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Chinese enterprise are widespreadly weak in technology innovation, causing the lack of enterprises late development power, still unable to keep enterprises sustainably and stability grow strong and causing the situation of short life span of enterprises. In the meantime, the economy growth of China is mainly carried out by high input of resources, not depending on the technology innovation and the raising of economic efficiency. In the light of those situations, changing the economy growth method, adjusting industrial structure is very urgent. Therefore, the government of China put forward the strategic decision of improving the self-renovation capability with the guidance of scientific views of development to make China become a creative type nation before 2020 (Bremmer, 2010).
On the basis of current situation of China, this research of HUAWEI Company is essential to China. Not only can it provide reference of expanding international market of those technology enterprises, but also improving the self-renovation capability of Chinese companies. HUAWEI Company, as a dazzling bright spot under the widespread weak technology innovation circumstance of China, still insists on walking the road of the technology innovation development. This is the reason of choosing HUAWEI Company as my topic in this research. But what interests me most is another issue; HUAWEI Company might be regarded by U.S.Congress, as the one of company which threatens national security of USA in October 2012.
Basically, the main objective of this research is to find out what is reason to make HUAWEI Company stands out above the rest and become one of the 500 Fortune Companies in the world. For developing this paper, I will review the previous work of internationalization of Chinese firms by using the case study of HUAWEI Company and attempts to analyze HUAWE Company's profile and its internationalization strategies employed as a latecomer firm. In addition, what the most important is how HUAWEI Company applies these resources to compete with their rivals, such as Samsung and Panasonic in Japan.
Finally, I will make this paper clearly by using literature review and research approach in the following stage.
2.0 Literature Review
In the modern society, internationalization is increasingly popular and became a mainstream for contemporary enterprises. Johanson & Vahlne (1997) defined internationalization as a process in which the firms gradually increase their international involvement. They claimed that internationalization is the product of a series of incremental decisions. In order to better understand the internationalization, I will introduce 'traditional internationalization theory' (Caves, 1971). On the basis of this theory, it demonstrates firms will internationalize rely on a definable competitive advantage that enable them to produce enough return to compensate the additional costs and risks associated with operating abroad markets. However, this theory cannot be explained entirely the reason of Chinese companies want to expand oversea markets due to this theory belongs to Western Theories. Indeed, Peng (2005) and Mathews (2002) have claimed that China does not require theories that are specific to itself. Child and Rodrigues (2005) suggest China should provide an opportunity to extend, rather than replace existing theory on the internationalization of firms, including that applied to developing country MNCs.
2.2 Analyze the situations of Internal and External
An organization's success is influenced by factors operating in its internal and external environment; an organization can increase its success by adopting strategies which manipulate these factors to its advantage. A successful organization will not only understand existing factors but also forecast change, so that it can take advantage of change within the environments in which it operates
For developing and analyzing the internal and external situation of HUAWEI Company, I will introduce some models and theories.
In 1971, Andrews introduced SWOT analysis. It is an important tool for rapidly establishing the overall strategic position of a business and its environments. SWOT stands for Strengths, Weaknesses, Opportunities and Threats. However, some findings form Menon et al (1999) and Hill and Westbrook (1997) have shown that SWOT might harm performance. For deeply analyze the internal situation of HUAWEI Company, resource-based view (RBV) can be proposed. The resource-based view is a way of viewing the firm and in turn of approaching strategy (Wernerfelt,1984). The resource-based view was popularized by Hamle and Prahalad (1994) in their book. Barney (1986) lists all assets, capabilities, organizational processes, firm attributes, information, knowledge, etc as resources. The RBV is used to explain that a firm accumulates valuable resources to achieve competitive advantage. However, in a changing environment, only internal analysis is insufficient for international markets.
Therefore, external analysis is same important for company which wants to operated international market. The most obvious way of external analysis is PEST model. A PEST analysis is used to identify the external forces an organization. This is a simple analysis of an organization's Political, Economical, Social and Technological environment. However, because of PEST analysis is relatively simple, compared with dynamic capability. The dynamic capability view is an extension of the resource-based view (RBV) due to the locus of RBV lies at the internal environment of the company. Teece, Pisano and Shuen (1997) have introduced the concept of 'dynamic capabilities', which are a firm's ability to rapidly integrate and reconfigure resources to match a changing environment.
