SWOT Analysis is one of the basic business-planning techniques that allows creating a business portrait of a certain company and its activities. The template for SWOT analysis is fairly simple – S stands for Strengths, W for Weaknesses, O for Opportunities and T for Threats. Basically, in any business book, you will read that SWOT analysis can be the most useful in dealing with large corporations that either wish to go international or expand their share on the market. There are various examples of this technique online suggesting that usually creating a SWOT matrix is the first step in building a solid business plan or strategy.
To properly understand the implication of SWOT analysis it is necessary to have relevant examples. The best option is to analyze a certain company. Chinese appliance brand Haier is a good one to choose since despite being an internationally recognized brand it still exists in the highly competitive business environment and has a lot of potential for expansion. Creating a SWOT analysis should give an insight into Haier’s current business model and possible development strategies for the future. Haier was founded in 1984 in Qingdao, China, as an appliance company that mostly produced refrigerators. It later grew into an international appliance conglomerate with consolidated production and ever-growing global distribution network. As of now, Haier remains prominent in its home market in China and aspires to furthermore increase its brand recognition around the globe.
A detailed SWOT analysis starts with Strengths. Haier’s position is very strong in the domestic market – it is one of the most prominent appliance companies in China that has customers’ trust and recognition. Haier has an impeccable reputation in China because of its customer service and excellent quality. Initially, Haier’s brand strategy involved a high level of quality control. They wanted to step away from the stereotype of Chinese products being of poor quality and initiated the “quality over quantity” system for their own brand. Later it has allowed them to expand and diversify, producing not only refrigerators but other kinds of products as well. Thanks to their solid reputation that allowed Haier to have a steady income, they were able to invest in research and development. That allowed them to introduce some innovations and to expand into the international market as well. This quality-based and steady approach is one of the main Strengths of Haier since it allows them to always rely on their domestic market in case of a failure in one of the foreign markets.
On the other hand, Haier’s Weaknesses first and foremost include limited brand recognition. Even though Haier is relatively well-known in China and Asia, it has no brand reputation on the Western markets. Haier is used to doing “by the book” and not trying to adjust their approach to the western realities. Ineffective marketing and advertising have resulted in Haier getting negative attention from the Western media and their general inability to build an appealing brand image. Western companies had more experience in working with brand image (including their online presence) and invest more money in marketing while Chinese companies usually focus more on production. It has created an informational inadequacy that surrounds Haier: western customers are inclined to believe the stereotypes about Chinese products like a lack of quality. The problem is the company is not doing enough to undermine that image. What we can also see thanks to the SWOT matrix, Haier has no luxury segment to its products and therefore is unable to be competitive in the high-end segment.
Opportunities for Haier all rely on their ability to follow global trends in production. Companies are becoming more and more socially aware and vulnerable to external pressure from various stakeholders (e.g., international organizations, media, etc.). The trend for social awareness presents numerous opportunities – going green and producing eco-friendly appliances, aiming at rural markets and opening a new line of high-priced but more “clean” products with all the production stages becoming transparent. It would allow concerned stakeholders to track the production cycle and account for the absence of unfair labor conditions and other violations. This, in turn, will positively affect the brand image as well.
On the contrary, one of the main Threats concerns the solid image that Haier has for itself in their domestic market as well. Being this huge and traditional company that comes from a country where business is heavily affected by the government might complicate introducing innovation. Of course, it gives their competitors a head start. Growing competition and Haier’s inability to quickly adapt might undermine their growth perspectives more than any brand image issues they have as of now. They need a new template of a successful business strategy to follow.
Below, all facets of Haier SWOT analysis are represented in a table view:
Strong position in the domestic market
High quality of products
Broad production facilities
Poor brand reputation
Unfair labor conditions
Entering new markets
Introduction of new products
The dependence on the government
Complicated introduction of innovations
All in all, SWOT analysis for Haier demonstrates how a general outline of the company’s business model and the external situation might be used for developing a solid business strategy in the future.