b Bargaining power of suppliers HIGH The company has created partnerships with

B bargaining power of suppliers high the company has

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b. Bargaining power of suppliers - HIGH The company has created partnerships with suppliers like Qualcomm which has given additional sincerity to its supply chain guaranteeing a continued supply of high quality products but this only makes such suppliers powerful. c. Threat of substitutes – LOW The threat of substitutes for smartphones is very low which is an advantage for companies like Xiaomi as more people are depending on smartphones deserting the use of old technology. It is also because Xiaomy has high quality products with affrodable price. d. Threat of New Entrants – HIGH China’s smartphone industry, barriers to entry are very high seeing the fact that there are already established companies ahead of Xiaomi including, Huawei BBK (which offers the Oppo and Vivo brands) as well as Apple and Samsung (Dunn 2017) and all have high economies of scale and production which makes it very expensive for new entrants to compete unless highly capitalized. e. Rivalry among Existing Firms – MEDIUM Rising popularity of smartphones and integration of internet into a wide range of personal and professional aspects of life are further intensifying competition in the global marketplace. China’s smartphone market is highly concentrated among the top five companies; Huawei, Oppo & Vivo, Xiaomi, Apple and Samsung dominating the market and accounting for at least three in every four handsets sold in China. Xiaomi has a competitive advantage against some of these competitors due to its leadership position in key markets such as India where it commands approximately 31% of 8
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the Indian market share, making it number one seller which has helped boost its profit margins. 2.2 Internal Environment 2.2.1 Value Chain Analysis Xiaomi value chain analysis is an analytical framework that assists in identifying business activities that can create value and competitive advantage to the mobile internet company. Figure below illustrates the essence of Xiaomi value chain analysis. Xiaomi Primary Activities - Xiaomi Inbound Logistics Xiaomi inbound logistics involves the delivery and storage activities of raw materials by the mobile internet company. Strategic relationships with Taiwan-based manufacturers of various components is one of the main sources of value for Xiaomi inbound logistics. Specifically, Xiaomi partners with Inventec and Hon Hai for assembly, Wintek and TPK for screen technology and Unicorn for PCB (printed circuit boards). Moreover, Taiwan Semiconductor Manufacturing Corporation (TSMC) is the main processor supplier for the company. Xiaomi also procures 9 Figure 1 Xiaomi Value Chain Analysis
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various electronic components from nearby countries. For example, MOS and batteries are mainly imported from Thailand. - Xiaomi Operations Operations activities within Xiaomi value chain analysis refer to the processes of transforming raw materials into ready products. The mobile internet company has established its presence in 70 countries and regions and it is among the top 5 in 16 markets. Xiaomi manufactures locally more than 75% of smartphones it sells in India. 10
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