The global market enables entrepreneurial individuals to create revenue outside their home country. Porter’s strategic model is formed like a diamond and comprises pieces that define Huawei’s case for international competitiveness inside a framework. Kalvin Lancaster and Paul Krugman popularized the concept of global strategic rivalry conflicts by concentrating on transnational companies and the struggle to achieve considerable benefits. According to this idea, a firm must optimize a few elements to overcome all obstacles to success and gain global recognition. Huawei takes a transnational approach that straddles domestic and global strategies. It comprises making minimal changes to products while increasing economies of scale through increased production of core items. Huawei engages with industry titans on goods that are not favorable, such as 2G cellular modems. Huawei achieves a sustained foreign exchange hedge when its revenue and costs are synchronized in foreign currencies, eliminating net volatility.
The worldwide market enables innovative business people to generate revenue outside their native nation. Agwu and Onwuegbuzie (2018) enumerated that global marketing alludes to cross-border transactions to fulfill individual needs and desires. The amount to which a corporation is involved internationally manifests its dedication to overseas market expansion. Nevertheless, given the rapidly changing nature of the worldwide business climate, many who wish to break into the international stage with their commodities face stiff competition. The report analyzes the implications of home and host country’s institutions on the firm’s organizational structure and foreign entry strategy. Additionally, the essay assesses Huawei’s external environment using Porter’s diamond.
National Competitive Advantage Analysis
Porter’s Diamond Framework Analysis
Factor conditions are the features and characteristics that provide a sector and its enterprises with a competitive edge. Huawei’s financial assets are available in equity and loan financing. Most equity-based financing is created within the business, exclusively through internal tools and facilities (Rashidin et al., 2020). On the other hand, debt-based capital entails borrowing from foreign factors and institutions (Rashidin et al., 2020). Furthermore, Huawei’s infrastructure consists of human and technological systems that effectively enable it to perform and operate in other nations and marketplaces.
Related and Supporting Industries
Related industries have aided Huawei’s activities by supplying support resources for operational efficiency. Huawei, for example, was able to obtain packaging and raw materials domestically in several consumer regions, which aided in cost containment and scale efficiencies (Wu et al., 2021). In-home markets complementary sectors have boosted the whole sector’s progress, allowing businesses like Huawei to advance and strengthen their retail operations, acquire clients, and build consciousness in client marketplaces for brand awareness and perception.
Strategy, Structure, and Rivalry
Huawei’s approach is to prioritize customers by providing high-quality commodities that maintain consistent quality and flavor. Huawei enables easy and rapid exposure to executives, fostering a dynamic and trustworthy corporate culture that contributes to the corporation’s growth and development. Competition from local opponents affects the company’s strategic evolution and concentration (Wu et al., 2021). The corporation is frequently pressed to explore novel methods and technologies in incorporating them into its daily operations.
Authorities can impact a company’s growth strategy through various regulations and their border ties with other nations across the globe. Huawei has gotten backing from its own country to develop manufacturing capacity and foreign governments to establish plants and gain access to import and export restrictions in other regions (Rashidin et al., 2020). Huawei has also benefited from industry standards that have aided the company in sustaining and growing its strategic advantage.
In the framework, unforeseen events refer to situations in market segments that are not certain to materialize but will nonetheless present opportunities or dangers to enterprises, based on the decisions taken by the organizations. Random occurrences are critical for Huawei’s company growth and worldwide activities to identify new possibilities and overcome risks and challenges in existing marketplaces (Wu et al., 2021). Finally, scientific advancements bolster Huawei’s operational activities by providing assistance and improvement prospects in technology and operational procedures.
The rising scale of local markets and domestic households enables businesses to better comprehend the mechanisms at work in the global market, enabling them to organize and schedule activities accordingly. Domestic Steelers who are knowledgeable and demanding have driven Huawei to focus its efforts on technology, which has resulted in the development of distinctive goods for buyers (Wu et al., 2021). Corporations such as Huawei can also impact consumer behavior in one place, judging by the reaction they obtained in another.
National Institutional Analysis
This theoretical paradigm utilizes the theories below to analyze Huawei’s global market competitiveness. The product life cycle theory, pioneered by Raymond Vernon, pioneered the concept of using a commodity’s life span to understand global trade trends in the marketing field (He et al., 2019). As per the hypothesis, when consumption for a newly developed good rises, the native nation exports it (He et al., 2019). As demand grows, local producers establish operations to meet the increasing demands. In terms of Huawei’s worldwide footprint, the company began operations in China. Still, as the need for its components developed in other countries, the company expanded into other markets. Today, Huawei works in more than 170 nations and territories, covering a global population of more than 3 billion individuals.
