Huawei Technologies and Its Strategic Dilemmas and Challenges

Huawei Technologies Case Study
Student’s Name
Institution
Huawei Technologies Case Study
Company Overview
Huawei Technologies, founded in 1987 by Ren Zhengfei, is a Chinese multinational company that started as a telecommunication operator and has grown to become one of the largest global providers of Information and Telecommunication (ICT) infrastructure and mobile devices (Huawei, n.d.-a). The history of Huawei Technologies has however not been very smooth as it is marred with a lot of controversies particularly with the notion that the tech giant has ties with the communist Chinese government. The speculation about the links of Huawei company with the Chinese government is primarily based on the relationship the founder, Zhengfei, had with the Chinese government in the past, working as a People’s Liberation Army personnel (Garsd, 2018). However, Huawei Technologies declared that the company is privately owned, with most of its shares owned by the employees, and no government entities have a stake in the company (Huawei, n.d.-a). The firm has grown tremendously over the past few decades, becoming the first Chinese company in the telecommunication industry to rank favorably among the most famous telecoms companies in the world. The company is currently under the leadership of Liang Hua who serves as the Chairman of the Board, with a bunch of rotating deputies serving as the top executives of the company. According to the annual report for the year 2020, Huawei collected revenue totaling CNY 891 Billion ($136.7 billion), recording a net profit of 3.6 percent compared with the previous year (Huawei, n.d.-b). The core business segments of the company include the consumers, enterprises, and carrier businesses, contributing revenue of 54.2 %, 11.3 %, and 34.0 % respectively (Huawei, n.d.-b). China remains the largest consumer of Huawei products and services, contributing 65.6% in revenue for the year 2020 followed by the EMEA and the Asia Pacific regions with 12.2% and 8.7% respectively (Huawei, n.d.-b).
Research and Innovation in Huawei Technologies
Huawei as a key player in the telecommunication industry is characterized by rapid development in invention and innovation. The company has invested much of its resources in research and innovation to remain competitive and deliver cutting edge technologies in its core business areas. The breakthroughs in the research sector that the company has managed in the past few years are mainly on the wireless networks, carrier and enterprise networks, and video codec. Huawei continues its research on wireless networks by collaborating with academic researchers and institutions to expand its innovativeness and introduction of new technologies on wireless networks including air interface technologies, new network architectures, and expansion of low-band and high-band networks (Huawei, n.d.-c). On the carrier and enterprise network segments, the company is focusing its effort on the development of network protocols towards achieving fully equipped internet of things technologies. Huawei is also partnering with different vendors to develop new video codec standards and also the CUVA HDR standards (Huawei, n.d.-c). Invention and innovativeness have been the major focus for Huawei Technologies. Among the breakthroughs in the invention and innovativeness of Huawei are high-speed optical networks, smartphone media technologies, software frameworks, and other basic software products like database technologies.
Telecommunication Industry Analysis
Huawei Technologies focuses its operation on the telecommunication electronics industry. The industry is relatively new compared to other industries such as manufacturing and agriculture. However, the rapid changes in technology and the stiff competitions from other global corporation has led to the rapid evolution of the industry, emerging as one of the key players in the global economy in the contemporary world. Some of the key players in the industry including Microsoft, Apple, Google, Cisco, Samsung, Hewlett-Packard, AT&T, Verizon, and T Mobile. These are the major international competitors of Huawei Technologies and have in the recent past emerged as the top corporations in the world. The main application areas for the industry players include mobile phone development, wireless and wired LAN technologies, telecommunication equipment, and radio communication. The telecommunication industry can further be classified into the equipment sector and the service sector. The equipment segment deals with the manufacture of gadgets to be used by individual consumers and other enterprises in the telecommunication industry for the purpose of communication. The equipment is wide-ranging, dealing with networking equipment, transmission medium, wireless and cabled network, satellites, handsets, among others. The service sector provides services that run on the telecommunication infrastructure put in place with the help of the telecommunication equipment.
Telecommunication Industry Market Research
The telecoms industry has a vast market, with the end-users of the telecoms equipment constituting the largest portion of the consumer market. According to Alsop (2020), the global telecom equipment market size was estimated at around $198 billion in 2019 while the business network equipment amounted to $119 billion in spending the same year. Wireless services provided by major industry players are the other contributing factor to the stability of the telecoms industry. Industry players such as AT&T, Verizon, and T Mobile have much of their business operations reliant on the revenues from the wireless services. Wireless services make up 40% of AT&T's revenue share, 70% for Verizon, and 100% for T-Mobile (Jhunjhunwala, 2020).
