Management issues in Haier Group
1.0 Introduction 4
1.1 Organizational background 4
2.0 Understanding the Hersey-Blanchard theory 6
2.1 Theory explanation 6
2.2 Benefits 9
2.3 The current leadership style in Haier 10
2.3.1 Strengths 12
2.3.2 Weaknesses 13
2.4 Weakness of this model 13
3.0 Globalization issue 14
3.1 Globalization on Haier’s last five years 15
3.1.1 Brand building strategy 15
3.1.2 Diversification development 16
3.1.3 Internationalization 17
3.1.4 Global brand building 18
3.2 Globalization on Haier’s future 18
3.2.1 Trends for Haier to meet 18
3.2.2 Future development 19
4.0 Manager roles 22
4.1 The monitor role 23
4.2 The leader role 24
4.3 The disturbance handler role 27
5.0 Organizational culture, leadership and national culture 28
5.1 Organizational culture and leadership style 28
5.1.1 Theoretical reference 28
5.1.2 Haier example 30
5.2 Organizational culture and national culture 31
5.2.1 Definition 31
5.2.2 Difference 32
5.2.3 Difficulties 33
6.0 Organizational structure 34
6.1 Haier’s organizational chart 34
6.2 Strengths 37
6.3 Weaknesses 38
6.4 Options 38
6.4.1 Option one 39
6.4.2 Option two 41
7.0 Conclusion 43
8.0 Reference 44
Figures and charts
Chart 1.0 Assets and liabilities performance of Haier from 2006 to 2010…………….5
Chart 2.0 Revenue and cost performance of Haier from 2006 to 2010……………….5
Figure 1.0 The Hersey-Blanchard Situational Leadership Model……………………..7
Figure 2.0 developing strategies of Haier during last five years……………………..15
Figure 3.0 Organizational chart based on Haier………………………………….…..36
Figure 4.0 the first option on Haier’s organizational chart…………………………..40
Figure 5.0 the second option for Haier’s organizational chart……………………….42
In this report, we explore the management issue of Haier in several aspects including its leadership style regarding with its strengths and weaknesses, globalization related issues, managerial roles, the relationship between organizational culture and leadership style as well as the national culture and their conflicts. Finally we also analysis the organizational chart of Haier and summarize its weaknesses and strengths to offer two modifications on this current structure.
1.1 Organizational background
Haier Group was founded in 1984 in Qingdao, China, which has become the most popular white goods manufacturer in China and also enjoys good popularity in the global market with a large proportion of the world market share in household appliance products making (Haier 2010).
Zhang Ruiming is its Chairman and the major founder of Haier. And under his wise guidance and management, effective and famous strategies are employed by Haier in both China and international markets to position its brand (Haier 2010). And the following chart 1.0 to 2.0 is the financial performance of Haier in the recent year, which discloses its assets and liability status and reverence performance, which all prove the good achievements made by Haier (Haier 2010).
Chart 1.0 Assets and liabilities performance of Haier from 2006 to 2010
Source: Haier 2010, Annual Report 2010, Haier Electronics Group Co., Ltd., electronic version,
Chart 2.0 Revenue and cost performance of Haier from 2006 to 2010
Source: Haier 2010, Annual Report 2010, Haier Electronics Group Co., Ltd., electronic version,
2.0 Understanding the Hersey-Blanchard theory
2.1 Theory explanation
Hersey-Blanchard theory is also known as the situational model of leadership, which is one of the contingency approaches that developed by Ken Blanchard and Paul Hersey in the late 1960s (Daft 2010). The situational leadership model links the leader’s behavioral style with the maturity level of followers as indicated by their readiness to perform in a given situation. “Readiness,” in this sense, is largely based on two major factors – follower ability and follower willingness to accomplish a specific task. Ability is the knowledge, experience, and skill that an individual possesses to do the job and is called job readiness. Willingness is the motivation and commitment required to accomplish a given task. The style of leadership depends on the level of readiness of the followers (Daft 2010).
This theory provides four styles of leadership — telling/directing, selling/coaching, participating/coaching and delegating/observing– to deal with subordinates at each of readiness levels. The Figure 1.0 below illustrates “The Situational Model of Leadership”.
Figure 1.0 The Hersey-Blanchard Situational Leadership Model.
Source: From Schermerhorn, Jr. (2011), Management, 11th edition, John Wiley & Sons, Inc., Pp 320.
From the Figure 1.0, the leadership styles characterize growing leader-follower relationships and declining levels of leader direction. Leaders shift from one style to another based on the task, situation and maturity level of the followers.
Using the “telling” style, the leader provides comprehensive directions to his staff and sets clear goals and roles. The telling style works best in this situation of low readiness, by giving instructions and bringing structure to a situation where followers lack capability and are unwilling or insecure about their tasks (Schermerhorn 2011).
