Huawei in Canada: Can It Become a Trusted Player? Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Huawei in Canada: Can It Become a Trusted Player? Case Solution

Introduction

Huawei is one of the world’s leading telecommunication equipment manufacturing companies. The company started to provide telephone switches to the corporate entities. Afterwards, as technology developed and China adopted the open door policy, the company gained high growth. In 1996, Huawei became a larger player in the telecommunication equipment market with Rmb 2.6 billion in revenues.

The company focuses on the research and development, as it uses 10% of its revenues in the research and development department. Furthermore, out of the total employees, 46% of them are engaged in research work. The company faced severe competition and slow industry growth, which then compelled the company to revise its business strategy and it considers that, globalization is necessary for growth.

In pursuance of the expansion strategy, the company entered into the Canadian market in 2008. The company used the combination of localization and globalization, Glocalization. The company gained success in few months and it successfully secured high-speed network infrastructure contracts from Telus and Bell Mobility. The company developed and grew rapidly in the country. It formed new headquarters in Ontario and established two new offices with increased staff. However, company’s success was threatened with the national security risks allegation in October 2012.

Problem statement

The company was successfully operating in the Canadian market, where it has gained moderate growth. But in Oct 2012, the company faced national security risks allegation claimed by U.S. This resulted in ban on the company’s products in U.S as well as numerous public contracts were terminated, which included restricting Huawei from bidding in the government projects of India, Australia, and U.S.

Here the President of Canadian operations, Sean Yang has to make major decisions to mitigate the risks that might affect the company’s Canadian business. He has to reaffirm the company’s commitment to the Canadian market. What strategies should the company adopt to maintain and promote trust of customers and to sustain the industry leadership position.

Analysis

To analyze the company’s decision to enter the Canadian market, PESTEL framework is used which is as follows:

PESTEL

Political

In 2002, the government of China promoted overseas expansion and many local enterprises expanded their operations to foreign countries. The government eased out the foreign exchange controls and increased regulatory approvals of overseas business activities, this encouraged the entities to make oversea investments and expand their businesses.

China has established a favorable trade relationship with Canada. The total exports to China doubled to C$52.7 billion within recent ten years. The exported telecommunication equipment alone amounted to $3.4 billion. Thus with the positive government attitude and support, telecommunication equipment demand in Canada made it the most favorable country for Huawei to expand its business in.

Economical

Canadian telecommunication market was the perfect match for Huawei. The industry has total worth C$44.8 billion as of 2013. However, the industry has lower market share for telecommunication equipment. Thus, for Huawei, there is an opportunity to utilize the under developed telecommunication equipment market.

The mobile broadband services were less utilized by the consumers. With the development of smartphones, there was high growth for the mobile internet and broadband services industry. The country has sound economic conditions that ensure a moderate level of growth.

The telecommunication industry was not matured and there were many years still uncovered by the mobile and telecommunication services.

Social

There is potential demand of technological equipment as the Canadian telecommunication market is advancing. With the increase in the use of smartphones, there is need of high speed mobile network and data transmission. Huawei had identified such opportunity and has targeted the Canadian market..................

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