Executive Summary

India is a market where the world is looking for. It is a market where the most complex situations prevail. Companies find it most hard to prevail in such situations. The case study that we are going to discuss is about one such market called the Electronic Appliances market. The Indian Electronic Appliance is a Oligopolistic Market where there are few number of sellers and the barriers to entry into the market is high. In such a situation, Haier, a Chinese home appliances company is trying to make a foot print in the market which is the most challenging situation a company can face. The case study discusses about how Haier entered into the Indian market with different strategies. It focuses on the challenges that it faced and the strategies it follows to sustain and make profits in the Indian Oligopolistic Market. In the case study we have tried to analyze the strategies Haier followed and the plans it took to sustain in hard times.

Problem Statement:
Haier wanted to expand its market into the Indian sub-continent, an oligopolistic market which had high amount of barriers. It followed different strategies to stay in the market and sustain its growth. The question posed is, was this the right path for Haier? Could the company sustain its growth thereafter?

Concepts of Oligopolistic market and relation with the case:

An oligopolistic market is categorized by having few sellers and they sell slightly differentiated products. Haier fits into this particular market perfectly. The company wanted to differentiate its products with the other products by following a strategy called Localisation strategy. The other competitors Haier saw while entering India were the Korean Giants, Samsung and LG. In oligopoly market decision taken by one player affects the strategies of others. Planning of one player has to be taken into account when planning for itself. All the decisions Haier made were influenced by the existing market which was preoccupied by Samsung and LG. In oligopolistic market firms have the objective of profit maximization and have the ability to set price. Haier had the ability to set price and sell products and premium range with higher profit margin. Another major characteristic is interdependence of firms i.e., due to few sellers and distinctive products ones strategy and planning affects others.

Analysis:
After getting huge success in home market, Haier wanted to capture the Indian market and it had some assumptions about the Indian Market. They are stated below Rapid GDP growth at the rate of 8.3% and it assumed that it would record the same growth rate in coming years. There was a growth rate of 11% to 14% of home appliance sector and it assumed that it would expand to 20% in coming years. Indians had high rates of disposable income The middle class was expanding Even though the market was oligopolistic, it had low entry barriers

The Indian market had its own drawbacks and Haier had to consider them while planning their operations in India Taxes in the Indian Market were there right from import of raw materials to the sales tax The tax levied on the goods manufactured increased the price of the products, thus reducing the pace at which industries grew

Government delayed its urbanisation process which made the electrification of areas delayed. So the goods sold by Haier were having a lag

To counter all the above situations, Haier had to develop a strategy which could overcome majority of the market challenges. It followed a Three-in-one Localisation Strategy which concentrated on three points R&D, manufacturing and marketing were carried according to the local demands. and it imported high end goods

The low end goods were outsourced to local companies adding a quality standard of Haier

Conclusion:
The move Haier took in India was a very bold move. It was entering a booming market which already had preoccupied players. With the localization strategy it could capture the price sensitive Indian market. The results stated in the case about the growth rates are impressive. The growth of the company in the first quarter of 2010 was 200% in turnover and 136% in sales. These show that the company has made a very good start in the Indian market. These figures also say that the company has a good future prospective also. The strategies that the company followed under the guidance of Braganza worked wonders for the company. It led to profit maximization situation in the market. The decisions were carefully executed, keeping in mind the moves that its competitors took and it has successfully took a stand in the Indian Electronic Appliance market which was running under oligopolistic situations.

Questions:
1) Why did Haier enter India? What did it plan to achieve in this new market? India entered a phase of liberalisation in 1991 .There were a series of policy changes that opened up the market to foreign investment .Haier believed that it was a best time to spread its footprint in the developing countries ,so the next target of Haier was India. These are the following reasons for Haier to enter Indian market : From 2000 to 2004, home appliance sector was growing between 11-14% annually & the growth was expected to expand upto 20% between 2005-10. The market was favourable with the rising disposable income, an expanding middle class, and a relatively low entry barrier in the white good market. Low penetration in home electronics also made the market appealing. The gross domestic product growth in 2003-2004 was 8.3%. Rural Indian market has immense capacity for growth because many were still awaiting electrification.

Haier was launched in India in 2004, T.K. Banerjee was appointed as the president of Haiers Indian operation. Banerjee wanted Haier to be in the top three brands in the home appliances in India .To achieve that position in the market Banerjee pushed for the localization strategy. The various steps planned to achieve this are as follows: Laid specific targets to gain 20% of Indias white good market in first 5 years and to be among the top three leading industry in 7 years, i.e. by 2010. Acquired a 40- acre manufacturing facility for supplying Indian market and a sourcing hub to global markets. Planned to launch an India-centric product line for Indian consumers. For sales, it developed a network of direct dealers and distributors in India. Opened Haier Experience Centres which exclusively showcased Haier products.

2. Evaluate Haiers Entry strategy in India?What was and was not working? By the time Haier entered the Indian market in early 2004, the company had successfully gained ground in overseas markets. Haier had over the years become a multinational manufacturer & was actively promoting its global markets. The entry strategy that Haier followed includes: Instead of making bold moves and executing rapid localization, it took a step-by-step approach i.e. Three-in-One localization in which it positioned itself as a local brand, produce locally, and carry out a local sales strategy and create products tailored to local needs. It projected itself as a global brand delivering latest technology and marketed its products as premium.
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It opted for premium price strategy in India by targeting higher income bracket and charging its product at 5% premium. Launched an India centric product line-up for Indian customers. It focused on value war rather than a price war. It focused on creating a name brand in the Indian market.