Using the “selling” approach, the leader tries to motivate and convince people to adopt the new processes and procedures. The selling style is recommended for moderate- to high- readiness situations. Here, followers lack capability but are willing or confident about the task (Schermerhorn 2011).
Leaders using the “participating” style share responsibility for decision making with their employees and become more of a facilitator than a manager. The participating style is recommended for low- to moderate- readiness situations. Here, followers are capable but also unwilling or insecure about the tasks (Schermerhorn 2011).
Using the “delegating” approach, the leader hands off the responsibility for making the decision to his subordinates, assuming they have the skills, knowledge, experience and desire to complete the task (Schermerhorn 2011).
Managers using the situational leadership model must be able to implement the alternative leadership styles as needed (Schermerhorn 2011). To do this, they have to understand the maturity of followers in terms of readiness for task performance and then use the style that best fits. For instance, you’ve just been put in charge of leading a new team and the team members are never work with you before. As far as you can tell, they have the required skills to achieve the department’s goals, but not all of them. The good news is that they’re excited and willing to do the task. You estimate they’re at a low-to-moderate maturity level, so you use the matching Participating leadership style. You coach them through the project’s goals, pushing and teaching where necessary, but largely leaving them to make their own decisions. As a result, their relationship with you is strengthened, and the team’s efforts are a success.
The benefits of adopting Hersey-Blanchard’s situational leadership model are:
- Better Communication – The model emphasizes the need for managers to constantly remain aware of the needs of their subordinates (Schermerhorn 2011). To be able to assess an employee’s abilities and lead him to perform efficiently, it is imperative for the leader to communicate. When a manager uses the situational style of leadership, he interacts with an employee, listens to what is said, and provides what is essential for a given situation. Therefore the situational leadership model allows for enhanced communication.
- Higher Morale – When employees and team members feel heard, their morale rises significantly. A leader who communicates openly, provides information and resources to meet every situation, and involves employees with the requisite skills in problem-solving, inspires his team to better performance (Schermerhorn 2011). As performance improves, an employee feels more confident of her own abilities, and is willing to take up greater responsibilities, making it easier for the leader to delegate tasks. Inspired individuals contribute more willingly and better to create a motivated team. From the leader’s point of view, using the directing or selling approach directly improves productivity, whereas the participating and delegating approach enhances employee participation and ultimately increases productivity.
- Personalized Management – Situational leadership involves a flexible approach to meet the distinct requirements of each situation and every individual (Schermerhorn 2011). It allows leaders to evaluate each subordinate, understand their individual needs and address those needs in the most effective way.
- Effective at Leadership Challenges – Leadership challenges are events that occur in which you are responsible for determining a solution and instructing othershow to reach it. Situational leadership theory allows you to confront each situation, determine the best solution and use the most effective leadership technique to reach your solution (Schermerhorn 2011).
2.3 The current leadership style in Haier
Zhang Ruimin is the Chairman of the Board of Directors and CEO of Haier Group in China. In 1984, Zhang Ruimin took the post of Director of Qingdao Refrigerator Factory – predecessor of Haier, thus starting the prologue of Haier’s entrepreneurship. Through 28 years of development, with his innovative entrepreneurial spirit and advanced strategic decision-making in conformity with the trend of the times, he has turned a small collectively-owned factory with a 1.47m Yuan loss into a global enterprise with global turnover of 135.7b Yuan ( Haier 2010).
In our opinion, Zhang Ruimin’s leadership style is typical; it appears the transformational leadership style because he always changes the rules according to the situations. By approach to the Hersey-Blanchard’s situational leadership model, we believe that, the Delegating leadership style is best described the current Zhang’s leadership style (Schermerhorn 2011).
As the market of Haier has extended from being local to global, its employee grew from 600 to over 50,000. “It is not possible to rely upon a person or one management team to make decisions as responding to the challenges today,” as said by Zhang. As a result, they have made multiple efforts to enhance their management position by flattening the organizational structure.
Zhang has recognized that the quality of personnel has become a huge issue as the organization expanding globally. The approach he has adopted is to personnel localization, by employing a local manager to operate the business. In addition, Haier has also sent people to its overseas corporations from its headquarters, to encourage those Chinese managers to be innovative and independent in a different market, and also improve their capabilities in the international environment.
For instance, the target that Zhang gave to their managers is to popularize Haier’s products in the U.S. market. And he empowered the managers in U.S to make every detailed decision themselves. In other words, he wants managers to discover solutions themselves that can enhance Haier’s competitiveness in that market. In short, Zhang prefer to set up a target, and leaves the followers decide themselves in their context on how to reach target and by what innovative approach. (Sheng & Ye 2011)
Zhang requires that the managers in Haier should be innovative and independent with their own balance sheet (Sheng & Ye 2011). In practice, it involves three steps: (1) Set up a target for every individual; (2) Provide the necessary support and resources to the individuals; and (3) Establish individualized balance sheet includes information like input and output.
