The present paper conducts an external environment analysis for the Chinese telecommunications company Huawei Technologies. External environment analysis plays an important role in the strategy-making process because it helps predict possible risks and develop strategies to mitigate them. Although Huawei is a Chinese company, its products are sold in Asia and Europe. From the political and economic perspectives, the tense relations between the European Union (EU) and the PRC are the potential risk factor for Huaweis performance. Currently, the EU has increased exports from China, and Huawei easily sells its gadgets in foreign markets (Shamout and Elayan, 2020). However, in the case of sanctions, Huawei will lose a significant commodity market.
Social conditions are beneficial for Huawei because gadgets have become an indispensable part of peoples lives. From the point of view of technologies, Huawei is taking leading positions in producing devices using the 5th generation mobile communications technology (Tekir, 2020). Nonetheless, it is legally forbidden for Huawei to cooperate with American telecommunication corporations such as Google and Intel (Ciucan, 2020). Nevertheless, Huawei has managed to overcome this issue by reshaping supply chains and shifting to other producers of microchips. Since Huawei sells its products abroad, it is obliged to follow the ecological standards of the EU. It is not a critical problem because this company actively promotes the reduction of carbon emissions (Fei, 2020). Overall, from social, legal, technological, and ecological perspectives, the external environment could be considered as favorable for Huawei Technologies.
Political tensions with the West are the potential risk factors for Huaweis presence in the region. Huawei could not handle this problem because it is a Chinese company and is strongly affected by relations between China and other countries. Therefore, the major problem of Huawei is its link with the PRC. The strategic recommendation is to become a multinational corporation to stop incurring losses because of the complicated relations between the West and China.
The strategic implication of the analysis is that companies, especially large ones, strongly depend on their country of origin. That is because Huawei produces gadgets for ordinary people and develops telecommunication technologies that the Chinese government could use for wartime needs. This implication limits the strategic recommendation outlined above. Huawei receives subsidies and a significant share of income from the government. Consequently, Huawei cannot break its links with the government and will always be affected by the political conditions in the world.
Reference List
Ciucan, I. A. (2020) ‘USA and Huawei, the creation of a technological iron curtain’, Economic Sciences Series, 20(1), pp. 61-65.
Fei, L. (2020) ‘Tech for a better planet: A corpus-based analysis of the environmental disclosure in CSR reports of Huawei’, IOP Conference Series: Earth and Environmental Science, 615(1), pp. 1-8.
Shamout, M. D., & Elayan, M. B. (2020) ‘A Comparative analysis of strategic planning practices in Gulf Cooperation Council Region: A case study of Huawei and Samsung companies’, Journal of Talent Development and Excellence, 12(1), pp. 4891-4910.
Tekir, G. (2020) ‘Huawei, 5G network and digital geopolitics’, International Journal of Politics and Security, 2(4), pp. 113-135.