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Strategic Analysis and Planning for Huawei

Research · December 2019

DOI: 10.13140/RG.2.2.26855.39846

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 SM80.1710 Strategy and Corporate
Environmental Sustainability
Group Report – Strategic Analysis and
Planning for Huawei

Submitted to:
Professor Roger Levermore

Submitted by: Group 6

Akshay S Hegde (st120750)
Moaz Altaf (st120384)
Deepsa Maharjan (st120942)
Kaustubh Jonchhe (st121120)
Danping Liu (st120945)

School of Management

Page limit: 25
Table of Contents
EXECUTIVE SUMMARY: ............................................................................................................ i

1. Introduction ............................................................................................................................. 1

1.1. Key Success Factors ......................................................................................................... 2

1.2. Corporate Strategy............................................................................................................ 3

2. Industry Analysis: .................................................................................................................... 4

3. Performance of Huawei in Industry......................................................................................... 5

3.1. Strategy Clock: ................................................................................................................. 6

2.1.1. Consumer Business Unit: .............................................................................................. 6

3.2. Benchmark Analysis ........................................................................................................ 7

4. Business of Huawei ................................................................................................................. 9

4.1. Value Proposition Canvas ................................................................................................ 9

4.2. Business canvas model ................................................................................................... 10

5. Internal factors affecting business ......................................................................................... 11

5.1. Porter’s Five Forces: ...................................................................................................... 11

5.2. Huawei value chain analysis: ......................................................................................... 13

6. External factors affecting Business ....................................................................................... 14

6.1. STEEPG analysis ........................................................................................................... 14

7. Sustainability ......................................................................................................................... 16

7.1. Huawei claims to be Eco-friendly: ................................................................................. 16

7.2. Some of the Huawei’s Sustainability and CSR Initiatives since 2014 ........................... 17

7.3. Huawei’s stance on ICT and the Sustainable Development Goals (SDGs) ................... 18

7.4. Green Operations and Manufacturing: ........................................................................... 18

7.5. Green Recycling by Huawei: ......................................................................................... 18

7.6. Criticism on Huawei: ..................................................................................................... 19

8. Future analysis ....................................................................................................................... 19

8.1. Predictable Trends .............................................................................................................. 19

8.1.1. 5G network will rule the market .................................................................................. 19

8.1.2. Towards the intellectual word ..................................................................................... 20

8.1.2.1. How Huawei is taking this change? ......................................................................... 21

8.1.3. Folding phone:................................................................................................................. 21

8.1.3.1. How Huawei is responding to it? ............................................................................. 21

8.2. Unpredictable Trends ..................................................................................................... 21

8.2.2.1. SO WHAT? ......................................................................................................... 23

8.2.3. Ban of 5G..................................................................................................................... 23

9. Suggestions & our recommendations .................................................................................... 24

9.1. Development of Indian Market ...................................................................................... 24

9.1.1. Why Indian Market? .................................................................................................... 24

9.1.2. How Huawei can grow in the Indian market ............................................................... 24

9.2. 5G – Recommendation ................................................................................................... 24

9.3. Recommendation to prevent cybercrime........................................................................ 25

9.4. Escape route Strategy (development of human augmentation field) ............................. 25

10. CONCLUSION: ................................................................................................................. 25

11. Appendix ............................................................................................................................ 27

11.1. Appendix 1: Quarter wise sales .................................................................................. 27

11.2. Appendix 2: Key Success Factors on the basis of activity ......................................... 27

11.3. Appendix 3: Key success factor comparison to competitors ...................................... 28

11.4. Appendix 4: Market Share .......................................................................................... 28

11.5. Appendix 5: Revenue breakdown on the basis of the type of business ...................... 29

11.6. Appendix 6: Revenue breakdown (Region based) ..................................................... 29

 11.7. Appendix 7: Strategy Clock ....................................................................................... 30

11.8. Appendix 8: Quarter wise mobile Shipment .............................................................. 30

11.9. Appendix 9: Smartphone market share in China ........................................................ 31

11.10. Appendix 10: Value Proposition canvas .................................................................... 31

11.11. Appendix 11: Advanced business canvas model ........................................................ 33

11.12. Appendix 12: Porters Five Forces .............................................................................. 34

11.13. Appendix 13: Value chain analysis ............................................................................ 35

11.14. Appendix 14: External Environment .......................................................................... 38

11.15. Appendix 15: SDG & ICT .......................................................................................... 38

11.16. Appendix 16: Sustainability Ranking ......................................................................... 39

11.17. Appendix 17: Other Criticism: ................................................................................... 39

11.18. Appendix 18: Cyber Crime......................................................................................... 40

11.19. Appendix 19: Materiality Mapping ............................................................................ 41

11.20. Appendix 20: System Thinking .................................................................................. 42

12. References .......................................................................................................................... 43

EXECUTIVE SUMMARY:
This major objective of this report is to focus on Huawei and its success as the world’s
highest inventor in the world of technology. In this report, Huawei’s background along with the
steep focus on the market it focuses on is shown in the limelight.

Huawei came into a steady stream of competition with brands such as Samsung and Apple
in early 2015. Founded in the year 1987, Huawei was founded on the grounds of focusing on the
development of Information and Technology. Huawei R&D is one of the strongest R&D in the
world with 87805 amongst which 11152 are U.S. patents. One of the major reasons that Huawei
plays a crucial part in the world of innovation is because of this. With the innovation of 5G, it has
opened up doors for innovation in new technology for Huawei. At the moment, the market is
focused on producing the best 1st generation of foldable phones and delivering products in which
consumers can be supplied 5G usable technology. Huawei has a vision for omnipresent
connectivity for all people. It is more focused on Artificial Intelligence (AI) which could be used
for everyday use in society and industry.

There is a huge market for telecommunications. The mobile industry is expected to

penetrate 70% of the population within the year 2025. This industry will also be able to generate
32 million jobs in total either directly or indirectly. Huawei itself has around 194000 employees at
its disposal. With a workforce, this huge Huawei has been able to displace this. Huawei has
continued to advance its position as one of the largest telecom equipment suppliers. To achieve
these results, Huawei continues to establish itself as a complete solutions vendor as well as a low-
cost provider of telecommunication equipment. Huawei is making a significant impact on the
infrastructure market as, leading with a low-cost strategy and following up with a strong product
and even stronger customer support. Huawei at the moment falls on the Hybrid category in the
strategy clock but slowly is pushing towards differentiation. With this all of Huawei’s products
will have moderate pricing with high value, much like Samsung’s. Huawei is focused on 4 main
parts as its business such as customer service, production, research & development, and marketing.

With the help of DHL, Huawei came to manufacturing logistics process IoT solutions. This
collaboration between the tech giant and the logistic giant helped save 10s of millions of Yuan.
With this Huawei has been able to produce more quality products and that is leading to stricter

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quality control. Huawei's other service is the post-sales service in which they provide a well-
polished number of services to the customers making them feel special. Huawei also hires
international stars and uses both traditional and digital methods for marketing. In this way Huawei
stands out from the crowd, especially in a market with very little growth.

The journey of Huawei has been a long one, and in this journey, the reason for Huawei’s
success is because of its consumer -centricity, a brilliant leadership strategy and a close
relationship with the Chinese military. CEO of Huawei, Mr. Ren Zhengfei hauls from a military
background. This helped Huawei to attain many military and government contracts. Another focus
for Huawei is environmental sustainability. With the Paris agreement being signed, most of the
countries have set their eyes on lowering their carbon footprint. With china tightening the screws
on this lot, Huawei is finding ways to lessen its aid to the emission gases. Though not that effective
as Huawei products still produce 65% carbon footprint in their lifetime.

