Founded in 1988 by Ren Zhengfei, Huawei has emerged as China's leading telecommunications equipment suppliers offering a product line and services similar to those of Cisco. Based in Shenzhen, and still private, Huawei has grown to sales of US$3 billion and 22,000 employees. In addition to China's domestic telecoms, it is increasing its revenues from and share of foreign projects, such as in Thailand, Korea, Singapore, Hong Kong and Brazil. The difficulty that the firm faces, however, is that many of the management practices and strategies that enabled it to grow so rapidly and successfully may be ineffective or inappropriate as the nature of competition in China changes, or as Huawei tries to compete in foreign markets. Some of these include its R&D capabilities, service provision, decision-making process, client relationship practices, and culture. Other changes will be necessary if it decides to attract external capital to fund expanded R&D and international activities. What changes should it make, and how could you convince the founder and CEO that these are necessary?
This case represents a firm that must make fundamental changes in order to compete with increasingly strong domestic and foreign rivals in its traditional domestic market, as well as in global markets that it is targeting for growth. Students must identify what changes in resources and capabilities, formal systems and structure, and culture would be implied by placing different priorities on domestic versus foreign markets and, among foreign markets, developing and developed markets. Provided with information on the founder/CEO's personality and beliefs, they will also be forced to consider how they could influence him, and perhaps much of the firm, of 1) the need to change and 2) the nature of changes that should be made. (A) and (B) are presented from two different points of view: an outside consultant who is more conservative, and a top manager who is more optimistic and aggressive. Students may be asked to argue from one of these perspectives, with a third party (such as the professor) managing the discussion to develop a conclusion. Unlike most cases of Chinese firms, this firm is doing very well, so there is no immediate and obvious need to change.
