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INTERNATIONAL BUSINESS ( 2 MBI A )

COMPANY OBSERVATION 3

Group Members :

1. Affan Naufal Syafida (01)


2. Aji Setiyoko (04)
3. Atika Rahmadhiyati (07)

1.
A. International Business Strategy of Xiami Company is multinational strategy which
focuses on local responsiveness. Subsidiaries operate autonomously or in a loose
federation. This strategy reduces the need for communications because local
subsidiaries can make many decisions. There are heavy reporting requirements though,
as the results from the subsidiaries have to be monitored at a headquarter location.

B. The two core competitive strategies, followed by Xiaomi, are production at a lower
price and production with superior features and quality. Besides these, the added
applications, present in Xiaomi smartphones, attracts the customers towards them. The
competitive strategy is the market survey of Xiaomi before the launch of its 1st Android
based smartphone. Xiaomi has discovered that two giant smartphone manufacturing
companies of the world, Apple Inc. and Samsung Electronics Co. has their customer
bases because of their separate features and OS platform bases. For this reason, Xiaomi
has chosen the Android OS platform and developed MIUI to deliver smartphones at a
cheaper rate. The company has developed all the common apps like cloud services, the
security app, music player (both online and offline), video player, browser, and many
more. As a result, the substitutes of most of the marketable apps, available in online
marketplaces like Google Play Store, are present in MIUI Express . Now, Xiaomi is a
successful smartphone manufacturing company with both of his hardware and software
manufacturing sections. The competitive price of Xiaomi smartphones and their own
online app market, as well as distribution market, is a deadly combination of
competitive strategies used by Xiaomi.

The following analysis is going to depict the growth path of Xiaomi. Xiaomi, the Apple of
China, is playing the leading role in the smartphone market of China with the sales
record of 90 percent its smartphones. According to Walker (2014), Xiaomi has also
explored its business in the international market such as Taiwan, Singapore, Hong Kong
with its official presence and Indonesia, India, Thailand with its online presence. After
one year of their journey, the software company has become a hardware company
announcing their 1st Android smartphone Mi-One in 2011. The creation of powerful
hardware as well as cost price selling of the smartphones and the easy to use app
services of their devices has given a revenue over $5 billion within 2013 only. In 2010,
Xiaomi has started the journey as a software developing company and released a user-
friendly interface, MIUI for Android of Google. Within 2014, 35 million users (approx..)
are enjoying MIUI in their devices worldwide, whereas, Xiaomi has shipped over 22
million smartphones by the end of 2013.

Therefore, the core competitive strategies which help Xiaomi to stay ahead in this
competition with Samsung are the razor-thin margins, online selling strategy,
competitive cost advantages, and quick expansion in the international market.

C. Xiaomi had quickly become an industry leader in the Chinese market. By 2016 it had
started to expand internationally, and this case lays out the companys globalization
strategies and challenges moving forward. The company sold over 70 million mobile
phones in 2015while 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 companys overall strategy.
But expanding to other countries would be a challenging road. For one, it would take
considerable time and effort to tailor the companys Android-based MIUI operating
system for diversified marketsand obtain market-access qualifications. Xiaomis
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. Xiaomis international plan included ten countries in
Asia, Europe, and Latin America. The next year or two would be critical for Xiaomiand
it needed to make the right strategic decisions to succeed in its globalization efforts.

3.

a. Xiaomi used Worldwide Area Structure, Under worldwide area structure, the world is
divided into geographic area. Operation authority and strategic decisions to each of
these activities are decentralized to each area. With headquarters retaining authority for
the overall strategic direction on the firms and financial control.
b.

Xiaomi Technology has an extremely flat structure. In Xiaomi, there the not much
hierarchy, only 3 the core founder of the Xiaomi, the department leader and the
employees. There are advantages in this organization like the short-line communications
are quicker and more efficient as well as the decisions are made quicker, which will
make the efficiency and productivity of the company much higher

c. Because xiaomi were private company and using flat structure for their organization,
there were not enough information about their organizational structure, despite they
were using worldwide area structure with geocentric based market in india, Singapore,
indonesa, brazil and Poland, we think xiaomi did this because they want to protect their
employed from being taken by other company because they used flat structure
organization, if one employee gone, there will be so much disruption on their company,
and with xiaomi success it prove that flat structure organization work best with xiaomi
cultural environment that family and clan model, with structure like this there will be
shorter and faster communication between division, therefore efficient in using
production factor