Haidilao International Hot Pot Cuisine Ltd.’s Case Study 1
Haidilao International Hot Pot Cuisine Ltd.’s Case Study
By [Name]
MGT 400 - Cross-Cultural Management
ASU
December 7, 2019
Haidilao International Hot Pot Cuisine Ltd.’s Case Study
Introduction
Haidilao International Hot Pot Cuisine Ltd.’s Case Study 2
The food and beverage industry, in China, has grown tremendously over the years with
food companies striving to meet the ever-changing needs of the people. Yen, Yeh and Lin (2018,
p.298) stipulates that like most parts of the world, the Chinese food market is facing a vast
growth with intense dynamic nature. Companies in this industry need to ensure that they have
strategies that give them a competitive advantage. This applies to Haidilao International Holding
Ltd, a Chinese Cuisine restaurant that focuses on the hot pot cuisine business. This restaurant,
over the years, has been offering unparalleled service levels through impressive dining
experiences. It has workable and perfect organizational design as well as effective operational
strategies. Like many Chinese firms, it to strive to formulate effective competitive strategies,
addresses stakeholder needs and concerns and instill values for a successful bottom line. This
paper provides an in-depth analysis of Haidilao International Holding Ltd’s internal and external
business environment analysis, its strategic goals, and control system and management structural
features. Further, it analyses its stakeholder expectations and contributions and its ethics and
business culture.
Haidilao has not only been strengthening its organizational power but also set itself apart
by its innovative service culture that cleverly combines personalization and experiential dining.
Some academic writers remark that service innovation in this firm is not an accident but is
deeply woven into the company’s operational philosophy, where frontline employees are given
the authority to go beyond customer expectations in their own creative ways (Zhang & Xu, 2016,
p.14). Such qualification enables the team to instantly cater for the special needs of the
customers with which they will have a great time and hence, they will keep coming back and
even refer other people. According to Chen, Shen annd Fan (2015, p.339), the company’s
commitment to the wellbeing of its employees, which among other things covers the provision of
recreational facilities and the employee support programs, has resulted in the creation of a
workforce where every worker is highly motivated. With a great focus on human-centered
incentives, Haidilao has successfully turned otherwise normal interactions into value-adding
exchanges which set it apart from its rivals. Liu and Jie (2017, p.538) argue that the focus on
meeting emotional and psychological needs of employees is but an expression of the deeper
motivational factors that result in employee commitment. At the same time, as the service sector
Haidilao International Hot Pot Cuisine Ltd.’s Case Study 3
is getting fiercer in competition, such customer engagement ingenuity becomes an element of the
firm’s strategic adaptability and long-term survival.
Haidilao's creative tactic is not only about worker power and consumer individualization,
but the company has also garnered operational agility and strategic scalability. They have created
processes which are normalized to deliver the same quality in different places. Meanwhile, the
steps have been outlined in a way that there is still enough room for local adaptation (Chen, Shen
& Fan, 2015, p.340). Besides assisting them to keep the brand's purity, their alternative also
permits them to keep the allegiance of the local customers with their different tastes and culture.
Zhang and Xu (2016, p.17) argue that the deployment of technology (e.g. digital ordering
systems and AI-assisted operations) has only facilitated the process but also made the customers
happy. Haidilao also builds feedback avenues that help management revise the offers based on
immediate customer insights, thus guaranteeing the meeting of market needs (Liu & Jie, 2017,
p.539). The company has put together a successful scheme for rapid expansion through the
embracing of both technological and procedural changes. This facility, while on the one hand,
maintaining their competitive position, can also be the point of reference for other Chinese food
service companies which are going through the rapid growth of the market.
Task 1: Internal and External Competitive analysis
The internal business environment of an organization is determined by various aspects of
the organization that gives it a competitive advantage over other organizations. It ensures that the
organization is fit to offer services that meet the needs of its clients in a better way. According to
Grant (2016, p.76) internal factors are those factors from within the company that it has control
over them and whose control leads to improved results. The SWOT analysis provided by
Micheal Porter in 1980- is useful in analyzing a company’s internal environment.
The SWOT Analysis of Haidilao
The strengths of an organization allow it to meet the ever changing nature of the market.
Competency and strength is an important aspect of an organization and within the restaurant
sector, this is an important as well. Haidilao restaurant, has gained intensive competitive
advantage from its alignment of customer interests with its management discipline that has led to
intense revenue generation. According to Grant (2016, p.76) this ensures that the interests of the
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customers are met which motivates them towards an increase in sales and hence the company’s
growth. Haidilao has strategically ensured that food safety is guaranteed for its customers among
other risks. It is part of the reason why despite the stiff competition, it has constantly realized
tremendous success such as increase in sales.