Kalvin Lancaster and Paul Krugman popularized the concept of global strategic rivalry competitions, focusing on multinational enterprises and the battle required to get significant benefits. According to this principle, a business must maximize a few variables that will result in the brand surmounting all obstacles to success and achieving widespread reputation globally (Cohn and Hira, 2020). Huawei’s technology advancements have aided the company in achieving economies of scale and lowering overhead and other operating costs, allowing it to expand into new areas while maximizing profit margins.
Finally, the national competitive advantage idea postulated that any business’s performance in world commerce is contingent upon the industry’s upgradeable and innovative capacities. As a result, these talents dictate how a corporation will function worldwide (Chang et al., 2021). One of the elements is the availability of resources in the domestic marketplace and their costs, which are important for the development of the business to be economical and steady (Chang et al., 2021). Huawei has a diverse set of resources at its disposal, which has enabled it to thrive in both the domestic and foreign markets. For example, Huawei’s instruction programs and other expenditure initiatives relating to its human capital and personnel worldwide have been accomplished. These strategic human resource responsibilities contribute to staff development and advancement from recruiting to quality management.
Home Institutional Environment
Entities such as the court and bureaucracies, political structures, and other market mechanism facilitators shape businesses’ competitive landscape and incentive compensation schemes by inadvertently or deliberately producing market flaws. The administrative paradigm’s impact is not limited to the domestic sphere; it can also play a significant role in the globalization of domestic enterprises, favorably and adversely (Gaur et al., 2018). Direct organizational involvement can form home market barriers enacted by national political factions to safeguard and develop local businesses, disparate industrial policies, and prohibitive and supportive native country policies relating to outward foreign direct investment (OFDI) (Gaur et al., 2018). In China, the authority is structured to participate in industrial prosperity, stimulating and regulating it actively.
Host Institutional Environment
Huawei’s initial focus in Europe was on the United Kingdom. Compared to its foray into poor economies, Huawei encountered significant credibility issues in the UK due to the increased responsibility of provenance, geographical proximity, and unfamiliarity with the marketplace (Wu et al., 2021). At the macroeconomic scale, the significant cultural and institutional divide separating China and the West restricted Huawei’s ability to pursue commercial possibilities and resulted in incorrect intelligence characterizations concerning the effectiveness of its possible partners. Huawei engaged in designing procedures and regulations for green procurement to help the company keep up with sector leaders. In 2012, Huawei was selected to participate in the Better Future Supplier Forum by a renowned British corporation BT (British Telecom). Thus, this showed that Huawei’s CSR engagement in developing a green distribution network has steadily gained recognition in the domestic market.
Comparison and Implications on International Business
Huawei benefits from the existence of supporting sectors as it grows and expands its company. Therefore, this is true and common for home and global marketplaces. In the domestic economy, enabling sectors have aided the whole sector’s expansion, allowing businesses like Huawei to advance and strengthen their commercial activities, captivate customers, and increase awareness in client market segments for brand knowledge and understanding. Huawei has also benefited from allied businesses such as BT in overseas markets in terms of growth and globalization. As a result, BT aided Huawei’s commercial activities by supplying support materials for functional efficiency.
Huawei employs a transnational approach that falls between multi-domestic and worldwide strategies. It entails making minor adjustments to merchandise while maximizing economies of scale by manufacturing more core commodities (Schaefer, 2020). Huawei attempts to balance efficiency and the necessity to adapt to local tastes in diverse areas (Schaefer, 2020). For instance, its global supply networks are based on similar brand names and essential accessory goods.
Huawei’s corporate structure has evolved in response to changing client needs. Understanding that concentrated leadership from headquarters was insufficient to satisfy an expanding worldwide client base, it created a country-based organization with representative locations’ that connected with users in their respective nations via their sales representatives (Yan et al., 2017). Additionally, the institution’s structure comprises customer-focused sub-units. For instance, an international finance facility in London assists global clients in managing project-related economic problems (Yan et al., 2017). Huawei’s strategy, based on openness, competitiveness, and partnership, is the foundation upon which it builds its core capabilities and a business-friendly landscape (Li, 2021). A company can only thrive in the long run if it fosters relationships with people, prioritizes the objectives of its clients and stakeholders, and seeks prosperity for all (Li, 2021). As a result, Huawei’s organizational structure and marketing position are natural, focused on delivering customer value.
