Q1:

Assess Xiaomi's ecosystem strategy. Define it and offer your thoughts regarding its
success, and whether you believe it will succeed in the future.

Xiaomi’s ecosystem mainly consists of connect smart products with the Xiaomi
smartphone as a remote control. And their ecosystem strategy is mainly collaborating
with other smart device companies to develop more Xiaomi co-branded products and
selling them with the existing distribution channels.
I credit the success largely to successful products instead of the ecosystem. Xiaomi
business model is largely about selling top-of-the-line products at almost bill-of-
material prices. Therefore, some of their products are extremely popular, such as the
Mi Band fitness tracker. However, it is worth noticing that Mi Band is compatible
with almost any Android device instead of only Xiaomi devices. Therefore, I would
credit the success more to the products instead of the ecosystem. But the collaboration

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strategy definitely reduces cost in both research and distribution phases. Therefore, I

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would say that it is an effective strategy so far.

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Q2:

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Assess Xiaomi's priorities in the following areas:
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Culture: How were employees perceived, and how does this compare to traditional
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Chinese corporate culture?
Design focus: How did their approach compare to Apple and other U.S. companies?
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Market strategy approach: Mass or niche?

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Culture: Employees were recognized as individuals and respected for personal effort
and individual personalities and differences. When joining the company, employees
are treated as joining a family and given a nice welcome package.
Design focus: Xiaomi has an emphasis on design. They have a designer among the
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founding team which is quite unique. As a result, Xiaomi embraced the idea of
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strategic innovation which seeks to build a superior breakthrough business model.

Market strategy: Xiaomi took a mass approach, with its products aimed to fit with
80% of the demographics. However, I would say that the success of their first
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generation of smart phone was largely because of fan enthusiasm, therefore that
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specific product would be more niche because it satisfied the demand of hardcore
fans.

Q3:
Should Xiaomi follow Apple into the bricks and mortar retail store environment, or
continue to pursue the “flagship” model?

I think Xiaomi can pursue the flagship model as a start. Firstly, the flagship model is
much cheaper to implement. According to the case, implementing the flagship
model cost about one-tenth of the retail store implementation. Secondly, adapting to

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 retail stores would inevitably involve more risk. For instance, if the retail store offers
different packaging, it might cause the customers to be unsatisfied with online
offerings. Finally, if the flagship model is showing great selling performance, Xiaomi
can always adjust to the bricks and mortar. Therefore, I think it’s better to pursue the
flagship model first, then adjust the strategy according to the performance.

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