There are various challenges in the beverage and food industry and one of them is
achieving scalability. This is a major problem facing Haidilao; however, it has effectively
addressed this challenge through aligning the interests of the customers and the management
discipline which has led to intense customer satisfaction. Yu and Huimin (2015, P.154)
articulates that the potential of an organization to attract more customers and to engage them
through novel opportunities brings better results. Haidilao has various opportunities that will
allow it expands its business networks. This is seen in its strategic goals that outline some of the
avenues it will follow to increase sales and increase customer satisfaction. Haidilao is also
seeking to improve its customer experience by introducing new menus and improving the
existing ones. Despite the new threats such as the entry of new businesses into the market with a
potential of surpassing the company’s performance, Haidilao is maintaining its brand recognition
and through differentiating its brand from the new ones. The table below summarizes factors to
consider in analyzing internal and external factors affecting an organization.
One of the major factors that has been instrumental in fuelling the internal fire of
Haidilao is the attitude of employee motivation and service culture that the company has taken.
As stated by Chen (2018, p.122), by providing employees with incentives and opportunities for
career growth, the company creates an environment that is customer service oriented. This
system of internal support has thus allowed the company to be able to give unchanging service
across its various branches, and even in times of rapid expansion. Zhang (2014, p.231) states that
tightly knit organizational relationships are a major cause of employee loyalty, which is, in turn,
the factor that enhances the efficient, productive, and smooth use of resources, thus leading to
positive outcomes in the business operations. Bao and Li (2016, p.4) propound more that service
differentiation as a marketing tool is that which is able to help a catering business to set itself
apart from its competitors, especially in the highly saturated markets. The advantage of Haidilao
in mixing human resource innovation and service personalization is that its internal environment
will continue to be a source of value. The company also beefs up its management practice by
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relating staff performance to customer satisfaction indices that not only strengthen brand loyalty
but also help the brand go a step further (Chen, Shen and Fan, 2015, p.340). The combination of
the welfare of workers and the provision of quality services makes Haidilao the first choice
among those rivals who are only into pricing or product-based competition.
Haidilao's external environment is characterized by fierce rivalry, varying customer
demands and fast innovation in the food industry. Lemus et al. (2015, p.18) state that Chinese
companies are moving from low-cost to innovation-driven business models for keeping viable
and growing. Hence, Haidilao's customer preference sensitivity has moved from being an
optional development to being a strategic necessity. Wang and Cheng (2012, p.751) state that a
customer's perception of service quality is the main source of customer loyalty; hence the
external competitive position must be kept by continually upgrading the experience of eating out.
Chen, Shen and Fan (2015, p.342) also present the view that innovativeness in the provision of
service can give the company a protective shield against the occurrence of such market threats as
new entrants and imitation. Thus, Haidilao foresees the external opportunities as well as dangers
and accordingly adjusts the menu, technology, and consumer engagement to maintain its growth.
The company's problem-preventing approach to innovation, partnership and changing consumer
preferences helps it maintain a strategic position that is strong.
Table 1: SWOT analysis concept table
INTERNAL
Factors
STRENGHTS
WEAKNES
What does the company do
well?
What is its USP?
What do you do best for
customers?
What are the available tools?
What does the
company fail to do?
Are there gaps in
expertise, resources
etc.?
EXTERNAL
Factors
OPPORTUNITIES
THREATS
What are the expected new
strategies and resources?
Are there future gaps to be
filled?
Are there any foreseen
partnerships?
Are there any key
competitors?
Are they any harmful
internal and external
effects?
What are the other
obstacles?
Haidilao International Hot Pot Cuisine Ltd.’s Case Study 6
PESTEL Analysis
The external factors such as politics, technology and polices affects how organizations
operate. Externally, there are numerous factors affecting Haidilao Ltd. The PESTEL analysis is
helpful in analyzing this company’s external environment. One of the external environmental
factors affecting Haidilao is the political factor which impacts its operations. Wang (2018, p.324)
asserts that political factors such as the entry of a new government into power and changing
policies could affect the operation of a business. Haidilao is an international business and there
are dynamic policies and new government regimes in various parts of the world whose decisions
affect its operations. Haidilao has been facing intense pressure in regard to the adherence to
international business regulations. However, it has constantly strived to adhere to these
regulations hence its presence in most foreign nations.
The economic changes and technology plays influences the running of restaurant
businesses today. Wang (2018, p.325) says that economic factors such as the efficiency among
the financial markets affects the running of a restaurant. Inflation rates affect Haidilao’s
operations but its strategic financial goals allow it to maintain 36.2% growth rate. It is achieved
through the alignment of customer interests and needs with its strategies making new changes to
their menus. Haidilao has invested in technology to improve its customer experiences. Through
innovations on customer services, it has reduced the production costs and increased its revenue.
Technology has also allowed it to achieve its sustainability through the use renewable
technology, proper waste management and recycling.
One more thing that is very important to Haidilao is the social and cultural aspect of their
PESTEL environment that has a big impact on customer expectations as well as corporate
responses. Changing lifestyles, the rise of urban living, and higher disposable incomes have all
had a big impact on eating out preferences in the several areas where Haidilao is present.
