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    Xiaomi - SM PDF

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    Sagar Parulekar
    Xiaomi is a Chinese electronics company known for its low-cost smartphones. It follows a strategy of cost leadership through low profit margins, positioning itself as a software and services company rather than hardware. Xiaomi imitates market leaders like Apple in its brand positioning. It has a matrix structure and ecosystem of invested companies to diversify its products and services while maintaining its brand. Though it faces threats from competitors and market saturation, Xiaomi leverages its large user base, manufacturing capabilities, and focus on future technologies like IoT to maintain its competitive edge through low prices and integrated products/services.

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    Xiaomi - SM PDF

    Uploaded by

    Sagar Parulekar
    392 views34 pages
    Xiaomi is a Chinese electronics company known for its low-cost smartphones. It follows a strategy of cost leadership through low profit margins, positioning itself as a software and services company rather than hardware. Xiaomi imitates market leaders like Apple in its brand positioning. It has a matrix structure and ecosystem of invested companies to diversify its products and services while maintaining its brand. Though it faces threats from competitors and market saturation, Xiaomi leverages its large user base, manufacturing capabilities, and focus on future technologies like IoT to maintain its competitive edge through low prices and integrated products/services.

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    Xiaomi is a Chinese electronics company known for its low-cost smartphones. It follows a strategy of cost leadership through low profit margins, positioning itself as a software and services company rather than hardware. Xiaomi imitates market leaders like Apple in its brand positioning. It has a matrix structure and ecosystem of invested companies to diversify its products and services while maintaining its brand. Though it faces threats from competitors and market saturation, Xiaomi leverages its large user base, manufacturing capabilities, and focus on future technologies like IoT to maintain its competitive edge through low prices and integrated products/services.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    392 views34 pages

    Xiaomi - SM PDF

    Uploaded by

    Sagar Parulekar
    Xiaomi is a Chinese electronics company known for its low-cost smartphones. It follows a strategy of cost leadership through low profit margins, positioning itself as a software and services company rather than hardware. Xiaomi imitates market leaders like Apple in its brand positioning. It has a matrix structure and ecosystem of invested companies to diversify its products and services while maintaining its brand. Though it faces threats from competitors and market saturation, Xiaomi leverages its large user base, manufacturing capabilities, and focus on future technologies like IoT to maintain its competitive edge through low prices and integrated products/services.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 34
    At a glance
    Powered by AI
    The key takeaways are that Xiaomi is a Chinese electronics company known for its low-cost smartphones. It follows a strategy of low profit margins and positions itself as a software and internet services provider rather than a hardware company alone.

    Some of Xiaomi's important resources and capabilities include its large manufacturing scale and partnerships with suppliers like Foxconn which help control costs, as well as its large fan base and ecosystem of related hardware products.

    Xiaomi is weaker than competitors like Oppo and Vivo in terms of experience and brand loyalty in certain markets, but maintains a cost advantage through a long product life cycle and vertically integrated supply chain. It is looking to IoT and other areas for future growth.

    Analysis of Xiaomi

    N017 Abhi Kapadia I057 Saahil Arora


    N032 Amogh Shete J035 Harshvardhan Khade
    N037 Manasvi Vakharia J054 Prachi Awasthi
    K092 Sagar Parulekar K084 Shrinidhi Vaidhya
    Introduction to Xiaomi
    Xiaomi Corporation is a Chinese electronics company headquartered in Beijing.
    Xiaomi makes and invests in smartphones, mobile apps, laptops, and related
    consumer electronics.

    Xiaomi has offices in Asia-Pacific, India, and Brazil. The company has established
    its presence in 70 countries and it is among the top 5 in 16 markets.

    Xiaomi is touted as the “Apple of China”


    How well is the
    firm’s strategy
    working?
    Primary business strategy based on cost-leadership

    Xiaomi follows a low-profit margin business strategy; profit margin was as low as
    1.8% in 2013 and 5% in 2018

    Xiaomi positions itself as a software and internet services provider company; not
    as a hardware company
    Accordingly, the sales of hardware are perceived as a means to deliver software
    and services in the long-term perspective

    Brand Positioning- Xiaomi uses imitative type of positioning by closely imitating


    the products of market leaders such as Apple and Samsung
    Xiaomi’s business strategy also integrates gathering and utilising a large fan base
    and aggressively increasing the ecosystem of products and services

    Firm infrastructure: Xiaomi has a matrix organizational structure; The co-founders


    each independently manage various business units as per their specialisation

    Despite its large size employing more than 18000 people in 70 countries, Xiaomi
    has only a few layers of management
    Xiaomi’s Mi “Ecosystem” Companies
    In 2013, Xiaomi announced its plans to invest in 100 hardware startups

    The CEO Lei Jun announced that Xiaomi would invest in 100 companies in 5 years
    to aggressively expand into new hardware fields

    Startups are reviewed by Xiaomi co-founders to ensure that core values and KPIs
    of both the parties are coherent with each other
    By March 2016, Xiaomi had invested in 55 Mi Ecosystem companies making
    products from power banks to air purifiers; diversifying from their usual product
    portfolio

    Of these companies, 29 were incubated from the ground up by Xiaomi, 7 have


    annual sales of over RMB 100M, 2 have reached annual sales of over RMB 1
    Billion, and 4 are already unicorns worth with over $1 billion

    These ecosystem companies are a part of Xiaomi’s diversification strategy


    Xiaomi’s Mi “Ecosystem” Companies
    Drawbacks:

    Xiaomi’s primary concern is dilution of the brand

    Startups need to operate with low profit margin according to Xiaomi business
    strategy

