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MANAGEMENT ISSUES IN HAIER GROUP

APRIL 5, 2015 RICKY LEAVE A COMMENT
Management issues in Haier Group

Content

1.0 Introduction 4

1.1 Organizational background 4

2.0 Understanding the Hersey-Blanchard theory 6

2.1 Theory explanation 6

2.2 Benefits 9

2.3 The current leadership style in Haier 10

2.3.1 Strengths 12

2.3.2 Weaknesses 13

2.4 Weakness of this model 13

3.0 Globalization issue 14

3.1 Globalization on Haier�s last five years 15

3.1.1 Brand building strategy 15

3.1.2 Diversification development 16

3.1.3 Internationalization 17

3.1.4 Global brand building 18

3.2 Globalization on Haier�s future 18

3.2.1 Trends for Haier to meet 18

3.2.2 Future development 19

4.0 Manager roles 22

4.1 The monitor role 23

4.2 The leader role 24

4.3 The disturbance handler role 27

5.0 Organizational culture, leadership and national culture 28

5.1 Organizational culture and leadership style 28

5.1.1 Theoretical reference 28

5.1.2 Haier example 30

5.2 Organizational culture and national culture 31

5.2.1 Definition 31

5.2.2 Difference 32

5.2.3 Difficulties 33

6.0 Organizational structure 34

6.1 Haier�s organizational chart 34

6.2 Strengths 37

6.3 Weaknesses 38

6.4 Options 38

6.4.1 Option one 39

6.4.2 Option two 41

7.0 Conclusion 43

8.0 Reference 44

Figures and charts

Chart 1.0 Assets and liabilities performance of Haier from 2006 to 2010�����.5

Chart 2.0 Revenue and cost performance of Haier from 2006 to 2010������.5

Figure 1.0 The Hersey-Blanchard Situational Leadership Model��������..7

Figure 2.0 developing strategies of Haier during last five years��������..15

Figure 3.0 Organizational chart based on Haier�������������.�..36

Figure 4.0 the first option on Haier�s organizational chart����������..40

Figure 5.0 the second option for Haier�s organizational chart���������.42

1.0 INTRODUCTION
In this report, we explore the management issue of Haier in several aspects
including its leadership style regarding with its strengths and weaknesses,
globalization related issues, managerial roles, the relationship between
organizational culture and leadership style as well as the national culture and
their conflicts. Finally we also analysis the organizational chart of Haier and
summarize its weaknesses and strengths to offer two modifications on this current
structure.

1.1 ORGANIZATIONAL BACKGROUND

Haier Group was founded in 1984 in Qingdao, China, which has become the most
popular white goods manufacturer in China and also enjoys good popularity in the
global market with a large proportion of the world market share in household
appliance products making (Haier 2010).

Zhang Ruiming is its Chairman and the major founder of Haier. And under his wise
guidance and management, effective and famous strategies are employed by Haier in
both China and international markets to position its brand (Haier 2010). And the
following chart 1.0 to 2.0 is the financial performance of Haier in the recent
year, which discloses its assets and liability status and reverence performance,
which all prove the good achievements made by Haier (Haier 2010).

Chart 1.0 Assets and liabilities performance of Haier from 2006 to 2010

figure 1.0

Source: Haier 2010, Annual Report 2010, Haier Electronics Group Co., Ltd.,
electronic version,

Chart 2.0 Revenue and cost performance of Haier from 2006 to 2010

figure 2.0

Source: Haier 2010, Annual Report 2010, Haier Electronics Group Co., Ltd.,
electronic version,

2.0 UNDERSTANDING THE HERSEY-BLANCHARD THEORY

2.1 THEORY EXPLANATION
Hersey-Blanchard theory is also known as the situational model of leadership, which
is one of the contingency approaches that developed by Ken Blanchard and Paul
Hersey in the late 1960s (Daft 2010). The situational leadership model links the
leader�s behavioral style with the maturity level of followers as indicated by
their readiness to perform in a given situation. �Readiness,� in this sense, is
largely based on two major factors � follower ability and follower willingness to
accomplish a specific task. Ability is the knowledge, experience, and skill that an
individual possesses to do the job and is called job readiness. Willingness is the
motivation and commitment required to accomplish a given task. The style of
leadership depends on the level of readiness of the followers (Daft 2010).

This theory provides four styles of leadership � telling/directing,

selling/coaching, participating/coaching and delegating/observing� to deal with
subordinates at each of readiness levels. The Figure 1.0 below illustrates �The
Situational Model of Leadership�.

Figure 1.0 The Hersey-Blanchard Situational Leadership Model.

figure 1.0
Source: From Schermerhorn, Jr. (2011), Management, 11th edition, John Wiley & Sons,
Inc., Pp 320.

From the Figure 1.0, the leadership styles characterize growing leader-follower
relationships and declining levels of leader direction. Leaders shift from one
style to another based on the task, situation and maturity level of the followers.

Using the �telling� style, the
staff and sets clear goals and
situation of low readiness, by
situation where followers lack
tasks (Schermerhorn 2011).
leader provides comprehensive directions to his
roles. The telling style works best in this
giving instructions and bringing structure to a
capability and are unwilling or insecure about their

Using the �selling� approach, the leader tries to motivate and convince people to
adopt the new processes and procedures. The selling style is recommended for
moderate- to high- readiness situations. Here, followers lack capability but are
willing or confident about the task (Schermerhorn 2011).