Customer satisfaction in the restaurant sector is more and more tied to service personalization,
setting, and convenience rather than being only about price according to Wang and Cheng (2012,
p.753). Adapting continually to different local tastes, dietary trends, and cultural customs is now
an imperative when dealing with international markets. Zhang (2014, p.242) says that employees
are the people who can best transform social expectations into the kind of service experiences
that will satisfy customer needs. With employees' behavior in line with consumer values, which
Haidilao International Hot Pot Cuisine Ltd.’s Case Study 7
are rapidly changing, such as health consciousness and experiential dining and, therefore, by
getting the staff involved in such a process, Haidilao, thus, keeps its attraction among different
age groups/distribution of population. Lemus et al. (2015, p.33) state that companies both in
China and abroad are more and more turning to innovation in process design as their main tool to
adapt themselves to social trends and to meet increasing expectations. All these conditions
demand Haidilao to be very cautious and sensitive when it comes to developing the menu,
marketing communication, and staff training, which are the main contributors to customer
loyalty.
The legal and environmental elements of the PESTEL framework model significantly
influence the external strategy as well as the operational decision-making of the company.
Environmental laws that target a carbon-neutral future, are reducing waste and require
manufacturers to do responsible sourcing are becoming increasingly rigorous in Haidilao’s
geographical areas of operation. Lemus et al. (2015, p.41) state that companies aspiring to be
competitive in the long run need to combine environmentally responsible procedures with their
business models if they want to stay alive. By making necessary adjustments to its waste
management systems and using green technologies as far as it is possible, Haidilao has made its
comeback. Courting the law is another point of major concern that centers on safety in the food
industry, labor standards, and international franchising regulations. Wang and Cheng (2012,
p.751) assert that following the regulatory framework not only diminishes the risks of business
but also increases customer loyalty and brand credibility. Zhang (2014, p.238) complements it by
saying that internal governance strengthens organizations’ capability of complying with the
external legal requirements through the implementation of systematic policies and employee’s
responsibility. The legal and environmental pressures do not only challenge them; they also
motivate them to come up with new ways of doing business that lead to them being recognized
as a company that cares.
Task 2: The strategic goal to enhance the dining experience through differentiation
Differentiation allows an organization to make its services unique hence making its
customer experiences unique. Customer dining experience through differentiation is one of
Haidilao strategic goals to improve its performances. Camillo and Di Pietro (2015, p.24) asserts
that the dining scene in the restaurant business today has grown into a very competitive since it is
Haidilao International Hot Pot Cuisine Ltd.’s Case Study 8
crucial to the customer’s experience. Haidilao applies differentiation as product development
strategy to ensure that it increases sales. It strives to improve its hot pot cuisine experiences
through customization. This justifies the Porter’s Competitive model that asserts that companies
have to adopt various forces to increase profits (Camillo & Di Pietro, 2015, p.24). Haidilao uses
substitute products and services as a method differentiation allowing it to compete indirectly
with its competitors and achieve higher performances through increased profits. As a result, it
has managed to gain a competitive advantage towards this strategic goal through differentiating
its dining experience.
The table below shows the Porter’s Five Generic Strategies
Table 2: Porter's Five Generic Strategies
PORTER’S FIVE GENERIC STRATEGIES
Generic Strategies
Type 1
Cost leadership
Low Cost
Type 2
Cost leadership
Best Value
Type 3
Differentiation
Type 4
Focus
Low Cost
Type 5
Focus
Best value
Innovation is one of the key business level strategies that a restaurant could apply to
improve its business’s bottom line and to gain a competitive advantage. Innovation could allow
Haidilao to continue improving its dining experience. It should work to continuously introduce
between five to ten dishes every season into its menu. By doing this, it will be able to attract new
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customers and maintain the original ones (Grant, 2016, p.77). Innovation includes alterations,
reorganization, variation and other factors that could be applied to customer services. For
instance, Haidilao offer hotpot deliveries within the restaurant’s vicinity which could not help in
reaching more customers. As part of innovation, it should create a section in its websites and
even social media platform such as Twitter or Facebook that could allow its customers to place
orders. This could further improve their dining experiences. Innovation could also involve the
provision of nutrition information through the website and accompanying menus with
information that could help customers make the right choices in regard to the meals they would
love to take.
Haidilao's differentiation strategy gets a major boost from its deliberate focus on
employee-centered service delivery that not only deepens customer interaction but also makes
the brand more distinctive. A supportive organizational climate energizes staff to go 'above and
beyond' and thus, a sense of responsibility and ownership of service delivery is extended to them
(Ding, 2018, p.41). Instead of relying on highly structured task allocations, the company
develops workplace models that allow employees to have more freedom, hold the effective
communication and be quick in decision-making. Lin (2018, p.6) is of the opinion that when
employees are well aware of their tasks and provided with relevant training, they not only
become competent in service personalization but also elevate customer satisfaction and loyalty.
Valued employees will also be the organization’s service ambassadors in their interactions with
customers. Meng (2015, p.18) notes that in modern restaurant environments, the customers' view
of the quality is mainly influenced by the interaction with the staff rather than the food. In doing
so, Haidilao is able to motivate its workers to pursue differentiation goals as well as maintain the
level of standard at each individual branch. According to Meng (2015, p.18), by not merely
viewing employees as providers of labor but as strategic partners in customer engagement, the
company is able to maintain its unique service culture that makes it stand out in a highly
competitive dining market.
