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Huawei Competitive Analysis

The document analyzes Huawei's competitive strategies using Porter's generic framework, emphasizing the importance of Cost Leadership as the primary approach to gain market advantage. It highlights the need for Huawei to focus on reducing costs while maintaining quality, targeting middle-class consumers who prioritize affordability. Additionally, it suggests that Huawei should enhance brand awareness through discounts and promotions to further solidify its market position.

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82 views3 pages

Huawei Competitive Analysis

The document analyzes Huawei's competitive strategies using Porter's generic framework, emphasizing the importance of Cost Leadership as the primary approach to gain market advantage. It highlights the need for Huawei to focus on reducing costs while maintaining quality, targeting middle-class consumers who prioritize affordability. Additionally, it suggests that Huawei should enhance brand awareness through discounts and promotions to further solidify its market position.

Uploaded by

dkdurgh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Huawei Competitive Analysis: Porter’s generic strategy

Porter's generic strategy framework will be used to examine how Huawei might obtain an
edge over its competition. Porter called the generic strategies "Cost Leadership" (no frills),
"Differentiation" (creating uniquely desirable products and services) and "Focus" (offering a
specialized service in a niche market). He then subdivided the Focus strategy into two parts:
"Cost Focus" and "Differentiation Focus." As shown in figure 1 below.

Porter's generic strategies are ways of gaining competitive advantage or developing the
"edge" that gets Huawei the sale and takes it away from its competitors. There are two main
ways of achieving this within a Cost Leadership strategy namely; Increasing profits by reducing
costs, while charging industry-average prices; and, increasing market share by charging lower
prices, while still making a reasonable profit on each sale because of the reduced costs. The
greatest risk in pursuing a Cost Leadership strategy is that these sources of cost reduction are not
unique to Huawei, and that other competitors copy the cost reduction strategies. This is why it's
important to continuously find ways of reducing every cost.
Differentiation involves making products or services different from and more attractive
than those of competitors. How this is done depends on the exact nature of industry and of the
products and services themselves, but will typically involve features, functionality, durability,
support, and also brand image that customers value. To make a success of a Differentiation
strategy, Huawei needs good research, development and innovation, and the ability to deliver
high-quality products or services. Also, Huawei should employ effective sales and marketing, so
that the market understands the benefits offered by the differentiated offerings. Thus, large
organizations pursuing a differentiation strategy need to stay agile with their new product
development processes. Otherwise, they risk attack on several fronts by competitors pursuing
Focus Differentiation strategies in different market segments.
Companies that use Focus strategies concentrate on particular niche markets and, by
understanding the dynamics of that market and the unique needs of customers within it, develop
uniquely low-cost or well-specified products for the market. Because they serve customers in
their market uniquely well, they tend to build strong brand loyalty amongst their customers. This
makes their particular market segment less attractive to competitors. As with broad market
strategies, it is still essential to decide whether you will pursue Cost Leadership or
Differentiation once you have selected a Focus strategy as your main approach: Focus is not
normally enough on its own.
But whether you use Cost Focus or Differentiation Focus, the key to making a success of
a generic Focus strategy is to ensure that you are adding something extra as a result of serving
only that market niche. It's simply not enough to focus on only one market segment because your
organization is too small to serve a broader market. The "something extra" that you add can
contribute to reducing costs (perhaps through your knowledge of specialist suppliers) or to
increasing differentiation (though your deep understanding of customers' needs).
Accordingly, Huawei should ensure to adopt the cost leadership strategy to handle
competitive pressure. Therefore, as cost leadership strategy involves gaining a competitive
advantage by lowering the cost it should be the main generic strategy that Huawei uses in various
consumer markets. The primary objective of using this strategy is to preserve the market
leadership position through efficient value chain management. This strategy would allow Huawei
to expand the market share by targeting the middle class, which makes the largest proportion of
overall consumer market mix in most of the countries. Middle class consumers generally place
high importance to the pricing factor and cost leadership is the best strategy to cater the needs of
this consumer segment.
Huawei should preserve its focus on affordability and easy accessibility of its produce
across the globe, which leads towards high brand awareness and high sales growth and provides
a strong competitive advantage basis. Other than charging low prices by lowering production
cost and maximizing supply chain efficiency, Huawei frequently should continuously offer
discounts and coupons to achieve sales targets and handle the competitive pressure by its closest
rival. The intended outcome of these discount and promotional campaigns is to increase brand
popularity and encourage consumption. Ultimately, Huawei’s adoption of cost leadership
strategy offers many benefits, such as- gaining quick brand recognition, expanding the customer
base, encouraging consumption and achieving sales targets by emphasizing over product’s
affordability and accessibility. Thus, the analysis of Huawei Huawei’s competitive advantage
strategies suggests cost leadership as the main strategy to adopt to gain a competitive edge in the
market.

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