Leaders using the �participating� style share responsibility for decision making
with their employees and become more of a facilitator than a manager. The
participating style is recommended for low- to moderate- readiness situations.
Here, followers are capable but also unwilling or insecure about the tasks
(Schermerhorn 2011).

Using the �delegating� approach, the leader hands off the responsibility for making
the decision to his subordinates, assuming they have the skills, knowledge,
experience and desire to complete the task (Schermerhorn 2011).

Managers using the situational leadership model must be able to implement the
alternative leadership styles as needed (Schermerhorn 2011). To do this, they have
to understand the maturity of followers in terms of readiness for task performance
and then use the style that best fits. For instance, you�ve just been put in charge
of leading a new team and the team members are never work with you before. As far
as you can tell, they have the required skills to achieve the department�s goals,
but not all of them. The good news is that they�re excited and willing to do the
task. You estimate they�re at a low-to-moderate maturity level, so you use the
matching Participating leadership style. You coach them through the project�s
goals, pushing and teaching where necessary, but largely leaving them to make their
own decisions. As a result, their relationship with you is strengthened, and the
team�s efforts are a success.

2.2 BENEFITS
The benefits of adopting Hersey-Blanchard�s situational leadership model are:

Better Communication � The model emphasizes the need for managers to constantly
remain aware of the needs of their subordinates (Schermerhorn 2011). To be able to
assess an employee�s abilities and lead him to perform efficiently, it is
imperative for the leader to communicate. When a manager uses the situational style
of leadership, he interacts with an employee, listens to what is said, and provides
what is essential for a given situation. Therefore the situational leadership model
allows for enhanced communication.
Higher Morale � When employees and team members feel heard, their morale rises
significantly. A leader who communicates openly, provides information and resources
to meet every situation, and involves employees with the requisite skills in
problem-solving, inspires his team to better performance (Schermerhorn 2011). As
performance improves, an employee feels more confident of her own abilities, and is
willing to take up greater responsibilities, making it easier for the leader to
delegate tasks. Inspired individuals contribute more willingly and better to create
a motivated team. From the leader�s point of view, using the directing or selling
approach directly improves productivity, whereas the participating and delegating
approach enhances employee participation and ultimately increases productivity.
Personalized Management � Situational leadership involves a flexible approach to
meet the distinct requirements of each situation and every individual (Schermerhorn
2011). It allows leaders to evaluate each subordinate, understand their individual
needs and address those needs in the most effective way.
Effective at Leadership Challenges � Leadership challenges are events that occur in
which you are responsible for determining a solution and instructing othershow to
reach it. Situational leadership theory allows you to confront each situation,
determine the best solution and use the most effective leadership technique to
reach your solution (Schermerhorn 2011).
2.3 THE CURRENT LEADERSHIP STYLE IN HAIER

Zhang Ruimin is the Chairman of the Board of Directors and CEO of Haier Group in
China. In 1984, Zhang Ruimin took the post of Director of Qingdao Refrigerator
Factory � predecessor of Haier, thus starting the prologue of Haier�s
entrepreneurship. Through 28 years of development, with his innovative
entrepreneurial spirit and advanced strategic decision-making in conformity with
the trend of the times, he has turned a small collectively-owned factory with a
1.47m Yuan loss into a global enterprise with global turnover of 135.7b Yuan
( Haier 2010).

In our opinion, Zhang Ruimin�s leadership style is typical; it appears the

transformational leadership style because he always changes the rules according to
the situations. By approach to the Hersey-Blanchard�s situational leadership model,
we believe that, the Delegating leadership style is best described the current
Zhang�s leadership style (Schermerhorn 2011).

As the market of Haier has extended from being local to global, its employee grew
from 600 to over 50,000. �It is not possible to rely upon a person or one
management team to make decisions as responding to the challenges today,� as said
by Zhang. As a result, they have made multiple efforts to enhance their management
position by flattening the organizational structure.

Zhang has recognized that the quality of personnel has become a huge issue as the
organization expanding globally. The approach he has adopted is to personnel
localization, by employing a local manager to operate the business. In addition,
Haier has also sent people to its overseas corporations from its headquarters, to
encourage those Chinese managers to be innovative and independent in a different
market, and also improve their capabilities in the international environment.

For instance, the target that Zhang gave to their managers is to popularize Haier�s
products in the U.S. market. And he empowered the managers in U.S to make every
detailed decision themselves. In other words, he wants managers to discover
solutions themselves that can enhance Haier�s competitiveness in that market. In
short, Zhang prefer to set up a target, and leaves the followers decide themselves
in their context on how to reach target and by what innovative approach. (Sheng &
Ye 2011)

Zhang requires that the managers in Haier should be innovative and independent with
their own balance sheet (Sheng & Ye 2011). In practice, it involves three steps:
(1) Set up a target for every individual; (2) Provide the necessary support and
resources to the individuals; and (3) Establish individualized balance sheet
includes information like input and output.

All the above characteristics of Zhang�s leadership style are related to the
Hersey-Blanchard�s delegating leadership style (Schermerhorn 2011). The delegating
leadership style is about all of the tasks are handled with little input from the
leader. The team member directs their own behavior and decides how tasks should be
accomplished. The team member is willing � even wants � to work by him or herself
with little support or supervision. The leader is focused on strategic issues and
works with the team to rapidly implement changes that enable the team to remain
competitive in the marketplace.

