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Xiaomi Company


Executive summary The study covered in the following pages includes the analysis of Xiaomi Company that is one of the leading and most popular electronic consumer companies. It produces smartphones and many other products and has it’s headquar...Read More


~Posted on Mar 2018

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Xiaomi Company

Executive summary The study covered in the fo...

Executive summary

The study covered in the following pages includes the analysis of Xiaomi Company that is one of the leading and most popular electronic consumer companies. It produces smartphones and many other products and has it’s headquarter in Beijing China. The study focuses on find out why the company has made such a huge success since its inception in the year 2010. Its strategic plan changes and the outcome of the changes are discussed at length. Recommendations and conclusion of the company are also given.

 

Introduction

Business strategy is one of the most crucial components in ensuring its success as well as the going concern (Jia, 2015, p.23).  In order to effectively utilize limited resources, it is very important to identify, set and follow the businesses long term direction a process which calls for establishment of business strategy. The following literature is going to take a critical view of business strategic plan (concepts and techniques) in the context of Xiaomi Company. Xiaomi Company was founded by eight partners back in the year 2010. The company was originally founded to run Google’s android operating systems and make phone operating systems. The study is organized in to various subsections including introduction, analysis, and a statement of business issues, outcomes, recommendations and conclusion thereafter.

Analysis

One of the company’s founders Lei Jun is termed as the 23rd richest person in chain. The company mainly deals with designing, producing and selling smart phones, laptops tablets and other consumer electronics. The mission of the company states goes “born to fancier”. The statement elaborates the company need to make its products more interesting and fancy. To clearly analyze the company, the following features shall be includes business strategy, company’s directions, external environment, five generic competitive strategies and resources, capabilities and competitiveness.

External environment

            This is the environments in which the company operates and one which has great impact on the business operation. It encompasses factors like competitive forces, industry dynamics, competitor analysis success factor and industry outlook and profitability. These factors are discussed at length in the following paragraphs.

Competitive forces

Industry rivalry- Smartphone industry is very competitive and flooded with a lot of many available options to choose from when it comes to buying a smartphone (Yang and Lie, 2016). There are so many superior companies in the industry among them Huawei, Vivo Oppo and many others in Chinees market aiming at acquiring bigger market share. They compete on every aspect like brand loyalty, consumers need, quality and price.  In the context of the industry rivalry, Xiomi Company is facing a stiff competition.

Threats of new entrants- presence of strong well established companies in the smartphone industry with customers who are very loyal to their products makes it impossible for new companies trying to penetrate the industry due to huge capital outlay. According to Xie and Jia (2016) xiaomi therefore, being an already well established company faces no challenge when it comes to new entries.

Substitutes- there are so many substitutes for the smartphone like tablets, laptops and other smartphones from competitors. However we can all agree that there is no one of them that can be a total replacement for a smartphone (Li and Lee, 2016). These electronics bear distinct features for the intended purpose. Although Xiaomi faces a little challenge from the substitutes, it faces big competition from other competitors.

Bargaining powers of suppliers- over the year’s xiaomi company has developed and maintained strong loyal suppliers mostly based in Taiwan. The supplier’s relationship and bargaining power is very moderate currently In return suppliers have helped to main an effective supply chain which is one if it’s major key to success (Yang and Wos, 2017).

Bargaining power of the consumers- presence of so many inter-changeable products in the smartphone industry poses quite a challenge to Xiaomi Company. This calls for the company to extend a degree of loyalty to the consumers to maintain them by offering better quality products

Competitor analysis

The rise of huawei, vivo and opp is bad news in the smartphone industry and even worse to Xiaomi Company. A recent report by Cai (2016) depicted that there is a very competitive market out there and Xiaomi needs to lower the prices and introduce better feature in order to stand out. Following a research conducted by Dong and Zhung, (2016) the chart below shows the analysis on the competitors in China.

Success factor

Xiaomi Company has grown into a giant smartphone in the industry since its inception in the year 2010. It is currently making 36.1 billion yurn in terms of annual sales. Factors like simplicity, ultimate, fast speed and world to mouth are attributed to the success of this company among them.

