Sun Tzu's Art of War and Winning Strategies

Author: Tang Chihua, Tang Tusheng
Publisher:
Publish Date: 2006-06-01
Features: See how the company strategically manages Haier, creating miracles through three consecutive strategies: the famous-brand strategy - diversification strategy - internationalization strategy. What is valuable and rare is that every strategic decision ensures correctness, and every strategic operation ensures success. Its development process can be divided into three stages:
Stage: From December 1884, implementing the famous-brand strategy. In 1984, the company had just introduced a refrigerator production line, and everything was scarce. Where to start to kick off development? At that time, the refrigerator market was in short supply, and many companies made money by expanding production. Some companies were enthusiastic about diversification. Haier did not follow the trend. Zhang Ruimin realized that if they did not do a good job with refrigerators, how could the company stand in the market? How could they talk about diversification? According to Haier's conditions at the time, the only correct choice was to focus on refrigerators, make money to support the company, and focus on quality, striving to create the Haier brand. Recognize the market, start a business; recognize the direction, take your own path. This is the unique aspect of Haier's strategic decision-making. After seven years of effort, they finally created the Haier brand, won the first national quality medal in the history of Chinese refrigerators, and was one of China's top ten famous trademarks. From the 41st designated factory in the refrigerator industry, they gradually rose to a leading position. While doing the famous-brand strategy, they formed the core of the company's thinking; tempered the team; cultivated the corporate culture; created Haier's distinctive OEC management; accumulated capital, laying a solid foundation for further development.
Second Stage: From December 1991 to December 1998, implementing the diversification strategy. In 1991, Haier had already become a national famous brand. What should be the next step for development? At that time, the prominent issues were: first, the company's scale was small, and products were in short supply; second, only one refrigerator product, with high marketing costs. The market needed Haier to scale up and diversify. From operating a single product to a series of home appliance products. This was both market demand and the need for Haier's continued development. The question was how to achieve diversification? The fastest way is through capital mergers and joint ventures, but this is a double-edged sword. At that time, many Chinese companies had been burdened by heavy debts due to mergers and joint ventures. How to ensure success with the smallest cost? Haier tirelessly sought a solution and finally adopted the strategy of "using intangible assets to revitalize paralyzed fish," eliminating risks. They merged 18 companies, and each merger was successful. After seven years of effort, Haier's products expanded from refrigerators to freezer cabinets, air conditioners, washing machines, and televisions. Later, they further expanded to computers, mobile phones, and robots. This integrated domestic resources, optimized Haier's industrial structure, expanded Haier's scale, and laid a solid foundation for marketing and the company's major development.
Third Stage: From December 1998, fully implementing the internationalization strategy. After Haier achieved its diversification development strategy, how could the company climb to new heights again? Should it follow the example of some domestic and foreign companies and implement large-scale industrial transfers, such as investing in real estate, automobiles, or pharmaceuticals and chemical industries. How should the main strategic focus be determined? The wisdom of the Haier people lies in "knowing oneself, knowing others, knowing the land, and knowing the sky," combining the company's development with the interests of the nation and the people to consider the problem. They found that in the West, for a long time, people had the impression that Chinese products could only be sold on street stalls; that Chinese companies could only process products for foreign companies. To change this passive state, Haier decided to stop the initial industrial transfer, such as contracting out the pharmaceutical industry and catering industry that had already been involved, still taking the home appliance industry as the main industry and fully implementing the internationalization strategy.