2.3.1 Strengths

Zhang�s delegating leadership style seems best fit in the current globalization
market, the success of the Haier proved so. The strengths of delegating leadership
style are: efficient use of time and talent; delegation will help a manager use
his/her time and the time of the employees effectively, and it will allow a manager
to get even more work done then they will alone (Schermerhorn 2011). Delegation is
a way of empowering employees and this is a promising advantage. Giving
responsibility and accountability to employees will give them an opportunity to
showcase their skills and talents, therefore it is an opportunity for staff
development; it will also provide them with the opportunity to have pride in their
work therefore increased motivation (Schermerhorn 2011).

2.3.2 Weaknesses

However, this delegating leadership style appears certain weaknesses in Haier:

Firstly, though people are willing to execute the strategy and increase their
skills, so far their competence is still inadequate to make some important
decisions (Sheng & Ye 2011). And secondly, there is difficulty on identify the
target of each individual�s balance sheet; the IT applications in their business
processes are not sophisticated enough to count profits and losses for each
individual (Sheng & Ye 2011). Moreover, the biggest problem is human minds. For
example, some executives in Haier have become complacent due to the good
performance the company. Lots of them are reacting slowly to the market change
(Sheng & Ye 2011).
2.4 WEAKNESS OF THIS MODEL
Though the Hersey-Blanchard situational leadership model bring successful results
when you have the ability to flex your leadership style to suit the particular
situation. There are certain drawbacks too.

First of all, this model ignores the differences between female managers and male
manager. Generally speaking, female managers might tend to have a nurturing style,
while male managers may lean toward a task-oriented management style (Schermerhorn
2011).

Secondly, the model ignores interpersonal relationships and the vary level of
maturity within work groups. Therefore, it is not much useful in leading a group of
people because the maturity level are differ among the group and poor interpersonal
relationships have a negative impact on performance (Schermerhorn 2011).

Moreover, situational leadership focuses on follower maturity as a key determinant,

it ignore other important situational factors such as relationships between leaders
and followers, position power and the structure of the task (Schermerhorn 2011).

Finally, there are difficulties on defining and quantifying the maturity level and
propensity to assume that job maturity matches emotional maturity. Hersey and
Blanchard describe job maturity as �capability to take responsibility� but there is
no credible source that supports the definition (Schermerhorn 2011).

3.0 GLOBALIZATION ISSUE

Griffin and Pustay (2010, p. 35) define globalization as the inexorable integration
of markets, nation states, technologies and so on in the way that is enabling
individuals, corporations and nation states to reach around the world farther,
faster, deeper, and cheaper than ever before. And the cause of globalization are
also summarized by Doh, (2009) including leveraging core competitiveness, acquiring
resources and supplies, seeking new markets, better competing with rivals and
changes in economy, technological, political environments.

Under the umbrella of globalization, it has influences on both Haier�s past and its
future.

3.1 GLOBALIZATION ON HAIER�S LAST FIVE YEARS

In the last five years, Haier has experienced a fast developing period under the
influence of globalization, which is supported by several effective and excellent
designed strategies in figure 2.0.

Figure 2.0 developing strategies of Haier during last five years

figure 2.0

3.1.1 Brand building strategy

The first strategy employed by Haier under the influence of globalization during
the last five years is named brand building strategy in both Chinese market and
international market (Yi & Ye 2005).

With the more and more open attitudes from Chinese government towards the
development of its national enterprise in both the domestic stage and international
stage, many national enterprise including Haier has learned and introduced those
advanced and modern foreign technologies as well as equipments to their industry.
Haier is the one which process in the first place, which has introduced those
modern technologies and equipments from the household appliance manufacture
industry to build its brand (Yi & Ye 2005). During that time, there were some many
Chinese enterprises in the household appliance market have sought the scale of
economies by concentrating on outputs while neglecting the quality of their
products when demand soars out of supply. Compared to these domestic rivals�
practices, Haier refused to pursue the high yields blindly (Yi & Ye 2005). To the
contrary, under Zhang Ruiming�s wise leadership, Haier is strict with its products�
quality under the support of comprehensive management of quality. Generally, Haier
has dedicated itself wholly to develop and implement a set of practical and
effective models such as management model, technique model, talent model and
corporate culture during the past five years to build its brand (Yi & Ye 2005).

3.1.2 Diversification development

During the past five years, globalization led to many foreign competitors surging
into Chinese market, which gives national enterprises in China great pressure
(Haier 2010).

Under the fierce competition, Chinese government has carried out the policies to
encourage enterprises to merger and acquire with each other. Under this situation,
Haier has developed itself in a diversification way. At first, Haier has promoted
the merger with more than 18 national enterprises engaged in household appliance
manufacture industry of China to embed them with the perspective of �Haier culture
activated shocked fish� to enable Hair Group enter into the period of fast
development and expansion both in Chinese and international market. Secondly, to
better meet the picky requirements from both domestic and international customers,
Haier has employed the star service system to its enterprise. Thirdly, under the
fierce competition such as price competition from both international competitors
and domestic competitors, Haier has been building its competitiveness via superior
quality control. For instance, during this period, Haier has begun to carry out
management approach named �overall every control and clear to ensure everything
that needs to be done has done every day which is also the great innovation of
Haier under the influence of globalization (Haier 2010).

3.1.3 Internationalization

After entering WTO, Haier become more active to expand its business internationally
under the call of Chinese government. To build the good image of China�s own brand
in international market to meet opportunities offered by globalization, three steps
strategy was employed by Haier such as moving into, mainstream step, and leadership
step under the guide from the philosophy that tough first, easy later (Business
Week 2009).

