Managerial roles analysis of Haier Group

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List of figures

 

Figure 1 Hersey and Blanchard’s situational model of leadership……………………. 6

Figure 2 The product life cycle…………………………………………………………………. 13

Figure 3 Mintzberg (1973)’s 10 managerial roles…………………………………………. 14

Figure 4 The organizational chart of Haier Electronics Group Co., Ltd………….. 20

Figure 5 Proposed functional structure for Haier Electronics Group Co., Ltd…. 21

Figure 6 Proposed matrix structure for Haier Electronics Group Co., Ltd………. 22

 

Content page

List of figures………………………………………………………………………………………………….. 1

1.     Introduction……………………………………………………………………………………………… 4

1.1      Background of Haier Group………………………………………………………………. 4

1.2      Research objectives………………………………………………………………………….. 4

2.     Leadership Style……………………………………………………………………………………….. 4

2.1      Hersey- Blanchard Situational Theory………………………………………………… 4

2.2      The current leadership style in Haier…………………………………………………… 6

2.3      Strengths and the weaknesses in participating style………………………………. 8

2.3.1     Advantages of Participative Leadership Style…………………………….. 8

2.3.2     The Disadvantages of Participative Leadership Style………………….. 8

3.     Impacts of globalization on Haier’s in the past and in the future……………………… 9

3.1      Impacts of globalization on Haier’s in the past five years…………………….. 10

3.1.1     Globalization in R&D activities………………………………………………. 10

3.1.2     Globalization in supply chain – the Haier e-mode……………………… 10

3.1.3     Global corporate culture…………………………………………………………. 11

3.2      Impacts of globalization on Haier’s in the future………………………………… 11

3.2.1     Speeded up innovation and shortened and incomplete product life cycle    11

3.2.2     Customization in products and the booming of e-business…………. 13

4.     Mintzberg (1973)’s 10 managerial roles analysis…………………………………………… 13

4.1      The managerial role of entrepreneur………………………………………………….. 14

4.2      The managerial role of leader…………………………………………………………… 15

4.3      The managerial role of disturbance handler………………………………………… 16

5.     Leadership style and gender difference………………………………………………………. 17

5.1      Key terms and literature review……………………………………………………….. 17

5.2      Critical discussion regarding sex stereotyping in leadership styles………… 18

5.2.1     Hair Group CEO: Zhang Ruimin…………………………………………….. 18

5.2.2     HELP University College: Dr Yap…………………………………………… 18

6.     Organization structure………………………………………………………………………………. 19

6.1      Concepts of organization structure……………………………………………………. 19

6.2      The organizational chart of Haier Group……………………………………………. 19

6.3      Other options of organizational structure…………………………………………… 21

6.3.1     Functional structure………………………………………………………………. 21

6.3.2     Matrix structure…………………………………………………………………….. 22

Reference list………………………………………………………………………………………………… 24

 

Case study of Haier Group

 

1.        Introduction

 

1.1    Background of Haier Group

 

In year 1985, Haier Goup was still a small manufacturer of a single product, the refrigerators, facing bankruptcy with a debt of 1.47 million RMB and a staff of 800 (Gollakota, Gupta, Gollakota & Srinivasan 2007). Now with Haier the set up 10 industrial parks worldwide and 22 plants overseas, Haier has established itself as a global manufacturer and enabling prompt action to satisfy local user needs for quality Haier products which in turn greatly provides great support for Haier to achieve its goal of world-class brand (Chinahaier.com 2011).

 

1.2    Research objectives

 

This study will analyze the case of Haier Goup in term of a number of fields with the help of the relative management theories. By examining the areas of Leadership styles and gender differences, Impacts of globalization on Haier’s in the past and in the future, Managerial roles, and Organization structure to see into the secrets behind Haier’s success.

 

2.        Leadership Style

(Using Hersey-Blanchard theory, identify the current leadership style. What are its strengths and weaknesses?)

