Huawei Strategic Marketing Audit

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Bargaining power of suppliers

The supplier industry is dominated by several companies which concentrated in Chengdu. They do not have to compete with alternative products when selling to Huawei. When their product is the main input of Huawei, they have strong price negotiation ability to Huawei, which can influence Huawei on its profitability and cost control. For example, the companies which provide Huawei core products such as integrated circuit boards, computing processors have strong price negotiation capabilities.

According to the ‘Five Forces’ analyze, Huawei has a comparative advantage over the major competitors in terms of new entrants, and substitution threats. However, when facing with buyers, suppliers and foreign competitors, Huawei is at a disadvantage. In general, Huawei is more optimistic about the competitive situation, with the industry to further growth and maturity, the company still has more space for growth and profitability.

PEST Analysis

Political

- European Union Accuses China's Huawei and ZTE of Violating Trade Policies (Jerin, 2013).

- Chinese government support for hi-tech (Terence, 2007).

Economic

- The global information economy and the rapid development of the Internet industry provide opportunities for development and great development space for Huawei.

- ICT industry growth (Cassandra, 2008)

- China is not The Trans-Pacific Partnership (TPP) member.

Social

- Low cost labor is a key feature.

- Demand for after-sales service becomes higher.

- Brand awareness - Attention to brand and product quality has become the concept of contemporary people's consumption.

Technological

- Technology also focuses on other value added services other than the basic calls.

- China government supports investment for development of technology.

- “5G, the Way to a Super-Connected World.” (Ken, 2015)

- The rapidly development of technology makes the product life cycle significantly shortened.

Product Life Cycle Analysis

The product of Huawei is in the mature life cycle stage, and it means that the potential customers are almost already users of the smartphone. The growth and profitability of Huawei depends entirely on its ability to attract new customers. By adding and improving the services and functions of smartphones, it can attract more potential consumers. Moreover, it is impossible to attract buyers by technology alone, so Huawei need to add value services for its product (Andy, 2016). Huawei can attract buyers in two ways during the mature lifecycle state:

- Service: Making cell phone more differential or affordable will attract buyers to buy and increase competition between companies by lower service fee or providing better consumer services. “Through an agreement with Vodafone, Huawei launched its Ascend PI handset here, aimed at budget-conscious consumers” (Benjamin, 2012).

- Innovative: The new designs and improvement in the physical appearance or hardware devices of smartphones, and more add-on features attracts customers to buy it at a higher rate.

SWOT Analysis

Strength

“Huawei is now on a par with the world’s largest equipment supplier, Ericsson and has become the third largest smartphone vendor in the world with seven R&D centres employing 1,200 people in Europe alone (Daniel, 2016)”. Moreover, because Huawei is a Chinese company, it means Huawei has competitive advantages for low wage cost and Chinese government subsidies. “Huawei used to boast of its cost advantage in research and development, mostly because its Chinese engineers commanded much lower salaries than its rivals' staff (The Economist,2009)”.

Weakness

In the global smartphone market, Huawei need to face with lots of competitors such as Apple and Samsung, which is in the leading position. In addition, “Made in China Label” is a big problem that every Chinese company need to deal with. People may doubt about the innovative ability of Chinese enterprises, it makes the products produced by Huawei more likely to be questioned. At the same time, the low-cost strategy of Huawei could be easy to make people doubt the reliability of the product.

Opportunity

In order to meet the rising demand of consumers and protect the investment of operators, Huawei has taken the lead in proposing the 4.5G concept in the industry. Based on the existing 4G network facilities, Huawei introduced 5G technology to optimize the network speed, improve the user experience and help operators and create more business to open up new business. Moreover, Huawei currently starts growth in Europe. Shearman (2011) mentioned that “Huawei, which has little brand-awareness in the UK, has made clear its plans to capitalize on the growing popularity of smartphones. It has focused on developing 'afford- able' devices that run on Google's Android operating system.”

Threats

Compared with Samsung and Apple, Huawei is at a disadvantage in terms of human resources, design and deployment of the network. Because telecom operators currently start to consider more network functions and performance, the low-cost strategy of Huawei may lose its appeal. The challenge is greater in markets such as the U.K. and Germany where subsidies of carriers have traditionally made Apple and Samsung phones more affordable, it may reduce the price advantage of Huawei. Moreover, in 2012, “Huawei and other Chinese tech companies such as ZTE have been banned from bidding for US government contracts, because of suspicions that they undertake industrial espionage for China” (Linda, 2014). It makes Huawei cannot successfully enter the US market and make people worry about whether there will be privacy problems.

Regardless of how the market changes, having its own core strengths of technology and market-leading equipment in general are the objective that Huawei must pursue. Having more