WL Gore’s Organization And Management

Distinctive features of WL Gore’s organisation and management

1. What are the distinctive features of WL Gore’s organisation and management? 

2. To what extent do they represent a consistent management approach based upon identifiable principles? 

3. What are the advantages and disadvantages of WL Gore’s approach to organisation and management? 

4. To what extent is the WL Gore approach to organisation and management transferable to other companies? And if it is, to what types of companies?

Internationalization is a process that is evolutionary as well as sequential in which the foreign commitments build up over time which emphasizes on establishments of subsidiaries overseas, production and manufacturing units set overseas, no exports or exports through independent agents (Johanson and Mattsson, 2015). The initial internationalization of Haier began in an unorganized manner. The organization targeted overseas markets in South-East Asia, US, Germany, the Netherlands, and Italy. The strategy employed in the Philippines, and Malaysia was the joint venture, in the US it employed sales agents through Welbilt Appliances and Walmart, in Germany it employed Liebherr. The aim of expanding overseas was not to take advantage of the manufacturing cost in China but to establish a global brand. As a result of this, the organization raised the standards of manufacturing, development, marketing as well as customer service so as to meet the international standards. In order to venture into the international market, the strategy adopted by Zhang was to create the local brand. In doing this, the company employed “locally designed, locally made, locally sold” slogan and implemented the seeding- to use local distributors as well as sale agents to build brand recognition, rooting- to set up manufacturing plants and get a market share and harvesting techniques-R & D and full range activities in international market. Instead of concentrating on the near markets with similar economic development, Haier focused on challenging markets. The strategy was to use people with local thinking and skills based on the target market. They use the experienced executives with knowledge of leading appliance companies to head the foreign establishments with expatriates from China as technical employees (Thai and Chong, 2013). 

In US, they used Jemal from Wellbilt Appliances whose leadership Haier allowed the company to penetrate niche markets. They positioned and specialized on small refrigerators for clients in offices, student’s dorms as well as wine coolers. Through this strategy, the organization became a leader in this market segment and thus expanded to window air conditioners as well as full-size appliances and used the same pricing strategy as those of the competitors (Sui and Baum, 2014). After capturing the market, they opened a manufacturing plant and used product differentiation via the innovative design targeting particular need of customers (Osuna, 2014). In order to augment the market penetration and to fully enter into the entire US market, they created four market segmentation as follows; 22 years to 30 years, 18 years to 25 years and 35 years to 55 years. They designed products with focus on each of these segments. In 2012, they created an R & D center in order to enhance its capacity in US and later the company became a Haier Group established subsidiary in 2013 and Adrian Micu became Haier America’s CEO. In Europe, the company began by the establishment of sales office in Varese and later employed acquisition strategy to obtain Meneghetti Equipment in order to take advantage of its distribution network and the refrigerator plant. The company shifted from positioning itself on low price brands to middle segment of the market through the use of product aesthetics and design (Vahlne and Johanson, 2017). The company utilized the design center situated in Varese as well as German R & D center located in Frankfurt with an emphasis in three-door models. In 2015, Haier Europe was led by Nick Fierling who was from Whirlpool.  In venturing into the Asian market, Haier Group utilized joint ventures strategy owing to the fact that the company can gain the local market and use the resources from the partner (Ramsey and Bahia, 2013). Additionally, acquisition strategy was employed in 2012 where the company acquired Sanyo’s domestic appliance section despite the Sanyo’s employee challenges of Haier’s management system of individual responsibility as opposed to Sanyo’s collective responsibility. On the other hand, the company acquired Fisher & Paykel in New Zealand specializing in washing machines, cookers and dishwashers in order to take advantage of its wide network spread over Italy, US, Mexico, Thailand and Australia.

Consistent management approach based upon identifiable principles

The internationalization strategy employed by Western organizations starts immediately after they have created a solid foundation and penetration of product brand in their local market. In respect to the fact that penetration and development in international market being a difficult one, these corporations quite often employs domestic strength for global capabilities (Hessels, J. and Parker, 2013). This is because penetration into a new country is just like getting started in business from scratch where there is no knowledge of the market, sales and lack of marketing infrastructure. The western organization treats this as an incremental source of revenue for the available services and products. These organizations pursue the international market with a focus on risk and investment minimization; employ a sale push approach instead of market-driven approach and a focus on top-line obsession with a view of growing the revenue instead of profits (Johanson and Mattsson, 2015). It is apparent that international sales in a norm for internationalization in western organizations. In a number of these organizations, they employ indirect channel of a local independent distributor or agent instead of using a directly controlled marketing subsidiary (Hamel, 2012). It is through the use of local independent distributor or agent where big organization does not know the costs as well as their operating profitability in that country (Young et al., 2014).

In comparison, Haier Group began its internationalization in what was a haphazard fashion by entering a number of overseas markets through established joint ventures with local companies in South-East Asia; sale under a retailer’s brand under Walmart and Welbilt Appliances in US; and sales agent and distributor in Germany and Italy.  Even though the creation of brand name is possible through localization of the brand name within China market, the aim of doing this was to ensure that there is a global brand as opposed to building of revenue by making a localized brand in those targeted international markets. This is because success as per Mr. Zhang was based on a localized brand. This challenged the organization to increase their manufacturing standards so as to meet international standards.

