Case 11:

Huawei: Ciscos Chinese Challenger

GrOuP 2:
Arif, Rieka, Rita, Rizal

Chinese challenger
How Huawei Challenge Cisco in Global Market?

Problem

Root
Cause

Could Huawei climb up the technology value chain, replicating its

success in low-end telecom networking in high-tech products and
services?
Could it build a global brand?

Market perception to chinese product as low quality.

Technology capability is still less than the global market leader.
Huaweis close connection with chinese military

Current
Strategy

Five Business-Level
Strategies
Recommendation

Current Strategy
Cost

Uniqueness
Differentiation :

Narrow Target

Broad Target

Cost Leadership :
- High skilled low cost labour
- Low product development cost

- 60% of 24.000 employee are masters /Phds

- Research centres in Shenzen + 6 other in China,
Bangalore, Moscow, Stockholme, Silicon Valley.
- Military style wolf-pack enterprise
- Global chinese relationship (Guanxi)
- Easy Access to government financial resources
(military Guanxi)

Integrated Cost leadership/Differentiation:

- Global image building campaign
- CRM improvement
- JVC with recognize global brand (3Com, Fujitsu)
Focus Differentiation:
Focus Cost Leadership :
Region:
^ Customer incentive -> free at
trial charge (france operator)
^ Initial overseas move in
developing countries

- Hiring local personnel to tailor technology &

services (middle-east)
- Heavy investment in 3G

Cost

Recommendation

Narrow Target

Broad Target

Cost Leadership :
- Implement lean manufacturing
facility to maintain low cost
production

Uniqueness

Differentiation :
- Improve product security functionality
- Development test bed centers in potential
region to proof product quality.

Integrated Cost leadership/Differentiation:

- Optimize JVC and joint research to improve brand
- Increase R&D spending (up to 13 % of revenue)
- Marketing campaign to minimize negative impact of military connection
- Improve after sales service to match global player performance
Focus Cost Leadership :
- Improve R&D head count and skill in
products with high market demand and
/ or strong market share
- Join with global retail network to
increase sales in retail product

Focus Differentiation:
- Focus R&D investment in future
technology (WiMax, LTTE, Telco 2.0,
UMTS/HSPA)
- Optimize JVC with 3 com to enter US
market (Using pure 3Com brand)
- Develop joint innovation center with global
operator (Vodafone & BT)

ThAnk yOu....

Five Business-Level
Strategies

SOURCE: Adapted with the

permission of The Free Press, an
imprint of Simon & Schuster Adult
Publishing Group, from Competitive
Advantage: Creating and Sustaining
Superior Performance, by Michael E.
Porter, 12. Copyright 1985, 1998
by Michael E. Porter.

Figure 4.1
Copyright 2004 SouthWestern. All rights reserved.

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