Case Study Description of Beijing Xiaomi Technology Co.: Growth Via Online Channels
Beijing Xiaomi Technology Co. Ltd. (Xiaomi) had grown into the third-largest cell phone brand in China and the sixth-largest in the world. The company solely deployed online channels, which contributed to its success. In the initial stage, Xiaomi depended on its own online channel to interact with consumers to develop user-friendly products and sell products. Three years after its inception, the company successfully established its flagship store on the largest business-to-consumer e-commerce platform in China. However, Xiaomi was facing a series of challenges, such as competitors' imitation and consumer complaints regarding services. Xiaomi was at a crossroads: should it stick to its online channels or develop online-to-offline channels? Miao Cui is affiliated with Dalian University of Technology.
Authors :: Miao Cui, Yanhong Guo, Feixiang Peng, Jilong Wang
Swot Analysis of "Beijing Xiaomi Technology Co.: Growth Via Online Channels" written by Miao Cui, Yanhong Guo, Feixiang Peng, Jilong Wang includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Xiaomi Channels facing as an external strategic factors. Some of the topics covered in Beijing Xiaomi Technology Co.: Growth Via Online Channels case study are - Strategic Management Strategies, Marketing and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Beijing Xiaomi Technology Co.: Growth Via Online Channels casestudy better are - – technology disruption, central banks are concerned over increasing inflation, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing transportation and logistics costs, there is increasing trade war between United States & China, there is backlash against globalization, competitive advantages are harder to sustain because of technology dispersion,
increasing inequality as vast percentage of new income is going to the top 1%, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Beijing Xiaomi Technology Co.: Growth Via Online Channels
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Beijing Xiaomi Technology Co.: Growth Via Online Channels case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Xiaomi Channels, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Xiaomi Channels operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Beijing Xiaomi Technology Co.: Growth Via Online Channels can be done for the following purposes –
1. Strategic planning using facts provided in Beijing Xiaomi Technology Co.: Growth Via Online Channels case study
2. Improving business portfolio management of Xiaomi Channels
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Xiaomi Channels
Strengths Beijing Xiaomi Technology Co.: Growth Via Online Channels | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Xiaomi Channels in Beijing Xiaomi Technology Co.: Growth Via Online Channels Harvard Business Review case study are -
High switching costs
– The high switching costs that Xiaomi Channels has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Superior customer experience
– The customer experience strategy of Xiaomi Channels in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Learning organization
- Xiaomi Channels is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Xiaomi Channels is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Beijing Xiaomi Technology Co.: Growth Via Online Channels Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Training and development
– Xiaomi Channels has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Beijing Xiaomi Technology Co.: Growth Via Online Channels Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Low bargaining power of suppliers
– Suppliers of Xiaomi Channels in the sector have low bargaining power. Beijing Xiaomi Technology Co.: Growth Via Online Channels has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Xiaomi Channels to manage not only supply disruptions but also source products at highly competitive prices.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Xiaomi Channels digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Xiaomi Channels has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Highly skilled collaborators
– Xiaomi Channels has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Beijing Xiaomi Technology Co.: Growth Via Online Channels HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Analytics focus
– Xiaomi Channels is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Miao Cui, Yanhong Guo, Feixiang Peng, Jilong Wang can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Cross disciplinary teams
– Horizontal connected teams at the Xiaomi Channels are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Ability to recruit top talent
– Xiaomi Channels is one of the leading recruiters in the industry. Managers in the Beijing Xiaomi Technology Co.: Growth Via Online Channels are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Innovation driven organization
– Xiaomi Channels is one of the most innovative firm in sector. Manager in Beijing Xiaomi Technology Co.: Growth Via Online Channels Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Successful track record of launching new products
– Xiaomi Channels has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Xiaomi Channels has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Weaknesses Beijing Xiaomi Technology Co.: Growth Via Online Channels | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Beijing Xiaomi Technology Co.: Growth Via Online Channels are -
Products dominated business model
– Even though Xiaomi Channels has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Beijing Xiaomi Technology Co.: Growth Via Online Channels should strive to include more intangible value offerings along with its core products and services.