 

2.1    Hersey- Blanchard Situational Theory

 

Hersey and Blanchard (1982) suggest this approach should be based on the two dimensions of leader behavior: task behavior and relationship behavior. In addition, it also include the degree of follower maturity (or readiness), which refers to the followers’ degree of motivation, competence, experience, and interest in accepting responsibility. Similar to the managerial grid, the two dimensions (task and relationship behavior) are used in conjunction with follower maturity. This model prescribes the use of particular behavior combinations (also called styles) depending on the maturity or readiness of followers (see figure1). Note that the amount of task behavior decreases steadily with increasing follower readiness, while relationship behavior starts low, then increases and finally decreases again. The four actual styles of leadership are:

 

  1. Telling. If the subordinates display a low level of readiness to be willing and able to achieve the task then the leader should adopt a task-oriented style by telling subordinates what is expected from them.

 

  1. Selling. This style would be most appropriate where the subordinates display moderate levels of readiness towards the task to be achieved.

 

  1. Participating. Where medium levels of subordinate readiness towards the task are found it is possible for the leader to learn towards the relationship aspects of the situation in terms of style.

 

  1. Delegating. With high levels of subordinate readiness there is an opportunity to delegate much of the responsibility for both task and relationship dimensions. The leadership role then becomes facilitation rather than managerial.

 

 figure1

Figure 1 Hersey and Blanchard’s situational model of leadership

Source: Strunz H., Dorsch M., 2001, page 146

 

So according to the figure1, the leader’s basic style should also change when the readiness of followers improves. When subordinate readiness is low, for example, the leader should rely on a “telling” style by providing direction and defining roles. When low to moderate readiness exists, the leader should use a “selling” style by offering direction and role definition accompanied by explanation and information. In a case of moderate-to-high follower readiness, the leader should use a “participating” style, allowing followers to share in decision making. Finally, when follower readiness is high, the leader is advised to use a “delegating” style by allowing followers to work independently with little or no overseeing (Lunenburg & Ornstein, 2011). In a word, manager’s leadership style must be adaptable and flexible to meet the changing needs of employees and situation. It should be matched to the readiness of the subordinates.

 

2.2    The current leadership style in Haier

 

The development of leadership style in Haier is based on its unique strategy. Due to Zhang recognized that the market was changing, and that domestic consumers would soon have better quality options available from foreign competitors, so the participating style as the mainly leadership style in Haier Group.

 

l  Zhang thinks that it is important that to give employees a sense of belonging. For example, one employee got sick and was hospitalized, the local office sent flowers to the employee; when one employee had birthday, and a manager sent email to him, which create a family environment through genuine care and consideration (Thompson & Martin, 2010). At the same time, Haier give the employees many opportunities to participate in product design, development and construction company. As a result, company has also overcome one of the recognized shortcomings of the divisional form.

 

l  To give employees enterprise culture- spiritual beliefs of employees, which lead to an integration between employees and business

 

l  Give the staff room to grow. For example, providing a good training, making career planning for their personal. All of these are attractive to employees and this can motivate them improving.

 

l  Do emotional investment to employees (Yi &Ye, 2003). For example, Haier set up complete incentive mechanisms, including the responsibility motivation, target incentive, honor incentives, material incentives and so on.

 

l  System of internal competition for posts by Haier, the vacant positions are posted on bulletin boards unified, any employee can participate in recruitment.

 

Through the analysis above, it can be seen that the current leadership style in Haier emphasis on the participating style. Because the objectives of these measures are try to meet employees’ emotional needs and provide many opportunities to make employees participate in.

 

2.3    Strengths and the weaknesses in participating style

 

2.3.1            Advantages of Participative Leadership Style

 

In my opinion, the participative leadership style not only increases employees’ satisfaction and performance, but also it can take the team towards higher levels of success in the long run. And in general, there are three kinds of enthusiastic dynamism benefits of participative leadership:

 

  1. It can help current leaders to find future leaders. When all team members are required to participate together for a common purpose, they will provide their suggestions. And the leader can weigh their suggestions, and then can find out the employee who is creative and have the leadership talent for the team or organization.

 

  1. It can motivate employees and increase productivity. When leader determines           adopting the suggestions from employees’, this can motivate them and have a positive impact on team spirit and employee performance. Due to everyone participated in the planning process, so they will be more enthusiastic about the implementation. Thus, it will contribute to a productive work.

