In times of stagnation, every company must consider its options for a change in management approach, especially in drastic situations that have the potential to drag it down from the dominating position on the market. Currently, Huawei faces significant challenges due to several factors that have an adverse effect on its growth and revenue. According to Shu (2020), despite seeing revenue of $100.7 billion, which is “an increase of 9.9% year-over-year, with a profit margin of 8%,” the company’s growth has slowed down immensely in comparison with 2019.
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This issue stems primarily from the trade conflict between the United States and China, in which the company has been caught due to its sheer size and several close ties with the Chinese government (Hart & Link, 2020). This staggering growth signifies the need to change the strategy of the company and adopt the set of principles that will lead it toward the alleviation of the impact of this conflict. This essay will discuss what breakout strategy is suitable for Huawei’s senior management team that will help the company to escape its current challenging situation.
Many growth strategies were already successfully implemented by the company, as it has been expanding into the markets of over 150 countries, gained an immense customer base, and continues to release new product lines. However, the success of Huawei has been recently attributed to the special treatment that the company receives from Chinese state banks, which reduced its operational costs and allowed it to set its prices lower than its competitors could afford (Hart & Link, 2020).
These issues drag the company down, which signifies the need for the implementation of a breakout strategy. In this situation, the company still holds the dominant position within the industry, although its primary market is narrow (Finkelstein et al., 2006). The breakout strategy that is suitable for a company of this size and in this position is expanding the horizons.
The company has a significant advantage in the form of in-depth knowledge of the networks. The fact that many networks across the globe use Huawei equipment caused a major security concern to the United States, but also implies that its products are renowned for their quality (Hart & Link, 2020). Nowadays, the President and his administration try to bring additional attention to this fact and impose limitations that will severely weaken Huawei’s ability to support its growth primarily by supplying network equipment (Hart & Link, 2020). Since the concern of the company is that its 5G network equipment will be put under sanctions, it has to come up with a way to change the playing field.
The primary strategy that could prove useful for Huawei is to focus on innovative technology that will give Huawei new leverage on the market. Possibly, the early exploration of the new type of wireless communications, which is now known as 6G, will give the company the much-needed advantage. The anticipatory strategic performance is a sign of a company that can withstand most of the changes in the market, especially those stemming from political and social sources.
Finkelstein, S., Harvey, C., & Lawton, T. (2006). Breakout strategy: Meeting the challenge of double-digit growth. McGraw Hill Professional.
Hart, M., & Link, J. (2020). There is a solution to the Huawei challenge. Center for American Progress. Web.
Shu, C. (2020). Huawei reports slowing growth as its operations ‘face significant challenges’. TechCrunch. Web.