No frontier risks strategy
– After analyzing the HBR case study Beijing Xiaomi Technology Co.: Growth Via Online Channels, it seems that company is thinking about the frontier risks that can impact Sales & Marketing strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Interest costs
– Compare to the competition, Xiaomi Channels has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Need for greater diversity
– Xiaomi Channels has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Workers concerns about automation
– As automation is fast increasing in the segment, Xiaomi Channels needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Capital Spending Reduction
– Even during the low interest decade, Xiaomi Channels has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
High operating costs
– Compare to the competitors, firm in the HBR case study Beijing Xiaomi Technology Co.: Growth Via Online Channels has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Xiaomi Channels 's lucrative customers.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Xiaomi Channels is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Beijing Xiaomi Technology Co.: Growth Via Online Channels can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Xiaomi Channels supply chain. Even after few cautionary changes mentioned in the HBR case study - Beijing Xiaomi Technology Co.: Growth Via Online Channels, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Xiaomi Channels vulnerable to further global disruptions in South East Asia.
Skills based hiring
– The stress on hiring functional specialists at Xiaomi Channels has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
High cash cycle compare to competitors
Xiaomi Channels has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Opportunities Beijing Xiaomi Technology Co.: Growth Via Online Channels | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Beijing Xiaomi Technology Co.: Growth Via Online Channels are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Xiaomi Channels is facing challenges because of the dominance of functional experts in the organization. Beijing Xiaomi Technology Co.: Growth Via Online Channels case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Xiaomi Channels to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Xiaomi Channels to hire the very best people irrespective of their geographical location.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Xiaomi Channels can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Beijing Xiaomi Technology Co.: Growth Via Online Channels, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Loyalty marketing
– Xiaomi Channels has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Using analytics as competitive advantage
– Xiaomi Channels has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Beijing Xiaomi Technology Co.: Growth Via Online Channels - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Xiaomi Channels to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Developing new processes and practices
– Xiaomi Channels can develop new processes and procedures in Sales & Marketing industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Xiaomi Channels in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, and it will provide faster access to the consumers.
Learning at scale
– Online learning technologies has now opened space for Xiaomi Channels to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Xiaomi Channels can use these opportunities to build new business models that can help the communities that Xiaomi Channels operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Buying journey improvements
– Xiaomi Channels can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Beijing Xiaomi Technology Co.: Growth Via Online Channels suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Xiaomi Channels can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Xiaomi Channels in the consumer business. Now Xiaomi Channels can target international markets with far fewer capital restrictions requirements than the existing system.
Better consumer reach
– The expansion of the 5G network will help Xiaomi Channels to increase its market reach. Xiaomi Channels will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Threats Beijing Xiaomi Technology Co.: Growth Via Online Channels External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Beijing Xiaomi Technology Co.: Growth Via Online Channels are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Xiaomi Channels can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Beijing Xiaomi Technology Co.: Growth Via Online Channels .
Regulatory challenges
– Xiaomi Channels needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Sales & Marketing industry regulations.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Xiaomi Channels in the Sales & Marketing sector and impact the bottomline of the organization.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Xiaomi Channels with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Xiaomi Channels will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
High dependence on third party suppliers
– Xiaomi Channels high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Xiaomi Channels business can come under increasing regulations regarding data privacy, data security, etc.
Technology acceleration in Forth Industrial Revolution
– Xiaomi Channels has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Xiaomi Channels needs to keep up with the evolution of technology in the Sales & Marketing sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Beijing Xiaomi Technology Co.: Growth Via Online Channels, Xiaomi Channels may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
Shortening product life cycle
– it is one of the major threat that Xiaomi Channels is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Xiaomi Channels needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Xiaomi Channels can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Weighted SWOT Analysis of Beijing Xiaomi Technology Co.: Growth Via Online Channels Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Beijing Xiaomi Technology Co.: Growth Via Online Channels needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Beijing Xiaomi Technology Co.: Growth Via Online Channels is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Beijing Xiaomi Technology Co.: Growth Via Online Channels is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Beijing Xiaomi Technology Co.: Growth Via Online Channels is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Xiaomi Channels needs to make to build a sustainable competitive advantage.