They have trained their employees on the workouts of carbon footprint and plan to
minimize the consumption of their smartphones. They are also coming up with a lifecycle
assessment method in which they determine how to extend a product’s life cycle with less carbon
footprint. In this they also try to figure out how to dispose the product without producing any
emissions. Hence, they have been taking a stance on ICT and redefining their sustainable
development goals. Huawei claims to have constructed 19 MW photovoltaic power stations. It
estimates a reduction of around 1800 tons CO2. Huawei also has set up 190 recycling in 8 countries
around the world. With even this effort the lack of e-waste products has filled up landfills. Huawei
claims to have cleaned or recycled 2.37% of these products. Huawei also ranks “D” by Greenpeace
guide in terms of environmental impact assessment.

Huawei might be a leading force in the world of innovation and technology, but it needs to
focus on sustainability and cleaning the environment as well. It also needs to focus on the Indian
markets as well as the American markets where brands like Apple and Samsung have dominated
over the years. These markets hold a significant amount of revenue and could help Huawei to grow
more. It will also be a good way to see Huawei as a strong brand when it starts to compete with
Apple Samsung and One Plus on an international platform.

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 1. Introduction
The world has experienced 3 types of revolution to date i.e. Agricultural, Industrial and the
Technological revolution. These revolutions shaped the market and the world, and we see the
world as it is today because of these revolutions. There is one more revolution and that is the
Information revolution. The information revolution has overlapped with all the other 3
revolutions as information sharing is necessary for a market, country, world to develop. During
each revolution, the information sharing technique was being refined for the betterment. At
present, we are at the age of the technological revolution with the overlapping of the information
revolution. With companies like Huawei, Apple, Samsung and many more, the technological
revolution is at its peak.

Founded in 1987, Huawei is a global provider of infrastructure focusing on the development

of Information and Communication Technology (ICT) and the manufacturing of smartphones.
With nearly 194,000 employees working and serving for 3 billion people in more than 170
countries, Huawei has a marked itself as a global presence of high tech at a good value. Partnering
with other members of the supply chain and open collaboration with other ecosystems, it has
managed to create long-term value for its products for the customers. Huawei focuses on
innovation (Jiang, 2018). The research and development wing is its golden spoon. R&D at Huawei
accounts for 14.9% of its revenue. With this Huawei is trying to empower people, enrich home
life, and inspire innovations in organizations of all shapes and sizes. Huawei’s innovation is always
focused on the customer. With small breakthroughs and basic research programs, it concentrates
on technology that will drive the world forward.

Huawei has a vision of creating omnipresent connectivity for all people. As the industry is
being revolutionized, Huawei is focused on artificial intelligence (AI) which could be used every
day as a part of the society, industry. It plans to embed it into the core of the system so the networks
could be more resilient. With all this, Huawei plans to personalize the experience and create a
digital platform so that the clients and customers would have a unique experience with advanced
security (Huawei, n.d.). With quality being the priority and the main reason behind the success and
survival of Huawei, it plans to fulfill the customer’s requirements by checking each component in

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every part of the value chain. They plan to work to align opportunities and challenges with
customers, responding quickly to their needs and achieving sustainable growth (Huawei, n.d.).

The focus of Huawei is one of three domains: fully connected networks, smart computing, and
creative phones and it continues to invest in service, basic research, and advancement in
engineering capability. Aiming to set the cornerstone for a more advanced and intelligent world,
Huawei focuses on supporting their customer by branching out into multiple paths for more
flexibility across multiple scenarios whilst building a continuous leadership in solution
competitiveness (Huawei, n.d.). (Appendix 1)

As you can from Appendix1, Samsung has led the race for the mobile phone industry since the
Q4 of the year 2017 to date. Huawei has grown steadily till 2019 Q1 but dropped 1.2% in 2019
Q2. We believe that the drop is because of the ban on Huawei from the USA affecting its
businesses. We concentrate on the mobile phone market as Huawei as a major share of the income
is generated from there. Huawei still has a growing market share and it has still delivered growth
in the sales as it has grown by 24% after the ban. The market is being developed with 5G
technologies and the innovation of the foldable phone, Huawei being a leader in the field of
innovation of technologies should be able to excel and grow their market (IDC, 2019).

After the ban of the US on Huawei, it should be calling on celebrations with its international
collaborations. The 2019 Q2 financial report released, showed that Huawei surpassed US $58.3
billion in the first half of 2019. The revenue grew was able to grow 23.2 percent in comparison
with the data of revenue from 2018. Huawei was also able to grow its market share throughout the
consolidation of the Chinese smartphone market. At the end of June, Huawei also had a 38 percent
stake in the Chinese market (Buchholz, 2019).

1.1.Key Success Factors

The journey from being the only Chinese company (out of 91 other companies listed on the
Fortune Global 500 list) to generate more revenues overseas than in China (2005), to becoming
the top 2 global market leaders in 2019 surpassing Apple, Huawei has created a milestone. It has
been successful to mark its position keeping up with the dynamic environment and market
(customers) needs. Samsung, being the top market leader uses vertical integration and innovative
design as a competitive advantage whereas Huawei focuses mainly on customer-centric

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strategy and its culture but comparatively has a low net profit margin than Samsung and Apple.
some of the factors contributing to the success of Huawei are in (Appendix 2)

Consumer-Centric

Huawei has always focused on its customers, their needs, their expectations, suggestions,
their dissatisfactions for product improvement, and taken all these into consideration for better
product development and better user experience.

Brilliant Leadership Strategy

Huawei follows a system where a small group of executives takes a turn to fulfill CEO
duties every six months. It is called a rotating CEO system (Cremer & Tao, 2015). The system is
believed to be more effective as the executives have time to better prepare themselves next time
for acting CEO. This even verifies that a wider breadth of expertise is present in most senior
leadership positions over time.

A strong team of R&D

Huawei has a very strong team that works under Research and Development. It has over
80,000 research and development employees (comprising 45% of its workforce) and has spent
14.6% of its annual revenue on R&D (2016) (Martinroll, 2018). Recently, it’s been reported that
investment in R&D is $15.1 billion in 2018 (Chinadaily, 2019).

Close Relationship with Chinese Military

The CEO Ren Zhengfei of Huawei coming from a military background has helped create a
guanxi network which has been extremely helpful to Huawei in its early stages (Martinroll, 2018).
It helped Huawei to secure a big contract order and huge financial loans from state banks.
(Appendix 3)

1.2.Corporate Strategy
Huawei has incorporated growth and market expansion strategy over many years to date. With
the customer's first attitude they adopted the Cost Leadership Strategy for market penetration and
winning a lot of customer's hearts with quality products at low prices. Only 14 years since
Huawei’s foundation in China, it expanded its operation in Mexico which represents their

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Globalization strategy to expand to emerging economies (Jordy & Jorge, 2015). It applied the
Internationalization of R&D for extensive development of the high-end products and software
which is expressed since 2006, about 65% of the company’s revenue has originated from the
international market (Qingrun & Yuying, 2018). Huawei started its global expansion in the year
1194. In 1994, for business investigation, Huawei sent a group of representatives to Russia.
Huawei's revenue in Russia in 2001 for the first time exceeded USD 100 million (Zekun, 2019).
Huawei entered the Latin American market in the year 1997, Indian and African markets in the
year 1998, and the European market in the year 2001. It also established partnerships with leading
corporate consulting firms like Hay Group, IBM and Price Waterhouse Cooper that dealt with
organization structure in 1997 which helped Huawei through an organizational transformation
process (Micheli & Carrillo, 2016).

2. Industry Analysis:
Currently, the telecommunication industry has bloomed, unlike any other industry. The market
is huge and is expected to keep on growing. Mobile phones have become a necessity in this century
as not only a way of keeping in touch but also as a way of entertainment for the new generation.
The mobile industry at the state fulfills the demand of every market category.

