, giving its employees increased global awareness and enhancing cross-cultural sensitivity. The tech giant believes that, for a truly global orientation, it employ global procedures and strategies that focus on achieving the highest international levels, not just those suitable for a Chinese market. Huawei thus trains its employees in the highest international standards in terms of customs, procedures, laws, health and safety, language, local norms and etiquette. Challenges in Key Markets Despite being hugely popular worldwide, Huawei's presence in the United States is limited. Although the reasons for this are largely political, there were preexisting market conditions that made the US smartphone market a tough one to break into compared to other global markets. The main reason is that a large majority of Americans buy smartphones from network carriers, so a smartphone manufacturer must make a deal with one of the big carriers to feature their phones. Consumers in other parts of the world are more open to buying their phones directly from a store and the company itself, which exposes them to a greater number of brands. The rise to global dominance has brought challenges to Huawei, especially with regards to its relations with the governments of some of the biggest markets. In 2018, the company faced political controversies rising out of concerns by some governments that Huawei telecom devices pose a potential security risk, which even led to banning of Huawei's business deals in some countries. For Huawei, the major impact comes from restrictions on the sales of its telecom network equipment; many countries, including the United States, New Zealand, Australia and Japan have banned Huawei's network communication equipment. Beyond Political Challenges These political issues have not hindered Huawei's smartphone growth, thanks to a strong domestic market and demands from other international markets. But the path of expansion may not be as easy and smooth for Huawei as it used to be, given the tense political situation with some influential countries. Huawei's global expansion is not dependent only on the political attitudes of these countries; the competitiveness of its products is of vital importance too, and its sustained growth will also depend on how well its products compare with that of its competitors. In the past, Huawei, along with other Chinese companies- has been under fire for copying competitors' technologies and selling at lower prices. Huawei is thus investing a lot in developing innovative technologies and currently has one of the largest R\&D budgets in the industry to develop a sustainable competitive advantage. It should also be noted that the security concerns raised by countries like the USA and Australia may not be shared by other countries like Thailand and Indonesia, who regard the need for affordable and reliable telecommunications and technology equipment as more important. Global Competition and Technological Power Balance The telecommunications sector, and the smartphone market space particularly, is dynamic and extremely competitive. In the span of a decade, we have seen the fortunes of leading companies change with the pace of innovation. Apple emerged as the leader by displacing the established players like Nokia, Blackberry and Sony Ericsson, but in turn was toppled by Samsung, moving it to the second spot, and more recently Huawei took over the second spot and shifted Apple down to third position, yet five years ago, many consumers would not have even heard of Huawei. The new shift in the global telecommunications race is 5G technology, the next generation of wireless networks. This technology will allow faster data speeds and will be used by selfdriving cars and smart cities, which use the Internet as the basic mode of functioning. Huawei along with Ericsson and Nokia, is aiming to be among the principle suppliers of this technology. Upgrading to 5G will require telecommunications firms around the world to spend a significant amount of money on updating their equipment, but telecommunication vendors are trying to make an early start. According to Huawei, its 5G equipment is already being used by two-thirds of the commercially launched 5G networks outside of China; the company has booked 50 commercial 5G contracts outside of China- in markets like the United Kingdom, Switzerland, Finland and South Korea. According to CEO Ren Zhengfei, no other provider of 5G technology will match Huawei for the next two or three years. In June 2019 , the company announced that it has increased its investments into the 5G technology and that cyber security and privacy are its top priorities. Huawei's growth and international expansion have been impressive and bold. Major factors have contributed to its success are a strong commitment to R&D, a global philosophy and outlook, focus on building a corporate brand, effective pricing strategies. However, Huawei still has a relatively weak presence in the South Asian and North American markets, which puts its current number two position in the smartphone market (behind Samsung) into question. As consumer needs and product technologies evolve, Huawei will have to work continuously to satisfy and create future consumer needs rather than merely meet their current ones. And with regards to the commercialization of 5G technology, Huawei will have to continue spearheading innovation and spreading the adoption of the technology in different markets