Aside from the products and services, the telecoms industry market is segmented following the various regions that often denote different economic blocks: North America, South America, Asia Pacific, Eastern Europe, Western Europe, Middle East, and Africa (The Business Research Company, n.d.). The Asia Pacific accounts for the largest and the fastest-growing market share for the telecoms industry globally with an estimated valuation of 372 billion euros in the year 2016 (Statista Research Department, 2016). Samsung Electronics is the dominant industry player in the Asia Pacific region with a valuation of about $278 billion in the year 2018 (Statista Research Department, 2021).
External Business Environment
The external business environment brings together all the factors that directly or indirectly influence an industry sector and the key players should keep up with these factors to remain relevant and competitive. The telecommunication industry that has since become a key player in the global economy is prone to environmental factors affecting diverse industries. The external environmental factors affecting a business can be classified into two broad categories: microenvironmental and macroenvironmental (Shtal et al., 2018). The microenvironment represents the factors whose impacts on the industry players are directly felt and the organizations can pull a few strings to influence the impacts of microenvironmental factors. The macroenvironment, on the other hand, are those external factors that the industry players do not have any influence on and the only way to stay afloat is to adapt to these factors. The most popular framework to analyze the external factors, particularly the macro-environmental factors affecting the telecommunication industry is the PESTLE analysis, an acronym to denote the political, economical, social, technological, legal, and environmental factors (Perera, 2017).
PESTLE Analysis of the Telecoms Industry
Political Factors
There are myriads of political risks and controversies and that accompany the telecoms industry, some of which cut across the large spectrum of industries playing part in the global economy. The trade agreements between the different economic blocks are the most immediate political aspect that impacts the telecommunication industry. Some regions or economic blocks have adopted varying regulatory and licensing policies while others have imposed trade barriers that the service providers in the telecoms industry cannot bypass. Recent political pressure between the emerging markets, particularly China, and the US had a direct impact on the telecoms sector. It was characterized with all sorts of threats including the termination of partnership between the telecoms industries from both ends of the globe. Recent acute concerns on the privacy and security issues facilitated by the immense development in the telecommunication industry have also taken a political angle, with some governments imposing strict policies to curb privacy and security threats.
Economical Factors
The equipment and services offered by the telecoms industry players are influenced by economic aspects such as the countries GDP, interest rates, and even taxation. The cost factors in the installation of telecommunication equipment and laying down the infrastructure also vary significantly depending on the economic strength of the different regions. Growth and development impact the use of IT infrastructure, with the extensive use of internet technologies in emerging economies and first world countries influencing the investment in the telecommunication sector. Economic crises such as the great recession and the cases of pandemics that impact the global economic situations also affect the telecoms industry.
Social Factors
The platforms that aim at replicating the social aspects of the society in a more efficient manner such as the social media platforms rely on the availability of telecommunication equipment, infrastructure, and connectivity, all of which are the products and services core to the telecoms industry. Almost every other aspect of living, including shopping, education, healthcare, and even dating is reliant on the use of internet technologies and gadgets such as smartphones. The rapid changes in the social aspects of society have provided the telecoms industry with favorable external influences and contributed to the rapid growth ad development of the industry.
Technological Factors
The telecoms industry is all about technology and the advancement in the technologies certainly has an impact on the industry sector. The emergence of new technologies breads diversity among the industry players, with most of them venturing into the most exciting and attractive consumer markets. Apple Inc, for instance, a pioneer in the production of computers, shifted its focus to the manufacture of smartphones in the year 2007 because of the technological advancements and the attractiveness to the consumer markets (Macedonia, 2007). 5G networking technology that is currently at their early stages has brought a lot of excitement in the industry, wiith every industry player focusing its resources to the emerging technology.
Legal Factors
The telecom industry players are often faced with legal hurdles ranging from compliance issues, standards, taxation, copyright issues, and even privacy laws. Other legal issues affecting the telecommunication industry include the interconnection and pricing, the universal access of services, competency policies, and the general telecoms frameworks that vary significantly from place to place (The World Bank, n.d.). The urge for most telecom industry players to conquer the global markets comes along with the risks of facing legal battles due to the varied interpretations of the laws governing the use and distribution of telecommunication services.
