Business Plan for Huawei Technologies Co. Ltd.

Business Plan for Huawei Technologies Co. Ltd.

Jay Soni

Strategic Management

December 12th, 2016

1. Executive Summary

Overview

Huawei Technologies Co. Ltd is a Chinese networking and telecommunications equipment and service company. It was established in the year of 1987, but gradually became a world player and multinational corporation since the end of 20th century and was included in the Global Fortune 500 companies. (Jason McLure 2012) Though being a leading telecommunication tycoon in the rest of the world, Huawei is comparatively new to U.S. customers. However, the high quality of its products and affordability of its price make Huawei a potential competitor in the U.S. Market. The business plan of our team is to promote Huawei in the U.S. market, and piloting this promotion in the New York metropolitan and some other popular cities in New York State as a start.

New York State Broadband Program:

In recognition of the growing importance of this technology to the state, this program was created to ensure that every New Yorker has access to the internet with high speed in both urban and rural area. So that, citizens can have greater opportunities to connect educational and workforce related development resources which will help to the state to develop and build an innovative and talented high-tech workforce. But, it has to be affordable to every resident. (NYS Broadband office 2015)

As a manufacturer of related products and services we would like to take the advantage of this program in the development of the New York State. The increased demand for high speed network asks for latest technology and advanced products, which Huawei can offer through partnerships with available ISPs in State.

There are approximately 80 Internet Service Providers (ISP) in NYS. Huawei can work closely with them to determine the type of broadband technology can provided in different region.

Business Structure:

The business structure will be set up as follows: Board of Directors, which will oversee operation of Huawei’s U.S. branch; Executive Management Team, which will conduct business operation in all the components of the business including sales and services, products and solutions, finance, marketing, operation and supply Chain, and human resources; Product Investment Review Board, which coordinates the technological research managements and product management, and independently review ethical issues.

1.1 Market Summary:

Since, the growth in Ethernet Switches has increased to 9% of the worldwide revenue in the second quarter of 2015 reaching a total of $5.6 Billion. Huawei is willing to increase their share in increased business; that to in the larger city of New York. However, the major market share is gripped by the other manufacturers like HP, Motorola, Alcatel Lucent, Cisco, D-Link, Dell etc. (Matthias Machowinski 2015)

Among all Huawei’s products, Smartphone is the money machine generating the most sales volume and profits based on the volatility of the product. However, due to the maturity of the smartphone and tablet market, which is predominantly occupied by Apple and Samsung, it would extremely difficult for Huawei to get a market share in the cellphone and tablet market. Apple and Samsung account for almost the whole industry profits, and the situation is the same in New York Metropolitan Area. In the first quarter of 2015, Apple’s profit in smartphone business soared up to 92%, Samsung, after a profit plummet, went through a little spike and rose to 15%. (WSJ 2015)

Instead, Huawei’s strength is really in telecommunication technology. Product innovation has a lot of advancement, but doesn’t have comparative advantage facing Apple and Samsung. More importantly, Huawei as an already well known international network switch vendor, doesn’t have as big role in the US market as the world. The follow graph compares Huawei’s market share both worldwide and nation-wide in the U.S.

[pic 1]

Source: http://press.ihs.com/press-release/technology/network-operators-rate-router-and-switch-vendors-ihs-survey

[pic 2]

Source: http://www.idc.com/getdoc.jsp?containerId=prUS25453715

As a conclusion, there is lot of leeway in the U.S. network switches market. Huawei’s performance has already been proved by its international reputation, compared with the U.S. consumers in which Huawei has very low profile in.

Target Market:

Huawei, a China-based $28 billion telecom powerhouse, is looking to make a big play for the enterprise networking market with the introduction in the U.S. market of a complete Ethernet networking line.

The first targeted market of Huawei will be New York metropolitan and some other popular cities in New York State. If the piloting site turns into a success, Huawei will then expand into major U.S. metropolitans and municipalities and other non-urban areas. Meanwhile, sales through e-commerce merchants like Best Buy and Amazon, etc., will be available simultaneously.

1. Market Demographics:

Demographics in the City of New York and its surrounding metropolitan areas are unique and vibrant. Demographics that are directly related to marketing strategies and decision-makings are mainly geography/transportation convenience, population and socio-economic condition.

Geographically, New York Metropolitan Area is the transportation hub of three States: the State of New York, New Jersey and Connecticut, as well as major transferring center for international flights. Meanwhile, there are three major airports in this area with almost all the major airlines in the world. The Port of New York and New Jersey is also the largest natural harbors in the world. Starting in New York City has major advantage for quickly load our products into the market, since all of Huawei products are manufactured abroad like Asia and Southeast Asia developing countries. Shipping cost will be reduced to a great deal due to the exemption of long distance land transportation, and the aggregating effect of wholesale shipping. The distribution to outer borough and suburban areas surrounding the City will also be fast-paced due to the developed transportation network.