Analysis and Strategies for Emerging Markets

Assignment-2

“Midea Globalization Challenge”

Submitted to: Sir Qaiser Janjua

Submitted by: Rida Zahid (160023)

Class: BBA-7
 Midea: Globalization Challenge for a Leading Chinese Home Appliance Manufacturer

Pressure to Globalize for Midea

 All customers do not accept standardized appliance products globally - Pressure to globalize for
Midea is not high
 Single set of rules governing the appliance industry is not observed to a greater extent- Pressure to
globalize is low or moderate
 Cultural Similarity worldwide is not high (for instance Chinese Culture and Europe’s culture is totally
different)- Pressure to globalize is not high
 Increasing demand from foreign countries is not very high and China’s citizens still prefer to use the
domestic products- Pressure to globalize for Midea is low
 There are no issues in segment size- Pressure to globalize is not high
 Sunk cost is not very high but medium- Pressure to globalize for Midea is low or Moderate

So overall pressure to globalize for Midea is not high, thus Midea should build its domestic position
strong. With respect to assets, Midea’s Assets are customized! As pressure to globalize in the appliance
industry for Midea is not very high and assets are customized to home market so I would suggest
“Defender” Strategy. By pursuing Defender strategy, Midea would focus on leveraging and utilizing its
local domestic assets in those market segments where multinationals are weak.

As Midea’s having large national sales and service networks, best distribution network in the
domestic country, advanced R&D center and is best in terms of quality, design and value so it should
make its domestic position strong rather than going global. Moreover Midea has advanced technology and
manufacturing in “fans” and is the largest fan manufacturer in the world so it should not leave its home
country as it is a lucrative market for Midea.

As Midea is well familiar with Chinese culture and its sunk cost is not very high so by following the
defender strategy, Midea can get leverage in the domestic market (China). Right now Midea don’t have
proper distribution network at the global level, not having significant resources and expertise to operate
global, not having alliances with global supplies and government and barely has a branded presence
worldwide so it is not right for Midea to become an international appliance company.

As technology is going advance day by day and Midea’s domestic and foreign competitors are
launching different innovative appliances for the Chinese market, so Midea should increase its product
line by launching non HCFC line of air conditioners to avoid ozone damage and launch quietest fans and
this would definitely provide leverage. By following Defender strategy, Midea can also discover more
new markets to tap and can get leverage by the best utilization of customized assets. Midea can tap into
new different market segments along with existing segments and for this its R&D center is excellent as it
also provides product’s testing facilities and provides useful market insights.

The demand for home appliances is increasing day by day due to reforms in China and penetration
rates are also increasing in the market so pressure to globalize for Midea is not high, thus Midea should
not take this situation granted and start focusing to tap the Chinese market to make its position
competitive along with providing superior services, affordable prices and excellent customer service!