3.1.4 Global brand building

The last activity employed by Haier during the past five years to meet
globalization�s requirements is to build its brand globally. From 2005 to 2021,
this is defined as internet era, promoting market segmentation and dramatic changes
towards traditional corporate feature. That is to say, the era of globalization and
internet requires companies to change from products sales concentrating on
enterprises to service sale concentrating on users. And this era also integrates
the world economy together to improve the relevance between globalization and
internationalization logically. Therefore, Haier has integrated its resources in
global region in product research and development, manufacture and marketing aimed
to build Haier brand as a global brand. And Haier has also developed its business
mode in more customers concentrated to produce win- win outcomes.

3.2 GLOBALIZATION ON HAIER�S FUTURE

3.2.1 Trends for Haier to meet

Towards the future of Haiers, it is important for this Chinese enterprise to meet
the trends promoted by Haier in its future globalization road.

For one thing, the global economy recovers gradually which also promotes the
recovery of global market and continue their development. Meanwhile, the price of
raw material has also been increased along with recovery from economy including
steel, oil, copper and other kind of resources (Haier 2010 & Zhang 2012).

For the other, labor cost in China has been increased especially in the second and
third tier cities. Moreover, when entering information age, the manners to reach
customers are increased such as the internet manner. (Haier 2010 & Zhang 2012)

By and large, with the rise of labor cost and raw materials, domestic enterprise
especially household appliance manufacturer had better improve their
competitiveness via innovation and creation on new product instead of relying on
assembling merely and well manage its labor force to improve their performance
outcomes (Haier 2010 & Zhang 2012).

3.2.2 Future development

3.2.2.1 Channel shifting

To meet the trend of information age, popularity of internet has been increased,
which offers both challenges and opportunities for household appliance makers and
their distributors. Under the platform of internet, it is necessary for Haier to
focus on the internet sources to explore a wider scale of customer sources and
provide them with convenient and better solutions for customers to purchase their
favorable products via internet platform (Haier 2010).

Moreover, under the assistance of internet, which may promote the products of Haier
more effectively by its great influence power on people, customer basis of Haier
may be increased to a certain level (Haier 2010).

That is to say, in the future, the promotion focus and selling focus of Haier may
be shifted to the internet platform a lot due to the influence power and
convenience of internet for both customers and Haier in booking, purchasing,
customers feedback collection and communication with customers via the official
website of Haier and other internet sources such as e-mails (Yidan 2009).

3.2.2.2 Increasing portfolios for brand and product

To meet more and more diversified requirements from a large customer basis via the
globalization trend and assistance from internet platform, Haier is believed to
develop the deeper and wider portfolios of products to meet customers� needs in the
future (Zhang 2012).

And to achieve this, Haier is believed to expand its products into more environment
friendly and energy friendly manners to make its household appliance products more
cost saving and welcome by customers (Zhang 2012).

3.2.2.3 Extending distribution system

To improve Haier�s competitiveness via cooperation with other business players in

both Chinese market and international market, Haier is believed to build and
develop a relatively open stage with positive interaction with those strong brands
in logistics or services industry to ensure the service quality such as product
delivery for its customers are ensured and satisfactory. Moreover, as the good
outcomes brought by the pre sale or after sale services, Haier is also expected to
build and develop its network system continuously to a higher level in the future
to attract more customers and brands to join Haier family to witness Haier�s
prosperity (Zhang 2012; Yidan 2009).

3.2.2.4 Enhancing the focus on online business

As the above mentioned, to meet the trend of globalization which offers so fast
developed technology for business players, Haier is also expected to fast develop
the utility of internet to further promote its online business as other big giants
have done in the household appliance industry. For instance, in the future it is
possible for Haier to further identify the actual needs from different customers,
reduce selling expenditures and transaction costs to establish the low cost but
effective selling platform by the assistance of internet and support from the
logistics systems in the efficient manner (Zhang 2012; Yidan 2009).

3.2.2.5 Effective training and developing programs

Considering the high cost of labor force in the future even at the present time, it
is also possible for Haier to enhance the effectiveness and efficiency of its
training and developing programs for its labor force. These effective training and
developing means especially cross training measures will be employed by Haier to
achieve the aim of high competitive labor force with the lowest costs (Zhang 2012;
Yidan 2009).

3.2.2.6 Diversity workforce development

Under the trend of globalization, people from different culture, nationality,

education background, religion, gender, sex orientation, race and so on will work
together to offer organizations with continuous innovation and creativity in their
products and serviced for customers all over the world (Stone 2011). For Haier,
with the chances offered by globalization under its own global expansion pace, it
is believed to develop a world pool of talents made up of diversity workforce to
make full utility of diversity workforce to enhance its competitiveness compared
both Chinese and international competitors in the global market region ( Haier
2010).

4.0 MANAGER ROLES

According to the observation and subsequent research from Mintzberg (Zhang 2012),
diverse activities practised by managers can be categorized into ten roles.
Referring to organizational practices and operational issues in Haier Group leaded
by Zhang Ruiming, we can define his management roles as a monitor, a leader and
disturbance handler.

4.1 THE MONITOR ROLE

In the monitor role, managers scan their environment for information that related
to their works, actively contact others for information, and because of their
personal contacts, receive a great deal of unsolicited information (Mintzbery
1973). The monitoring can be internal and external. As for Haier, the product
designers must go to the market to discover the needs and demands of the consumers,
therefore, requires the managers closely monitor the market change, specially the
changes of customer�s purchasing behaviors. The corporate expend huge resources on
R&D, and then come back with products which maximized value for customer.