Impact of Home/Host Institutions
The native country’s importance in corporate globalization dates back to the concepts of comparative efficiency. The Chinese authorities have assisted Huawei’s organizational structure through its research and development activities and boosting its creative capabilities. In market economies, the establishment of enabling architecture enhances activity collaboration. The establishment of a sophisticated financial system facilitates international commerce. China is a major example of this since Ramamurti and Hillemann (2018) suggest that the administration has strengthened Chinese enterprises’ worldwide performance in numerous ways through government-created privileges. The host nation’s trade legislation, which may include high tariffs or restrictive quotas, is seen as one of the most substantial business environmental factors that have inhibited exporting and facilitated international production (Lojacono et al., 2017). The UK’s foreign direct investment regulations encouraged Huawei’s institutional structure of customer-focused sub-units. For instance, a London-based global finance facility aids worldwide clients in resolving economic issues associated with specific projects.
Foreign Entry Strategy
Evolution and Current Form
Huawei’s global expansion has been successful thus far, and therefore, this accomplishment is contingent upon selecting the suitable mode of entry and positioning strategies. Huawei launched its worldwide operations in Russia in 1996, marking a watershed moment in its history. In 1997, it established a joint venture with Russian Beto Konzern and Russia Telecom to grow the Russian market (Lin et al., 2018). As a newcomer to the worldwide market, Huawei’s entry into the Russian economy was difficult initially. Huawei items began to be distributed in Western Europe and North America in 2001 (Lin et al., 2018). Huawei entered these established countries via several contractual mechanisms. These included franchising, co-research, co-production, and co-sales.
Huawei, for instance, collaborated with Marconi on commercialization in the European market. Marconi enables Huawei to market its goods in Europe via its distribution channels (Lin et al., 2018). Huawei now employs a variety of various entry points to its products. For instance, Huawei frequently engages in joint ventures and exports in conventional advantaged items such as switching networks and communications power. Huawei collaborates with industry giants on non-advantageous products, such as 2G cellular modems (Lin et al., 2018). It combines partnership, licensing, or co-research to develop products that have a technological edge but lack market resources.
Impact of Home/Host Institutions
When corporations function in a receiving country, they face significant disadvantages compared to their domestic country counterparts. Huawei, for example, preferred to establish foreign operations in the United Kingdom through a strategic relationship with BT (Usman et al., 2021). Later on, as Huawei gained global expertise, they determined that it would be more prudent to expand their international operations through methods such as greenfield partnership with the Better Future Supply Forum (BFSF) (Usman et al., 2021). Given that overseas operations’ effectiveness varies depending on the entry method used, it would be good to investigate how alternative entrance mechanisms operate. Huawei’s awareness of various proxies for the local environment, including nationality, culture, institutional, and economic aspects, has proven beneficial in determining its foreign entry approaches.
Foreign Exchange Risks and Mitigation
Huawei is ultimately exposed to three different categories of currency fluctuations: purchase risk, translation threat, and economic vulnerability. The transaction susceptibility occurs in response to the time difference between China and the United Kingdom, the period between a client’s eligibility to accept payment, and the actual physical delivery of the payment (Huang, 2019). The translation hazard happens during the conversion of an overseas Huawei subsidiary’s accounting records, such as its profit and loss statement or income statement, from its domestic currency to the parent’s functional currency (Huang, 2019). Market uncertainty is long-term in scope and is produced by the influence of unanticipated and inescapable exchange rates on a firm’s future revenues and market price.
Huawei might conduct business in a single currency to mitigate these concerns. For instance, it can insist on Renminbi billing and reimbursement even when functioning in the United Kingdom. As a result, the exchange risk is transferred to the local client and supplier. Furthermore, a sustainable foreign exchange hedge arises when a corporation’s income and expenses are aligned in foreign currencies, minimizing or eliminating net risk (Albouy and Dupuy, 2017). For instance, Huawei may purchase merchandise from Europe for distribution into its local China industry when trading in Europe and earning Euros.
In conclusion, Porter’s diamond is competitive tool businesses devise the strategic advantage necessary for multinational advancement. For Huawei, these circumstances and components have been very beneficial in assisting the company in accelerating its global expansion through continual innovation and modernization. By mistakenly or deliberately creating market faults, entities such as courts and agencies, political institutions, and other market mechanism intermediaries alter enterprises’ competitive landscapes and effective incentive structures. Their homelands’ innovative level and credibility substantially impact their globalization for technical enterprises in emerging economies. To minimize this detrimental effect, Huawei had to first join the developing economies before entering the industrialized market in the United Kingdom. Huawei is inevitably vulnerable to economic swings in three ways: purchasing risk, translation uncertainty, and economic susceptibility. Huawei may conduct commerce in a single currency to eliminate these hazards. For example, it can require invoicing and repayment in Renminbi, even when operating in the UK.
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