Comparing to the stats of 2018 and prediction for 2025, it is said that the mobile industry and
the economy are to boom in a big way. In 2018 there was 5.1 billion with unique mobile subscribers
and b the year 2025, it is expected to grow to 2025. The mobile industry will penetrate almost 70%
of the population. The total sim collection will grow from 7.9 billion to 9.2 billion by the year
2025. 80% of the world population will have connections with smartphones by the year 2025, with
59% having 4G connections comparing with 60% and 43% of the year 2018 respectively. The total
number of 5G connections will reach a whopping 1.4 billion by the year 2025 and it will have
already penetrated 15% of the market in just under 6 years. The total turnover revenue of the
mobile industry will have reached $1.14 trillion by the year 2025 compared to $1.03 trillion in
2018. Moreover, the industry will have created 32 million jobs directly or indirectly. The industry
will be contributing $4.8 trillion by the year 2023 which will grow $0.9 trillion from the year 2018.
It will be contributing 4.8% to the gross domestic product of the world (The GSMA, 2019).

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 Right now, the competitors in this industry are making an effort to build their own ecosystem
of technology in which they can attain and retain a group of customers. An ecosystem is defined
as a group of organisms living in harmony with each other in an environment. In this case, when
various products work in harmony and in perfect sync with each other, it forms an ecosystem that
helps to boost the revenue and returning of customers to buy the product of the same company
repeatedly. In this way, the customers will not leave a specific brand. A perfect example of a good
ecosystem created by a company is that of Apple. Apple has created such a good ecosystem and
has built the walls so high that the customers are inclined to buy the products of Apple. Apple’s
product is so in sync with each other that if you set a reminder in your phone then it automatically
sets that reminder to all your other Apple devices at once (Brownlee, 2018).

In this industry, the first one to innovate reaps the fruit of profit. Huawei has around 87805
patents and licensing them has helped Huawei to earn almost an amount of $1.4 billion. Huawei
has also paid almost $6 billion for the licensing IP of other products as well and most of them are
US countries. Huawei has spent 480 CNY million and this has led to them ranking first in
innovation in this industry. All of this has led to Huawei being a tech innovator and giant. The 5G
technology has recently been innovated by ZTE and this opens a door to another world of
innovation. Better AI, faster communications, the Internet of Things (IoT) and self-automated
driving being the directly driven are some examples of this (Huawei, 2019). The Internet of Things
(IoT) is simply the network of interconnected things/devices which are embedded with sensors,
software, network connectivity and necessary electronics that enable them to collect and exchange
data making them responsive. At present, 9.1 bn devices are connected to the IoT but it is predicted
that by the year 2025, 25.2 billion products will be connected to the IoT. I will help in developing
a much smarter world (internetofthingswiki, n.d.).

3. Performance of Huawei in Industry

Huawei made a whopping amount in revenue in the April-June quarter by generating $32.2
billion. The US trade ban didn’t affect Huawei as much as predicted by experts as it was able to
increase 23 percent sales compared to the previous year. The net profit margin was 8.7 percent of
$58.3 billion of revenue for the first six months. Huawei also sold 118 million smartphones in the
first half of 2019 with 59 million smartphones for each quarter. For the same period, the consumer
business accounted for 55 percent of the company’s sales. “Revenue grew fast up through May.

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Given the foundation we laid in the first half of the year, we continue to see the growth even after
we were added to the entity list.” says chairman Liang Hua (Byford, n.d.).(Appendix 4)

Huawei’s main business for last year has been the consumer business. The business rose 45.1
percent and helped Huawei accumulate 349 CNY ($52 billion) and accumulates for 48.4 percent
of the revenue, with the carrier business accumulating 294 billion CNY ($43.8 billion) and 40.8
percent of the revenue but this segment dropped by 1.3 percent. Enterprise business amounted to
the remaining 74.4 billion CNY and fills up the remaining 10.3 percent of the revenue (Russell,
2019). (Appendix 5)

Huawei is still very reliant on China for its revenue and profits. It for 51.6 percent of the total
revenue and amassed a 372 billion CNY and grew 19.1 percent. Business in the American market
has not been as fruitful for Huawei as it is only liable for the 6.6 percent, but it grew 21.3 percent
but is expected to drop this year because of the US-China trade war. European nations have always
been an important market for Huawei, it has amassed a 204 billion CNY for Huawei and it grew
by 24.3 percent. The European market is also liable to 28.4 percent of Huawei’s total revenue. The
remaining 11.4 percent is designated to countries in the Asia Pacific where Huawei accumulated
81 billion CNY and saw a growth of 15.1 percent (Russell, 2019).(Appendix 6)

3.1.Strategy Clock:
It is one of the easier modules to figure out the strategic position and market position of Huawei
in comparison to its competitors.

2.1.1. Consumer Business Unit:

This unit of Huawei covers smartphones, PC and tablets, wearables, mobile broadband
devices, family devices and device cloud services delivering a superior user experience to the
customers with the latest technological advances (Huawei, 2019). Huawei’s is positioned at
Hybrid (moderate price and moderate differentiation). Samsung and Apple have been ruling over
the industry for a while now and One Plus, Xiaomi, and OPPO seems to be fast-growing companies
in the recent trend. From the latest data of 2019 Q2, Huawei has surpassed Apple marking its
position to no. 2 in the global market owning 18.6% of the global smartphone share growing 4.6%
year-on-year (Arne Holst, 2019). With the rapid growth of Huawei, the gap between Samsung
(current market leader) and Huawei has narrowed down. Apple had a rough quarter since the
beginning of 2019 as its market share dropped from 12% (Q1) to 10.1% (Q2) (Statista, 2019).

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Samsung securing the top spot of the market grew 7.1% (Q2) year-on-year with 21.8% of the
global smartphone market share (Arne Holst, 2019).

In terms of Strategy Clock, Huawei falls in Hybrid (moderate price, moderate

differentiation, moderate value) and is slowly progressing towards Differentiation, Samsung falls
in Differentiation (moderate price and high value) whereas Apple is positioned in Focused
Differentiation (high price and high value). With the loss of market share, Apple is struggling to
win back its customers whereas Huawei and Samsung have been able to maintain its position
targeting all the broad range of consumer preferences. Now that the gap between these two market
leaders has narrowed much more with launching similar features and products (like 5G, water-
resistant, foldable screen), it would be quite interesting to see them compete.

It is a well-known fact of Huawei investing a huge part of revenue in Research and

Development, we suggest Huawei come up with a variation in the products and improvement on
the product value maintaining the moderate price which will help to shift from Hybrid to
Differentiation. This will not only help Huawei in motivating its loyal customers to upgrade but
also attract new customers. Another way it can proceed towards differentiation is shifting to eco-
friendly products as a sustainable green environment has been the major initiative taken by every
company to have a positive impact and sustain in the market. (Appendix 7)

In nowadays, smartphones play an important part in people’s lives. Globally speaking, the two
big brands, Samsung and Huawei, held more than 40% of the market share. Samsung has the most
shipments and is firmly on the top spot. Huawei grew by 28.2% year-on-year, surpassing Apple
and occupying the second place of the smartphone maker by shipment volume. Here, we assume
Samsung as the benchmarking company to analyze Huawei. (Appendix 8)

3.2.Benchmark Analysis
As the appendix6, Huawei achieved the leap in yearly growth, Samsung also increased
smoothly in the same period. We have made an analysis in terms of the following aspect.

1. Technology

Both Samsung and Huawei have world first-class technology. Huawei invests more than
10% of its sales revenue in R&D every year. In 2018, 45% of its workforce was involved in R&D,
with those great efforts, Huawei holds 87,805 patents by the end of 2018 (Huawei, 2018). Samsung

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also invested a lot in R&D. It has fully developed AMOLED display, as well as first-class chips,
cameras, battery mainboards. At the same time, it never stopped the pace of innovation. For
instance, Samsung’s DeX platform can enable smartphones to replace PCs in many office
scenarios, which not only reduced costs but also achieved a more flexible workflow (Samsung,
n.d.).

