Xiaomi: Designing an Ecosystem For the "Internet of Things" SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Xiaomi: Designing an Ecosystem For the "Internet of Things"
Xiaomi quickly rose to become one of China's top smartphone manufacturers after its founding in 2010. By mid-2015, it was looking to bolster its declining repeat purchase rate and deepen the impact of its products. The company begins to invest heavily in an "Ecosystem" of allied companies and compatible smart products. Xiaomi also must determine if its Internet-based sales model will continue to drive growth or if it must invest hundreds of millions of dollars in a full-fledged retail network.
Authors :: Jeremy B. Dann, Katherine Bennett, Andrew Ogden
Swot Analysis of "Xiaomi: Designing an Ecosystem For the "Internet of Things"" written by Jeremy B. Dann, Katherine Bennett, Andrew Ogden includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Xiaomi Ecosystem facing as an external strategic factors. Some of the topics covered in Xiaomi: Designing an Ecosystem For the "Internet of Things" case study are - Strategic Management Strategies, Customer service, Design, Managing organizations, Venture capital and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Xiaomi: Designing an Ecosystem For the "Internet of Things" casestudy better are - – increasing government debt because of Covid-19 spendings, increasing commodity prices, increasing transportation and logistics costs, digital marketing is dominated by two big players Facebook and Google, challanges to central banks by blockchain based private currencies, wage bills are increasing, talent flight as more people leaving formal jobs,
there is backlash against globalization, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of Xiaomi: Designing an Ecosystem For the "Internet of Things"
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Xiaomi: Designing an Ecosystem For the "Internet of Things" case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Xiaomi Ecosystem, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Xiaomi Ecosystem 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 Xiaomi: Designing an Ecosystem For the "Internet of Things" can be done for the following purposes –
1. Strategic planning using facts provided in Xiaomi: Designing an Ecosystem For the "Internet of Things" case study
2. Improving business portfolio management of Xiaomi Ecosystem
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Xiaomi Ecosystem
Strengths Xiaomi: Designing an Ecosystem For the "Internet of Things" | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Xiaomi Ecosystem in Xiaomi: Designing an Ecosystem For the "Internet of Things" Harvard Business Review case study are -
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Xiaomi Ecosystem digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Xiaomi Ecosystem 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.
Low bargaining power of suppliers
– Suppliers of Xiaomi Ecosystem in the sector have low bargaining power. Xiaomi: Designing an Ecosystem For the "Internet of Things" has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Xiaomi Ecosystem to manage not only supply disruptions but also source products at highly competitive prices.
Training and development
– Xiaomi Ecosystem has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Xiaomi: Designing an Ecosystem For the "Internet of Things" 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.
Diverse revenue streams
– Xiaomi Ecosystem is present in almost all the verticals within the industry. This has provided firm in Xiaomi: Designing an Ecosystem For the "Internet of Things" case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
High brand equity
– Xiaomi Ecosystem has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Xiaomi Ecosystem to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of Xiaomi Ecosystem
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Xiaomi Ecosystem does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Xiaomi Ecosystem is one of the most innovative firm in sector. Manager in Xiaomi: Designing an Ecosystem For the "Internet of Things" 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 Ecosystem has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Xiaomi Ecosystem 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.
Analytics focus
– Xiaomi Ecosystem 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 Jeremy B. Dann, Katherine Bennett, Andrew Ogden 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 Ecosystem 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.
Strong track record of project management
– Xiaomi Ecosystem is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to recruit top talent
– Xiaomi Ecosystem is one of the leading recruiters in the industry. Managers in the Xiaomi: Designing an Ecosystem For the "Internet of Things" are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses Xiaomi: Designing an Ecosystem For the "Internet of Things" | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Xiaomi: Designing an Ecosystem For the "Internet of Things" are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Xiaomi: Designing an Ecosystem For the "Internet of Things", it seems that the employees of Xiaomi Ecosystem don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High operating costs
– Compare to the competitors, firm in the HBR case study Xiaomi: Designing an Ecosystem For the "Internet of Things" 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 Ecosystem 's lucrative customers.