 

  1. All-round decisions create a positive energy within the organization (Ricketts, 2010). Through the brainstorms activities, employees can contribute more suggestions which are provided for leader’s decision-making. And these decisions from different angles, the leader can check and choose the useful ideas. If the employees always can give good suggestions through discussion, I think the organization can get a dynamic environment.

 

2.3.2            The Disadvantages of Participative Leadership Style

 

There also are three disadvantages in this style, which hinder the implementation and development.

 

  1. Time-intensive. When employees under a necessary structure and guidance to discuss and solve problems, they also need more effective time, however there is a time constraint. And employees can provide more suggestions according to different strategies. So as a leader, sometimes it is difficult to choose which suggestions should be adopted, especially before the deadline.

 

  1. Less effective with unskilled employees. Haier is a manufacturing company; there are lots of different employees with different levels. So in fact, sometimes it is difficult to collect effective suggestions. In addition, some employees are unskilled employees, for example, sometimes they are not clearly about the objectives of changes, or there is no their voice heard in the democratic process. As a result, it making less effective with unskilled employees. 

 

3.  Information sharing. Sometimes, there are some sensitive business information, in order not to leak these important information, so it can not achieve the objective of information sharing. However, according to participative leadership style, the sensitive information might be share, which leads to a big risk to the company. And because of different level of education and different departments, there will be conflict among employees during the discussion process. And these conflicts may give rise to cooperation problems within different departments.

 

3.        Impacts of globalization on Haier’s in the past and in the future

(What impacts has Globalization had on this organization over the past five years. How is this likely to change over the next five years in your view?)

 

3.1    Impacts of globalization on Haier’s in the past five years

 

The raise of Haier is a miracle but still typical story that could happen a lot in the 1980s as when the Chinese government started to deepen the reform and opening up policy and get in touch with the outside world in term of business sector and economic activities in particular. This could be seen from the company’s strategic change to introduce an advanced refrigerator production line from the German Liebherr Company, through a joint venture (Yi & Ye 2003, p.2) and rose up in the refrigerator business. Below we will probe into the impacts of globalization on Haier’s in the past five years by referring and discussing the major events related to the globalization.

 

3.1.1            Globalization in R&D activities

 

In order to maintain the competitive edge in the international market, Haier has set up 18 design centers worldwide to consolidate resources from developed countries. In the European Haier R&D center, the Haier team with the aim to satisfy the needs of the European consumers, has integrated the talent European, Asian and the US designers to develop a high-end Italian style three-door refrigerator which helped the company to won the Plus X award in year 2009 because of the genuine European-style design and also the humanized functions provided (Young 2011). The globalization of the R&D (research and development) activities has assisted the company to be inclusive to the different product design and also talents from the foreign markets who tend to have different ideas by living in a different cultural and social background, and the unique inputs contributed by them will help facilitate the diversification and globalization of the R&D activities of the group.

 

 

3.1.2            Globalization in supply chain – the Haier e-mode

 

Another globalization trend happens in the supply chain management (SCM) in term of e-business, the strategic mode of Haier’s e-business was clearly reflected by its e-business platform which includes the famous Haier’s B2B (business to business transactions) SCM project. The Haier’s SCM system was built up on the platform of iHaier.com (Hunter & Tan 2005, p.280). The system was built up early at the beginning of the new century but with wide and increasing usage in the recent few years while more and distributors and suppliers accepts the e-business mode and is attracted by Haier’s offers. With this platform the company manages to pick up the best suppliers around the world and set up close partnership with the suppliers while at the same time reduce the purchasing cost and improving the product quality.

 

3.1.3            Global corporate culture

 

Haier corporate culture is guided and developed by advanced concept, innovative strategy, efficient organization, creative technology and market orientation, which have enabled Haier to grow swiftly with business expansion from China to outside world (Chinahaier.com 2011). Through absorbing the diversified values and cultures during the globalization, the Haier Group has adopted a global corporate culture through out its global networks (Ashkanasy, Wilderom & Peterson 2011, p.570).

 

3.2    Impacts of globalization on Haier’s in the future

 

3.2.1            Speeded up innovation and shortened and incomplete product life cycle

 

With the concentrated R&D activities engaged by the world leading players in the home electronic appliance industry, it is expected that in the future, the relative technological innovation process will be speeded up and also the product life cycle will be shortened.