In the simplicity aspect the company embraces the beauty of simplicity. Xiaomi therefore concentrates with launch of fewer products annually and offering the best it can in terms of quality and price. Ultimate encompasses the need to do something you are good at and reaching the perfection (Cai, 2016). Xiaomi’s products are among the best and have got excellent features as compared to others. Fast speed ensures that the company acts extremely faster in terms of responses to the customers’ needs and specifications. Xiaomi collects data from the customers and try to modify their smartphones to correspond to the customers’ opinions. In the word to mouth, xiaomi has targeted reaching its customers all over by translating over twenty languages. This has helped to increase the level of satisfaction to its customers.

Resources capability and competitiveness

Under this subheading various factors like competitive advantage, internal strength, weaknesses, opportunities, threats, value chain and value proposition will be discussed in details. Some of threats includes presence of a hunger market (where the company releases a few product) and intensified market competition from the competitors. Xiaomi has maintained healthy supply chain with the suppliers although it is facing a challenge in that it is very costly to monitor the same. Opportunities available for the company include presence of new markets and new products and services. Constant growth in the income level is another great opportunity in that it creates ready markets for the targeted consumers. Xiaomi Company has a good internal strength in that it has been able to maintain very skilled workforce, availability of products differentiation and the fact that it has unique products gives it a competitive edge. Xiaomi also has some weaknesses in the supply as it has few supply outlets stationed in the market.  patent issue is another major weakness for xiami.

 

Five generic competitive strategies

 Best cost provider - the provision of relatively low price smart phones helped Xiaomi Company become a sensation in the china markets. Although the competitors quickly copied the cheap price strategy and according to shifted to targeting wealthier consumers with its expensive devices to fend competition from competitors.

Products differentiation- since innovation is one of the key to ensure success in the products. Xiaomi Company has taken a tweak in Smartphone features and capture newest experience in the technological world. It has also targeted massive consumers by developing other MI products such as TVs’, power banks, headphones and boxes. Finally, to successfully reach the German market, Xiaomi Company has developed an operating system adapting both English and German languages.

Low cost provider- Xiaomi Company made its first Smartphone in the year 2011 and has since that time continued to introduce many more products in the electronics industry which are of high quality and highly affordable.

Focused strategy- Xiaomis’ mainly focused on the Smartphone production. It also focused on providing low cheep products targeting china market

Focused differentiation strategy- Xiaomi Company is quickly taking a change in most of its strategies after realizing the competitors are following same principals. It has switched to providing expensive products to reach wealthier consumers as the competitors concentrate with low income earners. It has also widened the market size by targeting global markets that have less competition.

Detailed description of business issues

Surprisingly, Xiaomi Company was not the only prayer in the china market. The presence of other superior companies in the electronic industry geared the need to shift to other less saturated markets. This resulted to a haste to grow supporting it’s the growth by “get big first and get better later” philosophy. The company therefore penetrated to bigger markets like India, Russia and USA in an effort to satisfy its expansion urge.

Xiaomi Company suffered a major setback in the initial success of the smart phone brand. The success was hindered by presence of substitutes and stiff competition from the market. The surged the need to branch out to other range of products

 

Outcomes

Like it is commonly known” choices have consequences”. Perhaps, when the xiaomi company resolved to expand its market, it was not aware of the delaying hurdles that could act as a stabling block to the process of expansion. One of the major drawbacks was the lack of patents. This as a result made it produce infringed models of Erickson eight in India. A ruling regarding the patent issue by Delhi High Coat blocked importing selling and marketing their phones in India as it featured some of the patent features of Ericson eight company. The same patent setback was experience in the US in regard to some of its models. In totality the lack of well established patent portfolio affected the company delay.

Recommendations

Sound marketing research analysis should be conducted first in the targeted areas to pinpoint out some of the mandatory requirements. The research would help in pointing out some of the likely setbacks to be experienced in the market. The company would therefore prepare enough to eliminate the current hurdles that would hinder the furtherance of the business in future.

Critical analysis of the consumers should also be of first priority to help point out the needs and special specifications that the consumers would be looking for in order strengthen and fasten the marketing process.

 

Conclusion

Strategic plan of the company is essential in ensuring the long term success of the company and should be safeguarded like other valuable assets. Xiaomi Company intensified in the marketing and expansion strategies, which made attain recommendable success. Just like any decision has repercussions, the change of strategic plan has both positive and negative results.  The positive results are associated with increased sales and extensive market base whereas the negative ones come as challenges. The expansion plan for Xiaomi Company has not been fully met and it is now targeting markets in the US an Africa.





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