IntroductionThe purpose of this report is to use Huawei as the focus of an analysis and compare and contrast business models adopted by other companies that operate within the smartphone industry. The analysis will then include a description on Huawei’s organisational culture and the impact this has on the company’s success. An analysis of Huawei’s relationships with other companies and countries will be done to try and determine how this influences the supply chain and the distribution and logistics strategies.Comparison of business models, market positioning and market development of Huawei and its competitors at home and overseasA firm’s Business Model (BM) is thearticulation of the processes through which resources are leveraged to createand deliver value to stakeholders allowing the firm to generate a profit(Chesbrough,2010). For years the high-end smartphone industry has beendominated by Apple and Samsung with both companies being involved in a worldwidecorporate battle since 2010 as Samsung who was back then a supplier to Applehad released a product that was far to similar to the iPhone. For years, thesetwo companies have been battling for superiority within the industry and onlyfocusing on beating each other but however one Chinese phone manufacturer ishoping to battle both companies to be recognised as one of the best. Huawei waspreviously known for distributing smartphones that were cheap and un-brandedbut the company is dumping this business model and has re-invented its self tobecome a globally recognized brand by advancing rapidly into markets worldwide.Huawei has now become the worlds number three smartphone brand and earneditself a 10% global market share (Samsung-23.3% and Apple-14.7%).Innovation of new business models Asthe industry is getting more and more intense and populated with smartphonesthat are constantly improving to be better than their competitors it’s gettingmore complicated to design a business model that can meet targets and be thedominator of the smartphone industry. The business model is a key indicator ofwho is going to be at the top of the telecom market and the traditionalsmartphone business model is facing challenges that have never been dealt withbefore from issues that the companies have not necessarily had any influence onsuch as globalization and the important role that internet plays in todaysworld. Having a successful business model has been key to the rise and successof Huawei, they have even got their own Business Model Innovation Centre (BMIC)which has been praised for analysing current business models from itscompetitors to see an end result of them bettering themselves as a globalorganisation. The BMIC develops methodologies and tools to help allow thebusiness innovate there current business model to help the business to continuegrowth to be multilingual, multicultural and multinational with plenty ofrecognition in key international markets. With the innovation of the businessmodel, its expected that new opportunities will arise but with threats alsoemerging from industry competitors it is imperative that the business model cancapitalize on these issues to ensure that a well sustained profit is achievedalong with having that competitive advantage over its major competitors.Challenges of implementing a successful business modelTo ensure that these can be overcome as quickly and as safely as possible there are numerous challenges that must be overcome, including:Revenue enhancement through differentiated user experienceBusinessmodel innovation that supports/monetizes new servicesCoststructure optimization for sustained profitabilityTransactionmodel adaptation that improves financialsParticipationin emerging disruptors such as cloud computingHuawei’srole is to help clients understand how and when to do these things so thattime-to-market and commercial risk are minimized.Inrecent years Huawei has worked hard to establish itself as the undisputednumber one smartphone brand in China and part of their business model has beento establish themselves within other markets. Huawei has advanced aggressivelyinto other markets and focused mainly on boosting brand awareness andincreasing sales especially in Europe.Global recognition In Europe, the company is growing at an unprecedentedrate due to the company releasing better quality products and re-inventing thebrands image with high end marketing campaigns. In particular, Europeans havebeen receptive of Huawei and are ditching previous mentality of either gettingthe latest iPhone or Samsung and open to trying new technology released byHuawei. Around half of Huawei’s 100+million phone sales and 65% of the company’srevenue in 2016 was generated from markets outside of its home country, China. Huaweisaw an increase in market share as its popularity rapidly rose in countriessuch as Germany, Italy and Spain. The rise of Huawei has stifled the iPhonesmomentum in China and is now being recognised as the worlds third largestsmartphone make in 2016. For Huawei to continue this rise they have to continueto pursue a business model that can allow them to compete with Apple andSamsung. Adaptation of new business modelsWhenyou look at the rise of the Huawei it’s clear that the success has come fromadopting new business models to fit current market trends and to ensure thatthey remain competitive towards its competitors. The adaptation and change forits business models over the years has ensured that it remains a dark horse inthe smartphone industry. Many years ago, Huawei was known for selling ‘cheapand cheerful’ products, which were renowned to not last very long. As a company,Huawei has invested millions in R&D to help them pursue better approachesto the industry and to try and get the company renowned as one of the best. Asyou can see from the image below the amount of units that Huawei now sellscompared to back in 2013 is a substantial improvement, which can effectively bedown to several improvements it has made as a company over the period of 3years. The willingness of adapting and changing its ideas to fit and matchcompanies such as Apple and Samsung will be a major factor of its success.Huawei’s organisational culture Huaweihas a sharp vision, a vision to enrich life through communication. It focuseson its customers’ challenges and needs and strives to create maximum valuethrough excellent service (Huawei, 2013)The rise and success of Huawei has been brilliant and the visionary founder Ren Zhengfei who started the company when he had no money and no connections within the technology industry. He has been praised for