All the above characteristics of Zhang’s leadership style are related to the Hersey-Blanchard’s delegating leadership style (Schermerhorn 2011). The delegating leadership style is about all of the tasks are handled with little input from the leader. The team member directs their own behavior and decides how tasks should be accomplished. The team member is willing – even wants – to work by him or herself with little support or supervision. The leader is focused on strategic issues and works with the team to rapidly implement changes that enable the team to remain competitive in the marketplace.
Zhang’s delegating leadership style seems best fit in the current globalization market, the success of the Haier proved so. The strengths of delegating leadership style are: efficient use of time and talent; delegation will help a manager use his/her time and the time of the employees effectively, and it will allow a manager to get even more work done then they will alone (Schermerhorn 2011). Delegation is a way of empowering employees and this is a promising advantage. Giving responsibility and accountability to employees will give them an opportunity to showcase their skills and talents, therefore it is an opportunity for staff development; it will also provide them with the opportunity to have pride in their work therefore increased motivation (Schermerhorn 2011).
However, this delegating leadership style appears certain weaknesses in Haier: Firstly, though people are willing to execute the strategy and increase their skills, so far their competence is still inadequate to make some important decisions (Sheng & Ye 2011). And secondly, there is difficulty on identify the target of each individual’s balance sheet; the IT applications in their business processes are not sophisticated enough to count profits and losses for each individual (Sheng & Ye 2011). Moreover, the biggest problem is human minds. For example, some executives in Haier have become complacent due to the good performance the company. Lots of them are reacting slowly to the market change (Sheng & Ye 2011).
2.4 Weakness of this model
Though the Hersey-Blanchard situational leadership model bring successful results when you have the ability to flex your leadership style to suit the particular situation. There are certain drawbacks too.
First of all, this model ignores the differences between female managers and male manager. Generally speaking, female managers might tend to have a nurturing style, while male managers may lean toward a task-oriented management style (Schermerhorn 2011).
Secondly, the model ignores interpersonal relationships and the vary level of maturity within work groups. Therefore, it is not much useful in leading a group of people because the maturity level are differ among the group and poor interpersonal relationships have a negative impact on performance (Schermerhorn 2011).
Moreover, situational leadership focuses on follower maturity as a key determinant, it ignore other important situational factors such as relationships between leaders and followers, position power and the structure of the task (Schermerhorn 2011).
Finally, there are difficulties on defining and quantifying the maturity level and propensity to assume that job maturity matches emotional maturity. Hersey and Blanchard describe job maturity as “capability to take responsibility” but there is no credible source that supports the definition (Schermerhorn 2011).
3.0 Globalization issue
Griffin and Pustay (2010, p. 35) define globalization as the inexorable integration of markets, nation states, technologies and so on in the way that is enabling individuals, corporations and nation states to reach around the world farther, faster, deeper, and cheaper than ever before. And the cause of globalization are also summarized by Doh, (2009) including leveraging core competitiveness, acquiring resources and supplies, seeking new markets, better competing with rivals and changes in economy, technological, political environments.
Under the umbrella of globalization, it has influences on both Haier’s past and its future.
3.1 Globalization on Haier’s last five years
In the last five years, Haier has experienced a fast developing period under the influence of globalization, which is supported by several effective and excellent designed strategies in figure 2.0.
Figure 2.0 developing strategies of Haier during last five years
3.1.1 Brand building strategy
The first strategy employed by Haier under the influence of globalization during the last five years is named brand building strategy in both Chinese market and international market (Yi & Ye 2005).
With the more and more open attitudes from Chinese government towards the development of its national enterprise in both the domestic stage and international stage, many national enterprise including Haier has learned and introduced those advanced and modern foreign technologies as well as equipments to their industry. Haier is the one which process in the first place, which has introduced those modern technologies and equipments from the household appliance manufacture industry to build its brand (Yi & Ye 2005). During that time, there were some many Chinese enterprises in the household appliance market have sought the scale of economies by concentrating on outputs while neglecting the quality of their products when demand soars out of supply. Compared to these domestic rivals’ practices, Haier refused to pursue the high yields blindly (Yi & Ye 2005). To the contrary, under Zhang Ruiming’s wise leadership, Haier is strict with its products’ quality under the support of comprehensive management of quality. Generally, Haier has dedicated itself wholly to develop and implement a set of practical and effective models such as management model, technique model, talent model and corporate culture during the past five years to build its brand (Yi & Ye 2005).
3.1.2 Diversification development
During the past five years, globalization led to many foreign competitors surging into Chinese market, which gives national enterprises in China great pressure (Haier 2010).