2. OS

Both Samsung and Huawei use the Android operating system, but Samsung will update
and modify its OS in a timelier manner, according to users who have used both brands. Since the
US blacklisted Huawei on May 15, 2019, Huawei has released its own Harmony OS as an
alternative, but Harmony OS can't replace Android in the short term.

3. Price positioning

Since Samsung always focused on the mid-level and high-level smartphone market,
representing the image of a high-end brand, the price of its products is high, loyal fans are willing
to pay, which brings great profits for the company. However, Huawei has long been engaged in
the mid-end and low-end market, taking a cost-effective strategy and earns relatively lowering
profits.

4. Brand

The US ban on Huawei invisibly gave Huawei a big brand advertisement. In the Chinese
market, people began understanding or purchase Huawei smartphones because of their patriotic
sentiment and Huawei's strong brand competitiveness. As we can see above, its domestic market
share growing to 36% (Counterpoint, 2019), leads to the Chinese smartphone market. The
influence of the charging explosion event of Samsung Galaxy Note 7 in 2016 and Chinese users
are more likely to choose domestic brands Samsung’s mobile phone market in China has shrunk
to 0.7% (Jeet, 2019). Although Samsung is still the world’s number one smartphone manufacturer,
it has already lost the world's largest mobile phone market. (Appendix 9)

5. Craftsmanship

Samsung mobile phones have been the dominant player in the smartphone market for many
years. There is no reason for this. Samsung mobile phones are well-made, especially in the

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processing of complex processes. In addition, Samsung mobile phones have stylish appearances
and ringtones that other mobile phones do not have. People who prefer Samsung smartphone is
because it looks very high-end. With the entry into the high-end smartphone market, the design of
Huawei smartphones is becoming more and more premium, especially its P range and Mate range.

4. Business of Huawei
4.1.Value Proposition Canvas
The value proposition canvas of Huawei shows the expectations of the customers regarding
Huawei’s products and services regarding what it wishes to deliver to meet and satisfy the
customer’s needs and expectations.

One of the ways Huawei creates value for its customers is by manufacturing it. As India is the
fastest-growing market for the smartphone industry and a crucial market for the future growth of
companies, Huawei needs to focus more on creating value to lead the market which at the present
it is not. By focusing on creating local manufacturing in the state, Huawei is setting up for long
term success which will open the opportunities to enter and lead the Indian market (Vivan Sharan,
2019). Moreover, by manufacturing locally the company can escape the 20% duty tax on imported
products so it can invest these resources somewhere else like into R&D that creates a long term
value for its customers (News18, 2019).

Research and Development is one of the key activities for Huawei and one of the ways the
company can create value is through constant innovation trying to create new demand for its
customers. According to the latest 2018 data, Huawei has invested more than $15 billion in R&D,
which accounts for about 14.1% of the company’s sales revenue is the third-largest company to
spend on R&D after Google and Amazon (Chinadaily, 2019). Some examples of Huawei utilizing
its R&D are partnering with Leica to create a better quality of camera phone technology, creating
the world’s first 7nm processor (“The Kiren 980”) and the first one to launch 5G smartphones
(Huawei, n.d.). Huawei has been constantly trying to develop better components for its phones
(like long-lasting battery life with no overheating problem, more storage capacity, etc.) through
R&D. It uses relatively cheap products but over the year, it has focused increasingly on the quality
of its products and services with the start of selling premium phones.

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 In addition, Huawei has developed its own chipset and processors to run on the servers of the
companies that also adds value to the customers. The reason behind this invention was because of
the US-China trade war and the rumors of Chinese espionage which is not yet proven with facts
by the US (Iris Deng , 2019). By innovating these chips, it can replace the market competitors like
Google and be in full control of their products. Recently Huawei released its foldable-screen
phone, which is creating a new demand for its smartphones, but this will be an experimental device
as it is launched only in China. With the recent release of the old smartphone brand Motorola with
its revamp design of the foldable screen, the competition has increased as other competitors like
Samsung and One Plus is also working to launch on 5G and foldable phones (Yadav Raj, 2019).

Appendix 10

4.2. Business canvas model

Business Model Canvas is strategic management and lean startup template for developing new
or documenting existing business models. It is a visual chart with elements describing a firm's or
product's value proposition, infrastructure, customers, and finances.

As you can see from the model of Huawei, we have focused on 4 main areas: Research and
Development, Customer and Marketing Services, Production and Corporate Social Responsibility.
All of this focuses on the internal factors of Huawei. It gives us more a detail insight on Huawei
represents itself in terms of manufacturing, innovation and customer service.

Production:

Production deals with the process of manufacturing, packaging, and logistics. For a
company to be successful it should produce high-quality products with proper packaging which
informs the customers about the product. Huawei’s cost of production is 204884 CNY million and
for the property plant equipment, the have an expenditure for 74268 CNY million (Martinroll,
2018).This clear result later on when the production capacity increases and the cost of production
per unit decreases. Huawei provides enterprise networking service to its customers

Customer and Service Marketing:

Customer and service marketing focuses on the three aspects of branding, marketing, and
after-sales service. Huawei has 35000 stores worldwide and employees almost 80000 for

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CRMInvalid source specified.. It has a brand value of $8.4 billion. Huawei also sold 200 million
smartphones this year as told on October Invalid source specified.. The cause of having such
good brand presence and selling 200 million smartphones is because they put the customer first
and have an excellently trained team to help the customer with any queries and problems.

Research and Development:

At the present moment, Huawei's research and development works are focused on the 5G
of the internet which will help them to develop and learn more about the IoT. They have end to
end products of 5G. They are always focused on their main motive which is innovation. The clear
result is that they have already started to research on the 6G. For more development and research,
they have also collaborated with different organizations to help them develop products with high
quality and lower price.

Corporate Social Responsibility:

Corporate social responsibility focuses on the Community, Eco-friendly practices and

Environment that Huawei practices in their daily lives. Huawei tries to recycle as much as possible
and as a clear result has reduced more than 53000 tons of CO2 emissions and minimized the landfill
rate by 2.37%. They have also invested 7300 CNY million in employee benefits and provide the
best infrastructure available to their employees. Huawei also trains ICT professionals and students
on the matter of Information and Communication Technology. They also have seed funds in 35
countries and given access to the internet to students of Sudan.

Appendix 11

5. Internal factors affecting business

5.1.Porter’s Five Forces:
It is the industry analysis tool that helps understand the competitive dynamics of the industry,
determine strategic choices for the company and allows managers to have cognitive thinking to
stay ahead of the competition. The table below depicts the five forces framework applied to
Huawei.

Five Forces Effect Consumer Business Unit

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1 The threat of New Low It takes quite a huge investment, resources, time and
Entrants advanced technologies to establish and compete where
the competitors are well-established market leaders so
there’s a low threat of new entrants.

2 Competitive Rivalry High Huawei climbing up the ladder to top 2 positions as a

market leader (18.6%) faces a high competition with the
other Chinese brand that is growing in a fast pace
environment like Oneplus, Xiaomi and OPPO. It is still
in the red ocean trying to create differentiation in the
range of products it offers. (Arne Holst, 2019)
3 Threat of Substitute Low There’s a low threat of Huawei being substituted by any
other products as it has been diversified in many other
product lines. Possible substitutes can be a smartwatch,
tablets or folding phones in the long-term, but
smartphones are the strongest in terms of mobility,
functionality, and ability to expand.