implementing and sustaining a culture that thrives Huawei’s employees in day-to-day business and its this mentality that is continuously praised but has had some implications in the past. Back in 2008 once of Huawei’s employees jumped to his death in the company’s headquarters and was the sixth employee to have committed suicide with the same mysterious circumstances. It has been blamed on Huawei’s aggressive and ruthless corporate culture of adopting the ‘wolf-culture’, which is explained below. In most top companies today, they rely strongly on continuing the culture of the organization, which can often relate to beliefs and values which were originally set out when the company was first generated. For Huawei these factors have determined the success of company and it has been stated that this also differentiates them from other market leaders such as Apple and Samsung. ‘Wolf-Culture’Themain organisational culture of Huawei, which sets out its key values, beliefsand attitudes, which is followed by all of its organisational members, is knownas ‘wolf-culture’, this has three main characters, which are defined as:Character 1– Wolvesare bloodthirsty, employees of the company are extremely sensitive toinformation related to its main competitors and any changed within the marketitself and they could respond promptly and adapt to any changes to ensure theyremain successful. Character 2- Wolvesare resistant to coldness, the fearlessness of difficulties that may riseand eagerness of making progress are insisted to every member of Huawei nomatter how complicated the challenge may be.Character 3- Takingactions in teams, The atmosphere of team cooperation is particularly strongin Huawei and people are encouraged to develop and share personal opinions witheach other (laoyzy, 2011). The ‘wolf-culture’ brings Huawei a high level of keen insightabout the unsteady market and assists the company to quickly react to any existingopportunities. As a result, Huawei could expand its business volume aboutapproximately twenty percent every year (Heissougly, 2010). Huawei vision, mission and core valuesVision – To enrich life through communication. Mission – To focus on our customers’ market challenges and needs by providing excellent communications network solutions and services in order to consistently create maximum value for customers. Core Values – To put the customers firstDedication Continuous ImprovementsOpenness and initiativeIntegrityTeamworkHuawei’s relationships and partnerships in host countriesHuaweiis the only Chinese company out of 91 mainland Chinese companies listed on theFortune Global 500 list, which earns more revenue abroad than in China.Huawei’s revenue from overseas markets exceeded that from the Chinese marketfor the first time in 2005. For the company this is a massive achievement and astep towards being recognised as the leading smartphone provider. Marketing CampaignsInrecent years Huawei has witnessed itself becoming increasingly popular out ofChina and seen a dramatic rise in its European sales, this surge in sales wasinitiated by the improvement in product quality and the high profileadvertising campaigns it has created. Promotions for Huawei newest products arebeing advertised in several cities across Europe, some campaigns are:Covering the trams of RotterdamThey have opened a flagship store in a prominent location atdowntown BrusselsGigantic Banners in Berlinand Lodz (Poland)In the city centre of Warsawlooks like an advertising convention and Huawei is the guest of honourThis successful campaign across European cities has also seen the company sponsor major European football teams such as Arsenal, AC Milan and Paris Saint-Germain. Huawei is not messing about when it comes to marketing, they are figuring out what can generate the most attention and ensuring that they get the brand more recognition as being one of the top smartphone providers. These campaigns across Europe is just a fraction of what they are actually doing, they are also recruiting European athletes such as Lionel Messi and Robert Lewandowski to be brand ambassadors along other entertainment stars such as Scarlett Johansson to endorse its high-end products. Europe has become Huawei’s most successful overseas territory and they have overtaken Apple and became the world’s second largest smartphone maker by shipment in several countries including Finland, Italy, Poland and Spain. It has ranked number three in Germany and number four in France, (Canalys, 2016). One of the main factors that has influenced Huawei’s presence in Europe is its relationship with local phone carriers. Before they started, selling phones Huawei were building telecom stations for European carriers such as Orange in France and Elisa Oyj in Finland. After previously building a successful relationship with already, well established businesses it has allowed Huawei a quick market entry and allowed them to spend its marketing budget on the best display positions inside local retailers, (Jeronimo, 2016). Retaining a strong relationship with previous clients has obviously benefited the company in establishing the brand outside of China but there are bigger problems that the company has been encountering. Although it is a huge success Huawei, starting to be recognised on a global scale but the company hasn’t got much closer to its end goal of profitability due to the fact shipment of all the high-end products still remains limited. The rise of Huawei does deserve praise when you look at how far they come, when comparing the amount of products its shipped with Apple and Samsung its still only a fraction of what there figures are. In the first half of 2016 Huawei only shipped 3.6 million smartphones priced higher than $600. When comparing this statistic with Apples 77.8 million and Samsung’s 31.6 million it just shows that there is still a lot of work needed to be done. Political UncertaintyThe main factor that is restricting Huawei from achievingfigures as high as its competitors is the fact that its unable to replicate itsEuropean strategy in the US. Reasons for this is that is doesn’t have a strongrelationship with any of the ‘big four’ phone carriers in the US (Verizon,AT&T, T-Mobile and Sprint). The US is a market where phone carriersdominate smartphone sales and without the support of the industry dominators,it has and will continue to make Huawei’s US ambitions a failure. In 2012, acongressional report was made stating that Huawei’s hardware could be used bythe Chinese government for spying purposes. This is an allegation that thecompany continues to