    Moreover, startups suffer from over-dependence on Xiaomi for branding and


    distribution
    What are the
    firm's
    competitively
    important
    resources and
    capabilities?
    Resources
    Tangible: distribution channel including its e-commerce platform and App store

    Intangible: loyal fan-base, large user-base, technology ecosystem, economies of


    scale, best practices on making products with low price/performance ratio

    Overall Xiaomi’s resources provide low cost, high quality and great internet
    services to its users; which is why Chinese users are spending more time in
    Xiaomi Apps than any other competitor
    Capabilities
    Speed of product development and bringing it to the market

    Operational efficiency

    R&D

    The company's MiUI Android OS has established a loyal community of users who
    form a crucial part of Xiaomi's customer base and contribute to the company's
    drive for market awareness
    Value Chain Analysis
    Inbound Logistics

    Strategic relationships with Taiwanese


    manufacturers of various components

    Xiaomi partners with Inventec and Hon


    Hai for assembly, Wintek and TPK for
    screen technology and Unicorn for PCB

    Xiaomi also procures various electronic


    components from Thailand
    Value Chain Analysis
    Operations

    Xiaomi manufactures locally more than


    75% of smartphones it sells in India

    Location of manufacturing units in


    China and India is one of the main
    sources of value in Xiaomi operations

    Manufacturing plants setup in Tamil


    Nadu and Andhra Pradesh
    Value Chain Analysis
    Outbound Logistics

    Initially, company sales were limited to


    online platform to save costs and
    maintain its cost leadership position in
    the global marketplace.

    With increasing demand and


    intensifying competition Xiaomi had to
    open “Mi” company-operated stores in
    2016-17
    Value Chain Analysis
    Marketing and Sales

    Xiaomi solely relied on WOM and


    forums; no advertising or marketing
    expenses

    Vivo and Oppo were investing huge


    amounts on posters, banners, celebrity
    endorsements and newspaper
    advertising, forcing Xiaomi to do the
    same
    Value Chain Analysis
    Sales Techniques

    Flash sales- Sale of products and


    services online at a heavily discounted
    price for a short period of time

    Reward Mi Customer Loyalty Scheme

    Seasonal sales promotions


    Value Chain Analysis
    Service

    Xiaomi post-sale service was often


    criticized as poor; this problem was
    rooted on company’s cost leadership
    strategy

    Due to intensifying competition, Xiaomi


    had pay attention to customer service.

    95% of all complaints at service centres


    are processed within a day
    Is firm able to take
    advantage of
    market
    opportunities and
    external threats
    Xiaomi founder and CEO Lei Jun considers smartphones as a distribution channel
    for other products and services [IoT], but not the primary sources of revenues

    In March 2017, Xiaomi kiosks were established to reach districts without Mi Home
    Stores and towns and villages with limited e-commerce access

    Xiaomi also announced in 2017 that it planned to set up a second manufacturing


    unit in India in partnership with Foxconn

    Focus India: On May 2, 2018, Xiaomi announced the launch of Mi Music and Mi
    Video to offer "value-added internet services" in India
    SWOT Analysis
    Strengths Weaknesses

    Efficient leadership by Lei Jun Low profit margin

    Impressive growth rate Lesser smartphone functionalities


    compared to big players such as Apple
    Cost advantage and Samsung

    Unique Android OS and strong brand Competitive advantage is easy to copy


    following and difficult to sustain

    Protectionist policy of Chinese Intense work culture


    government
    SWOT Analysis
    Opportunities Threats

    Increasing presence in IoT and Market saturation in smartphone


    e-commerce segment industry

    Formation of Ecosystem Company Increase in the costs of resources


    strategy
    China’s new labour laws will affect cost
    Proliferation of products in the of production
    marketplace
    Emergence of CSR-related scandals
    Is the firm
    stronger or
    weaker than its
    key rivals?
    Xiaomi’s present critical challenges include maintaining cost leadership amid
    intensifying competition from other budget internet technology brands such as
    Oppo and Vivo

    Vivo and Oppo are offering similar value proportion to users; Xiaomi is finding it
    difficult to sustain brand loyalty
    Xiaomi also has lesser experience in the marketplace as Vivo and Oppo were
    established before Xiaomi came in

    Xiaomi is looking into the future through its e-commerce store and inroads into IoT
    segment
    Xiaomi keeps most of its products in the market longer; eighteen months rather
    than the six-month norm followed by many smartphone companies

    This strategy allows Xiaomi to take advantage of price reductions in the prices of
    key components of its product

    It enables the company to sell hardware with specifications comparable to


    high-end devices at a fraction of the cost
    Porter’s Five Forces Analysis
    Threat of New Entrants

    High entry barriers for potentially new market


    players: economies of scale, large initial capital
    requirement and access to distribution channel
    Porter’s Five Forces Analysis
    Buyer Bargaining Power

    High buyer bargaining power- large market


    demand, easy access to information and many
    competitors in marketplace

    Xiaomi trying to reduce buyer power by increasing


    interdependence of products and services within
    its ecosystem
    Porter’s Five Forces Analysis
    Rivalry among Existing Firms/Threat of
    Substitutes

    Intense competition among numerous players on


    the basis of cost and/or differentiation

    Supplier Bargaining Power

    Companies tie up with suppliers for long-term


    goals. Xiaomi and Apple tie up with Foxconn
    Are the firm's
    prices and costs
    competitive with
    rivals?
    Xiaomi sells at almost bill-of-material prices; making it a leader in budget
    technology companies

    Xiaomi operates on a vertically-integrated model that enables the company to sell


    hardware at cost or below in order to attract users and earn money by selling
    content

    To control capital costs, Xiaomi sold exclusively from online stores and didn't
    establish any physical retail outlet for the first four years of its establishment.
    THANK YOU

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