Environmental
The Telecoms industry plays a part in the menace of climate change that the global community is currently battling with. The technological advancement in which telecom industry players have embraced with a lot of enthusiasm has led to the surge in e-waste that was estimated at 50 million metric tonnes in 2018 (Tiseo, 2021). Waste management among the global brands in the industry has become core to their business operations due to the dire situation of electronic waste and its impact on the global ecosystem. The environmental factors are also fueling innovativeness among the industry players to come up with energy-efficient and eco-friendly products to curb the imminent danger of climate change.
Company Analysis – Huawei Technologies
Business Model
Huawei Technologies, as a key player in the telecoms industry, aims at providing the consumers, enterprises, and institutions with high quality and stellar technologies and products to accomplish their communication needs. The basic building blocks of a business help understand how the various components within Huawei interrelate and understand the company's business model (Teece, 2018).
Huawei’s Customer Segments
Huawei, as one of the leading telecommunication providers in the world, has a wide range of customers not only in the telecoms industry but also across other industry segments. The wide range of customers can be segmented into three broad categories: direct consumers, cooperate institutions, governments, and public institutions. Direct consumers represent the individuals who purchase Huawei's products such as smartphones, tablets, wearables, and a few other electronic gadgets for their personal use. The individual consumers also subscribe to other services that accompany Huawei's products as well as in-app purchases of products and services offered by the organization. The different products are made available to individual customers through the company's authorized distributors and retailers.
The other major customer segment for Huawei Technologies is the commercial and corporate enterprises. Other than the manufacture and sale of smartphones and other gadgets used by the individual consumers, Huawei also offers a wide range of solutions that are core in the operation of cooperate institutions in the contemporary era. These include network solutions, support services, industry consulting and application integration, training and certifications, and cloud computing solutions (Huawei Enterprise, n.d.). The third customer segment for Huawei Technologies are the government and the public institutions whose core operations are more or less the same as those of corporate institutions and thus the services offered by Huawei Technologies are alike.
Value Proposition
Huawei Technologies boasts of offering a wide range of valuable products and services to its customer base particularly having emerged as one of the largest brands in the telecoms industry. A reputable brand name is one of the core values of Huawei Technologies. The reputation of Huawei Technologies is primarily supported by its cutting-edge technologies that are reliable and offer maximum customer satisfaction. Also, the company focuses much of its effort on continuous innovation to satisfy the rapidly changing user needs and match the advancing technologies. Individuals and institutions benefit from the innovative technologies from Huawei to enhance their efficiency. The ubiquitous broadband that Huawei Technologies is committed to offering to its customer base not only offers on-demand bandwidth and latency support but also has intelligence capabilities that help connect people based on their arising needs (Huawei, n.d.-d). For Huawei to create utmost value to the customers and also realize sustainable growth, the company has made a lot of commitments including striving to improve products and operations quality, cutting down unnecessary formalities to ensure maximum customer satisfaction, and also work on the company’s ethical principles (Xu, 2017).
Distribution Channels
The main channel where Huawei products and services reach its customers is through the large interconnected retailers across the globe. China, the home country for the telecoms giant has most of the company's physical outlets. The products reach the global market by means of export under the category of good technology and services (Dmitrijevs, 2020). As a tech-savvy company, Huawei also has online platforms where consumers can purchase its products directly from the company and make arrangements for delivery through the different cargo carriers services that have partnerships with Huawei. The products can also reach customers through authorized Huawei dealers and resellers spread out across the globe. For the commercial and industrial products that often come at a higher cost, the company has a dedicated team of personnel spread out across the international company outlets to reach the clients directly. Services such as cloud services and certification are easily accessed through the company’s online platforms.
Customer Relationship
The greatest stakeholders for Huawei Technologies are the customers and the company is well aware of the need to establish a strong connection with them to ensure the its overall success. Consequently, the company has put in place measures to effectively ensure the customer relationship is always at its best. The online distribution channel has been customized with a lot of intuitiveness to ensure that it matches the customer expectations. The retail merchants distributed across the globe, on the other hand, provides more personal interactions with Huawei's customers following the ethical principles and values laid down by Huawei’s customer relations segment. Customer support is among the top priority function...