Under the fierce competition, Chinese government has carried out the policies to encourage enterprises to merger and acquire with each other. Under this situation, Haier has developed itself in a diversification way. At first, Haier has promoted the merger with more than 18 national enterprises engaged in household appliance manufacture industry of China to embed them with the perspective of “Haier culture activated shocked fish” to enable Hair Group enter into the period of fast development and expansion both in Chinese and international market. Secondly, to better meet the picky requirements from both domestic and international customers, Haier has employed the star service system to its enterprise. Thirdly, under the fierce competition such as price competition from both international competitors and domestic competitors, Haier has been building its competitiveness via superior quality control. For instance, during this period, Haier has begun to carry out management approach named “overall every control and clear to ensure everything that needs to be done has done every day which is also the great innovation of Haier under the influence of globalization (Haier 2010).
After entering WTO, Haier become more active to expand its business internationally under the call of Chinese government. To build the good image of China’s own brand in international market to meet opportunities offered by globalization, three steps strategy was employed by Haier such as moving into, mainstream step, and leadership step under the guide from the philosophy that tough first, easy later (Business Week 2009).
3.1.4 Global brand building
The last activity employed by Haier during the past five years to meet globalization’s requirements is to build its brand globally. From 2005 to 2021, this is defined as internet era, promoting market segmentation and dramatic changes towards traditional corporate feature. That is to say, the era of globalization and internet requires companies to change from products sales concentrating on enterprises to service sale concentrating on users. And this era also integrates the world economy together to improve the relevance between globalization and internationalization logically. Therefore, Haier has integrated its resources in global region in product research and development, manufacture and marketing aimed to build Haier brand as a global brand. And Haier has also developed its business mode in more customers concentrated to produce win- win outcomes.
3.2 Globalization on Haier’s future
3.2.1 Trends for Haier to meet
Towards the future of Haiers, it is important for this Chinese enterprise to meet the trends promoted by Haier in its future globalization road.
For one thing, the global economy recovers gradually which also promotes the recovery of global market and continue their development. Meanwhile, the price of raw material has also been increased along with recovery from economy including steel, oil, copper and other kind of resources (Haier 2010 & Zhang 2012).
For the other, labor cost in China has been increased especially in the second and third tier cities. Moreover, when entering information age, the manners to reach customers are increased such as the internet manner. (Haier 2010 & Zhang 2012)
By and large, with the rise of labor cost and raw materials, domestic enterprise especially household appliance manufacturer had better improve their competitiveness via innovation and creation on new product instead of relying on assembling merely and well manage its labor force to improve their performance outcomes (Haier 2010 & Zhang 2012).
3.2.2 Future development
220.127.116.11 Channel shifting
To meet the trend of information age, popularity of internet has been increased, which offers both challenges and opportunities for household appliance makers and their distributors. Under the platform of internet, it is necessary for Haier to focus on the internet sources to explore a wider scale of customer sources and provide them with convenient and better solutions for customers to purchase their favorable products via internet platform (Haier 2010).
Moreover, under the assistance of internet, which may promote the products of Haier more effectively by its great influence power on people, customer basis of Haier may be increased to a certain level (Haier 2010).
That is to say, in the future, the promotion focus and selling focus of Haier may be shifted to the internet platform a lot due to the influence power and convenience of internet for both customers and Haier in booking, purchasing, customers feedback collection and communication with customers via the official website of Haier and other internet sources such as e-mails (Yidan 2009).
18.104.22.168 Increasing portfolios for brand and product
To meet more and more diversified requirements from a large customer basis via the globalization trend and assistance from internet platform, Haier is believed to develop the deeper and wider portfolios of products to meet customers’ needs in the future (Zhang 2012).
And to achieve this, Haier is believed to expand its products into more environment friendly and energy friendly manners to make its household appliance products more cost saving and welcome by customers (Zhang 2012).
22.214.171.124 Extending distribution system
To improve Haier’s competitiveness via cooperation with other business players in both Chinese market and international market, Haier is believed to build and develop a relatively open stage with positive interaction with those strong brands in logistics or services industry to ensure the service quality such as product delivery for its customers are ensured and satisfactory. Moreover, as the good outcomes brought by the pre sale or after sale services, Haier is also expected to build and develop its network system continuously to a higher level in the future to attract more customers and brands to join Haier family to witness Haier’s prosperity (Zhang 2012; Yidan 2009).
126.96.36.199 Enhancing the focus on online business
As the above mentioned, to meet the trend of globalization which offers so fast developed technology for business players, Haier is also expected to fast develop the utility of internet to further promote its online business as other big giants have done in the household appliance industry. For instance, in the future it is possible for Haier to further identify the actual needs from different customers, reduce selling expenditures and transaction costs to establish the low cost but effective selling platform by the assistance of internet and support from the logistics systems in the efficient manner (Zhang 2012; Yidan 2009).
188.8.131.52 Effective training and developing programs
Considering the high cost of labor force in the future even at the present time, it is also possible for Haier to enhance the effectiveness and efficiency of its training and developing programs for its labor force. These effective training and developing means especially cross training measures will be employed by Haier to achieve the aim of high competitive labor force with the lowest costs (Zhang 2012; Yidan 2009).