4 Bargaining Power of Low
Suppliers
5 Bargaining Power of High
Buyers
With over 2000 global and 50 core suppliers, Huawei has
been operating nationwide (jqknews, 2018). As it focuses
on the sustainability and quality of the products, Huawei
runs a qualification process of suppliers in compliance
with the applicable laws and Supplier Sustainability
agreement (Huawei, n.d.). Every year it audits suppliers
and who fail the audit will lose to cooperate with Huawei.
As Huawei is operating in a very competitive market with
other new brands marking its position higher and higher,
the bargaining power of buyers is high. Customers are
always willing to pay less and get more and with a variety
of other low-cost high-quality products, they can switch
anytime. As switching cost is also low, they have the
ultimate power to control.

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 Concluding the five forces, it discloses the tough competition in the consumer business
industry where the demand is very high, and the competition is neck-to-neck from Samsung and
Apple from the opulent market and fast-growing Chinese brand from mid to dime-store market.
Despite its huge investment in Research and Development, it is still in the red ocean. Huawei
should focus on innovation of the new products that are differentiable from the rest of the other
rivals so that it can win the market and squeeze the profit out of it. Since there’s a low threat of
new entrants and low threat of substitutes, Huawei can utilize its R&D to investing and innovating
different products. Recently, it has been investing in Cloud services which is not making profits
as expected but the company believes it will yield fruits in the long run as the whole world is
shifting towards AI, cloud computing and being more digital. (Appendix 12)

5.2.Huawei value chain analysis:

5.2.1. Primary activity:

Huawei’s good inbound logistics helped Huawei to handle 10,000 order lines per day
(CORPORATE NEWS MEDIA-OUTREACH, 2017) (Iottechnews, 2017) (Huawei, n.d.). Huawei
Operates in 170 countries with more than 35000 stores (Vance & Einhorn, 2011). (Huifeng,
2016).. It has well designed Outbound logistics, it sells its products through online, physical stores
and other modes. It uses both traditional and digital methods of marketing and sales activity. It
also hires global stars like Lionel Messi, Saina Nehwal as brand ambassadors to promote Huawei
(Consumer Huawei , 2016) (Business Standard, n.d.). Huawei provides after-sales service through
its online complaining portal, hiCare app and through its service centers (PRWEBME, 2018).

5.2.1.1.Secondary activity:

Huawei has a very good AI-based infrastructure for manufacturing smartphones. Its stores
and factories are well designed and planned. Huawei has nearly 194000 employees. It invested
around 13.51 CNY billion on Human Resource management. It always focused on technology
development. It is the leading company that provides ICT solutions. It has 56492 patents on
telecommunications, networking, and other technology inventions (Decker, 2019). (appendix 13)

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6. External factors affecting Business
6.1. STEEPG analysis
6.1.1. Social
Population growth rate: The size of the population has been grown more than 400% throughout
the 20th century. The current population is 7.7 billion and United Nations projects that population
will grow by 11.2 billion by the end of this century (Roser, 2014). Population of Africa is growing
rapidly (World’s population will continue to grow and will reach nearly 10 billion by 2050, 2019)
which is a positive point for Huawei as Huawei already has a very good brand image in Africa it's
brand value increased by 14% to US$7.6 billion (Hakeenah, 2018). This will impact positively to
the smartphone industry.

Social class: Now more than half of the world is a middle class or rich class which shows people
have become wealthier which increases the purchasing power and living standards of the people
(Kharas & Hamel, 2018). Which is good news for smartphone company as people gain more
purchasing power sale of the smartphone will also increase. There is an increased opportunity for
smartphone makers

6.1.2. Technology
Internet connectivity: Since January 2012, Internet users have increased by 82%, which is almost
1.7 billion people (KEMP, 2017). It is expected that there will be an increase in mobile phone
owners to 7.33 billion by 2033 (Lynkova, November). The information revolution is creating the
need for the internet and mobile phones. Internet connectivity helping Huawei to increase its
business as it is into networking and smartphone business. The Internet also helping Huawei to
advertise more effectively. Huawei has very good search engine optimization any search about
Huawei is taking us to Huawei's website which helps to build a positive brand image. This will
impact positively in the future.

Automation: The artificial intelligence market will expand to a $190 billion industry by 2025.
Artificial intelligence and automation will be seen in the field of sales, marketing and also as a
chatbot (ZOOMINFO, 2019). The global robotic process automation for smartphone
manufacturers market is expected to increase to around USD 3,992.6 million by 2023, registering
a CAGR of 30.51% throughout the forecast period (Kenneth research, 2019). An increase in

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automation and AI is positive to Huawei as its production, marketing, and consumer service
already (Maidment & Huawei, 2017). There will be a positive impact because of automation in
the future.

6.1.3. Environment
Paris agreement: Since Paris agreement, many governments around the world are trying to
enforce strict laws and practices in their respective countries to reduce carbon emissions which
may result in the boycott and/or ban on those telecom and smartphones companies, if they don’t
change their usual practices of violating human rights during the resource acquisition and causing
harm to the environment. Similarly, the Chinese Government has tightened the screws against
the environmental violations taking place in the country. Therefore, Huawei had to bring many
changes too. The manufacturing of the products through renewable and clean energy is expensive.
Therefore, in addition, to receiving a subsidy from the Government, it seems that they will have to
raise the price of their products for the customers, which may go against their cost differentiation
strategy. There might be a negative impact of this factor on the smartphone industry.

Climate change: The insufficient initiatives are taken by the telecom and smartphone companies,
resulting in the electronic waste ending up in the landfills and the unfair means of acquisition
of the materials used in the production of smartphones and ICT devices, may cause negative
perception for the telecom industry in future. Huawei seems to have taken several initiatives to
increase the efficiency of its resource utilization and to minimize CO2 emissions. It took initiatives
like green pipe strategy, green partner (for suppliers), green world, and green operations
(for their manufacturing) to maximize consumption in energy efficiency and minimize
carbon emissions. However, there is so much more that needs to be done.

6.1.4. Economical
Economic slowdown all over the world: Global economy is facing an economic slowdown of
3% in the year 2019. IMFBlog estimates that the US-China trade conflicts will decrease the level
of global GDP by 0.8% by 2020. Trade growth in the first half of 2019 has dropped to 1%, it is
the weakest level since 2012 (Gopinath, 2019). This will negatively impact the business of Huawei.
This will reduce the buying capacity of customers.

Labor cost: There is an increase in the labor cost in china. The manufacturing labor costs per hour
increased to $5.51 in 2018 (Yan, 2017). Still, labor cost in China is lesser than the US. Thanks to

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low labor costs in china which is helping to produce the smartphone at a lower cost, but still
increase in labor costs will negatively impact its business to some extent. It will impact negatively
by increasing cost of labor
6.1.5. Political:
Stability of the Chinese government: stability in the political condition is a very important factor
for business success. There is a risk of political stability in China. It can negatively impact the
business Huawei as the change in government may lead to change in legal policies and regulations
(theglobaleconomy, n.d.) (Bloomberg News, 2019).

Corruption: It is one of the biggest problems that every company is facing. In the year 2017
Huawei's chief sales officer is detained because of involvement in corruption (Tao, 2017). There
are even incidents in china where chains ex-top general jailed for life. This is time affects every
negatively for Huawei's business.

6.1.6. Global
Globalization: There is a rapid growth in globalization. Globalization improved innovation in the
field of technology and networking (KUEPPER, 2019). Technological advancement helped
improvement in communication. Which has a positive impact on Huawei's business as it provides
networking and smartphone service to its customer. There is a positive impact on Huawei's
business because of globalization. Appendix 14

7. Sustainability
7.1.Huawei claims to be Eco-friendly:
Huawei claims to have integrated green and eco-friendly practices for the manufacturing and
lifecycle assessment of their Information and Communication Technologies (ICT) products
including smartphones, telecom, and wireless products, etc. They also claim to have increased the
energy efficiency of their products and reduced the environmental impact of their products
including the reduction in the Green House Gas (GHG) emissions during their manufacturing.