In a word, to take advantage of these analysis models, it can better recognize the international competitive advantage of HUAWEI Company and the international environment.
2.3 Entry Mode
It is obvious that the internationalization process of HUAWEI is successful up till now. This success depends on the appropriate market entry mode choice and market strategies. Therefore, after knowing the competitive advantages of company, I will research which entry modes used to be by HUAWEI. In 1980s, there is an popular entry mode- Uppsala process mode, was created by Johanson and Vahlne (1977). It identifies the different development stages of internationalization and treats MNEs as learners (Contractor 2007; Mathews 2006). But along with the rapidly development of internationalization, Uppsala process mode cannot fit with the market any more. Therefore, in 1995, Driscoll introduced a comprehensive foreign market entry decision mode- dynamic mode choice framework, which taken export, contractual and investment regarded as the main foreign market entry modes. This model fully considers the difference between ideal model and actual one and takes interchangeable mode characteristics into consideration when company chooses international market entry mode. What is more, Driscoll (1995) pointed that there is no optimal entry modes due to some factors influence the entry mode choice, such as firm factors, environment factors and other factors.
In the light of these circumstances, HUAWEI Company have not purely adopt one mode, it applied different market entry mode in different markets, which means produces different products in different geographical markets. In my opinion, this is the important reason why HUAWEI Company can be became one of the 500 Fortune Companies in the world as a latecomer in such short time, in spite of not listed.
3.1 Aspects of Investigation
Originally, for developing this research, I had intended to dissect the secret of success in HUAWEI Company via three aspects: Whole world, Chinese market and HUAWEI Company itself. Unfortunately, when I collect some information related to HUAWEI Company, I found the information is too massive to analyze for me and too scattered. Therefore, I decide to focus on company itself; in the meantime, I am going to compare HUAWEI Company and their specific competitors in international market.
3.2 Methods of Investigation
At the beginning of this paper, I would like to choose Quantitative research and Qualitative research as my primary methods in this paper. Based on my previous experiences, quantitative method is relatively simple and more intuitive to reflect the performance and strategies of the company. Quantitative research (Lisa, 2008) refers to the systematic analysis of market phenomena through statistical, mathematical or computational techniques. It consists usually ratio analysis and questionnaire. However, David (1998) illustrated that quantitative method, especially in questionnaire still have some limitations, preset answers will not necessarily reflect how people really feel about a subject and results are limited as they provide numerical description rather than detailed narrative. While it comes to Qualitative research, secondary data and focus group interview are very popular methods in market research. Inevitably, secondary data in this research have some limitations. Because HUAWEI Company is not a public listed company and company's information are very limited, especially in highly confidential strategic issues and finance and cost of expansion (Sunny, 2009). What is worse, Douglas(2005) argues that focus groups are often useless and cause more trouble, with focus groups often aiming to please rather than offering their own opinions or evaluations, and with data is often optimal to support a foreseeing conclusion.
Actually, focus group interview is little hard to me. I have no able to contact and interview one of manager in HUAWEI Company, but I still can collect the interview data through another TV program on internet.
In the light of above information, i finally decide to take advantage of the combination of quantitative and qualitative data gathering, the mixed methods research(Jiang, 2009) is a type of research where researcher mixes or combines quantitative and qualitative research techniques, approaches, concepts or language into a single study. Its striking strengths include increasing complementary strengths and decreasing non-overlapping weakness in research and enforce the validity and trustworthiness of research. Therefore, mixed method research is more reliability approach for investigating markets.
Based on my research currently, HUAWEI Company is perhaps the most outstanding example of a Chinese company that has rapidly established itself in overseas markets. The case of HUAWEI has challenged the traditional internationalization theory. Indeed, according to the findings, HUAWEI does not fit well the traditional motivations of MNCs expanding abroad to leverage their competitive advantages. In terms of entry mode, HUAWEI Company prefers different market entry mode in different markets to only one entry mode. This is very wise decision. In addition, for adopting the mixed method research, I hope this research can provide readers to more comprehensive insight in HUAWEI Company.
Finally, as far as I am concerned, this research will be of great help to China, not only for existing multinational company, but also to those companies intend to operate oversea markets.