Figure 2 The product life cycle

Source: Stark 2011

 

The product life cycle (PLC) was first put forward by Raymond Vernon relating to a typical in 1966 product’s material life and the PLC was later classified by Philip Kotler (2003) into four stages in sequence of a cycle: introduction stage, growth stage, maturity stage and decline stage. As predicted by Pedro F. Cunha and Paul G. Maropoulos (2007, p.280), with the adoption of the lean production, the home appliances as lower complexity and higher volume products will be meeting with shortened and reducing product life cycle. And to Haier Group, with its 18 established design centers worldwide to consolidate resources from developed countries, the product development will be expected to speed up and hence the product life cycle will be reduced.

 

3.2.2            Customization in products and the booming of e-business

 

As just mentioned, the strategic mode of Haier’s e-business was clearly reflected by its e-business platform which includes both B2C and B2B functions, with the globalization trend, in the future, we could foresee that more and more people and companies will purchase or do the business via online platform especially when transactions involve different participants in different areas.

 

4.        Mintzberg (1973)’s 10 managerial roles analysis

(Henry Mintzberg’s research indicates that diverse manager activities can be organized into then roles. Describe how relevant three of these roles are in your chosen organization.)

Figure 3 Mintzberg (1973)’s 10 managerial roles

Source: Martin & fellenz 2010, p.192

 

With observations and subsequent research Henry Mintzberg managed to conclude that managers’ activities can be organized into ten roles (Kurke & Aldrich 1983). As seen from the figure above, these 10 managerial roles could be classified into three groups: interpersonal roles, informational roles and decisional roles. Below we will list out three key roles that are obvious in Zhang RuiMin, the CEO and Chairman of the Board of Directors for the Haier Group, who has led the Haier Group from a small factory on its way towards a global leader in home electronic appliance manufacturing industry.

 

4.1    The managerial role of entrepreneur

 

Mintzberg’s entrepreneur subrole involves proactively and voluntarily initiating, designing, or encourages change and innovation (Dyck & Neubert 2010, p.8). In the history of the development of Haier Group, Zhang has played perfectly the role of entrepreneur by making a number of key designs of the group and the brand. For example, during an interview with Zhang Ruimin CEO of the Haier, Zhang had mentioned that “The objective of most Chinese enterprises is to export products and earn foreign currency. This is their only purpose. Our purpose in exporting is to establish a brand reputation overseas. We have created an important brand in China, and we are taking that brand to other markets (qdweb.net 2003).” And it is Zhang’s design of the Haier Group to build up its brand value rather than focusing on exporting the low cost product using low price strategy that correctly position the company which resulted in the success that the Haier Group has today around the globe. Another key strategic decision that Zhang has made to the company with significant impact on the future development of the group is the strategic choice of diversification strategy in its business though at the beginning and even now there are different voices doubting the strategy as not workable because the Haier brand has always been accepted and accredited in the while home electronic appliance. But Zhang’s decision and persistence again confirms his effective role of entrepreneur.

 

4.2    The managerial role of leader

 

Based on the view of Mintzberg, the leader role is that of performing the management functions to effectively operate the managers’ organization unit. And hence the leader role pervades all managerial behavior. This means that the leader role influences how the leader performs other roles (Lussier & Achua 2010, p.10). Based on my personal working experience, the leader role is all about the chemicals that a leader is able to create and apply them to the employees in term of trust, cooperation, understanding and admiration.

 

Back to the case of Haier, being the leader Zhang Ruimin always sets different goals and has a vision to the future. The most important thing is he knows what he wants and how to get it. The power to influence the followers and make them believe this is the right thing to do has enable Zhang to be an effective leader. What is more, Zhang also leads by example. For example, back in 1985, Zhang received a complaint about the inferior quality of the product. After finding out the 76 defective models of the 400 products he asked his employees to give advices about how to deal with it. When he got the answer of keeping these defects and selling to employees with lower price, Zhang Ruimin said: “If I permit you to sell these today, there will be another 76 such products in the future.” So Zhang Ruimin picked up a sledgehammer and told those responsible persons to smash them. In this way he had included himself to be the first one in the task and make the employees to follow his strict requirement of the product quality (runsky.com 2005). In this way, Zhang managed to tell the followers that the quality problems were not acceptable in Haier and his emotional actions represented his evaluations on the employees’ performance which is a key job that a leader should do.

