Question

Explain Huawei's CSR strategy based on Porter's five force analysis. The 2018 Huawei Sustainability report can be used for reference including other external sources.

Word count: 1000 words

Answer 1

The technology industry has one in all the most important and most profitable markets within the world with two major players Samsung and Apple having a combined global market share of 39.0%. Huawei on the opposite hand is one in all the world’s largest low-cost smartphone vendors having a worldwide market share of 11.8% with major competitors Xiaomi and OPPO having 8.4% and 7.1% market shares respectively in line with a half-moon of 2018 (Statista 2018). Besides smartphones, Huawei engages within the design, manufacture, and marketing of the many other products like tablets, processors, and currently entered the PC market to require on major brands Lenovo, HP, Dell, among others (Auchard 2017).

4.0 Huawei Porters Five Forces Analysis 2018
4.1 Bargaining power of buyers
Huawei customers have a comparatively high bargaining power thanks to the supply of the many similar products (smartphones, tablets, PC’s) on the low-end market from fellow technology companies like Xiaomi, Lenovo, OPPO, among others that have related price ranges. This makes switching costs low which supplies consumers the power to decide on between a large style of products. However, product differentiation and branding make it hard for a few customers to buy Huawei products as an example many buy buyers aren't willing to change from using high-end Apple products to low-cost Huawei products (Vilner 2017).

4.2 Bargaining power of suppliers
Technology industry providers are mostly Big companies like Intel AMD and MediaTek that offer processors, ATL chips, memory, extra and usually have huge bargaining power because there are only a few accomplished suppliers within the technology industry. this provides suppliers the power to induce the very best price possible for his or her products from Huawei to enhance their profit margins. However, to reduce supplier costs, Huawei started manufacturing its own processors like the Kirin 970 processor which may be a hyper-fast mobile chip with a Neural processing unit that is able to allow cloud-based computing and on-device AI to run alongside one another hence making the device faster (Boxall 2017).

4.3 Threat of substitutes
This is considered an occasional threat by Huawei because there are few substitutes for its smartphone, tablet and PC products which include telephones, two-way radios, and satellite phones. These are considered old-fashioned by the fashionable generation because unlike smartphones, you can not access social media or the internet when using telephones or two-way radios. additionally, satellite phones are related to high operational costs, lagging and interference problems compared to smartphones.

4.4 Competitive rivalry
Huawei being the most famous low-cost smartphone vendor worldwide faces huge competition within the low-end smartphone and PC markets both locally and internationally from major rivals like Lenovo, Xiaomi, OPPO among others which manufacture similar products like Tablets, Smartphones, and PCs with similar cost ranges. This has led to cost wars, product innovations and extensive advertising of recent and existing products. as an example, Lenovo increased its smartphone sales in India by debuting smartphones for under $100 which were also ready to withstand three days of use on one charge (Ming 2017).

4.5 Threat of entry/Barriers to entry
This is considered an occasional threat by Huawei because it requires huge capital investments, expensive skilled human resources and lots of your time to completely establish a technology company and be ready to compete with existing companies both locally and internationally. additionally, there are few accomplished suppliers within the technology industry hence it'd be very expensive for a brand new entrant to induce products from suppliers thus limiting entry. additionally, product differentiation, branding and marketing power by some technology companies like Apple and Samsung make it difficult for brand spanking new entrants to prosper. as an example, Apple has its own package with an extended eco-system of products that clearly differentiate it from other products along with its high marketing power which doesn't favor a brand new entrant (Moorman 2018).