100%(1)1 out of 1 people found this document helpful
This preview shows page 9 - 12 out of 25 pages.
b.Bargaining power of suppliers - HIGHThe company has created partnerships with suppliers like Qualcommwhich has given additional sincerity to its supply chain guaranteeing acontinued supply of high quality products but this only makes suchsuppliers powerful.c.Threat of substitutes – LOW The threat of substitutes for smartphones is very low which is anadvantage for companies like Xiaomi as more people are depending onsmartphones deserting the use of old technology. It is also because Xiaomyhas high quality products with affrodable price.d.Threat of New Entrants – HIGHChina’s smartphone industry, barriers to entry are very high seeing the factthat there are already established companies ahead of Xiaomi including,Huawei BBK (which offers the Oppo and Vivo brands) as well as Appleand Samsung (Dunn 2017) and all have high economies of scale andproduction which makes it very expensive for new entrants to competeunless highly capitalized. e.Rivalry among Existing Firms – MEDIUMRising popularity of smartphones and integration of internet into a widerange of personal and professional aspects of life are further intensifyingcompetition in the global marketplace. China’s smartphone market ishighly concentrated among the top five companies; Huawei, Oppo & Vivo,Xiaomi, Apple and Samsung dominating the market and accounting for atleast three in every four handsets sold in China. Xiaomi has a competitiveadvantage against some of these competitors due to its leadership positionin key markets such as India where it commands approximately 31% of8
the Indian market share, making it number one seller which has helpedboost its profit margins.2.2 Internal Environment2.2.1 Value Chain AnalysisXiaomi 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 LogisticsXiaomi inbound logistics involves the delivery and storage activities ofraw materials by the mobile internet company. Strategic relationshipswith Taiwan-based manufacturers of various components is one of themain sources of value for Xiaomi inbound logistics. Specifically,Xiaomi partners with Inventec and Hon Hai for assembly, Wintek andTPK for screen technology and Unicorn for PCB (printed circuitboards).Moreover, Taiwan Semiconductor Manufacturing Corporation (TSMC)is the main processor supplier for the company. Xiaomi also procures9Figure 1 Xiaomi Value Chain Analysis
various electronic components from nearby countries. For example,MOS and batteries are mainly imported from Thailand.-Xiaomi OperationsOperations activities within Xiaomi value chain analysis refer to theprocesses of transforming raw materials into ready products. Themobile internet company has established its presence in 70 countriesand regions and it is among the top 5 in 16 markets. Xiaomimanufactures locally more than 75% of smartphones it sells in India.10