Customization is also a major factor in the way Haidilao is able to meet the desires of
different customer segments without losing the company's unique identity. The company, rather
than imposing a one-size-fits-all service model, customizes its dining atmosphere, leisure
activities and menu according to the local customs. Huang and Luo (2012, p.761) put it that the
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recognition and handling of specific service attributes in this way opens the door for businesses
to tailor their offerings depending on the needs of the different consumer segments. Staff
members receive the real-time instruction on how they should perform the service, depending on
whether the customers want to have a social gathering or are looking for a quick meal. Lin
(2018, p.9) points out that the existence of flexible job roles gives room for such adjustment that
allows the staff to change the operations without any negative impact on the quality of the
service. This diversified way of customization makes it possible for Haidilao to keep a brand that
does not lack coherence and at the same time, there is still room for innovation and localized
adaptation. Meng (2015, p.22) is of the opinion that when personalization is merged with
marketing strategies it has the potential of significantly improving customer loyalty and thereby
creating repeat visits. The company manages to get a real point of difference in the saturated
market by being at the crossroads of the standardized brand values and flexible implementation.
Haidilao's marketing differentiation has been a great success to the company as it further
solidifies the customer's loyalty and gives them a reason to remember the brand for a long time
after their immediate dining experience. Instead of solely using traditional advertising media, the
company centres its properties on the customer stories and the interactive engagement that come
as a result of the service culture of the brand. Ding (2018, p.56) emphasizes that the internal
environment has to be quite robust to make it certain that marketed promises reach the stage of
delivery. Haidilao is implementing visibility through the digital medium, storytelling, and using
customer engagement tools as a way of communicating their value proposition. This, in turn,
empowers them to create links with new and old customers by using platforms that are not only
for showing the brand but also close customer engagement. Lin (2018, p.11) says that it is easily
for employees to become the marketing messages virtual when service roles are well structured
and thus they do the customer interactions in real time. Without a doubt, by integration of online
communication, service authenticity and experiential branding, Haidilao optimizes its presence
thereby supporting the differentiation strategy. Meng (2015, p.25) is of the same opinion when
he adds that targeting segments that give preference to unique and memorable experiences is a
tool that can be used to trigger the effectiveness of marketing efforts. This promotion-practice
linkage is at the core of the company's consistency and helps the firm in maintaining its
relevance across different markets.
Haidilao International Hot Pot Cuisine Ltd.’s Case Study 11
Part of the company's success in differentiation over time is directly related to a service
regular update and customer loyalty as well. A culture that is deeply rooted within the company
shapes employees' preparedness for problem-solving, for improving the company's efficiency as
well as for networking with customers in order to anticipate their needs and avoid. As per Ding
(2018, p.48), feedback from customers is used as a mechanism for better understanding of
possible service gaps, trying new approaches and the ability for the company to respond quickly
to customers’ ever-changing expectations. Huang and Luo (2012, p.763) claim that the most
efficient way of handling service quality is to group customers’ needs and correspondingly to
structure the usage of company resources for solving the problem. Haidilao makes use of this
theory by bringing in the support of staff training, performance incentive and clear responsibility.
Lin (2018, p.8) stresses that employees who are provided with a structured system of incentives
are the main reasons of them keeping high motivation for professional service provision on a
regular basis. Meng (2015, p.20) adds that the emotional and the sensory aspects of hospitality
are the main factors differentiating it from other competitors, especially in markets where the
level of competition is high and the tendency of imitation. The fact that Haidilao is able to keep
innovating its service methods unconsciously is a key factor that makes customers keep returning
because of the excitement they receive from their experiences besides of being able to meet their
needs. Part of this commitment to improvement is the basis of the customers' loyalty and also it
consolidates the company’s long-term positioning.
Task 3: Haidilao’s control and management structure
Better performance in the food and beverage industry requires a well-structured
management team and control system. The systems theory of management articulates that
systems management in an organization offers alternatives in regard to approaches in managing
as well as planning of organizations. It holds that businesses are like the human body because
they consist of various components that have to work in a harmonious way to ensure that the
entire system works as desired (Thompson, 2017, p.109). This theory also holds that
organization success relies on the various elements within its structure such as interdependence
between the management team and employees, synergy and the interrelations existing between
the numerous subsystems.
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The systems theory of management further explains a lot about Haidilao because its
management believes in the continuous organizational changes. Thompson (2017, p.109) says
that restructuring organizations subsystems plays a key role in performance improvement. The
management team at Haidilao has constantly ensured that there is a balanced relationship
between the restaurants and employees. These balanced relationships between the headquarters
and the restaurants as well as its third-party service providers has led to effective customer
services and increased sales. Finally, it puts importance to a foundation for talent development,
supply chain and management development.
Control and management structure’s influence on the strategy implementation
An organization’s control and management structure offers a wide array of benefits. The
key features of Haidilao’s management structure offer it a lot of advantages by influencing its
strategy implementation. According to Nieves and Segarra-Ciprés (2015, p.51) continuously
restructuring organizational subsystems plays a key role in performance improvement.
