Competitive advantage is the advantage a company has over the competitors either by providing customer with greater value by lowering the price or provide greater benefits and services which are set at a higher price (“Competitive Advantage” 2019). There are 3 types of competitive advantages which are differentiation, cost leadership and focus. Cost leadership is when company price their products at a lower price with a reasonable value (AMADEO 2019). Differentiation is when companies deliver greater benefits than its competitors (AMADEO 2019). Focus is where leaders of the company provide services and understand their target market better. Both cost leadership or differentiation can be used to understand their target market better. The key to have focus strategy that are successful is by choosing a specific target market (AMADEO 2019).
Huawei’s competitive advantage will be using differentiation strategy. Huawei’s strong team, Research and Development’s staff comprises of 48% of its total employees. Huawei recruit staff which are potential where 85% employees at least have a bachelor degree and 60% having master’s or PhD. Therefore, Huawei are good in innovating products in meeting its target market’s needs. Huawei’s competitive advantages will be its strong R&D team that are part of the team that ensure innovation of products. It helps to bring Huawei into world’s stage. Products that includes optical networking, wireless infrastructure, and Datacom products are now holding or in a global challenger or leadership positions (Low 2007). Huawei is using differentiation strategy as they have good innovation of products, quality and customer services (AMADEO 2019).
Cost leadership competitive advantage were also used by Huawei. This can be paying employees less wages. For instance, core competencies are a competitive advantage’s source for a company not its rivals. Research and Development (R&D) is Huawei’s first competence. Huawei’s competitive advantages over other international competitors is that Huawei had low cost labour force in China. Huawei then put its marketing team into the R&D team to ensure that the telephone companies and service providers can communicate among each other in a shortest time frame. Second core competencies will be Huawei had a close relationship with Chinese Military. Due to the close relationship, it helps Huawei to get big orders in the past and getting huge financial loan from banks (“Analysis Of Huawei And Its Core Competencies Management Essay” 2019).
Another competitive advantages of cost leadership for Huawei is that it ensures lower prices on its products compared to its competitors. Its pricing strategy core is to ensure that its price is lower than its competitors. However, the price will not be too low as it would be questioned on the quality of the product if product’s prices are set too low. Therefore, Huawei’s product will be priced 5% to 15% lower than its competitor to ensure that the product’s quality is present. But for US and Europe which are the mature market, Huawei need to consider a pricing strategy because society ensure measures pricing as quality and reliability indicator. In mature market, premium pricing represents a product that are premium. Thus, pricing strategy is crucial for Huawei as negative perception of “Made in China” which means low-quality and low-cost will creates a bad image for Huawei (“Huawei – Transforming A Chinese Technology Business To A Global Brand” 2018).
In a conclusion, Huawei’s competitive advantages includes cost leadership, differentiation and focus. Focus in the terms of Huawei understand its target market and fulfill their needs when innovating products. This 3 competitive advantages makes Huawei a successful brand in the World.
References
AMADEO, KIMBERLY. 2019. “Use These 3 Harvard Business School Strategies To Beat Your Competition”. The Balance. https://www.thebalance.com/what-is-competitive-advantage-3-strategies-that-work-3305828.
“Analysis Of Huawei And Its Core Competencies Management Essay”. 2019. Ukessays.Com. Accessed May 20. https://www.ukessays.com/essays/management/analysis-of-huawei-and-its-core-competencies-management-essay.php.
“Competitive Advantage”. 2019. Tutor2u. Accessed May 20. https://www.tutor2u.net/business/reference/competitive-advantage.
“Huawei – Transforming A Chinese Technology Business To A Global Brand”. 2018. Martin Roll. https://martinroll.com/resources/articles/strategy/huawei-transforming-chinese-technology-business-global-brand/.
Low, Brian. 2007. “Huawei Technologies Corporation: From Local Dominance To Global Challenge?”. Journal Of Business & Industrial Marketing 22 (2): 138-144. doi:10.1108/08858620710730258.
Eric Kong 