High cash cycle compare to competitors
Xiaomi Ecosystem 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Xiaomi Ecosystem 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 Ecosystem 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.
Slow to strategic competitive environment developments
– As Xiaomi: Designing an Ecosystem For the "Internet of Things" HBR case study mentions - Xiaomi Ecosystem 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.
Aligning sales with marketing
– It come across in the case study Xiaomi: Designing an Ecosystem For the "Internet of Things" 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 Xiaomi: Designing an Ecosystem For the "Internet of Things" can leverage the sales team experience to cultivate customer relationships as Xiaomi Ecosystem is planning to shift buying processes online.
Interest costs
– Compare to the competition, Xiaomi Ecosystem 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.
Slow decision making process
– As mentioned earlier in the report, Xiaomi Ecosystem has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Xiaomi Ecosystem even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Xiaomi: Designing an Ecosystem For the "Internet of Things", in the dynamic environment Xiaomi Ecosystem has struggled to respond to the nimble upstart competition. Xiaomi Ecosystem has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Low market penetration in new markets
– Outside its home market of Xiaomi Ecosystem, firm in the HBR case study Xiaomi: Designing an Ecosystem For the "Internet of Things" needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Xiaomi: Designing an Ecosystem For the "Internet of Things" | 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 Xiaomi: Designing an Ecosystem For the "Internet of Things" are -
Creating value in data economy
– The success of analytics program of Xiaomi Ecosystem has opened avenues for new revenue streams for the organization in the industry. This can help Xiaomi Ecosystem to build a more holistic ecosystem as suggested in the Xiaomi: Designing an Ecosystem For the "Internet of Things" case study. Xiaomi Ecosystem can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Loyalty marketing
– Xiaomi Ecosystem 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.
Buying journey improvements
– Xiaomi Ecosystem can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Xiaomi: Designing an Ecosystem For the "Internet of Things" 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Xiaomi Ecosystem 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 Ecosystem 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 Ecosystem can use these opportunities to build new business models that can help the communities that Xiaomi Ecosystem operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Using analytics as competitive advantage
– Xiaomi Ecosystem 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 Xiaomi: Designing an Ecosystem For the "Internet of Things" - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Xiaomi Ecosystem to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Xiaomi Ecosystem is facing challenges because of the dominance of functional experts in the organization. Xiaomi: Designing an Ecosystem For the "Internet of Things" 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.
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 Ecosystem in the consumer business. Now Xiaomi Ecosystem can target international markets with far fewer capital restrictions requirements than the existing system.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Xiaomi Ecosystem can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Leveraging digital technologies
– Xiaomi Ecosystem 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.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Xiaomi Ecosystem to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Xiaomi Ecosystem can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Xiaomi Ecosystem in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Threats Xiaomi: Designing an Ecosystem For the "Internet of Things" External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Xiaomi: Designing an Ecosystem For the "Internet of Things" are -
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 Ecosystem 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 Ecosystem 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.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Xiaomi Ecosystem.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Xiaomi Ecosystem with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing wage structure of Xiaomi Ecosystem
– 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 Ecosystem.
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.
Consumer confidence and its impact on Xiaomi Ecosystem demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Xiaomi Ecosystem in the Strategy & Execution industry. The Strategy & Execution 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 international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Xiaomi Ecosystem 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 Xiaomi: Designing an Ecosystem For the "Internet of Things" .
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Xiaomi Ecosystem can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Ecosystem in the Strategy & Execution sector and impact the bottomline of the organization.
Environmental challenges
– Xiaomi Ecosystem 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 Ecosystem can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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 Ecosystem needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Weighted SWOT Analysis of Xiaomi: Designing an Ecosystem For the "Internet of Things" 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 Xiaomi: Designing an Ecosystem For the "Internet of Things" 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 Xiaomi: Designing an Ecosystem For the "Internet of Things" 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 Xiaomi: Designing an Ecosystem For the "Internet of Things" 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 Xiaomi: Designing an Ecosystem For the "Internet of Things" 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 Ecosystem needs to make to build a sustainable competitive advantage.
