Huawei in Malaysia Strategic Management

Executive Summary

         I am required to conduct an assignment about Huawei in Malaysia. There are Porter’s 5 forces and PESTLE analysis in this report. Porter’s 5 forces analysis contains 5 components which are including the threat of entry, the threat of substitutes, the bargaining power of buyers, the bargaining power of suppliers and the extent of rivalry between competitors. While, the PESTLE analysis has six components which including Politic, Economy, Social, Technology, Legal and Environment. In this report I only choose four components from PESTLE analysis which are Politic, Technology, Legal and Environment. PESTLE analysis is use to analyse the organization’s position in the external environment.

Table of Content

1.0        Country analysis        3

2.0        Introduction of Company        4

3.0        Porter’s 5 Forces        5

3.1 The threat of entry        5

3.2 The threat of substitutes        5

3.3 The bargaining power of buyers        6

3.4        The bargaining power of suppliers        6

3.5 The extent of rivalry between competitors        7

4.0        PESTLE analysis        8

4.1 Politic        8

4.2 Technology        8

4.3 Legal        8

4.4 Environment        9

5.0        Conclusion        10

6.0        References        11

7.0        Appendix        14

1.  Country analysis

Malaysia has a diversified economy and become a leading exporter of electrical appliances, electronic parts and components and natural gas. Besides then manufacturing industry, Malaysia is a major tourist destination too (BBC, 2018). There is an increased amount of foreign investments from United States and China. The increasing in foreign investments will create a lot job opportunity for the Malaysian. Therefore, the economy of Malaysia will increase, the standard of living also will become better (Kana, 2018).

The people in Malaysia have to accept that the fact the internet, cyberspace and online content is a way of today’s life. The research shows that the average usage period of social media networks is over four hours daily (Povera, 2018).

According to Appendix 1, the world becomes highly interconnected, smartphone is the one of the factors in the technological progress. Over the past few year, there has been a sharply rise in the percentage of smartphone users in Malaysia. The production of cheaply manufactured mobile phones which means it hits the economic of scale and a decrease in the cost of service plans is driving everyone having their own smartphones. At the end of 2016, Samsung was the market leader among all smartphone company in Malaysia and followed by Apple (Tableau , 2018).

1.  Introduction of Company

Huawei Technologies Co Ltd is a company that provides networking products and telecommunication solutions to the consumers. The organization is helping to connect each other. By using the Huawei’s smart devices and smartphones, the people can experience a digital work, life and entertainment (Huawei Official Website , 2018).

Huawei’s Vision and Mission is bringing digital to every person, home and organization for a fully connected, intelligent world. Besides that, Huawei’s strategy is enable digital transformation with ICT infrastructure and intelligent devices. In 2017, the revenue of the company is around 603,621 (CNY Million). The consumers are largely from consumer, enterprise, carrier and other. The business results by region which is including China, Asia Pacific, Europe, Middle East and Africa (EMEA) and also America (Huawei official website , 2018).

Huawei recognizes the impact that the global supply chains to the environment. Therefore, Huawei only choose to work with suppliers that have commit to Corporate Social Responsibility (CSR). CSR is combined into the full lifecycle of the product. The suppliers are required to provide the product that protects the communities and the environment. The suppliers must follow the applicable laws, regulations, industry standards and internationals standards (Huawei Official Website , 2018).

Moreover, Huawei has a “Quality First” strategy, which encourage the suppliers to improve the quality of the product by paying premium prices. Besides that, Huawei organization also highly value and support the cyber security protection. This can ensure the security of consumer and user communications, personal data, user privacy and other information.

Huawei has a policy to dissolve the boundaries and working together with the partners. There is a standard organization which actively contribute to key standards organization.

Besides that, Huawei is also boosting the economic growth of the country. It can generate tax revenue, increase employment and deliver innovative solutions the digital transformation of all industries. It can improve the quality of people’s life style.

1.  Porter’s 5 Forces

3.1 The threat of entry

The threat of entry for a smartphone industry is very low because the barriers to entry are high. It is because the organization may need a huge amount of capital to produce their produce and also hit the economies of scale to earn profits. Huawei is a Chinese maker that has expertise in the smartphone industry. Therefore, it is easy for Huawei to enter the market in Malaysia.

Besides that, Huawei is seeking to use blockchain tech to protect digital property rights. The legislation restrictions of the intellectual property make the threat of entry in the smartphone industry very low (Zhao, 2018). The new entrant will feel high barriers when seeking the supply and distribution channels, which Huawei has the biggest advantage because the company is possible to provide their own smartphone component.

Moreover, the incumbency advantage makes Huawei become the third largest smartphone industry in the world compare to Samsung and Apple. Therefore, the Huawei’s smartphone market share is continuing increasing (Wang, 2017).