An analysis of Haiers corporate culture. How does the culture of an organization support adaptation in organizations facing a turbulent environment?

by syc1991 (student)

University Degree Business and Administrative studies

An analysis of Haier’s corporate culture

1. Introduction

In the background of rapid economic progressing, the general developing trend of the enterprise management is transformed from a strategic management to a higher level cultural management (Turner et al, 2009). Corporate culture has a very important role in the development of the enterprise. Therefore, it is necessary to have a comprehensive understanding of corporate culture and the effect of environment on the enterprise. In Denison's organizational culture model, corporate culture has a strong adaptability, and it is agreed that corporate culture is an adaptive culture. In order to warn others to pay more attention to the importance of the adaptability of the culture, this essay is developed by giving literature review about adaptive culture, analyzing the adaptive culture of Haier and assessing how this culture adapts to the complex environment.

2. Literature review about adaptive culture

The corporate culture is about various values of ideology, which refers to long-term stable cultural concepts and historical traditions as well as a unique business spirit and style (Kosfeld and Siemens, 2011). In Dennison's corporate culture diagnostic model, the four cultural identities which refer to adaptability, mission, involvement and consistency have a significant impact on an organization's business development (Agbejule, 2011). Among the characteristics, adaptability of corporate culture is what this essay focuses on. Adaptability mainly refers to the ability of the company to respond quickly to a variety of signals in the external environment. This cultural feature majorly reflects the company's adaptive ability to the external challenges, including the ability to capture and reaction speed of the various direct and indirect signals to the market and customers.

Today's environment changes in violent upheaval require that companies must continue to learn and change in order to have the ability to respond to a turbulent environment. The turbulent environment is equipped with high instability, unpredictability and complexity. So the perception, the speed of reaction and action with whether the requirements of the environment matches play an important role in the development of the company. Only to adjust the learning styles and learning focus to follow the changes in the environment, the company would successfully achieve organizational change, enable enterprises to access and improve environmental resilience and have a competitive advantage by carrying out reasonable plans or policies. It is accepted that there are three dimensions to measure the adaptability of corporate culture: creating changes, putting customers in the first place and organizational learning (Kotrba et al, 2012).

Creating changes are related to whether the companies are afraid to risk change, whether the company learns to carefully observe the external environment and forecast the relative processes and changes and timely implement the change (Kotrba et al, 2012). The innovation concept is an important factor to ensure that the corporate culture updates with the external environment and better adapt to the changing environment.

Customers first refer to whether the company has the ability to understand their customers and expect their future demands (Kotrba et al, 2012). Those companies which practice their decisions from the customers' point of view do much better to satisfy customers' needs, which indicate the humane feature of the company's culture.

Organizational learning is about whether the company can take the external signals as a good opportunity to encourage innovation and absorb new knowledge (Kotrba et al, 2012). If a company performs well in organizational learning, its culture is equipped with good compatibility and ability to become stronger.

In addition, there is a need to understand the functions of adaptive culture. The culture has a guiding function, constraint function, cohesive function, incentive function, adjustment function (Tellis, Prabhu and Chandy, 2009).

Guiding function is to play a leading role for its leaders and workers of enterprises, which can play ...

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Guiding function is to play a leading role for its leaders and workers of enterprises, which can play a role in guiding the value orientation and behavior orientation of the whole enterprise and every member. One of the performances is to help the enterprise to make scientific goals.

The implementation of the constraint function of corporate culture is mainly through improving the management system and ethics, which majorly refer to constrain the behaviors of leaders and employees in order to correct the direction of development.

Cohesion function refers to that when one set of values is co-sanctioned by the employees, it will become a kind of "glue" to unite all the staff, resulting in a tremendous solidarity and cohesion.

Incentive function refers to that corporate culture motivates employees to produce high-up emotions and energy and enterprising spirit from the heart; its incentive to people is not an external impetus, but an inner boot.

Adjustment function is to adjust and adapt, which is actually an expression of the dynamic role of the enterprise. One of the performances is to regulate some internal elements in order to adapt to the external environment.

Having a clear understanding of the dimensions and functions of adaptive culture is beneficial to know about how to analyze a typical corporate culture and the adaptive ability.

3. A detailed analysis about the adaptive culture of Haier

3.1 The importance of the adaptive culture of Haier in its developing history

Haier has developed to the international company from small plants facing the verge of collapse in 1984, with the annual sales income of more than 300 million to more than 700 billion Yuan now (Duysters et al, 2009). There are a lot of factors accounting for the fast development, but it is necessary to point out that the adaptive culture plays a decisive role, the people and the spirit of innovation support the development of Haier.

3.2 Analyzing Haier spirits, service concepts and other elements related to its adaptive culture.

The corporate culture of Haier takes the concept of innovation as the guide, strategic innovation as the foundation, organizational innovation as the protection, technological innovation as the approach and market innovation as the goal (Liu, 2011). Therefore, the core spirit of Haier's corporate culture is innovation. Haier has always believed that enterprises cannot be afraid to take risks, but they should learn to carefully observe processes and changes, and then implement reforms timely. Accounting for its innovative spirit, Haier realizes its transformation from pyramid organizational structure to a flat organizational structure, which shows its ability to be initiative to respond to environmental changes. By summing up the experience, using practices and implementing the relevant measures. Haier has adapted to the environment in organizational change.