184.108.40.206 Diversity workforce development
Under the trend of globalization, people from different culture, nationality, education background, religion, gender, sex orientation, race and so on will work together to offer organizations with continuous innovation and creativity in their products and serviced for customers all over the world (Stone 2011). For Haier, with the chances offered by globalization under its own global expansion pace, it is believed to develop a world pool of talents made up of diversity workforce to make full utility of diversity workforce to enhance its competitiveness compared both Chinese and international competitors in the global market region ( Haier 2010).
4.0 Manager roles
According to the observation and subsequent research from Mintzberg (Zhang 2012), diverse activities practised by managers can be categorized into ten roles. Referring to organizational practices and operational issues in Haier Group leaded by Zhang Ruiming, we can define his management roles as a monitor, a leader and disturbance handler.
4.1 The monitor role
In the monitor role, managers scan their environment for information that related to their works, actively contact others for information, and because of their personal contacts, receive a great deal of unsolicited information (Mintzbery 1973). The monitoring can be internal and external. As for Haier, the product designers must go to the market to discover the needs and demands of the consumers, therefore, requires the managers closely monitor the market change, specially the changes of customer’s purchasing behaviors. The corporate expend huge resources on R&D, and then come back with products which maximized value for customer.
As mentioned earlier, the business goal of Haier is to satisfy their consumers as quickly as possible and they want consumers to feel that Haier is the one company that comes closest to satisfying their needs. To achieve these goals, Haier focused on developing innovative products. For example, in the U.S. market, when report showed there is stock shortage on dormitory refrigerator, the marketing manager took immediately action to discover the reasons of such popularities by gathering information from the target market. By closely monitoring the market, Haier captured the great opportunity on the market of American college students. Moreover, Haier’s product designers designed lot of innovative products based on the customer-oriented (for example, the Wine Cabinets introduced by Haier are popularized in the American and European market).
In order to understand the customer’s needs, it requires all the managers even the workers to collaborate together and monitor the market closely. Haier adopted open system approach to the business, which is a system that has interaction with its surrounding environment and be able to adapt to the changes that occur in their environment. Therefore, the strengths of Haier are the speeding innovation and the ability to differentiate them from its competitors. From this open system, we found that the managerial activities included monitoring the market environment and gathering feedbacks.
Besides receiving firsthand information, managers in Haier also monitor their environment by reading local newspapers or take advantage of electronic monitoring and distribution services to keep track of customer, competitors, and technological changes that affect their business.
4.2 The leader role
Flannery (2001) advocated the leader role possesses relationships with his or her subordinates by communication, impact, encouragement and motivation. Zhang Ruiming as the CEO of Haier Group, just from his position side, we can define his role as the leader. As a matter of fact, what Zhang Ruiming has practised in his managerial role of Haier has proved his leader role.
First, Zhang Ruiming is excellent at directing and motivating his subordinates. Haier Group is developed from a small and approximate to bankrupt refrigerator making factory, which is just under the wise direction of Zhang Ruiming to be developed and expanded as the most influential household appliance making factory even ranking among the top 500 enterprises in Fortune magazine (Zhang 2012). For example, Mr Zhang has led Haier to set up business goals including diversification product developing strategy to expand products categories from merely refrigerator to washing machine, air conditioning, TV and other household appliance categories; build up plans to improve infrastructure quality of Haier Group such as establishing Haier Industrial Part to offer hardware support for its international expansion strategy; make every important issues down via vertical hierarchy and power from his position to further direct and lead his followers and ordinary employees so as to fulfill organizational objectives
Secondly, Zhang Ruinming takes every training issue for employees into account. Besides ordinary training and developing programs for employees every year, Mr. Zhang supported by human resource department of Haier Group to offer employees more opportunities to receive the on the job training. For example, at the very beginning of Haier’s foundation, Mr. Zhang resolute decide to send two fresh men to France representing Haier to open the France market for Haier (Flannery 2001). Under the encouragement and confidence building efforts from Mr. Zhang for the two young guys, France market was conquered by Haier Group with the support of the two fresh men. For Haier, what it gains is not only the oversea market, but also two potential talents under practical trainings in the international market. In addition to the actual training in market, other kinds of training and developing activities are also recommended by Zhang Ruiming to further improve the competitiveness of his employees including off the job training, performance competition, cross training and so on (Zhang 2012) .
