Case Study Description of Xiaomi's Globalization Strategy and Challenges
Xiaomi, the Chinese smartphone company founded in 2010, had quickly become an industry leader in the Chinese market. By 2016 it had started to expand internationally, and this case lays out the company's globalization strategies and challenges moving forward. Hugo Barra, a top Android executive, had left Google a few years earlier to lead Xiaomi's international growth. Xiaomi's founder and CEO, Lei Jun, said the company's ultimate goal was "making good but cheap things," a low pricing strategy that had succeeded in China. The company sold over 70 million mobile phones in 2015-while aggressively building out a robust ecosystem. However, Xiaomi had expected to sell 80 to 100 million units that year; it was facing a declining domestic market and increased competition. Therefore, international expansion had become an important part of the company's overall strategy. But expanding to other countries would be a challenging road. For one, it would take considerable time and effort to tailor the company's Android-based MIUI operating system for diversified markets-and obtain market-access qualifications. Xiaomi's patent portfolio was thin compared to those of large competitors, and it ran the risk of lawsuits from companies that held patent rights in the countries it wanted to enter. Other challenges included building out sales channels, output capacity, and cross-culture management development. Xiaomi's international plan included ten countries in Asia, Europe, and Latin America. The next year or two would be critical for Xiaomi-and it needed to make the right strategic decisions to succeed in its globalization efforts.
Authors :: Gang Zheng, Yanting Guo, Robert A. Burgelman
Swot Analysis of "Xiaomi's Globalization Strategy and Challenges" written by Gang Zheng, Yanting Guo, Robert A. Burgelman includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Xiaomi's Xiaomi facing as an external strategic factors. Some of the topics covered in Xiaomi's Globalization Strategy and Challenges case study are - Strategic Management Strategies, Globalization, Mobile and Global Business.
Some of the macro environment factors that can be used to understand the Xiaomi's Globalization Strategy and Challenges casestudy better are - – increasing commodity prices, competitive advantages are harder to sustain because of technology dispersion, wage bills are increasing, digital marketing is dominated by two big players Facebook and Google, talent flight as more people leaving formal jobs, increasing transportation and logistics costs, central banks are concerned over increasing inflation,
supply chains are disrupted by pandemic , there is backlash against globalization, etc
Introduction to SWOT Analysis of Xiaomi's Globalization Strategy and Challenges
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Xiaomi's Globalization Strategy and Challenges case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Xiaomi's Xiaomi, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Xiaomi's Xiaomi 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's Globalization Strategy and Challenges can be done for the following purposes –
1. Strategic planning using facts provided in Xiaomi's Globalization Strategy and Challenges case study
2. Improving business portfolio management of Xiaomi's Xiaomi
3. Assessing feasibility of the new initiative in Global Business field.
4. Making a Global Business topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Xiaomi's Xiaomi
Strengths Xiaomi's Globalization Strategy and Challenges | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Xiaomi's Xiaomi in Xiaomi's Globalization Strategy and Challenges Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Xiaomi's Xiaomi 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 lead change in Global Business field
– Xiaomi's Xiaomi is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Xiaomi's Xiaomi in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Low bargaining power of suppliers
– Suppliers of Xiaomi's Xiaomi in the sector have low bargaining power. Xiaomi's Globalization Strategy and Challenges has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Xiaomi's Xiaomi to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Xiaomi's Xiaomi is present in almost all the verticals within the industry. This has provided firm in Xiaomi's Globalization Strategy and Challenges 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's Xiaomi has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Xiaomi's Xiaomi to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Xiaomi's Xiaomi 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's Xiaomi is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Xiaomi's Globalization Strategy and Challenges Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Xiaomi's Xiaomi digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Xiaomi's Xiaomi 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.
Superior customer experience
– The customer experience strategy of Xiaomi's Xiaomi in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Effective Research and Development (R&D)
– Xiaomi's Xiaomi 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 Xiaomi's Globalization Strategy and Challenges - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Sustainable margins compare to other players in Global Business industry
– Xiaomi's Globalization Strategy and Challenges firm has clearly differentiated products in the market place. This has enabled Xiaomi's Xiaomi to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Xiaomi's Xiaomi to invest into research and development (R&D) and innovation.