As mentioned earlier, the business goal of Haier is to satisfy their consumers as

quickly as possible and they want consumers to feel that Haier is the one company
that comes closest to satisfying their needs. To achieve these goals, Haier focused
on developing innovative products. For example, in the U.S. market, when report
showed there is stock shortage on dormitory refrigerator, the marketing manager
took immediately action to discover the reasons of such popularities by gathering
information from the target market. By closely monitoring the market, Haier
captured the great opportunity on the market of American college students.
Moreover, Haier�s product designers designed lot of innovative products based on
the customer-oriented (for example, the Wine Cabinets introduced by Haier are
popularized in the American and European market).

In order to understand the customer�s needs, it requires all the managers even the
workers to collaborate together and monitor the market closely. Haier adopted open
system approach to the business, which is a system that has interaction with its
surrounding environment and be able to adapt to the changes that occur in their
environment. Therefore, the strengths of Haier are the speeding innovation and the
ability to differentiate them from its competitors. From this open system, we found
that the managerial activities included monitoring the market environment and
gathering feedbacks.

Besides receiving firsthand information, managers in Haier also monitor their

environment by reading local newspapers or take advantage of electronic monitoring
and distribution services to keep track of customer, competitors, and technological
changes that affect their business.

4.2 THE LEADER ROLE

Flannery (2001) advocated the leader role possesses relationships with his or her
subordinates by communication, impact, encouragement and motivation. Zhang Ruiming
as the CEO of Haier Group, just from his position side, we can define his role as
the leader. As a matter of fact, what Zhang Ruiming has practised in his managerial
role of Haier has proved his leader role.

First, Zhang Ruiming is excellent at directing and motivating his subordinates.

Haier Group is developed from a small and approximate to bankrupt refrigerator
making factory, which is just under the wise direction of Zhang Ruiming to be
developed and expanded as the most influential household appliance making factory
even ranking among the top 500 enterprises in Fortune magazine (Zhang 2012). For
example, Mr Zhang has led Haier to set up business goals including diversification
product developing strategy to expand products categories from merely refrigerator
to washing machine, air conditioning, TV and other household appliance categories;
build up plans to improve infrastructure quality of Haier Group such as
establishing Haier Industrial Part to offer hardware support for its international
expansion strategy; make every important issues down via vertical hierarchy and
power from his position to further direct and lead his followers and ordinary
employees so as to fulfill organizational objectives

Secondly, Zhang Ruinming takes every training issue for employees into account.
Besides ordinary training and developing programs for employees every year, Mr.
Zhang supported by human resource department of Haier Group to offer employees more
opportunities to receive the on the job training. For example, at the very
beginning of Haier�s foundation, Mr. Zhang resolute decide to send two fresh men to
France representing Haier to open the France market for Haier (Flannery 2001).
Under the encouragement and confidence building efforts from Mr. Zhang for the two
young guys, France market was conquered by Haier Group with the support of the two
fresh men. For Haier, what it gains is not only the oversea market, but also two
potential talents under practical trainings in the international market. In
addition to the actual training in market, other kinds of training and developing
activities are also recommended by Zhang Ruiming to further improve the
competitiveness of his employees including off the job training, performance
competition, cross training and so on (Zhang 2012) .

Thirdly, the leader role played by Zhang Ruiming is also reflected from his
offering of counseling and building effective communication mechanism in Haier
Group. As the leader, Mr. Zhang is good at counseling, who often offers advice and
encouragement to his employees when they encountering problems to improve their
self-confidence and performance. For instance, once there are two designers lacking
in confidence towards their designs when Haier is exploring international market
faced with competition from international players, Zhang Ruiming encourages them
you should have confidence in yourself because you can, which largely improve the
confidence of people on their own ability. Besides this evidence, there are so many
evidences of Mr. Zhang to give advice and counsel for his people when they are in a
dilemma, which proves the typical leader role embraced by Zhang Ruiming (Bartlett &
Ghoshal 2009). Moreover, Zhang Ruiming has also established effective communication
mechanism inside Haier including upward communication, downward communication and
horizontal communication to concern the organization of Haier as a whole. The
upward communication strategy promoted by Zhang Ruiming in Haier, for instance, is
designed as open door to employees communication strategy, which means all level of
managerial people in Haier are required to open their door to communicate with
their subordinates to find out their problems, accept their suggestions for
improvement, offer thorough performance report and other important issues. This
kind of communication strategy promoted by Zhang Ruiming has promoted the
communication effectiveness of Haier between management and ordinary employees
(Bartlett & Ghoshal 2009).

By and large, all of the managerial behaviors and practices mentioned above prove
the leader role played by Zhang Ruiming as the CEO of Haier Group is relatively
excellent.

4.3 THE DISTURBANCE HANDLER ROLE

According to Daft (2010), disturbance handler role involves the activities such as
solving conflicts or disputes inside the organization, make the organization more
compatible with the outside environment. In Haier, Zhang Ruiming also plays the
role as disturbance handler to lead Haier to operate healthily.

In dealing with the inside conflicts or disputes, Mr. Zhang often perform
outstandingly to relieve many sharp conflicts and disputes (Bartlett & Ghoshal
2009). Let�s use three examples involved in Mr. Zhang to prove his excellence as
the disturbance handler.

The first evidence was at the beginning of Haier�s foundation, during which a large
quantity of new produced refrigerators involved with quality problems. Under this
business ethical dilemma, Zhang Ruiming made up a resolute decision to break all of
the products with quality problems, which indicated Haier would face a big loss.
While the decision made by Zhang Ruiming is really wise, not only help Haier to
build a good reputation among customers as a high quality and ethical brand but
also make deep impression in the mind of employees that business ethics is always
focused by Haier and its people (Bartlett & Ghoshal 2009)..