Thompson (2017, p. 110) claims that restructuring ensures that a company improves productivity
by reaching its goals. Haidilao has utilized this feature in ensuring that its goals are met hence
the good performance.
Building effective relationships between the management and departments enhances
effective change and strategy implementation. Haidilao’s effective relationship between the
headquarters and the restaurants has continuous led to smooth flow of power from the
management team in the restaurant. As a result, the company has realized efficient
implementation of strategies and objectives (Nieves & Segarra-Ciprés, 2015, p.52). The good
relationship between the headquarters and the third party suppliers and employees has led to
better service delivery to customers and a better image for Haidilao. Finally, the importance it
places on a foundation for talent development, supply chain and management development will
lead to increase employee engagement, improved service delivery and better performance.
Haidilao’s control system is very much reliant on the corporate culture that the company
has established and which reflects the behavior of the staff members in the same way as the
organizational goals. Rather than solely relying on formal authority, the company incorporates
the values and the collective responsibility, which is a part of daily operations, into all the
Haidilao International Hot Pot Cuisine Ltd.’s Case Study 13
departments, so that the cohesion can be established. Xia (2018, p.14) states that the positive
service culture in a Chinese firm gives the employee four initiative and reduces the hierarchical
friction in the decision-making process. This cultural harmony is what guarantees that local
managers in the branches can always act in a customer-friendly way without needing that a
higher level of command from the headquarters, which, in turn, leads to faster response. Xu
(2012, p.88) claims that the organizations that have innovation as their structural culture are the
ones that can efficiently manage their control system during the period of expansion. Haidilao
has taken this on board by allowing the feedback from different stores to the management and
this is how the new ideas have been able to influence the company-wide strategies. Fuchen
(2017, p.22) also points out that the strong internal culture can help a company to overcome
crises since employees under pressure continue to perform in a trustworthy manner. Through this
method that promotes the culture of cohesion, Haidilao is able to keep operational consistency
while at the same time allowing for local branch decision-making and innovation.
Besides the fusion of structural and cultural, Haidilao also employs information flow as a
control mechanism to support on-demand oversight and strategic alignment. The organisation
promotes upward communication from frontline employees to managers, thereby ensuring that
trends and issues get identified at an early stage. Xu (2012, p.91) states that communication
channels that are integrated in management systems enable companies to adjust their strategies
quicker than those solely relying on top-down directives. This has been a factor that has made
Haidilao successful especially in the areas where consumer feedback has been a major influence
on the changes of service. Ling-han et al. (2013, p.59) noted that the company’s capability to
comprehend customer sentiment through digitally tracked interactions was the main reason for
managing the reputation quickly and the upgrading of the services. Fuchen (2017, p.19) points
out that well-organized communication systems are the foundation of crisis readiness as they
lessen the time between the occurrence of the problem and the delivery of the corrective action.
Haidilao reaches a point where a communication system is part of its control framework and thus
develops a responsive structure that supports the strategy implementation and operational
improvement but on the other hand does not lose the control.
One more aspect that affects the efficiency of Haidilao's management is the company's
capacity to incorporate digital platforms into the supervisory processes. The leadership, instead
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of being confined to on-the-spot physical inspections or highly consolidated reporting, is more
and more using real-time data analytics for performance evaluation across branches. Xu (2012,
p.89) states that the digitization of internal processes enables companies to track their results
dynamically and carry on their operations with the least possible disruption. For Haidilao, this
translates to the review and taking of necessary action from sales trends, staffing needs as well as
customer behavior on the spot. Xia (2018, p.18) discovered that digital integration in service
sectors can be a way to support the cultural values and at the same time, cut down on the
ambiguities of employees' expectations. Ling-han et al. (2013, p.63) have also observed that the
sentiment monitoring on digital platforms can lead to quicker taking of measures against
reputational risks. These instruments not only improve the control function but also allow
Haidilao to enjoy the advantages of less stringent but still performance metrics tracking.
Task 4: Contributions and expectations of Haidilao’s Stakeholders
Stakeholders play a crucial role in the running of organizations. This applies to all
industries including the food and beverage industry. According to Dedeoğlu and Demirer (2015,
p.131) the stakeholders of an organization are those people who claim, stake or have interest in
the organization’s activities and its performance. The stakeholder theory developed by Milton
Friedman in the 201th century holds that companies are beholden only to its stakeholders which
mean that companies have an obligation to make its stakeholders satisfied through making profit
for them. This should be the goal of every organization in the food and beverage industry.
At Haidilao International Holdings Ltd, the internal stakeholders include the company’s
workforce whose interest is to see the company’s performances skyrocket each year. They ensure
that services to customers are done in an effective and satisfactory way through differentiation
and application of new technology. The employees of Haidilao, for instance, provide their skills
and expertise to the restaurant by preparing sumptuous hot pot cuisines for its customers. The
employees expect good salaries, stable employment, promotions and wages for their services at
the Haidilao’s restaurants. The other stakeholders are the managers (Serra-Cantallops, et al.,
2018, p.15). Their contributions include their expertise and skills in management for effective
running of the organization such as coordination of employees. Their expectations include good
salaries; bonuses for good work and power to enable them run the organization.
