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Huawei’s Business Environment Essay

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Updated: May 11th, 2022

Macroenvironment Analysis

Political: Political forces often influence how smartphone companies operate internationally. Particularly, the growing level of protectionist policies in some western countries, such as the United States (US) and the United Kingdom (UK), are impacting how foreign companies operate through increased government control and oversight (BBC 2019). This action limits the level of growth for smartphone companies because some of them have outsourced their services to service providers who are located in other nations. Therefore, their operations are dependent on the good political relations between countries (Tao & Chunbo 2014).

Technology: The development of the 5G network in the mobile telecommunications market is set to revolutionise the industry through increased speeds, low production costs and enhanced energy efficiencies (Vaswani 2019; Yan 2019; Wang, Zhou & Sha 2017). In addition, the growth and acceptance of smartphones, as a popular communication device, has created opportunities for companies to develop products that exploit the potential for enhanced virtual communications, such as social media (BBC 2019). These technological forces could impact a company’s business processes and market position by influencing its preparedness to embrace new technology and convey the benefits to customers (Tao & Chunbo 2014).

Microenvironment Analysis

An increase in the number of people who use smartphones implies a growth in the market size for mobile phone companies. For example, there has been a surge in the percentage of smartphone users in the UK from 63.12% in 2014 to 75.4% in 2016 (MIC Research Team 2016). This growth signifies the potential for an increase in market share for Huawei. Table 1 below shows the company’s market share, relative to its peers.

Table 1. Huawei’s market share (Adapted from Lomas 2018).

Company Market share (%)
Huawei 13.3
Samsung 19.3
Apple 11.9
Xiaomi 8.8
Oppo 7.6
Others 39

According to the data highlighted above, Samsung has the largest market share (19.3%) for a single company, followed by Huawei, which commands a 13.3% share in the mobile telephone sector (Lomas 2018). Xiaomi and Oppo command less than 10%, while “other” smartphone companies control the rest of the market. Huawei has also developed strong links with its suppliers, such as T-mobile, Vodafone and Clearwire (MIC Research Team 2016; Tao & Chunbo 2014). They provide key components for making smartphones and have a strong impact on the firm’s operations because of their strong control in the market (MIC Research Team 2016).

Internal Environment

Huawei’s internal environment will be analysed by reviewing its pricing, capital, quality and brand potential. One of the firm’s key competencies is its competitive pricing. Apple and Samsung have long been considered to be market leaders in this regard with few options available to purchase cheaper mobile phones. Huawei’s success has been pegged on bridging this gap through competitive pricing (Tao & Chunbo 2014). Comparatively, one of Huawei’s weaknesses is limited capital because it does not have the cash reserves that its rivals do. This constraint negatively affects the company’s effectiveness in the industry.

Similarly, compared to its peers, the Chinese firm has a weaker brand name. Consequently, it has a smaller brand following, which makes it less impactful in the market. Nonetheless, innovation and technology developments in the smartphone industry (such as the 5G technology) have created new opportunities for growth (He & Yang 2019). Lastly, lucrative global markets such as the US and India offer immense potential for growth because Huawei has not had a significant impact on any of them (MIC Research Team 2016).

SWOT Analysis

Table 1. SWOT Analysis (Source: Developed by Author).

Strengths
  • Competitive pricing
  • Good quality products
Weaknesses
  • Limited capital
  • Weak brand name
Opportunities
  • Technological development
  • Newmarket development
Threats
  • Competition

Reference List

BBC 2019, . Web.

He, Y & Yang, M 2019, ‘Research on cross-layer design and optimization algorithm of network robot 5G multimedia sensor network’, International Journal of Advanced Robotic Systems, vol. 16, no. 4, pp. 1-10.

Lomas, N 2018, . Web.

MIC Research Team 2016, Global ICT Industry and Market Report: 2013 Edition, MIC, London.

Tao, T & Chunbo, W 2014, The Huawei story, SAGE Publications India, New Delhi.

Vaswani, K 2019, . Web.

Wang, H, Zhou, Y & Sha, W 2017, ‘Research on wireless coverage area detection technology for 5G mobile communication networks’, International Journal of Distributed Sensor Networks, vol. 13, no. 12, pp. 212-239.

Yan, G 2019, ‘Simulation analysis of key technology optimization of 5G mobile communication network based on internet of things technology’, International Journal of Distributed Sensor Networks, vol. 15, no. 6, pp. 1-10.

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