 

4.3    The managerial role of disturbance handler

 

According to Anne M. Barker, Dori Taylor Sullivan and Michael J. Emery (2006, p.99) the disturbance handler role, in contrast to the entrepreneur, must deal effectively with conflicts or threats as they arise. And a disturbance could be referred as a scenario that creates pressure for the leader or manager to respond or else it will negatively influence the work and/or members of the unit. During his long career life in Haier Group as the CEO, Zhang had met a lot of challenges and disturbances and he managed to resolve the majority of them with acceptable results.

 

One disturbance that Zhang had met is the ownership problem of Haier Group. Officially, Haier is a ‘collectively owned’ enterprise but in a dispute over the Internet domain names in 2001, Haier had identified itself as a super large state owned enterprise. And after that, there had been a lot of dispute over the ownership of the group (Tipton 2007, p.208). The ownership issue is actually originating from the set up of the company and also is involved with the political factors, Zhang’s strategy to cope with the disputes was to cooling down the different voices and he had avoided the dispute by claiming that it is the development of the company that is important rather than the ownership issue. Later he announced that the company would not deal with the ownership problem before a widely accepted and workable solution is formed. Zhang’s way of handling the ownership issue is proved to be correct because in China any problem involved in the political factors will be complicated and also some other large companies that tried to resolve the ownership issues had resulted in slow business development.

 

5.        Leadership style and gender difference

(Do you think gender makes a difference when it comes to leadership style? Use example(s) and literature to support your stand.)

 

5.1    Key terms and literature review

 

Leadership Styles refer to the manner in which administrators interact with individuals with whom they work (Jorissen, 2002). As proposed by Barbara J. Bank (2011, p.322) that historically, men have more been leaders than the women counterparts in the political and business sectors, and in term of gender differences, social scientists seem to make equally plausible cases to support both the absence and existence of the gender differences in the leadership styles. According to the findings, Eagly, Johannesen-Schmidt, and van Engen (2003) who analyzed data from 45 different studies between 1985 and 2000 in order to test whether women and men different in their typical leadership styles, female leaders tended to be more transformational than their male counterparts, whilst male leaders were more likely to adopt transactional and laissez-faire leadership styles though such differences is not significant. But there are also difference views. For example, while there is always a stereotyping idea that men leaders tend to be task oriented and in contrast women leaders tend to be people oriented, in some studies women and men managers used a very similar style (Birdsall 1980).

 

5.2    Critical discussion regarding sex stereotyping in leadership styles

 

In my understanding based on my working and studying experiences, there is not obvious different between men leaders and women leaders. In the following, I will support my view shenm

 

5.2.1            Hair Group CEO: Zhang Ruimin

 

Haier is the subject of a book, The Haier Way, and 30 business school case studies, so the world is taking notice of the company and its CEO, Zhang Ruimin, who says that a deep care for people, dedication to quality, a drive to go global, and a steady focus on innovation are at the core of his leadership style. Haier’s motto is “Great managers make great people; great people make great products,” and Zhang says he pays more than lip service to people care (Telegraph.co.uk 2010). In this regard, Zhang has made an excellent example by caring for his employees in term of addressing their concerns at work and also in their personal life. Hence as a male leader, the people oriented leadership that Zhang had shown in his leadership behaviors has enhanced my suggestion that there is not obvious different between men leaders and women leaders.

 

5.2.2            HELP University College: Dr Yap

 

Dr. Yap Kim Len is the Dean of HELP Graduate School of HELP University College who holds a B.A (Hons) in Accounting, a Masters degree in International Business and International Finance from the United Kingdom and a Ph.D in Accounting from the University of Otago, New Zealand. A qualified accountant with a CPA from Australia, Dr. Yap is a Chartered Accountant of the Malaysia Institute of Accountants (MIA) with many years of accounting and auditing experience in the profession (Atcenacademy.com 2010). In my optioning and also in many students’ eyes, Dr. Yap is a task oriented leaders, for example, many students had tried to apply for extensions for handing in the assignment in a later time exceeding the deadline but were turned down by Dr. Yap despite that some of the students had quite strong reasons behind the late submission of the assignments. Instead, Dr. Yap has been famous for her work efficiency and teaching effectiveness in the classrooms. In this point, we can see that women leaders are not necessarily people oriented and they could show strong task oriented features and leadership style.