As per their Global Industry Vision (GIV), Carbon and GHG emissions would be reduced
by 80% on average on each ICT network and connection. ICT can play a vital role in making a
greener planet. Energy-efficient ICT enabled devices can help reduce the overall power
consumption, which in turn would reduce the energy demand and hence there will be lesser GHG

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and Carbon emissions. As per Huawei’s claim, they are constantly doing the Environmental
Lifecycle Assessment (LCA) of their products from design to end-use and they are also doing the
water footprint assessment of their smartphones. Their smartphone Honor became the first product
with a Water footprint verification statement.

Actions are taken by Huawei to develop Eco-friendly products as per their claim:

According to Huawei’s Sustainability report 2014 (Huawei, 2014) they are taking the following
actions for the development of eco-friendly products.

• Boosting the energy efficiency of their ICT and wireless products

• Minimizing the energy consumption of their smartphones
• Water footprint assessment of their smartphones
• Lifecycle assessment method
• Minimizing the environmental impact of their products using eco-friendly material
• Using recyclable, renewable and re-usable packaging materials to meet sustainability
standards.

7.2. Some of the Huawei’s Sustainability and CSR Initiatives since 2014
• Trained 10,000 students with ICT knowledge
• Distributed energy-efficient ICT technologies to the governments, energy sector,
transportation and finance industries
• Development of the World’s first smartphone with a Water Footprint verification statement
• Won the "Cyber Security Organization of the Year" award
• Using energy-saving approaches at technical and managerial levels, they could save 43
million kWh of electricity
• With the use of an effective circular economy model, they minimized the landfill rate by
2.37%
• Collaborated with their suppliers to reduce more than 53,000 tons of CO2 emissions.
• Introduced 100% auditing of their medium-to-high risk suppliers.
• Deployment of the “Seeds for the Future” program in 35 countries in 5 different continents
• Access to the Internet for more than 3000 students in South Sudan
• Training ICT professionals in Myanmar

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 • Won Sustainable Impact Award at ITU, Budapest in 2019 for Green 5G Power Solution.
• Invested CNY 7300 million in employees’ benefits.

7.3.Huawei’s stance on ICT and the Sustainable Development Goals (SDGs)

According to Huawei’s website, they believe that ICT and SDGs should go hand in hand.
They see a strong correlation of ICT in achieving the United Nations Sustainable Development
Goals. They are determined to offer a lending hand in the promotion for ICT in order to achieve
these goals. The following figure shows the correlation of ICT with SDG in percentage. The higher
the percentage, the stronger the relation. (Appendix 15)

It can be noticed that they tie 72% of correlation of ICT education with SDG Number 4
(Quality education), 70% of correlation of ICT based infrastructure with SDG Number 3 (Good
Health and Well Being), 63% of correlation of ICT networks and services with SDG Number 9
(Industry, Innovation and Infrastructure), and 57% of correlation of ICT based construction to
develop more school for girls with SDG Number 5 (Gender Equality) and so on.

7.4.Green Operations and Manufacturing:

Huwaei also claims to have constructed a 19-MegaWatt phot Similarly, the Greenpeace
Guide to Greener Electronics 2017 report (Green Peace, 2017) gave Grade ‘D’ to Huawei in
terms of environmental impact assessment. This assessment included parameters like
Energy use, overall resource consumption, and chemical elimination.

Conservation of Energy and CO2 emissions reduction in partnership with the suppliers:

Huawei claims to have reduced 53,652 tons of CO2 equivalent through this program, by the
end of 2014.

7.5.Green Recycling by Huawei:

Huawei claims to recycle the used smartphones from its consumers. They claim that they
want to encourage the recycling of the resource, the reuse of the product and help in the prevailing
circular economy.

They claim to have set up around 190 recycling stations in 8 countries around the World.

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7.6. Criticism on Huawei:
However, the telecom industry itself is under the knife of criticism for causing emissions and
the environment. Scientists believe that stronger electromagnetic radiations like 4G or 5G may
cause cancers among Humans too. (European Union Scientist Warning on 5G)

Similarly, the lack of e-cycling (recycling of electronic waste) and most of the e-waste
including the rare Earth metals ending up in the landfills or in poor countries have been criticized
heavily. Although Huawei claims to have reduced it by just 2.37% it is almost negligible compared
to what they produce or sell around the World.

Moreover, Huawei was ranked among the weakest performing brands in terms of
sustainability by the Sustainable Electronics Report of 2014 (RankaBrand, 2019). According
to that report, Huawei was given Label E. It means that it met the least of its sustainability criteria.
Label A was given to those companies which met 75% or more of their sustainability criteria. In
this report, it was also mentioned that Huawei was less transparent and clear about its current
Sustainability measures.

The following figure from this report shows how they ranked Huawei and other companies in
Sustainability measures ranking. (Appendix 16)

Similarly, the Greenpeace Guide to Greener Electronics 2017 report (Green Peace, 2017)
gave Grade ‘D’ to Huawei in terms of environmental impact assessment. This assessment
included parameters like Energy use, overall resource consumption, and chemical elimination.
(Appendix17)

8. Future analysis
8.1. Predictable Trends
8.1.1. 5G network will rule the market
5G is expected to be a radicle innovation that will disrupt the existing 4G market. It will
provide faster internet and better communication efficiency than 4G (WORLD & Pandya, 2019).
5G has the capacity to enable smart city infrastructure and truly autonomous driving. 5G fixed
wireless is expected to reshape the ISP broadband and the landscape of services (Altavilla, 2019).
By 2025 All major wireless carriers expect to have a significant number of customers on 5G

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networks, and the technology industry is already developing next-generation technologies to take
advantage of a high-speed connection. Countries that are expected to adopt 5G in the near future
are China, South Korea, United Kingdom, Germany, and the United States (Craven, 2019).

8.1.1.2 How Huawei is taking this change?

It opens Its First 5G Open Lab in South Korea with the partnership of Korean small and
medium scale economies to build a 5G ecosystem. It is prepared with including 5G standards
products, terminals, security. Huawei is invested more than US$ 600 million 5G technology R&D
in between 2009 to 2013. It has invested the US $1.4 billion in 5G product development in the
year 2017 to 2018. Huawei is becoming a partner with 50+ corporates for 30 5G commercial
contracts and 25000 base station shipments. Huawei improved its infrastructure and also received
many awards for the 5G Evolution Outstanding Contribution Award, Best Infrastructure Award,
5G R&D Outstanding Contribution Award and many more. Huawei is the only equipment provider
that has the capacity to provide end to end 5G products and solutions including Customer-premises
equipment (Carrier Huawei, n.d.). Huawei is the second-largest smartphone company in the globe
with a market share of around 15.8% (KHANDELWAL, n.d.). They have every chance of
becoming the largest selling smartphone when we see their preparation for 5G technology
adaption.

8.1.2. Towards the intellectual word

Nowadays every activity is dependent upon AI and smart devices which will continue in
the future too. It is estimated that living with robot and such kind of activity will increase in the
near future. For instance Sony came up with the robot dog which is known as Sony AIBO which
has its own intelligence and acts as same as the real dog (Peters, 2019). This trend will affect the
whole business canvas model. By 2025, 77% of the world's population will be connected around
100 billion connections, which will lead to an increase in productivity by 2.3% and innovation
capability by 2.2%. The major drivers of digitalization will be the Internet of things, connectivity,
cloud, video. Cloud computing and big data will be one of the future trends as it increases storage
capacity and enhanced performance of the internet. Companies on cloud computing will increase
competitive advantage by 74%, business agility by 45%, customer experience by 43%, and the
ability to innovate by 40% (Huawei, 2017). The rise in the market of cloud computing is 22.8%
and it is expected to increase to $127.5 by 2018. It is projected that 62% of customer relationship

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management software will be cloud-based (DATAFLAIR TEAM , 2019), and the adoption of
cloud computing will increase swiftly. The future of cloud computing will be mobile phones
(Schwarz, n.d.).