Another evidence showing Zhang Ruiming is the disturbance handler is his effective
practice to represent Haier to deal with the outside conflicts and pressure so as
to make Haier adapt to the environment crisis. For example, when involving in
battle with AE group, the big giant in household appliance making industry, Zhang
Ruiming refused its offer to merger, but to make up the decision to build oversea
factory to protect its Chinese brand image. This kind practice of Zhang Ruiming to
protect Haier from the attack of oversea competitor and adopt itself to the
international developing environment discloses the disturbance handler role of
Zhang Ruiming (Bartlett & Ghoshal 2009).

By and large, the above evidences prove the roles played by Zhang Ruiming are the
monitor, the leader and the disturbance handler of Haier group.

5.0 ORGANIZATIONAL CULTURE, LEADERSHIP AND NATIONAL CULTURE

5.1 ORGANIZATIONAL CULTURE AND LEADERSHIP STYLE
5.1.1 Theoretical reference
Lok and Crawford (2004) defined organizational culture sometimes also called
corporate culture represents the shared perspectives, values, belief, criterion and
behaviors in a company. And Schein (1996) further extended organizational culture
to a border scale of the relationship maintained by a business including
relationship with consumers, partners, and peddlers and so on, which is developed
rooting from corporate objectives, strategies, structures, plans and business
practices. Daft (2010, p. 631) defined leadership is the ability to influence
people towards the attainment of organizational goals.

As both organizational culture and leadership style always align with

organizational objectives in the organization, which makes the relationship between
organizational culture and leadership style close and firm (Sharma & Sharma 2010).
In a word, organizational culture often influences the leadership style of an
organization.

According to the research of Jaharuddin and Long (2009) on foreign and local
organizations, several kinds of leadership styles influenced by organizational
cultures are explored from these companies. In a word, a certain type of
organizational culture often tends to foster a certain kind of leadership style,
which is suitable for the organizational nature.

Firstly, if the culture of an organization is marked with the characteristics of

hierarchy which possesses strictly hierarchic system for employees to follow in
their organization, the leadership style in this kind of organization is often
fostered as the auditor style, which marked leaders with the characteristic that
the leader is often persistent or stubborn on those they are expected to be
fulfilled and require detailed analysis of employees towards their jobs and tasks
so as to ensure both the stability and quality of their performance. And since the
hierarchy culture has involved with strict requirement on formality, centralization
of power, high expectation from leaders on employees to follow the principles or
regulations strictly, which has a great influence on the leadership style in their
organization to regulate its employees to achieve the expected results and
outcomes.

Secondly, the clan culture described by Jaharuddin and Long (2009) in their
investigations as this kind of relationship marked with high value on the emphasis
of the working climate of participative and comfortable style. This kind of culture
in organization contributes to the ambassador leadership style which pays great
attention to the communication effectiveness inside their organization to ensure
the opinion of employees can be received and disputes can be resolved in time in
their organization.

Thirdly, in the culture of results focusing, it emphasizes the outcomes or

achievements rather than other kinds of issues based on corporate goals and
objectives. Under the influence of this culture, the leadership style is defined as
driver style which is marked with ambitious and high degree of energy (Sharma &
Sharma 2010).

Generally speaking, organizational culture has great influence on the leadership

style in almost all of the organization, which we can infer from the example of
Haier Group.
5.1.2 Haier example

At first, we state out the culture of Haier which is based on the sustainable
development issue. Just as its CEO, Zhang Ruiming pointed out the culture of Haier
is to focus on the employee with great respect on employees to promote their
working morality and enthusiasm to make their sense of belonging to a highest level
(Yi & Ye 2005).

Secondly, the leadership style employed by Zhang Ruiming, Haier�s CEO, is the
delegating leadership, which is described by Daft (2010) to be built based on the
combination of high consideration for people and the relationship building in an
organization instead of the high or only focus on production task.

In terms of the current organizational culture in Haier, which focuses on people to

promote the sustainable development aim, it has great influence on the delegating
leadership style expressed by Zhang Ruiming in Haier Group. For one thing, in
Haier�s culture, we find the focus on people such as relationship building and
respect for people have the same concern of the delegating leadership style from
Mr. Zhang, who focus people first and then the task issue. For the other, we may
conclude it�s the organizational culture emphasizing the focus of people influence
the leadership style of Mr. Zhang to employ delegating leadership style. Or
further, it is the interaction of the organizational culture and Mr. Zhang�s
delegating leadership finally promotes the people focus spirit in Haier Group.
(Haier 2010; Daft 2010)

5.2 ORGANIZATIONAL CULTURE AND NATIONAL CULTURE

5.2.1 Definition

Just as we mentioned above, organizational culture represents the shared

perspectives, values, belief, criterion and behaviors in a company and it also
refers to a border scale of the relationship maintained by a business including
relationship with consumers, partners, and peddlers and so on, which is developed
rooting from corporate objectives, strategies, structures, plans and business
practices according to Lok and Crawford (2004) as well as Schein (1996).

And according to Duygulu and Ozeren (2009), national culture refers to the
collective programming of the perspectives belong to a certain kind of group which
may distinguish this group from the other. Moreover, according to Hofstede (Daft
2010), there are four dimensions of national culture which distinguish one country
from the other including power distance, individualism vs. collectivism,
masculinity vs. femininity and uncertainty avoidance.