Thirdly, the leader role played by Zhang Ruiming is also reflected from his offering of counseling and building effective communication mechanism in Haier Group. As the leader, Mr. Zhang is good at counseling, who often offers advice and encouragement to his employees when they encountering problems to improve their self-confidence and performance. For instance, once there are two designers lacking in confidence towards their designs when Haier is exploring international market faced with competition from international players, Zhang Ruiming encourages them you should have confidence in yourself because you can, which largely improve the confidence of people on their own ability. Besides this evidence, there are so many evidences of Mr. Zhang to give advice and counsel for his people when they are in a dilemma, which proves the typical leader role embraced by Zhang Ruiming (Bartlett & Ghoshal 2009). Moreover, Zhang Ruiming has also established effective communication mechanism inside Haier including upward communication, downward communication and horizontal communication to concern the organization of Haier as a whole. The upward communication strategy promoted by Zhang Ruiming in Haier, for instance, is designed as open door to employees communication strategy, which means all level of managerial people in Haier are required to open their door to communicate with their subordinates to find out their problems, accept their suggestions for improvement, offer thorough performance report and other important issues. This kind of communication strategy promoted by Zhang Ruiming has promoted the communication effectiveness of Haier between management and ordinary employees (Bartlett & Ghoshal 2009).
By and large, all of the managerial behaviors and practices mentioned above prove the leader role played by Zhang Ruiming as the CEO of Haier Group is relatively excellent.
4.3 The disturbance handler role
According to Daft (2010), disturbance handler role involves the activities such as solving conflicts or disputes inside the organization, make the organization more compatible with the outside environment. In Haier, Zhang Ruiming also plays the role as disturbance handler to lead Haier to operate healthily.
In dealing with the inside conflicts or disputes, Mr. Zhang often perform outstandingly to relieve many sharp conflicts and disputes (Bartlett & Ghoshal 2009). Let’s use three examples involved in Mr. Zhang to prove his excellence as the disturbance handler.
The first evidence was at the beginning of Haier’s foundation, during which a large quantity of new produced refrigerators involved with quality problems. Under this business ethical dilemma, Zhang Ruiming made up a resolute decision to break all of the products with quality problems, which indicated Haier would face a big loss. While the decision made by Zhang Ruiming is really wise, not only help Haier to build a good reputation among customers as a high quality and ethical brand but also make deep impression in the mind of employees that business ethics is always focused by Haier and its people (Bartlett & Ghoshal 2009)..
Another evidence showing Zhang Ruiming is the disturbance handler is his effective practice to represent Haier to deal with the outside conflicts and pressure so as to make Haier adapt to the environment crisis. For example, when involving in battle with AE group, the big giant in household appliance making industry, Zhang Ruiming refused its offer to merger, but to make up the decision to build oversea factory to protect its Chinese brand image. This kind practice of Zhang Ruiming to protect Haier from the attack of oversea competitor and adopt itself to the international developing environment discloses the disturbance handler role of Zhang Ruiming (Bartlett & Ghoshal 2009).
By and large, the above evidences prove the roles played by Zhang Ruiming are the monitor, the leader and the disturbance handler of Haier group.
5.0 Organizational culture, leadership and national culture
5.1 Organizational culture and leadership style
5.1.1 Theoretical reference
Lok and Crawford (2004) defined organizational culture sometimes also called corporate culture represents the shared perspectives, values, belief, criterion and behaviors in a company. And Schein (1996) further extended organizational culture to a border scale of the relationship maintained by a business including relationship with consumers, partners, and peddlers and so on, which is developed rooting from corporate objectives, strategies, structures, plans and business practices. Daft (2010, p. 631) defined leadership is the ability to influence people towards the attainment of organizational goals.
As both organizational culture and leadership style always align with organizational objectives in the organization, which makes the relationship between organizational culture and leadership style close and firm (Sharma & Sharma 2010). In a word, organizational culture often influences the leadership style of an organization.
According to the research of Jaharuddin and Long (2009) on foreign and local organizations, several kinds of leadership styles influenced by organizational cultures are explored from these companies. In a word, a certain type of organizational culture often tends to foster a certain kind of leadership style, which is suitable for the organizational nature.
Firstly, if the culture of an organization is marked with the characteristics of hierarchy which possesses strictly hierarchic system for employees to follow in their organization, the leadership style in this kind of organization is often fostered as the auditor style, which marked leaders with the characteristic that the leader is often persistent or stubborn on those they are expected to be fulfilled and require detailed analysis of employees towards their jobs and tasks so as to ensure both the stability and quality of their performance. And since the hierarchy culture has involved with strict requirement on formality, centralization of power, high expectation from leaders on employees to follow the principles or regulations strictly, which has a great influence on the leadership style in their organization to regulate its employees to achieve the expected results and outcomes.
Secondly, the clan culture described by Jaharuddin and Long (2009) in their investigations as this kind of relationship marked with high value on the emphasis of the working climate of participative and comfortable style. This kind of culture in organization contributes to the ambassador leadership style which pays great attention to the communication effectiveness inside their organization to ensure the opinion of employees can be received and disputes can be resolved in time in their organization.
Thirdly, in the culture of results focusing, it emphasizes the outcomes or achievements rather than other kinds of issues based on corporate goals and objectives. Under the influence of this culture, the leadership style is defined as driver style which is marked with ambitious and high degree of energy (Sharma & Sharma 2010).