deny but with anti-china talks often occurring under theTrump administration this is likely going to continue as a threat for thecompany. For now, Huawei has to carry on with a less effective strategy in theUS of selling phone through lesser known carriers and online stores such asAmazon. Last year Huawei was nowhere near the top five smartphone makers in theUS as it only shipped 1.4 million units (Canalys ,2016). This figure aloneproves to Huawei that not enough is being done in the biggest market in theworld but with allegations being made politically, does not give them muchconfidence and belief that the issue can be rectified any time soon.Huawei’s supply chain, distribution and logistics strategiesAstrong and reliable supply chain is essential to the survival of any company,for Huawei it is essential that they can rely on all stakeholders within thesupply chain as this enables them to ship products all over the world once theyhave been manufactured. When it comes to logistics Huawei’s strategy has beento adopt the asset-light strategy which allows them not worry about any largeexpenditure costs to purchase any large fleet of transport themselves, theywill instead use courier companies to ship products all over the world. Huawei’sCEO has previously mentioned that they are hoping to work with suppliers allover the world to help build a business ecosystem in which all stakeholders canall create value to share the risks involved and to enjoy the benefits that thesuccess of working with each other will hopefully bring. Huawei believe thatworking closely with their suppliers is essential to building that competitiveedge and this can help them achieve the positive results needed. With theincrease of popularity of smartphones it has led to companies like Huawei to changethe strategy in which these phones are distributed. The most common source ofdistribution has previously been phone carriers distributing the phone themselling it with a monthly payment plan requiring users to sign a fixed contractduring a fixed duration. Due to the popularity of companies like Amazon, Tescoand Ebay this has given smartphone companies another platform to advertise andsell its products and gives millions of sales each year. It is imperative forcompanies like Huawei to keep up to date with key trends that are trending indifferent markets that it’s operating in. In emerging markets such as Russiaand Africa it is common for consumers to purchase just the phone and not fixedto any contract with any phone carrier, however, in Europe and the US it isgetting increasingly popular to purchase the phone on a fixed contract basis.When it comes to distribution since 2012 Huawei has been pushing to be activein as many distribution channels and using the UK as an example it hassucceeded in doing this. In doing so Huawei sets out clear guidelines to itssuppliers and distributors that it expects them to follow. One of the mainfactors that it sets out is to pursue a sustainable approach. Sustainability ispart of Huawei’s procurement strategy and to be eligible to be part of Huawei’ssupply chain they insist that all members must comply with applicable laws andregulations set out in Huawei’s supplier sustainability agreement. They usethis agreement to continuously drive supplier improvements and to monitor andcontrol any risks that are can occur.Managing risk Allthese factors enabled Huawei to minimize supply risks, increase customersatisfaction, and boost the competitiveness of the supply chain. To help thecompany ensure that all companies are complying with this agreement they riskrank and audit each company. Each year they will conduct an audit for supplierswhich represents around 90% of their procurement spending and assign a prioritylevel of high, medium or low. The factors, which determine which level isgiven, are:Supplier locationProduct/material manufacturingSustainability performanceRisk management systemsEnvironmental risksOnce this audit has been conducted,it then allows Huawei to manage the performance of everyone involved in itssupply chain and they will do this annually and audit the results and anyimprovements that can be made. Performance appraisals are in place to determinethe reliability and performance for Huawei’s suppliers and then this allowsthem to determine who they need to offer improvement to and who needs to bepraised for the continued hard-work and loyalty given to the company. Theappraisal cover a few different factors:LabourHealth and safetyImpact it has on the environment (sustainability)Business ethicsManagement systemsIn the event of a new supplier being added to the supply chain, Huawei has a qualification process the company must pass to enable them to become business partners. This process will examine the supplier’s capacity and their compliance with applicable laws and regulations set out in their own supplier sustainability Agreement. To ensure that all suppliers comply with the sustainability agreement they provide training and coaching that is necessary and they also encourage them to include sustainability into their business models and strategies. They do this as they view sustainability as a key to reduce business risks and to perform operations more efficiently. Prohibition of ‘conflict minerals’As sustainability is the main focus of Huawei’s supply chain another focus of theirs is that companies must have good business ethics so they prohibit the use of ‘conflict minerals’. This refers to minerals that are sold to finance ongoing-armed conflicts in which the countries are mined or smelted. This is a common occurrence in Africa. The problem of this is making not just Huawei but other smartphone providers more aware of the issue and the US and Europe have just passed new laws to help deal with the issue and prevent the armed militias from making an come from top companies. This is not necessarily just associated with smartphone providers but the issue is a complex one that will be resolved through an organised global commitment and close cooperation between businesses and governments. All these factors will contribute to a successful and sustainable supply chain. It is also imperative that Huawei stays in a close partnership with other businesses in the same industry; this will allow them all to address problems that the companies may be facing or to rectify any problems that can occur. In a nutshell, collaboration allows us to combine strengths and gain advantage to boost industry competitiveness (Huawei, 2016).ReferencesAnon, (2018). 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