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Externally, customers are other stakeholders who contribute to this restaurant’s through
their purchase of the hot pot cuisines and other services. For them, they expect quality services at
affordable and reasonable prices. Suppliers also play a key role at Haidilao International
holdings. They invest on high-quality inputs and in turn expect to get revenue from the
restaurant’s purchase of their inputs. The government is also a key stakeholder because its
decisions affect the restaurant’s business makes policies and rules that governs the restaurant’s
business practices in the various countries (Serra-Cantallops, et al., 2018, p.15). The government
expects free and fair competition from Haidilao.
Stakeholder satisfaction and Corporate Social responsibility
The stakeholder satisfaction in any organizations is based on a good relationship with the
management and good performance. At Haidilao Ltd, employees are quite satisfied based on
various indicators. In the case, it is indicated that the company is making profits which means
that revenue generation as quite satisfactory. Its growth rate has increased to 36.2% within a
period of 12 months. This results to high profit generation for the benefit its stakeholders. The
company also maintains a good relationship with them which is another source of satisfaction.
Rahimi and Gunlu (2016, p.90) states that CSR ensures offers a benefit from the growth of
Haidilao because it improves the restaurants’ public image hence more profit, it increases its
media coverage, it also boosts employees’ engagement as well as attracting and retaining
investors.
Just like employees and customers, investors are also an essential group of stakeholders
whose input is the main reason for Haidilao's long-term development. The organization can thus
spread into new markets, update its technology, and run staff development programs, all through
the financial input made by investors. Chen (2018, p.123) emphasizes that by far the most
amount of investors in the present will give their money only when they will perceive
transparency and a conscientious management policy in return. Haidilao's profitability, excellent
customer retention, and global diversification combine to support the shareholders' idea that their
money is being invested in the most efficient way. As stated by Liu and Jie (2017, p.536), the
service firms that back employee inventiveness with capital become the ones to attract the most
confidence from investors. It is so because the latter see in such companies traces of permanently
sustainable businesses. Nothhaft (2017, p.238) is of the same view and further adds that the
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concept of Haidilao's 'eater-tainment' has become one of the brand's advantages in the highly
saturated markets, which has turned out to be a factor of its increasing appeal to the investors.
The investors are eagerly looking forward to receiving not only dividends but also long-term
benefits in the form of company value through innovation and reputation management. Their
needs have a profound impact on the manner in which Haidilao carries out resource allocation as
well as performance measurement, especially in the presence of tightened competition in the
global market.
Haidilao has created an extensive network of support from local communities that take
advantage of the company's provision of labor, consumer advocacy, and hosting its physical
operations. According to Qian (2014, p.20), communities, for their part, expect the company to
generate employment, live up to cultural standards, and support local development initiatives
(Meng, 2015, p.11). Bao and Li (2016, p.4) are of the opinion that companies adopting the
differentiation strategy are required to mix social engagement with their business in order to gain
long-term legitimacy. Besides, Haidilao has successfully gotten the advantages of putting its
restaurants in the cities and towns where the good will of the local people is the key to the
loyalty of the brand and recruitment. Qian (2014, p.19) is of the view that customer satisfaction
is not only based on service quality but also on the customers' perception of a company's
contribution to social welfare. CSR initiatives like food safety education, training courses, and
environmentally friendly waste disposal have been the support of the public image. Since
community demands are changing, Haidilao needs to move quickly if it wants to retain its social
license to operate and avoid a reputational crisis.
There are other stakeholders who are the strategic partners and innovation contributors
that take part in the reconstruction of Haidilao’s operational patterns. Zhang and Xu (2016, p.3)
dwell on the collaborations between logistics and digital services as one of the sources of
innovation in the service process. These partners in fact bring in the technical knowledge that
Haidilao might not have internally and this allows the company to keep its effectiveness and
flexibility. Lemus et al. (2015, p.29) note that innovation in products and processes has become a
must for Chinese firms if they are to survive in the market, especially after the decline of low-
cost advantages. Suppliers with well-organized purchasing systems, technology providers and
marketing experts work hand in hand to transform the restaurant’s services. Usually, their
Haidilao International Hot Pot Cuisine Ltd.’s Case Study 17
interests are centered on prompt contracts, continuity in partnership and the sharing of economic
benefits. Wang and Cheng (2012, p.751) say that the regularity of service quality is largely
dependent on how external partners that best fit the brand expectations are found. As the scope
of these partnerships extends, Haidilao will have to develop communication methods and
contractual incentives that guarantee a win-win outcome and are in line with the company’s
strategic goals.