 

6.        Organization structure

(Draw an orgnigram (organization chart) of the current structure. Show two other options for the structure and explain what the advantages and disadvantages of the new organization would be)

 

6.1    Concepts of organization structure

 

Organizational structure formally determines the hierarchy within an organization. In other words, who reports to whom? Some companies refer to this as the organizational chart. Types of organizational structure include: functional structure, divisional structure, and matrix structure. Divisional structure is further broken down into three sub-types: product structure, market structure, and geographic structure and the functional structure groups employees together based upon the functions of specific jobs within the organization (Associatedcontent.com 2007). And the matrix structure classifies the staffs using a mixture of both functional and divisional structure.

 

6.2    The organizational chart of Haier Group

Figure 4 The organizational chart of Haier Electronics Group Co., Ltd.

Source: Haier-elec.com.hk 2011

 

While the Haier Group has a large and complex organization structure, in the part of the assignment we will use a subsidiary, Haier Electronics Group Co., Ltd, which is directly under the Haier Group as a typical example to try to exhibit the company’s organization configuration in term of the type of organizational chart. As seen from the organization chart above, Haier Electronics Group Co., Ltd is using a divisional structure, and to be specific the group is using a product structure as under the group there are three major product divisions: washing machine, water heater and integrated channel service. And under each product division, there are smaller companies focusing producing similar product lines. Below we will seek to provide two other options of organizational structure for Haier Electronics Group Co., Ltd and also discuss the advantages and disadvantages of them.

 

6.3    Other options of organizational structure

 

6.3.1            Functional structure

Figure 5 Proposed functional structure for Haier Electronics Group Co., Ltd

 

6.3.1.1      Advantages of functional structure

 

First of all, the functional structure has the advantage of economies of scale because it combines similar departments under the original different product divisions into a single functional department, for example, the new combined R&D (research and development) department will integrate all different product R&D small departments will enjoy a bigger scale and thus would have the advantage of economies of scale. The advantage of economies of scale will empower the newt R&D functional department more resources to focus on the key challenges and technology development.

 

Secondly, by combining similar departments under the original different product divisions into a single functional department, duplication of personnel and equipment would be reduced (Plunkett, Attner & Allen 2008, p.306). What is more the larger scale of the functional departments helps develop senior executives because with more labor head count will enable the department to have a layered hierarchy. And the advantages of having sufficient senior executives and leaders will be immeasurable.

 

6.3.1.2      Disadvantages of functional structure

 

The first disadvantage is that the increased responsibility for individual employees especially for the management and also work overload could happen. With a larger team to manage, there could be possibility that the mangers roles would become confused when the various jobs from different product lines rush in. And furthermore, because of the work overload, employees could become worrying and agitated and thus less motivated to work. Another key disadvantage is using a department to manage the similar functions in different product line is that it would be difficult to keep the management effectiveness and efficiency while the product lines are in different regions and markets and the wide market coverage is obvious in Haier Electronics Group Co., Ltd.

 

 

6.3.2            Matrix structure

Figure 6 Proposed matrix structure for Haier Electronics Group Co., Ltd

6.3.2.1      Advantages of matrix structure

 

As mentioned above, the matrix structure classifies the staffs using a mixture of both functional and divisional structure, this would means that a matrix structure would have the mix advantages of functional specialization and also the the focus and accountability of the divisional structure. On one hand, the functional features will help keep the specialization of the employees on the specific field and on the other hand, the divisional structure will help divide the group and employees by geographical market and the organizational output. The adoption of the matrix structure will help balance the specialization and cost of management in organizations as large as Haier Electronics Group Co., Ltd.

 

6.3.2.2      Disadvantages of matrix structure

 

There are two major disadvantages in using the matrix structure, the first disadvantage is that because of the existence of the dual management structure, there could be management confusions and conflicts created by dual command; the second disadvantage is that it will cause more group resources and operating cost to support a dual management structure.

 

 

Reference list

 

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