The things that were working : Extensive branding and manufacturing campaigns . Established a factory Localisation changed perception of people that Haier was a non made-in-china product.

The things that were not working according to plan are: Investments were not paying off and the operations needed an overhaul. Poor reputation of after sales care. It failed to achieve the set revenue targets. Governments delay in developing infrastructure like electrification in rural areas which consist of 60% of total population of India. Low market share when they focused on premium product strategy . Heavy taxation policies lead to decrease in profit margin which resulted in decrease in demand.

3. Discuss Haiers Localization Model in India and other markets? Were they different? If so why? Localisation model in India Haier adopted three in one localization strategy in which R&D, manufacturing and marketing was done in local way Low end products were outsourced to local companies and the high end products were imported. The low end products were not left completely to the local companies but demanded high quality standards that Haier had The factories of Haier were established in government technological parks so that the taxes load can be reduced Developed a strong network of dealers and distributors The company took responsibility for branding, managing retail outlets and showrooms by opening more experience centres It made products according to the situations prevailing in India. If the consumers demand a product which can support fluctuating voltages, Haier made them.

Other markets Situations in other countries were slightly different. In USA, Haier exported products through scattered channels and then arrived at a common channel. After this it implemented the Localization strategy. But whereas in India it started with the Localization strategy and then made a foot print in the market through other strategy of entering the mass markets etc. 4. Analyse the landscape of Indias consumer electronic market. What were the Korean Companys strategies and how did this impact the market? The Indian white goods market was dominated by Korean brands and local Indian brands. Korean producer LG was the evident market leader in almost every sector of the white goods market. By 2004,it has amazed 24% of the colour television market,33% of the washing machine market ,26% of the refrigerator market and 35%of the air conditioner market .coming in as close seconds were Samsung and Whirlpool ,followed by Indian brands and Japanese brands. LG and Samsung entered the Indian market in the mid-1990s on two ends of the price spectrum .LG adopted low pricing strategies with basic -function products .for example, it launched Sampoorna ,a colour television. In 2004, more than 65% of its revenue came from non -urban sources. After taking hold of the low priced market, LG later seeped into the medium -end segment by offering feature -rich products and branding itself as an "inspirational brand". Samsung on the other hand while initially launching products ,later crossed into the mass market and released more price-sensitive products ,aiming for leadership in both the premium and large -volume categories. The Korean giants believed in R&D. The allocated some amount of the budget to R&D, so that they understand the market better and come up with products suitable for the Indian consumers and the situations. The market was packed and had no space for other companies to enter. It was then that Haier wanted to enter India. They had to follow a strategy that will get them a place among the Korean giants. The strategy was called Localization strategy and it worked well for Haier. 5. Evaluate Braganzas decisions and actions? What were his analysis ? Ans ) In September 2009, Haier India replaced Banerjee with Eric Braganza as president of its India operations. Braganza was experienced and served at senior positions at two of the major electronic appliances markets by then. So Haier thought it could improve after the change it made.

Braganzas Decisions and actions: Braganza identified the problem areas and found that the marketing and sales department were at the weak positions He changed the structure of the organization and took care that 30% of the employees were replaced On the flip side he changed his sales strategies. He planned to add 100 direct dealers and 1000 indirect dealers to the distribution network so that the efficiency of the sales department would increase. He lifted the confidence of the retailers by treating them as the first consumers He offered them good products and competitive margins, together with single dealerships in select locations to encourage brand loyalty. The company offered a margin hike of around 3% compared to the industry average Number of experience centres were increased, and as a result aimed at raising the revenue by 5-12 % The after sales support was improved, thus planning to solve all customer issues within 6 hours in all metro cities. He also planned to open after sales service stations. He also repositioned the pricing strategy so that the products would be of much dearer to the masses. Through this, Braganza was trying to target the middle market and turning a competition on to Samsung and LG

Results: The results of the decisions that Braganza took indeed bought positive results to the company. The company launched 25 new products. The company also laid down plans to launch high end products like laptops and cameras. All the above decisions taken by Braganza indicate that he launched a aggressive marketing and branding campaign. He concentrated much on the marketing and sales department, so that market is in good reach to the consumers. The new president analyzed that the market was not in reach of the masses and it needed a expansion. Braganza was also successful in this move. 6.Going forward how can Haier sustain its growth in India? In the first quarter of 2010, the company reported a 200% increase in turnover. Sales in 2010 expanded 136% to US$182.8 million. Haiers market share in consumer durables rose to 7%.Haier sustained its growth in India. Braganza was looking at expanding .In the initial years of Haiers Indias existence, the thrust was to position its presence in India, and now the plans were on coarse and the company was looking further into the future , he thought. The changing market landscape was a promising opportunity, but could turn into a disaster if Haier failed to catch the wave. It would take time to tell whether the current pricing strategy would be effective, and Haier still needs to work on the range and diversity of its products.