Haier’s internationalization strategy is successful. The strategy brought the organization into the limelight in the international competitive market (Poulfelt and Andersen, 2014). The company is now one of the best international organizations in the niche created through, differentiation, specialization and innovation of home appliances. The success of the organization is attributed to a focused differentiation of its products which began in 1980s. This made their products unique from those of competitors because they ventured in making quality products. In addition, in 1990s, Haier’s success is due to the strategy they adopted which focused on consumer-responsive innovation approach. This approach centered on developments of quality products for particular customers in the targeted market (Wee, 2017). As per Guo, Su and Ahlstrom, (2016) is the route to success for every organization. Giving design changes to meet the inclinations (Baylis, 2016) of particular client bunches were encouraged at Haier Group through adaptable modular design. The company items depend on modules and sub-modules, and on fundamental stages that can fluctuate. Occasionally they included some new design features, keeping the original model. The product modification included coolers with partitioned compartments that kept ice-creams at a somewhat higher temperature to allow simplicity of serving, and Korean refrigerators with isolated compartments for kimchee. The other success contributor was the reorganization of the company structure to bottom-up structure where decisions came from the lower people (Grant, 2016). The company created self-managing teams in specific units tasked with and the team led the decisions. The approach as per Zhang in dealing with management was a duty regarding innovation, adaptation, and consistent change. This was emphasized through the motto that the present work must be done today; the present achievement must be superior to yesterday’s; and tomorrow’s objective must be higher than today’s. Increasingly, this implied receiving an entirely unexpected origination of the present Haier and the expectation they are endeavoring to accomplish (Grant et al., 2014). The company adopted reinvention with the aim of upgrading clients’ needs and this stretched to giving network to it apparatuses. In 2014, it propelled the savvy apparatuses with the use Broadcom that was implanted remotely enabling clients to scan and control their machines remotely including home apparatus controls, such as controlling lighting, sound entertainment, and security alarm system monitoring. 

Advantages and disadvantages of WL Gore’s approach to organisation and management

The management system

The governance system was not clear because Haier was made of two public companies- Qingdao Haier Company Ltd and Haier Electronics Group Company Ltd. These two companies were listed in Shanghai and Hong Kong respectively. There was an opaque relationship that existed in between the two organizations (Block and Block, 2014). Irrespective of the opaque structure, Zhang Ruimin has the power that was attributed to the position as the chairman and CEO as well as from the informal authority as an architect and political ties which gave Haier a lot of independence from interferences from the municipal as well as the provincial government. His administration theory consolidated Chinese customs from Confucius and Sun Tzu to Mao Zedong and Western thoughts. Zhang’s administration thinking developed in parallel with his technique with a concentration on building Haier’s abilities in connection with the quality administration, client-centered, brand building, and new product advancement (Argyris, 2017). Continuously, there was a change in structure and administration system. The internal relationships were detailed to be oriented towards “market-chains”. The thought behind “market-chains” was to serve its clients; all the relationship inside the organization was reclassified to focus on supplier-client relationship in which every unit, each activity, and everybody was connected to a client and unit or task was another person’s customer. Along these lines, everybody in Haier regardless of level and function felt the pressure of the market directly (Borja and Castells, 2013). The organization structure was re-organized and shifted to decentralize from the hierarchy in order to mirror the entrepreneurial platform to create a borderless enterprise with the utilization of technology to connect everyone (Fan, Wong, and Zhang, 2013). The company management shifted focus so that everyone is an agent of interaction as well as networking among people. This ensured that even customers are part of product development in the organization through the commitment to innovation, adaptation, as well as continuous improvement (Shafritz, Ott and Jang, 2015).

Performance Management

A component of the administration is a sense of duty regarding operation through responsibility and singular motivations (Pulakos et al., 2015). Haier Group applied the OEC, the “OEC” rule “Overall, Every, and Control and Clear”— implies that each representative needs to achieve the objective work each day. The OEC administration control system goes for the control of everything that each representative completes on his or her activity consistently with a 1% expansion over what was done the earlier day (Buckingham, and Goodall, 2015). OEC turned out to be a component of the performance management framework were operation targets are set by corporate head-sections for each division. Every division presents a divisional activity program (Bach, 2013). This turns into a month-by-month arrangement of operation management where the genuine operation is contrasted with the earlier month’s operation and focuses on the present month. Month to month divisional operation is aggregated into day by day execution evaluation for each representative. Every day starts with group leaders instructing colleagues and every day closes with every laborer finishing a self-checking appraisal against particular OEC criteria. These evaluations are connected to employee pay through an arrangement of rewards and punishments (De Waal, 2013).