Media, both traditional and digital, have a stakeholder role as they influence public
perception by shaping the behavior of consumers. According to Soni (2017, p.56), companies in
sectors with a high degree of visibility need to rely on a good press to continue being leaders of
their brands. In the case of Haidilao, media exposure can either radiate customer reviews or
reveal the deficiency of the service. Liu and Jie (2017, p.538) believe that the introduction of
new ideas into the service is the main source of the conversation that takes place both on the
internet and in the real world. Bao and Li (2016, p.6) point out that differentiation strategies will
be more effective if media stories present the brand as innovative and customer-centered. In
other words, media outlets require, among other things, access to accurate information, corporate
transparency and timely responses to public queries. Consequently, Haidilao expects the media
to be the partners in its journey of quality enhancement and stakeholder care. Nothhaft (2017,
p.240) notes that media relationships contribute to keeping customer interest in experiential
dining, particularly among the younger demographics. The growth of digital communication
platforms has made it necessary to manage media stakeholders if one wants to protect and
strengthen brand equity.
Task 5: The essential business ethics and culture of Haidilao
Organizational culture is a necessary tool for every organization seeking an increase in
performance and better public image. Rahimi and Gunlu (2016, p.92) adds that organizational
culture and ethics refers to the underlying values, beliefs, assumptions and ways of interacting
within an organization that contributes to unique psychological and social environment of
business. At Haidilao, employees are respected. This is indicated by their ability to maintain
good relations with employees leading to increased performance. They are given the authority to
run the business as the administration trust their expertise and skills. The company also offers
training since their employees have goods skills that have improved its performance. Its
Haidilao International Hot Pot Cuisine Ltd.’s Case Study 18
leadership maintains a family atmosphere where relationships between all stakeholders are
valued leading to a passionate working environment full of happiness.
The figure below shows some of the approaches that managers could use to improve
organizational relationship with employees.
The business ethics and cultures influences on Haidilao’s strategy implementation and
success
The business culture of an organization plays a key role in influencing performance
through employee attitudes and behavior towards work. The organizational culture theory asserts
that organizational culture gives a company a competitive advantage and it is formed through the
obstacles and challenges of the company and it dictates how people in an organization
communicate, solve problems and work towards the company’s success. At Haidilao, the culture
created over time has led to the high level of innovation as employees work constantly towards
the improvement of existing and the introduction of new menus for customers. It also led o
stability due to its rule orientation and a high emphasis on the people where employee interest
are aligned with the management leading to increased customer satisfaction and better
performance over the years. It has also emphasized on the attention on detail which has led to the
improvement in the dining experiences of the customers.
One of the most conspicuous features of the value system of the Haidilao is the trust and
freedom given to the people which led to their empowerment status. They are given ample
freedom to independently solve the problems, which not only increases the speed of service but
also gives rise to the feeling of ownership and pride among them. Wu (2017, p.307) states that
the trust of management in crisis situations has always been a factor which has brought staff
O
A
D
A
A
A
P
A
L H
Figure 1: Management Approaches in an organizational culture
Haidilao International Hot Pot Cuisine Ltd.’s Case Study 19
confidence and accountability. Instead of having all the decisions centrally, the company gives
its staff the liberty of making the best decisions so that the customer can have the best
experience. Yang and Mei (2014, p.145) state that this empowerment practice enables
"organizational ownership behavior," thereby leading to greater loyalty and lower turnover than
would otherwise be the case. Meanwhile, Nothhaft (2017, p.238) says that employees are given
decentralized responsibility to tailor services to the customer's needs thus solidify the brand's
differentiation strategy. This autonomy culture, which is supported by ethics and is seen as
mutual respect, is a culture in which employees feel respected and able to affect the outcomes of
the day-to-day activities in a significant way.
One of the features that make Haidilao stand out from the rest is the trust and
empowerment through which the company not only achieves strategic goals, but also gains
employee satisfaction. The employees are given the freedom to solve customer issues without the
constant intervention of their superiors, thus they get the necessary confidence to take care of
challenging situations when they happen. Wu (2017, p.307) observes that when trust is given
during the time of operational crises, this not only fosters the feeling of accountability but also
gives the employees the impression that their decision is valued. Instead of command and
control, Haidilao allows the frontline workers the freedom to customize the services in real time
as per the needs of the customers, which tallies with the virtues of both efficiency and creativity.
Yang and Mei (2014, p.145) indicate that such a paradigm of power nurture "organizational
ownership behavior," thus the company gets the benefit of loyal staff who remain for a long
time, not only at one location but also at others. As if to add to it, Nothhaft (2017, p.238) points
out that the decentralization of authority is what really allows the brand to be different in the
eyes of customers as the flexibility in service is what is less among the competitors. The
company does this by elevating the power of the employees to the rank of an ethic of mutual
respect and responsibility and hence employees feel that they make a significant impact on
customer experiences. Such a setting is important in that it provides a cultural safety net that
allows innovation to survive, besides also instilling professional pride. The use of autonomy here
is no longer just another operational tactic but a moral testament to the ability and worth of
employees, thus it becomes one of the main reasons for the perpetuation of the long-term
organization unity.
Haidilao International Hot Pot Cuisine Ltd.’s Case Study 20
One of the other key things about Haidilao’s company life is the fact that it combines the
use of traditional Chinese values with the judgments of modern administration, thus ensuring not
only moral conduct but also strategic resilience as well. Besides, the cultural norms such as
harmony, reciprocity and collective responsibility deeply permeate the daily-life and standard
business practices of employees in various departments and at different managerial levels. Li
(2016, p.23) points out that Chinese companies are often heavily inclined towards the use of
relational values rather than sticking firmly to the procedural structures which means that the
decisions taken will be contextually based and appropriately left to the discretion of the human.