5.2.2 Difference

According to Pun, Chin and Lau (2003), the primary difference between national
culture and organizational culture is the different expectations from each other.
The expectation from national culture indicates the nation�s value including the
issues of ethics and morality, housing, food, dressing, music, songs, languages and
other nation related issues. While organizational culture refers to the special
means or the way the organization operates its business including issues such as
the relationship of employees and management, compensating packages for employees
and the expected behaviors or performances of employees from the company.

Secondly, the difference between national culture and organizational culture also
exists on their influence. The influence of national culture often has the power to
shape value systems of the national members, which differs from one country to the
other. And the benefits brought out by organizational culture are several. At
first, it assists organizations to build up the common values and integrates
employees� behaviors with organizational values. For example, many multinational
organizations make full use of the hand books, ethics code, written values and
other useful tools for their employees in the global market to align their
behaviors with these cultural essences (Pun, Chin & Lau 2003).

Generally speaking, the difference between national culture and organizational

culture are due to their nature and aim to influence people in their own territory.

5.2.3 Difficulties

Besides the above analysis, we may find that there are actual conflicts faced by
employees aroused from organizational culture and national culture. And it is the
greatest value for companies to carefully manage and assess when there are
conflicts between national culture and organizational culture especially when
companies enter into a new country (Pun, Chin & Lau 2003). For instance, when Haier
enters into the western countries including American market, the open and
individualism focused American culture has conflicted with the conservative and
collective focus culture of Haier under the influence of traditional Chinese
culture, which arouses so many problems for Haier to deal with including human
resource management, communication mechanism building, organizational structure
modification, marketing strategy building towards American employees, customers and
the market requirements which are even totally different from the Chinese market
(Yidan 2009).

When meeting such kind of cultural challenges, multinational organizations

including Haier Group is recommended to make use of effective and preventative
actions to both motivate the local employees and promote their sense of belongings
to actually accept Haier�s culture. Similarly, it is also necessary for these
companies to develop and implement measures to solve these conflicts met by
companies like Haier (Yidan 2009).

Generally speaking, it is important and necessary for companies like Haier to well
deal with these conflicts aroused by the difference between national culture and
organizational culture so as to smoothen its development process in both domestic
and international market.

6.0 ORGANIZATIONAL STRUCTURE

6.1 HAIER�S ORGANIZATIONAL CHART
According to Daft (2010), organization chart is defined with three major
specialties. The first specialty is its sets of formal assignments which are
distributed to departments and individual employees. The second specialty of
organization chart is that it works as formal relationships such as the authority
lines, decision obligations, the hierarchic level of numbers and the scale or span
for managers� control. And the last specialty for organization chart is its aim to
design the certain kind of system to confirm the cooperation effectiveness across
different departments. In a word, these issues and elements such as the set of
formal assignments and reporting relationships in the formal manner often offers
the framework to organizations to control employees in the vertical manner.

In Haier, organization chart also has some many functions for it to better operate
its business internationally with a clear understanding and outlines on its
organizational structure and formal relationships and so on.

In figure 3.0, it shows the organization chart for Haier group in the following,
which not only discloses its management structure but also its department design
and formal relationship in this organization.

Figure 3.0 Organizational chart based on Haier

From the organizational chart, we find that the structure of Haier Group is
relatively clear and detailed. The characteristics of Haier�s organization
structure is defined clear to assist Haier to clarify the responsibilities and
rights for different organizations and management workers, which has realized the
decentralization of authority and the flat organizational structure to meet the
initial requirements of expansion and diversified operation with the relatively
largest enhancement of working enthusiasms of employees. In fact, as Sheng and Ye
(2011) mentioned, the era of globalization and new economy is the outstanding
characteristics of this period which also mark Haier�s organization chart with the
obvious remark of this period.

6.2 STRENGTHS
Based on the analysis of Haier�s organizational chart in the above, we can get
these strengths of this kind of chart for Haier in the special era.

For one thing, due to the relatively well alignment of organizational structure and
marketing system in Haier, the tasks and assignments of Haier are well distributed
and fulfilled in each department to assist the further oversea expansion. For
example, every facility bureau owns its own marketing department, which is in
charge of selling, exporting and building oversea department for its own products.
For the other, Haier�s headquarter also owns its marketing company to direct the
operation of the selling practices and monitor the operation of the marketing
departments of different bureaus of Haier Group. Under this relatively clear
segmentation of each department in their special responsibilities, it is able to
realize the optimization of the inputs for each department and bureau to produce
the expected outputs and then build the competitiveness of Haier Group
comprehensively. (Haier 2010; Sheng & Ye 2011)

Generally speaking, that the strengths stand out from its organizational chart of
Haier are relatively effective for Haier to improve its competitiveness entirely to
assist the building up and maintaining of global network so as to meet diversity
needs of the global market.

6.3 WEAKNESSES
Although the organizational chart of Haier is regarded to function in the expected
manner, there are still several weaknesses faced by Haier group.

On the one hand, although the entire organizational structure of Haier is seemed to
lean to a flat level, the structure of refrigerator department belongs to
centralization of power structure, which is regarded to be fit for the single line
of refrigerator line development rather than the entire development of the house
hold appliance products such as washing machines, air conditioners, TVs, fans and
other kinds of small appliance. One the other hand, this kind of structure also
owns its shortage to keep each household product to develop together. (Haier 2010;
Sheng & Ye 2011)
Generally speaking, this kind of structure especially the structure in refrigerator
bureau is ineffective to support the entire development of the whole organization.

