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 - – supply chains are disrupted by pandemic , increasing energy prices, increasing inequality as vast percentage of new income is going to the top 1%, increasing commodity prices, digital marketing is dominated by two big players Facebook and Google, increasing government debt because of Covid-19 spendings, there is backlash against globalization,
customer relationship management is fast transforming because of increasing concerns over data privacy, banking and financial system is disrupted by Bitcoin and other crypto currencies, 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 -
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.
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.
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.
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.
Effective Research and Development (R&D)
– Xiaomi Channels has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Beijing Xiaomi Technology Co.: Growth Via Online Channels - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
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.
Strong track record of project management
– Xiaomi Channels is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
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.
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.
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.
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.
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 -
Aligning sales with marketing
– It come across in the case study Beijing Xiaomi Technology Co.: Growth Via Online Channels that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Beijing Xiaomi Technology Co.: Growth Via Online Channels can leverage the sales team experience to cultivate customer relationships as Xiaomi Channels is planning to shift buying processes online.
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.
Increasing silos among functional specialists
– The organizational structure of Xiaomi Channels is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Xiaomi Channels needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Xiaomi Channels to focus more on services rather than just following the product oriented approach.
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.
Lack of clear differentiation of Xiaomi Channels products
– To increase the profitability and margins on the products, Xiaomi Channels needs to provide more differentiated products than what it is currently offering in the marketplace.
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.
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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Beijing Xiaomi Technology Co.: Growth Via Online Channels, in the dynamic environment Xiaomi Channels has struggled to respond to the nimble upstart competition. Xiaomi Channels has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Beijing Xiaomi Technology Co.: Growth Via Online Channels, is just above the industry average. Xiaomi Channels needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Slow to strategic competitive environment developments
– As Beijing Xiaomi Technology Co.: Growth Via Online Channels HBR case study mentions - Xiaomi Channels takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
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 -
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.
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.
Building a culture of innovation
– managers at Xiaomi Channels can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Sales & Marketing segment.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Xiaomi Channels can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
Manufacturing automation
– Xiaomi Channels can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
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.
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.
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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Xiaomi Channels can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Leveraging digital technologies
– Xiaomi Channels can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Sales & Marketing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Xiaomi Channels can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Xiaomi Channels can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
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.
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 -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Xiaomi Channels in the Sales & Marketing industry. The Sales & Marketing industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Increasing wage structure of Xiaomi Channels
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Xiaomi Channels.
Stagnating economy with rate increase
– Xiaomi Channels can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
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.
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 .
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Xiaomi Channels needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
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.
Easy access to finance
– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Xiaomi Channels can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 .
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.
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.
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.
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.