Haier takes every action on terms of customers, take the initiative to understand their customers, make them feel satisfied, and expected customers' future needs (Gao, Ye and Huang, 2012). All the managers in Haier agree that those who can meet the individual needs of the customers would be the last winner. On the basis of this, Haier breaks that the service is limited to after-sale, and becomes the first enterprise to establish an exquisite service, which refers to offer the most intimate human care.

The adaptability of corporate culture is also measured by the company's ability to take external signals as a good opportunity to encourage innovation and absorb new knowledge. Before, sales of washing machine were a big problem in summer because the operation of the general washing machine required a large number of water, electric and time. Then, Haier took the opportunity to improve its technology on the basis of research and developed China first "instant wash" washing machine. There is a logical link between organizational learning ability and enterprise environmental resilience, and in order to be consistent with the environment, the enterprise must learn to forget and re-learn skills based on past behavior.

4. Assessment of the effect of the adaptive culture on environment on the basis of dimensions and functions of the culture.

On the basis of the analysis above, Haier possesses innovative spirit, humanized service and outstanding learning ability, which are the measurements of adaptive culture and has helped Haier to overcome many external challenges when facing a turbulent environment.

The international financial crisis had a large influence on different enterprises. As the Chinese largest appliance enterprise, Haier actively dealt with the difficulties and took an innovative attitude to response to the crisis, and then created a great harvest in the cold "winter" (Sun, 2011). Although enterprise overcapacity, vicious competition and substantial decline in exports gave a heavy attack to other companies, Haier survived because of the adaptive culture. Taking advantage of the innovative thinking of the corporate culture, Haier repositioned its market entry point as the following: building a high-end brand image overseas and stepping into rural communities in China through innovation. In 2011, the Haier Group's global turnover arrived at 150.9 billion Yuan, with more than 80,000 employees in 17 countries around the world, and spread more than 100 countries and regions all over the world (http://www.haier.net/en/, 2011). The financial crisis demonstrated the adaptability of the innovative thinking of Haier to the unflavored environment. Haier aimed at the market, insisted on the innovative road and provided personalized products to customers on the basis of offering solutions to the problems encountered by users. In the case of the downturn in the global market, an innovative culture helps Haier to change its mind and establish a unique mode different from others, which indicates the successful implementation of innovative corporate culture and its guiding role in an emergency.

There is a hammer in the showroom of Haier's corporate culture. This hammer punched the quality awareness of employees, punched a "defective product is a useless product" concept and punched a world brand in the minds of customers---Haier. In the age of materials shortage, 76 refrigerators Haier punched contributed the formation of the sense of quality and service concept: Customer is God; therefore the enterprise must provide qualified products to meet customer needs (Hawes and Chew, 2011). Haier has encountered many difficulties about product quality and finally got through the trouble smoothly, which benefits its service concept to put customers in the first place and indicates its cohesion. For instance, due to engine aging, Haier washing machines sold in Japan were involved in smoke incidents; therefore, the products of Haier were questioned by communities. In such adverse circumstances, Haier chose to recall many washing machines and offered a free inspection and parts replacement (Williamson, 2010). In order to safeguard the interests of its customers and adhere to the concept of customer first, Haier sacrificed its own short-term profits without hesitation so the company won the trust and support of consumers when facing difficulties. According to the recalling behavior, the cultural concept of the customer first has been deeply rooted in the staffs' awareness of Haier and the interests of customers would be the eternal goal that a company should strive to achieve. Such cultural ideas effectively responding to external challenges and changes and united in face of difficulties help Haier to achieve reputation and credibility and constraint employees' disingenuous behaviors when getting into trouble.

In the era of the Internet, the users have enough information to grasp the product features and prices, continue to compare and bargain until the consumers find the best that meet their individual needs. It is necessary to point out that the initiative right rests in the hands of customers. In the fiercely competitive situation, the general simple innovation has been unable to meet the need for enterprises to achieve a breakthrough development, changes and challenges in this age of the Internet inevitably motivate enterprises to adjust their strategy and management mode. In order to adapt to the needs of the times, Haier regarded the Internet challenges as an opportunity to learn some competitive skills and motivate its employees to progress as the times goes, and set up to explore and practice in business model innovation (Li, 2012). When the global environment of white appliance was transferring, Haier strived to adjust its layout. Only in Southeast Asia, Haier acquired Panasonic's Sanyo, two R & D centers and four manufacturing bases, which effectively enhance the competitiveness of Haier in the Southeast Asian market (Li, 2012). This process of self-growth and self-fulfillment made Haier get better market outcomes in an unflavored condition. As to Haier, all kinds of challenges are excellent opportunities to grow. It is this ability to actively seize the opportunities when facing external challenges that assist Haier to achieve high growth and high value-added in the contrarian. Thus, it is worth noting that the ability to learn skills and self-adjustment in challenges is an important factor to establish adaptive culture, which has helped Haier to realize its prosperity.

5. Conclusion

Through the analysis, it is agreed that the adaptability of the corporate culture including its innovative spirit, services concepts and learning ability are important in the long-term development of an enterprise. The adaptive culture is the sole and intangible assets of the company and has helped Haier to overcome many difficulties in a complex environment. It is can be concluded that the construction of corporate culture has something to do with the developing scale and the influence of the company.

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Reference

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