Positioning in China and village relations are actually good reasons why the implant model is
confirming in that way Chinese firms related to human resources in making Monopolize Maria
and constructive communication which even supported innovation and department in way of
Haidilao. Sense of Ding (2018, p.42) helps to reveal that a company culture that is based on
issues of shared cultural assumptions fosters loyalty and increases staffs’ willingness to present
their new ideas boldly. In the same way, Wu (2017, p.308) points out the significance of
ensuring the dignity of employees during the operations period and as such, their motivation will
be maintained at the same time that the performance targets are met. Rather than taking up the
strict rules as the sole way of control, the company is instead relying on the ethical consistency
and collective trust which are the guiding factors of behavior. Accordingly, cultural values do not
function solely as symbols on corporate walls but genuinely influence the daily work-flow.
Through the holistic halting in every aspect of process, communication and training, Haidilao
converts culture from an obstacle into a competitive advantage. Gradually, this assimilation of
tradition and modernity brings about not only sustainable development and improved partnership
but also an atmosphere where the employees become gradually respectful at the same time
responsible.
Ethical responsibility at Haidilao is just as important to the company as the service,
which is customer satisfaction, the shared moral duty, and not a superficial performance metric.
Employee interaction with customers needs to be under customer expectations and based on
customer empathy and patience, and not ritualistically as if by a script. Nothhaft (2017, p.241)
calls this concept "eater-tainment," pointing out the company's commitment to producing dining
experiences that go beyond regular hospitality. Ding (2018, p.57) believes that the overall
Haidilao International Hot Pot Cuisine Ltd.’s Case Study 21
positive sphere within the organization greatly influences the way service standards are
internalized and put into practice, thus making ethics the center of performance rather than being
only motivational. Li (2016, p.29) further states that the companies whose business is influenced
by Confucius tradition generally put the emphasis on mutual benefits and the establishment of
relationships while working with clients, thus viewing every interaction as part of a long-term
relationship. At Haidilao, staff are given the necessary skills to address customer complaints with
humility, thus proposing effective solutions as well as providing emotional support to the upset
consumers. The focus on ethical behavior becomes a source of support to the customer and the
company's reputation in the battles of the market (Li , 2016, p.30). Also, it makes employees
think of customer engagement as a manifestation of their personal and the organization's
integrity. When customers are treated in a way consistent with these values, they see honesty and
commitment, and employees receive moral satisfaction that is an important element in the
provision of service quality.
Managerial leadership is the power that holds the world's ethical culture of Haidilao and
reflects on the pattern of the standards expected everywhere in the organization. Leaders nurture
honesty by showing openness, modesty, and being responsible at all times, not only in routine
operations but also in crises. Wu (2017, p.306) insists that top executives support the trust by
publicly admitting their mistakes, thus, they are setting a good example that encourages
employees to solve issues together instead of pushing them away. Li (2016, p.33) adds that in
Chinese management, leadership often acquires its legitimacy partly from ethical conduct and
good relationships rather than from the sheer positional authority. Yang and Mei (2014, p.149)
propose that employees are more potent to assimilate company values when leaders not only talk
the talk but also walk the walk. Ding (2018, p.61) is of the same opinion and further asserts that a
positive leader approach will result in a better organizational atmosphere, therefore, a higher
degree of loyalty towards the common goals. The leaders of Haidilao depend on the combination
of mentorship, dialogue, and constructive criticism for their sway. According to Yang and Mei
(2014, p.150), instead of constantly checking up on them, leaders gain the confidence of their
employees by allowing them to show their strengths and by giving them space for in-depth
thinking. Through this way, the group becomes stronger and the chances of clashes between
members are lessened which, in turn, ethics have become not just a concept but a part of
Haidilao International Hot Pot Cuisine Ltd.’s Case Study 22
everyday behavior. Thus, leadership transpires into an instrumental solution that is capable of
producing stability, flexibility and ethics of the highest order all through the company.
Conclusion
Haidilao International Holding Ltd is a leading Chinese hot pot cuisine. Its internal and
external analysis shows that this restaurant places more emphasis on the alignment of customer
interests with its management hence its intense revenue generation. Its strategic goals give it
opportunities to overcome and its threats. It has overcome external issues such as political,
economic and technological challenges through effective business strategies. One of its strategic
goals is to continue enhancing the customer’s dining experiences through differentiation.
Innovations such as online delivery services and the provision of nutritional information could
lead to better performance. Its organizational culture and control systems show a structure that
embraces close relationship among subsystems. Also, its stakeholder play a fundamental role in
ensuring that the company improves its performance and generates profit, as well as meeting its
CSR initiatives. Finally, its business culture is characterized by high levels of trust, devolution of
power and respect between the management and employees.
Haidilao International Hot Pot Cuisine Ltd.’s Case Study 23
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