6.4 OPTIONS
As there are still some weaknesses of the organizational chart in Haier, in the
following we suggested two options for Haier to further modify its organizational
structure.

6.4.1 Option one

Based on the current situation of Haier in both Chinese market and oversea market,
we suggest two kinds of modifications for Haier in its current structure which are
shown in figure 4.0 and figure 5.0

Figure 4.0 the first option on Haier�s organizational chart

At first, we recommended Haier Group to realize the actual transformation of its

market orientation from Chinese market centered structure to an international
market focused structure to catch every opportunities offered by the globalization.
That is to say, Haier is recommended to enhance the right and subdivision of the
oversea department or bureau to make its function and operation meet the
requirement of international standard (Haier 2010; Sheng & Ye 2011).

Secondly, as the more and more focus of service quality in both Chinese and
international market, Haier is also recommended to transfer from only manufacturing
centralization to comprehensive focus on service and manufacturing (Haier 2010;
Sheng & Ye 2011).

This kind of option owns the advantage that it is the actual choice for Haier Group
to realize its globalization and internationalization as an actual multinational
corporate rather than the Chinese enterprise developing in oversea market (Haier
2010; Sheng & Ye 2011).

Meanwhile, it also owns its disadvantage. Because the building up and modification
on these international or oversea departments require more time and money
investment, it put greater pressure and risks for Haier to develop in its future
(Haier 2010; Sheng & Ye 2011).

6.4.2 Option two

We advise Haier to transfer from the strict line management structure to the
innovative three structures including research & development; human resource
management and customer management to ensure the completion of every order from
customers are satisfactory with high quality which is shown in figure 5.0 (Haier
2010; Sheng & Ye 2011).

The advantage of this option for Haier is to ensure the total budget management,
total equipment management as well as the total quality management in Haier to
compete with these domestic and international competitors (Haier 2010; Sheng & Ye
2011).

The disadvantage of this option is the same as the above one, which will cost a lot
of resources including capital, human resources, time and so on from Haier with
increasing pressure and uncertainties (Haier 2010; Sheng & Ye 2011)

Figure 5.0 the second option for Haier�s organizational chart

figure 5.07.0 Conclusion

In this report, we explore several management issues of Haier Group, which is the
big giant of white products making in both China and international market. With the
analysis of its leadership style, management roles, the influence from
globalization, relationship between Haier�s culture, national culture and
leadership style and Haier�s organizational structure, we confirm some strengths
and weaknesses parts of Haier�s management and also offer several suggestions for
its further improvement.

By and large, we hope this Chinese household appliance manufacture brand can keep
its prosperity in is future development.

8.0 REFERENCE
Bartlett, C. A. & Ghoshal, S. 2009, Translational Management-text, Cases, and
Readings in Cross-Border Management, 3rd edn., McGraw-Hill, London,

Business Week 2009, Asian Cover Story: The Star of Asia Managers, Business Week,
Iss. 3633, New York,

Daft, R. L. 2010, New Era of Management, 9th edn, South-Western, Ohio, p. 631,

Doh, J 2009, International Management: Culture, Strategy and Behavior, McGraw Hill,
New York,

Duygulu,E. & Ozeren, E. 2009, The Effects of Leadership Styles and Organizational
Culture on Firm�s Innovativeness, African Journal of Business Management, vol. 3,

Flannery, R. 2001, China Going towards the World: Ambitious Haier, an International
Brand Name Created by a Chinese Transnational Group, Forbes, Iss.6,

Griffin, R.W. & Pustay, M. W. 2010, International Buisness, 6th edn., Pearson, New
Jersey, p. 35,

Haier 2010, Annual Report 2010, Haier Electronics Group Co., Ltd., electronic
version,

Jaharuddin, N. S. & Long, J. S. 2009, Corporate culture, leadership style, and

performance of foreign and local organizations in Malaysia, Journal of Management
Development, vol. 19,

Lok, P. & Crawford, J. 2004, The Effect of Organizational Culture and Leadership
Style on Job Satisfaction and Organizational Commitment, The Journal of Management
Development, vol. 23,

Mintzbery, H. 1973, The Nature of Managerial Work, Harper & Row, New York,

Pun, K. F., Chin, K. S. & Lau, H. 2003, A Review of the Chinese Cultural Influences
on Chinese Enterprise Management, International Journal of Management Reviews, vol.
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Schein, E. H. 1996, Three Cultures of Management: The Key to Organizational

Learning, Sloan Management Review,

Schermerhorn, Jr. 2011, Management, 11th edition, John Wiley & Sons, Inc., Pp 320.

Sharma, S. K. & Sharma, A. 2010, Examining the Relationship between Organizational

Culture and Leadership Styles, Journal of the Indian Academy of Applied Psychology,
vol.36, no. 1,

Sheng, J. J. & Ye, S. X. 2011, �The Haier Way: The Making of a Chinese Business
Leader and a Global Brand�, Virginia Polytechnic Institute and State University
Press, Virginia,

Stone, R. 2011, Human Resource Management, 7th edn, Milton Old: John Wiley & Sons,
Australia,

Yidan, L. 2009, Strategic Plan for Haier�s Global Brand Building, Mikkeli
University of Applied Science, Mikkeli,

Yi, J. J. & Ye, S. X. 2005, The Haier Way: The Making of a Chinese Business Leader
and a Global Brand, Virginia Polytechnic Institute and State University Press,
Virginia,

Zhang, R. M. 2012, CEO�s Remark: Haier is the sea: About Haier, Available from:

<ULR: http://www.haier.com/english/about/ceo.html>

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