Huawei, case study of using core competency for market success

Huawei technologies founded in 1987 by Ren Zhengfei is a company that skilfully employs a suite of inter-connected core competency to sustain market success in its business strategy.

Core competency is a capability that gives competitive advantage over fellow competitors in the short to medium run and if sustained further for a fairly longer term. Every company that wishes to develop and employ core competencies must ensure that these are inter-connected and flow from the pyramidal hierarchy of business concept, business principles, and business strategy to business operations seamlessly. Huawei does this brilliantly well. 

First and foremost, Huawei is R&D oriented company. Its orientation is towards bold innovation capability is translated into core competency much more quickly. Nearly 48% of its staff cadre consists of R&D personnel. Huawei employs a staggering 76,000 people in this segment alone. Their exposure to techno is significant. Nearly 85% have baccalaureate degree out of which 60% have masters or doctoral qualifications.

Second core competency is that R&D is not dismissed as production stuff only. It is, in fact integrated with marketing teams who are sufficiently techno savvy to the extent that they, after briefing potential customers have the ability to prescribe the configurations that suit both technological need and the monetary outlay customers can allocate for projects of such nature. An added benefit is that, the team can report to the design department on the suitable technical requirements and suggest the low cost methods for producing such.

Third one is fostering relationship by its staff with wide ranging people in administration & military establishments in China known as “Guanxi Network” and elsewhere in Western countries with research organizations, think tanks that shape public opinion. Moreover Huawei is singularly benefited by establishing more than 21 research centres globally.

Fourth significant core competency is the flexibility of its business model that provides switching from B2C, B2B seamlessly. For example its original products Phone switches and later addition of Telco Network are meant for B2B. Under this Huawei gives consulting services along with equipment cutting down the installed cost of networks to affordable price. More than 1,500 such networks are used globally serving one third of world population. Huawei smartphones are in the B2C category where the company commands second largest customer base after Samsung.

Last but not least is the low-cost sustainable advantage that is adopted as the connecting thread in its business strategy and business model. Whereas most companies have huge overheads that need to be absorbed into product pricing, Huawei writes off overheads from revenue generated and price its product with cost of production plus reasonable margin. In any case Huawei production coat by unit is much lower than its main competitors in the West.

 

Cheers!

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail:   cosmicgems@gmail.com

Blog:   Business Strategist