Transferability of WL Gore’s approach to organisation and management

Value Proposition

Haier’s “approach to playing” in the market owing to value proposition has step by step expanded since Zhang Ruimin moved into becoming CEO in the mid-1980s. The company has kept the top role in the industry as a result of its popularity for quality in China. It turned into a customizer by adjusting its products to client requests. Haier currently offers not simply home apparatuses but rather related services, adjusted to meet buyer request in different markets. Haier conveys its approach by exceeding expectations at four differentiating abilities (Osterwalder et al., 2014). 

Customer Service Leadership

The concentration on client benefit allowed the organization to be consistent even as it pushes to undergo a dramatic transformation. The organization does go only as a manufacturer of products, but also as a supplier of the solution for its clients’ issues. Through its simplicity and congruity, this has given all workers a solid direction with which to decide and come up with solutions, despite the problematic market difficulties, for example, new innovations or new contenders (Wong, Liu, and Tjosvold, 2015). The organization developed and compensated great talents; the organization has been attracting talented engineers and business-people (Jiang, Chuang, and Chiao, 2015).

Building Quality Brand

In order to enhance quality, the organization set out to encourage performance and responsibility. They implemented schedules and practices for consistent improvement from the quality development and connected pay to performance in a way that has not been experienced in the Chinese market, through a structure called “Overall Every Control and Clear” (OEC). Consistently, specialists followed quality outcomes and recording using paper and pencil, and their wages were connected specifically to the results. This gave the organization straightforward methods for setting up objectives and controlling accomplishment for “everything, everyone, and every day,” and, an approach to urge representatives to continually challenge their past execution (Fatma, Rahman, and Khan, 2015). The operational capacity of OEC gave a “secure-base” on which to create striking change. For instance, the organization managed coordination with a focus on zero-defects, bringing in low stock, short conveyance times, as well as low working capital. The OEC principle was never deserted but rather, it was scaled up to always meet set objectives. The staff became acclimated to making little strides that added up to extraordinary outcomes (Tuškej, Golob, and Podnar, 2013).

The Niche Innovator

The customer-responsive innovation was auspicious, in light of the fact that quality was not anymore a differentiator because different organizations had realized the trick. The innovation strategy of the organization allowed the creation of a vegetable washer, intended to suit the additional grime and soil of the tubers. Additionally, Haier developed a little, low-power clothes washer called the Little Prodigy that could allow small clothes fit in without much of a stretch and it was liked by the urban dwellers (Eggers, Kraus, and Covin, 2014).

Types of companies that can benefit from WL Gore’s approach

Additionally, the organization in perceiving the necessities of learners in dormitory rooms propelled the creation of mini-refrigerators in the US that was followed with wine fridges and afterward bringing accomplishment into becoming an accomplished manufacturer of home machines for the US market. Then, in Pakistan, Haier sold additional extensive clothes washers intended for heavy and strong robes (Turnipseed and Turnipseed, 2013). The key to all this development was Haier’s customer-centric operations, fast innovation in view of purchaser demands and the organizations as well as cooperation among R&D, promotion, as well as sales team (Ray Gehani, 2013).

In the current competitive environment, there is a fast acceleration of change and organizations have to reinvent themselves at an accelerating pace. The era of thinking to build a competitive advantage over time is gone and companies need to focus on building an evolutionary advantage over time. This is because there is need to strategically build an organization that is adaptable and the one which is nimble like change itself. Haier Group is an organization that is an example of revolutionary reinvention overtime in venturing into the international market. The reason is that we are currently in a hyper-competitive market where the turbulence of creative destruction is blowing fiercely and constantly. The only way to guard the margin is to endeavor into deep constant innovation. 

In addition, innovation cannot come along without the engagement of the employees. These are people who must be adaptable as well as innovative. With the shift from industrial to knowledge and to creative economy requires skills and capabilities that are changing. The present era not only requires people with obedience, diligence, and intellect but also people with of initiative, creativity, and passion. However, the dilemma is that people with initiative, creativity, and passion cannot be managed because these entails gifts that they bring forth to the organization. The challenge rests on how to build an organization having people who are willing to give their initiative, creativity, and passion with no coercion from anybody. The solution is the Haier Group way where people are given the entire mandate to be in charge and accountable on every section. The ZZJYTs (is zhu jing ying ti) way and approach are the best. In a number of organizations, it is a crisis to change and an average employee does not have time to think of innovation.

A number of organizations are failing to embrace the internet. The internet is adaptable; spawn new businesses as well as new type of social organizations. Haier Group embraced web-based appliances as well as connecting the product with the customer. This reinvention created a platform for innovation because it is engaging. The internet has no ideology of control as it was in many organization years back. The internet brings in different principles with no rules, regulations but bestowed with immense freedom. The web carries the characteristics of adaptability, innovation, as well as hyper-competition which are the option to be in the current economy. Organizations need to train their employees on innovation. Employees in an organization from all categories should think innovation. The reason is that many organizations currently are experiencing downward returns on incremental approach whereas those embracing real innovation approach are experiencing upward returns. Employees with skills that are in line with the present demands pave the way for the organization to adapt to the dynamic changes experiences in the changing competitive market. The responsibility is in the hands of strategic management principles of the company. 

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