8.1.2.1. How Huawei is taking this change?

Its Big Data Solution is an enterprise-class offering that meets big data utility, storage, and
data analysis capabilities. This platform allows the new enterprise to capture new business
opportunities and detect risks by instantly analyzing massive sets of data. It is satisfying 700
customers in the finance, government, public safety, carrier, education, energy, transportation, and
health care sectors in more than 40 nations. Huawei's intelligent data solution has more than 500
business partner and it is trusted by more than 1500 customers from over 60 countries.

8.1.3. Folding phone:

The world is becoming nano, people prefer gadgets to be smaller and The global foldable phone
market is anticipated to witness a compound annual growth rate of 24.6% from 2019 to 2025.
Folding the phone is expected to be a fast-growing market in the near future (Energias Market
Research, 2019). According to the gulf news folding phones will be the next disruptive wonder in
the smartphone industry. Still, there are some technical problems with folding phones (Bershidsky,
November).

8.1.3.1. How Huawei is responding to it?

Huawei already released its folding smartphone which costs around $2400 in China. Huawei's
folding phone that is Huawei Mate X sold out in China within minutes (Lumb, 2019). It is very
important for Huawei to keep on investing in the R&D of folding phones to grow in the market.
As of now, they are the pioneer in this market.

8.2. Unpredictable Trends

8.2.1. Human augmentation can disrupt the smartphone market.

This industry is gaining more boom nowadays. This industry can disrupt the smartphone
industry but the probability of disrupting is very low as human augmentation products are
dependent on a smartphone as of now. The field of human augmentation which is referred to as
“Human 2.0”, concentrates on generating cognitive and physical enhancements as an essential part
of the human body. An example is using active control systems to create limb prosthetics with

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characteristics that can exceed the highest natural human performance (Gartner, n.d.). This
industry is likely to have a Compound Annual Growth Rate of over 38% during the forecast period
(2019-2024). Modern technology improvements in human development are not only restricted to
treating illness and disabilities but are also employed in boosting human characteristics and
capabilities (mordor intelligence, n.d.). North America region has been expected to hold the largest
market share in the market whereas, the Asia Pacific is estimated to be the fastest-growing market.
The global human augmentation market is estimated to grow substantially over the predicted
period (Kenneth Research, 2019).

8.2.1.1.So what?

If human augmentation disrupts the market of the smartphone industry many companies
will collapse in the market. The human augmentation business-like Augmented reality, Smart
clothes, Exoskeleton, Bionic eyes, Brain-machine interfacings, Decision-making drones
(Wattenbergh, 2019). Gartner estimates that AI augmentation will generate $2.9 trillion in business
value and 6.2 billion hours of worker productivity in 2021 (Dignan, 2019).

8.2.2. Cyber Crime

Cyber-crime also is known as a computer crime is the crime committed with the computer
as an instrument to conduct illegal works. Some basic examples of cyber-crimes are Phishing
scams, Identity theft, Online harassment, Invasion of privacy, Cyber-attacks, Hacking,
Cyberstalking. Companies need to be aware that a hack could cost them more than a callback of a
product. In November of 2014, Sony was hacked and its first report regarding the financial losses
of the hack was reported at $15 million. It was apparent Sony had more than that in the losses.
Last year the total cost of cyber-crime was reported at $600 billion. (Lau, 2018)

It is reported that cyber-crime will cost about $6 trillion annually by the year 2021, which
rises from $3 trillion from 2025 according to the prediction of Cybersecurity Ventures in August
of 2016. (Morgan, 2019). Cyber-crime is on the rise and different countries are hacked for their
information. The top three countries that reported cyber-crime last year were the US, Japan, and
Germany. The lowest countries are Brazil and Australia. (Wilczek, 2019)

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8.2.2.1. SO WHAT?
When a company is hacked then the company faces problems with the entirety of its data
as well as security. If Huawei is hacked, then it will face similar problems like this. Movies were
pirated and data were published online. If in the case Huawei is hacked, then the major concern of
Huawei would be the financial data and research and development data. Huawei has spent $15.1
billion on R&D in the year 2018 (Huawei, n.d.), so its most critical asset is its data. If this is the
case than Huawei could lose more than they expect if hacked. Appendix 18

8.2.3. Ban of 5G
The anthropogenic electromagnetic radiation, like Wi-Fi, 3G, 4G, 5G, etc., interferes with
the natural electromagnetic radiation of the honeybees resulting in their death, as many scientists
believe. And if honeybees go extinct, it would be almost impossible for Human beings to survive
(Vanbergen, 2019). Scientists also believe that stronger electromagnetic radiations like 4G or 5G
may cause cancers among Humans too (jresco, 2019) This evidence may lead to imposing a ban
on 5G which may result in telephone and smartphone companies, like Huawei, getting out of
business.

Here are some more of the unpredictable environment trends that may affect Huawei:

• Climate change and the unexpected shifts in the patterns may affect Huawei’s business
especially the harsh weather, or disasters and unexpected monsoon shifts may cause an
impact on the transportation of resources and the final product. It may make it difficult for
the delivery of the final products to the customers within the due date.
• Harsh weathers due to climate change may severely impact the products and may damage the
products or result in a decrease in the demand.
• As a result of the strict laws on carbon emissions and waste management, big companies
like Huawei may have to pay fines and penalties if they don’t adhere to these laws.
• If there is an environmental hazard or incident caused by Huawei, resulting in the life loss of
humans or animals, then Huawei may suffer a major financial loss due to the public
retaliation as a boycott or bad perception of the company.

Materiality Mapping: Appendix 19

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9. Suggestions & our recommendations
9.1. Development of Indian Market
Its sales in Europe and Africa are increasing but when it comes to American and Indian market
Huawei is lagging behind. It is facing difficulty in America because of political issues. We
recommend them to focus on the Indian market.

9.1.1. Why Indian Market?

As the Indian market is very huge with a population of 1.339 billion (worldometers, n.d.)
and India is the second-largest smartphone selling market in the globe. There is a prediction that
there will be a need of 442 million smartphones by the end of 2022 in the Indian market (Statista
Research Department, 2019). Indian market is also dominated by Xiaomi which is a Chinese brand
with a market share of 28%. followed by Samsung with 25% (Sharma, 2019). Huawei started its
businesses in India in 1999 after it opened a research and development center in Bangalore, but it
has no effect in the Indian market. Huawei has better customer satisfaction than Xiaomi and
Samsung in India but new entrants like One Plus and Oppo (Srinivasan, 2019).

9.1.2. How Huawei can grow in the Indian market

Huawei's marketing in India is not that effective, so there is a need for effective advertisement
and marketing in India. In India, they can buy some YouTubers as YouTube is in trend in India
for creating a brand image. Huawei has a dual branding strategy in India with honor brand. This
also hindering Huawei's brand image as many people don’t know honor is a brand of Huawei.
Huawei can go for affiliative marketing in India with famous websites. They also can tie up with
local distributors and mobile phone sellers for marketing and a sales activity

9.2. 5G – Recommendation
5G opens up new doors to a world of possibilities. With 5G technology, doctors could be in
another part of the world but use a robotic arm to operate in another part of the world. But as we
know higher the speed of the generation the lower the range of the connectivity. With 5g networks,
it is important to have a clear line of sight with the router and even so much as a tree could disrupt
the speed of the network. We recommend Huawei use this to their advantage and strategically pick
up tender from telecommunication companies and government contracts for the installation of the
5G routers across a town or in buildings. This will boost up the number of sales as well as the
revenue of the company. We also recommend that the company should align itself not only locally
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but also internationally in the growing markets like India, Singapore, Malaysia, and other
European countries (where 5g is or will be introduced). This would not only help the sales and
revenue of the company but also aligns itself with the vision and core value of the company of
digitalizing the world and shared success with collaboration and openness. According to Gartner
global 5G Network Infrastructure income to Achieve $4.2 Billion in 2020. Gartner estimates that
7% of Content security policy global have already deployed 5G infrastructure in their networks.