Organizational Resilience of Xiaomi's Xiaomi
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Xiaomi's Xiaomi does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Xiaomi's Xiaomi is one of the most innovative firm in sector. Manager in Xiaomi's Globalization Strategy and Challenges Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses Xiaomi's Globalization Strategy and Challenges | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Xiaomi's Globalization Strategy and Challenges are -
Lack of clear differentiation of Xiaomi's Xiaomi products
– To increase the profitability and margins on the products, Xiaomi's Xiaomi needs to provide more differentiated products than what it is currently offering in the marketplace.
Products dominated business model
– Even though Xiaomi's Xiaomi 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 - Xiaomi's Globalization Strategy and Challenges should strive to include more intangible value offerings along with its core products and services.
High operating costs
– Compare to the competitors, firm in the HBR case study Xiaomi's Globalization Strategy and Challenges 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's Xiaomi 's lucrative customers.
No frontier risks strategy
– After analyzing the HBR case study Xiaomi's Globalization Strategy and Challenges, it seems that company is thinking about the frontier risks that can impact Global Business 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Xiaomi's Globalization Strategy and Challenges, in the dynamic environment Xiaomi's Xiaomi has struggled to respond to the nimble upstart competition. Xiaomi's Xiaomi has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Interest costs
– Compare to the competition, Xiaomi's Xiaomi 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Xiaomi's Globalization Strategy and Challenges, it seems that the employees of Xiaomi's Xiaomi 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.
Capital Spending Reduction
– Even during the low interest decade, Xiaomi's Xiaomi 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's Globalization Strategy and Challenges HBR case study mentions - Xiaomi's Xiaomi 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Xiaomi's Xiaomi is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Xiaomi's Globalization Strategy and Challenges can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Workers concerns about automation
– As automation is fast increasing in the segment, Xiaomi's Xiaomi 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.
Opportunities Xiaomi's Globalization Strategy and Challenges | 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's Globalization Strategy and Challenges are -
Leveraging digital technologies
– Xiaomi's Xiaomi 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.
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's Xiaomi in the consumer business. Now Xiaomi's Xiaomi can target international markets with far fewer capital restrictions requirements than the existing system.
Manufacturing automation
– Xiaomi's Xiaomi can use the latest technology developments to improve its manufacturing and designing process in Global Business 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Xiaomi's Xiaomi 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.
Creating value in data economy
– The success of analytics program of Xiaomi's Xiaomi has opened avenues for new revenue streams for the organization in the industry. This can help Xiaomi's Xiaomi to build a more holistic ecosystem as suggested in the Xiaomi's Globalization Strategy and Challenges case study. Xiaomi's Xiaomi can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Xiaomi's Xiaomi can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Xiaomi's Globalization Strategy and Challenges 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Xiaomi's Xiaomi 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, Xiaomi's Globalization Strategy and Challenges, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Xiaomi's Xiaomi is facing challenges because of the dominance of functional experts in the organization. Xiaomi's Globalization Strategy and Challenges 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.
Better consumer reach
– The expansion of the 5G network will help Xiaomi's Xiaomi to increase its market reach. Xiaomi's Xiaomi 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Xiaomi's Xiaomi can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Xiaomi's Xiaomi 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's Xiaomi to hire the very best people irrespective of their geographical location.
Using analytics as competitive advantage
– Xiaomi's Xiaomi 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's Globalization Strategy and Challenges - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Xiaomi's Xiaomi to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Learning at scale
– Online learning technologies has now opened space for Xiaomi's Xiaomi 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.
Threats Xiaomi's Globalization Strategy and Challenges External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Xiaomi's Globalization Strategy and Challenges are -
Environmental challenges
– Xiaomi's Xiaomi 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's Xiaomi can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Xiaomi's Globalization Strategy and Challenges, Xiaomi's Xiaomi may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Global Business .
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.
Regulatory challenges
– Xiaomi's Xiaomi 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 Global Business 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's Xiaomi in the Global Business sector and impact the bottomline of the organization.
Increasing wage structure of Xiaomi's Xiaomi
– 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's Xiaomi.
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's Xiaomi needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
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.
Consumer confidence and its impact on Xiaomi's Xiaomi 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.
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's Xiaomi business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Xiaomi's Xiaomi in the Global Business industry. The Global Business 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.
High dependence on third party suppliers
– Xiaomi's Xiaomi 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.
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's Xiaomi 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.
Weighted SWOT Analysis of Xiaomi's Globalization Strategy and Challenges 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's Globalization Strategy and Challenges 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's Globalization Strategy and Challenges 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's Globalization Strategy and Challenges 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's Globalization Strategy and Challenges 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's Xiaomi needs to make to build a sustainable competitive advantage.