Generally speaking, organizational culture has great influence on the leadership style in almost all of the organization, which we can infer from the example of Haier Group.
5.1.2 Haier example
At first, we state out the culture of Haier which is based on the sustainable development issue. Just as its CEO, Zhang Ruiming pointed out the culture of Haier is to focus on the employee with great respect on employees to promote their working morality and enthusiasm to make their sense of belonging to a highest level (Yi & Ye 2005).
Secondly, the leadership style employed by Zhang Ruiming, Haier’s CEO, is the delegating leadership, which is described by Daft (2010) to be built based on the combination of high consideration for people and the relationship building in an organization instead of the high or only focus on production task.
In terms of the current organizational culture in Haier, which focuses on people to promote the sustainable development aim, it has great influence on the delegating leadership style expressed by Zhang Ruiming in Haier Group. For one thing, in Haier’s culture, we find the focus on people such as relationship building and respect for people have the same concern of the delegating leadership style from Mr. Zhang, who focus people first and then the task issue. For the other, we may conclude it’s the organizational culture emphasizing the focus of people influence the leadership style of Mr. Zhang to employ delegating leadership style. Or further, it is the interaction of the organizational culture and Mr. Zhang’s delegating leadership finally promotes the people focus spirit in Haier Group. (Haier 2010; Daft 2010)
5.2 Organizational culture and national culture
Just as we mentioned above, organizational culture represents the shared perspectives, values, belief, criterion and behaviors in a company and it also refers to a border scale of the relationship maintained by a business including relationship with consumers, partners, and peddlers and so on, which is developed rooting from corporate objectives, strategies, structures, plans and business practices according to Lok and Crawford (2004) as well as Schein (1996).
And according to Duygulu and Ozeren (2009), national culture refers to the collective programming of the perspectives belong to a certain kind of group which may distinguish this group from the other. Moreover, according to Hofstede (Daft 2010), there are four dimensions of national culture which distinguish one country from the other including power distance, individualism vs. collectivism, masculinity vs. femininity and uncertainty avoidance.
According to Pun, Chin and Lau (2003), the primary difference between national culture and organizational culture is the different expectations from each other. The expectation from national culture indicates the nation’s value including the issues of ethics and morality, housing, food, dressing, music, songs, languages and other nation related issues. While organizational culture refers to the special means or the way the organization operates its business including issues such as the relationship of employees and management, compensating packages for employees and the expected behaviors or performances of employees from the company.
Secondly, the difference between national culture and organizational culture also exists on their influence. The influence of national culture often has the power to shape value systems of the national members, which differs from one country to the other. And the benefits brought out by organizational culture are several. At first, it assists organizations to build up the common values and integrates employees’ behaviors with organizational values. For example, many multinational organizations make full use of the hand books, ethics code, written values and other useful tools for their employees in the global market to align their behaviors with these cultural essences (Pun, Chin & Lau 2003).
Generally speaking, the difference between national culture and organizational culture are due to their nature and aim to influence people in their own territory.
Besides the above analysis, we may find that there are actual conflicts faced by employees aroused from organizational culture and national culture. And it is the greatest value for companies to carefully manage and assess when there are conflicts between national culture and organizational culture especially when companies enter into a new country (Pun, Chin & Lau 2003). For instance, when Haier enters into the western countries including American market, the open and individualism focused American culture has conflicted with the conservative and collective focus culture of Haier under the influence of traditional Chinese culture, which arouses so many problems for Haier to deal with including human resource management, communication mechanism building, organizational structure modification, marketing strategy building towards American employees, customers and the market requirements which are even totally different from the Chinese market (Yidan 2009).
When meeting such kind of cultural challenges, multinational organizations including Haier Group is recommended to make use of effective and preventative actions to both motivate the local employees and promote their sense of belongings to actually accept Haier’s culture. Similarly, it is also necessary for these companies to develop and implement measures to solve these conflicts met by companies like Haier (Yidan 2009).
Generally speaking, it is important and necessary for companies like Haier to well deal with these conflicts aroused by the difference between national culture and organizational culture so as to smoothen its development process in both domestic and international market.
6.0 Organizational structure
6.1 Haier’s organizational chart
According to Daft (2010), organization chart is defined with three major specialties. The first specialty is its sets of formal assignments which are distributed to departments and individual employees. The second specialty of organization chart is that it works as formal relationships such as the authority lines, decision obligations, the hierarchic level of numbers and the scale or span for managers’ control. And the last specialty for organization chart is its aim to design the certain kind of system to confirm the cooperation effectiveness across different departments. In a word, these issues and elements such as the set of formal assignments and reporting relationships in the formal manner often offers the framework to organizations to control employees in the vertical manner.
In Haier, organization chart also has some many functions for it to better operate its business internationally with a clear understanding and outlines on its organizational structure and formal relationships and so on.