9.3. Recommendation to prevent cybercrime

Huawei cannot avoid cybercrime but can prevent it from happening. For this Huawei needs to
put up firewalls and employ more ethical hackers who could help them to prevent a possible hack.
Another great way to prevent a possible hack is to have taught all the employees about the ways
that the hackers could enter through the system. Huawei can enter into partnership withIn 2016,
Bangladesh bank hack was started through a simple e-mail. Hence prevention of these hacks
should be a top priority. They have to conduct regular awareness sessions with their employees.
Huawei can hire machine learning and artificial intelligence experts to prevent the threat from AI
security with the help of advanced machine learning algorithms like R-code and Support Vector
Machine (RAY, 9).

9.4. Escape route Strategy (development of human augmentation field)

Huawei has lot of areas that they can invest if they are losing their smartphone industry. They
can invest in the field of human augmentation. It can be a field that can dominate the market and
also have minute chance of disrupting market of smartphones. Huawei has every equipment with
respect to AI, networking, and smartphone which can be advantage to move into the field of human
augmentation. If unpredictably human augmentation disrupts the market of smartphone then
Huawei can enter this market. Huawei should invest more on R&D on human augmentation.

10. CONCLUSION:
As a world leading manufacture in the technology world, Huawei has been determined to create
an omnipresent connectivity with a personalized experience for everyone. With a giant workforce
and even a greater R&D team, they are persuading this vision of theirs. As we are entering a world
of 5G technology and also where most of the products will be connected with IoT, it opens a
gateway for the ones in the tech world to lead the expansion of technology to a higher standard to

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ease the life of human beings. With automated cars and AI surgery, Huawei should also expand
itself to be a cleaner and greener industry. Huawei was determined as the weakest performing
brands in terms of sustainability in 2014. Being the 2nd highest manufacturer of smartphones, now
it needs to aim at being ranked the 1st tech company focusing on sustainability and eco-friendly.
With this thinking, Huawei might be able to incline their sales as most of this generation is trying
to have a cleaner and greener environment in this world of pollution.

Appendix 20: System Thinking

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11. Appendix
11.1. Appendix 1: Quarter wise sales

11.2. Appendix 2: Key Success Factors on the basis of activity

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11.3. Appendix 3: Key success factor comparison to competitors

11.4. Appendix 4: Market Share

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11.5. Appendix 5: Revenue breakdown on the basis of the type of business

11.6. Appendix 6: Revenue breakdown (Region based)

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11.7. Appendix 7: Strategy Clock

11.8. Appendix 8: Quarter wise mobile Shipment

Source: (Michail, 2019)

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11.9. Appendix 9: Smartphone market share in China

11.10. Appendix 10: Value Proposition canvas

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11.11. Appendix 11: Advanced business canvas model

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11.12. Appendix 12: Porters Five Forces

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11.13. Appendix 13: Value chain analysis

Primary Activity

Inbound logistics

Huawei maintains its relationship with its suppliers. Songshan Lake Supply and Logistics
Center of Huawei provides functions such as materials acceptance, storage, selection, matching,
and distribution. This is possible because of advanced technology like including radio frequency
(RF), picking to light (PTL), goods-to-person pick-up (GTP), and Carousel. used in managing
logistics. DHL and Huawei came together for inbound to manufacturing logistics process IoT
solutions. These helped Huawei optimize its cost, 10s of millions of Yuan saved. Huawei is able
to handle 10,000 order lines per day (CORPORATE NEWS MEDIA-OUTREACH, 2017)
(Iottechnews, 2017) (Huawei, n.d.).

Operations

These are the conversion process that changes inputs into outputs that are sold. Here, your
operational systems create value for the customers. Huawei always focuses on providing the best
possible value to its customers, it has very strict quality control rules and regulations. Huawei

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operates in more than 170 counties, and it serves more than 45 telecom operators (Vance &
Einhorn, 2011). It serves its customers with 35000 its own stores this year Huawei is planning to
open 15000 more stores (Huifeng, 2016).

Outbound logistics

These are the activities that deliver your product or service to customers. This includes
activities like collection, storage, and distribution systems. Huawei sells its product through online
stores, its showrooms and through retailers.

Marketing and sales

This is the process of communicating values to the customers. This is an important process
that stands us out from our competitors. It uses both traditional and digital methods of marketing.
It sells its phone through an e-commerce channel also which is also an important channel of
marketing. Some examples of Huawei's marketing and sales activities are- sales force, advertising,
promotional activities, pricing, channel selection, quoting and building relations with channel
members. It also hires global stars like Lionel Messi, Saina Nehwal as brand ambassadors to
promote Huawei (Consumer Huawei , 2016) (Business Standard, n.d.). The marketing strategies
can either be push or pull in nature, depending on the Huawei’s business objectives, brand image,
competitive dynamics and current standing in the market.

Service

This is the activity of maintaining and providing values to the customers after they purchase
it. It is one of the important channels which can increase brand value. Huawei provides after-sales
service through its online complaining portal, hiCare app and also through its service centers
(PRWEBME, 2018).

Secondary activity

Infrastructure

Huawei has a very good data center infrastructure management system and also the stores
are well managed and planned. Huawei is increasing 15000 physical stores across the globe for
better reach to the customer and also to give better service to the customer (Huifeng, 2016).

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Human resource management

Huawei has nearly 194000employees and operates in 170 countries. Huawei invests a lot
of money in employee healthcare management, in the year 2018 Huawei invested around 13.51
CNY billion. Huawei has very good and employee favorable human resource policy which creates
a decent workplace. It has employee shareholding schemes that involve around 198768 employee-
shareholders. Huawei spent around 98,164 CNY million in the year 2018 for employee benefits.
It provides a lot of training programs like BCM training to its employees (Huawei (Annual report),
2018). Huawei $286 million to compensate for helping counter-sanctions (Huawei, n.d.).

Technology development

Huawei is a technology company that operates in many countries. It is the leading company
that provides ICT solutions. It has 56492 patents on telecommunications, networking, and other
technology inventions (Decker, 2019). Huawei holds the patent for the 5G network. It invests
more than 10% of total sales revenue and 45% of employees on R&D. The key area of investment
in technologies, architectures and standards in the field of information and communication
technologies (Science Business, n.d.).

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11.14. Appendix 14: External Environment

11.15. Appendix 15: SDG & ICT

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11.16. Appendix 16: Sustainability Ranking

11.17. Appendix 17: Other Criticism:

• Huawei has faced the bribery scandal in Algeria back in 2012
• Rankabrand Sustainable Electronics Report put Huawei on their Greenwashing Alert list in
2014.
• Low grade in 2017 Greenpeace guide to Greener Electronics.
• There have been questions on the labor rights in China including a death of a Chinese worker
while working at an Electronics Company. Huawei was one of those companies which refused
to comment on this incident to media and China Labour Watch ( (China Labor Watch, 2019)).
• Sourcing practices for Cobalt for manufacturing of Smartphone batteries included Human
rights abuse according to 2017 report of Amnesty International.
• (Milieudefensie and Friends of the Earth, 2014)questioned the tin sourcing for the
manufacturing of the Smartphones and the practices involved in the process. The companies
which acquire tin through mines in Indonesia were accused of neglecting human rights.

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11.18. Appendix 18: Cyber Crime

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11.19. Appendix 19: Materiality Mapping

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11.20. Appendix 20: System Thinking

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