Written Assignment Unit 3

BUS 4407 – Strategic Management

AY2021 – T4

University of the People

SWOT Analysis

September 19, 2021

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Introduction

SWOT analysis, first formulated by Ken Andrews to help create business strategies, can be used

as a tool to analyze the internal and external aspects of an organization (Carpenter, Bauer, &

Erdogan, 2010). The internal facets include Strengths and Weaknesses, while the external

elements are Opportunities and Threats. This brief essay will describe and create a SWOT

analysis for Xiaomi, a China-based smartphone and gadget maker.

About Xiaomi

According to the company’s website, Xiaomi is an internet company that produces smartphones

and smart devices connected with the Internet of Things (IoT) platform (Xiaomi Corporation, n.

d.). The company is less than a decade old and was listed on the Hong Kong Stock Exchange in

2018. In 2020, It ranked 3rd in terms of smartphone shipments globally and had made it on the

Fortune Global 500 list. Xiaomi has a strong brand presence in Asia, primarily due to its

competitive prices and high-quality smartphones and gadgets. As a consumer, I use Xiaomi

products because it offers high-specification smartphones at competitive prices.

SWOT Analysis for Xiaomi

Although Xiaomi has a stronger branding in Asia than in the Western hemisphere, it is one of the

sizeable technology companies in the world. It competes with Samsung, Google, Apple, and

Microsoft on a global scale.

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Strengths

A company's strengths can refer to what makes it stands out among competitors and can answer

the question of what does the organization does well (Bush, 2016). Xiaomi a powerful tech

company for several reasons.

First, the company emphasizes on producing smart devices that can be connected through the

Internet of Things platforms. Many communication and home electronic manufacturers can

produce devices with unique features or functions. However, these devices are not connected to a

central platform that can control all of them. Xiaomi’s products include smart lightbulbs,

smartwatches, TV, body scale, sound speaker, electrical sockets and sensors, wifi routers, air and

water purifiers, and cleaning gears that can be connected to the owner’s smartphone. With the

emergence of the Internet of Things, we can control these devices with our smartphones, even

when we are not home.

Secondly, affordable pricing. The company offers smart devices at incredibly lower prices,

cutting its competitors through significant discounts for consumers. Such strength allows Xiaomi

to penetrate the market in both developed and developing countries.

Third, even though the company offers very competitive pricing, it can still produce high-quality

products. The devices that Xiaomi produces use high-specification components. This is perhaps

made possible by its bargaining power over suppliers.

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Weaknesses

The weaknesses of an organization are about what it does not do well. One of the weaknesses of

Xiaomi is the offline distribution of products. When the firm launches a new smartphone or

gadget, consumers need to physically queue at the outlets to be the first to own the latest

products. And often, after the initial launch of a product, it will take weeks for the next batch of

production to fulfill the majority of the customers’ preorders.

The second weakness is the lack of advertising, notably in other Asian countries. In my country,

one would not find a billboard, TV commercial, or even internet ads about Xiaomi. This lack of

advertising is perhaps due to the low advertising budget to compensate for its competitive

pricing.

The third weakness is its relatively low brand image in the Western hemisphere. Xiaomi is

primarily known in Asia, and unfortunately, some parts of the world still consider Chinese

products to be more inferior in quality.

Opportunities

The opportunities available for Xiaomi may include the rapidly growing smartphone market

globally, especially in regions where smartphones are still considered expensive. With its

competitive pricing, Xiaomi may be able to tap into these markets.

The second opportunity is the growing need for internet devices, especially during this COVID-

19 pandemic. As many people work from home, the opportunity to sell more mobile devices
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increases. However, this opportunity may not be unique to Xiaomi because other smartphone

manufacturers also compete for the work-from-home market.

The third opportunity for Xiaomi is the one that I think the company has not been exploring:

green branding. With the growing awareness of the adverse environmental impact of using

electronic devices, the company may be able to start implementing green manufacturing and

advertise its efforts in keeping its products as green as possible.

Threats

The most apparent threat for Xiaomi is competition, especially from other China-based

smartphone manufacturers that can produce similarly lower-priced devices. The competition in

the smartphone industry involves large capital investment in technology, and often, legal battles

in which competing companies claim intellectual property rights.

The second threat is still related to the competition but in terms of customer service outlets.

Samsung is known for its customer service excellence and the availability of service centers, at

least in my country. If Xiaomi continues to sell more smartphones and smart devices, it will need

to ramp up the number and availability of its customer service centers immediately.

The third threat for Xiaomi is perhaps related more to product differentiation in the smartphone

industry. From the day Apple launched its first iPhone, the world of smartphones seems to have

stalled in terms of innovation and fresh ideas.

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The following is the SWOT analysis chart for Xiaomi to summarize the above paragraphs:

Weaknesses:
Strengths:
1. Offline distribution
1. IoT-connected products
2. Lack of product or brand advertising
2. Very competitive pricing
3. Weak brand perception in the Western
3. High-specification products hemisphere
Xiaomi
SWOT
Opportunities: Analysis Threats:
1. Rapidly-growing smartphone market 1. Competition from similar manufacturers
globally. in China.
2. The opportunity amidst pandemic: Work 2. Competition in customer service.
from home devices. 3. Lack of product differentiation in the
3. Greener products and branding. smartphone industry.

For Xiaomi, a smartphone maker, the more vital factors are the internal ones. The company’s IoT

products, extremely competitive pricing and high-specification offers have enabled it to tap into

many opportunities in the smart devices market. At the same time, however, its weaknesses that

include the insufficiency in distribution channels, advertising, and brand perception, can be

exploited by its competitors by making these weaknesses their strengths.

For the overall strategy formulation for Xiaomi, we can attempt to analyze the relationships

between the four SWOT factors as follows:

1. Strengths and Opportunities: Xiaomi can use its competitive pricing strength to penetrate

the rapidly-growing smartphone market, especially in developing countries.

2. Strengths and Threats: The company can avoid the threat from the lack of product

differentiation using its strength in IoT connectivity.

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3. Weaknesses and Opportunities: Xiaomi can ride on the work-from-home trend to

overcome its disadvantage in brand advertising and weak brand perception in the Western

hemisphere.

4. Weaknesses and Threats: The company can minimize the shortcomings of offline

distribution by strengthening its online presence, such as through social media and e-

commerce platforms. Also, it can avoid the threat of competitive customer service by

setting up online sales and service centers that can help customers report or complain

about problems when using Xiaomi devices.

Of these premises, the ideas that are most important to the overall strategy formulation for

Xiaomi are, I believe, the strengths and opportunities aspect, with which the company can use its

competitive pricing to tap into a larger market worldwide.

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References

Bush, T. (2016). SWOT Analysis Strengths: Definition & Examples. In PESTLE Analysis.

Retrieved September 19, 2021, from; https://pestleanalysis.com/swot-analysis-strengths-

definition-examples/.

Carpenter, M., Bauer, T., & Erdogan, B.  (2010).  Principles of Management (v1.0). Flat World

Knowledge. September 2, 2021, from;

https://my.uopeople.edu/pluginfile.php/85281/mod_page/content/38/BUS4407Textbook

%20%281%29.pdf.

Xiaomi Corporation. (n. d.). About Us: Always believe that something wonderful is about to

happen. In Mobile Internet. Retrieved September 19, 2021, from;

https://www.mi.com/global/about/.