In figure 3.0, it shows the organization chart for Haier group in the following, which not only discloses its management structure but also its department design and formal relationship in this organization.
Figure 3.0 Organizational chart based on Haier
From the organizational chart, we find that the structure of Haier Group is relatively clear and detailed. The characteristics of Haier’s organization structure is defined clear to assist Haier to clarify the responsibilities and rights for different organizations and management workers, which has realized the decentralization of authority and the flat organizational structure to meet the initial requirements of expansion and diversified operation with the relatively largest enhancement of working enthusiasms of employees. In fact, as Sheng and Ye (2011) mentioned, the era of globalization and new economy is the outstanding characteristics of this period which also mark Haier’s organization chart with the obvious remark of this period.
Based on the analysis of Haier’s organizational chart in the above, we can get these strengths of this kind of chart for Haier in the special era.
For one thing, due to the relatively well alignment of organizational structure and marketing system in Haier, the tasks and assignments of Haier are well distributed and fulfilled in each department to assist the further oversea expansion. For example, every facility bureau owns its own marketing department, which is in charge of selling, exporting and building oversea department for its own products. For the other, Haier’s headquarter also owns its marketing company to direct the operation of the selling practices and monitor the operation of the marketing departments of different bureaus of Haier Group. Under this relatively clear segmentation of each department in their special responsibilities, it is able to realize the optimization of the inputs for each department and bureau to produce the expected outputs and then build the competitiveness of Haier Group comprehensively. (Haier 2010; Sheng & Ye 2011)
Generally speaking, that the strengths stand out from its organizational chart of Haier are relatively effective for Haier to improve its competitiveness entirely to assist the building up and maintaining of global network so as to meet diversity needs of the global market.
Although the organizational chart of Haier is regarded to function in the expected manner, there are still several weaknesses faced by Haier group.
On the one hand, although the entire organizational structure of Haier is seemed to lean to a flat level, the structure of refrigerator department belongs to centralization of power structure, which is regarded to be fit for the single line of refrigerator line development rather than the entire development of the house hold appliance products such as washing machines, air conditioners, TVs, fans and other kinds of small appliance. One the other hand, this kind of structure also owns its shortage to keep each household product to develop together. (Haier 2010; Sheng & Ye 2011)
Generally speaking, this kind of structure especially the structure in refrigerator bureau is ineffective to support the entire development of the whole organization.
As there are still some weaknesses of the organizational chart in Haier, in the following we suggested two options for Haier to further modify its organizational structure.
6.4.1 Option one
Based on the current situation of Haier in both Chinese market and oversea market, we suggest two kinds of modifications for Haier in its current structure which are shown in figure 4.0 and figure 5.0
Figure 4.0 the first option on Haier’s organizational chart
At first, we recommended Haier Group to realize the actual transformation of its market orientation from Chinese market centered structure to an international market focused structure to catch every opportunities offered by the globalization. That is to say, Haier is recommended to enhance the right and subdivision of the oversea department or bureau to make its function and operation meet the requirement of international standard (Haier 2010; Sheng & Ye 2011).
Secondly, as the more and more focus of service quality in both Chinese and international market, Haier is also recommended to transfer from only manufacturing centralization to comprehensive focus on service and manufacturing (Haier 2010; Sheng & Ye 2011).
This kind of option owns the advantage that it is the actual choice for Haier Group to realize its globalization and internationalization as an actual multinational corporate rather than the Chinese enterprise developing in oversea market (Haier 2010; Sheng & Ye 2011).
Meanwhile, it also owns its disadvantage. Because the building up and modification on these international or oversea departments require more time and money investment, it put greater pressure and risks for Haier to develop in its future (Haier 2010; Sheng & Ye 2011).
6.4.2 Option two
We advise Haier to transfer from the strict line management structure to the innovative three structures including research & development; human resource management and customer management to ensure the completion of every order from customers are satisfactory with high quality which is shown in figure 5.0 (Haier 2010; Sheng & Ye 2011).
The advantage of this option for Haier is to ensure the total budget management, total equipment management as well as the total quality management in Haier to compete with these domestic and international competitors (Haier 2010; Sheng & Ye 2011).
The disadvantage of this option is the same as the above one, which will cost a lot of resources including capital, human resources, time and so on from Haier with increasing pressure and uncertainties (Haier 2010; Sheng & Ye 2011)
Figure 5.0 the second option for Haier’s organizational chart
In this report, we explore several management issues of Haier Group, which is the big giant of white products making in both China and international market. With the analysis of its leadership style, management roles, the influence from globalization, relationship between Haier’s culture, national culture and leadership style and Haier’s organizational structure, we confirm some strengths and weaknesses parts of Haier’s management and also offer several suggestions for its further improvement.
By and large, we hope this Chinese household appliance manufacture brand can keep its prosperity in is future development.
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