The year 2020 wasnt a good year for Xiaomi. The US Department of Defence added Xiaomi to a list of Chinese companies that are not allowed to receive any American investment and are to be faced with tough restrictions to their businesses. The US accuses the companies of having ties to the Chinese military and/or being Communist Chinese Military companies. Xiaomi also faces intense competition from both high-end smartphone manufacturers like Apple and Samsung who unlike Xiaomi, charge premium prices but have managed to command a large market share due to their quality and strong brand names. It also faces intense competition from its fellow low price smartphone category competitors like Huawei, Vivo and Oppo who have achieved dominance in markets like China. Infact, Oppo rose for the first time in January 2021 to become the leading smartphone in China with a market share of 21%, followed closely by Vivo with 20% while Xiaomi, Apple and Huawei ranked third each with 16%.
In this comprehensive strategy analysis, we analyse Xiaomi's external and internal business environment using Pestle and Swot in order to understand the existing and future trends in the smartphone industry and their effect on Xiaomi, that is to say, whether they present opportunities that can be harnessed or threats that need to be mitigated.
Peyton, Mariam (2021) "Pestle and Swot Analysis of Xiaomi 2020-2021" 123 Writing [Online] at https://www.123writing.com/sample/pestle-and-swot-analysis-of-xiaomi-2020-2021
Peyton, M. 2021. Pestle and Swot Analysis of Xiaomi 2020-2021. 123 Writing. Retrieved from https://www.123writing.com/sample/pestle-and-swot-analysis-of-xiaomi-2020-2021
XIAOMI STRATEGIC ANALYSIS Case Study
Key Learning Outcomes
- Understand the broad macro-environment of Xiaomi and the Chinese smartphone industry in terms of political, economic, social, technological, environmental and legal factors (PESTEL/PEST/STEEPLE).
- Use our swot analysis example to gain an overall understanding of Xiaomi's strengths and weaknesses and strategic options arising from the opportunities and threats that have been identified from the Pestle analysis example on it's business environment.
- To apply strategy business models and frameworks such as Pestle/Pest/Steeple, Swot etc to real company cases.
Analyse the internal and external environment of Xiaomi and the Chinese smartphone industry using Pestel and Swot.
Xiaomi was founded in April 2010 by Lei Jun and a decade later, the company bumped Apple down the ranks to become the world’s third largest smartphone maker and its products are sold in over 90 markets around the world (Mi, 2020). Part of its growth was a result of the downward spiral of Huawei whose sales begun to fall after the US sanctions (Ting-Fang et al, 2020).
By the end of 2020, Xiaomi’s global market share was 13% ahead of Apple’s 11% and only surpassed by Samsung and Huawei whose markets shares were 22% and 14% respectively (MacMillan, 2021). The company operates in business segments like Hardware, internet services, e-commerce and new retail selling smartphones, laptops, headphones, televisions and other smart devices like electric scooters, smart bands, and power banks among others (Forbes, 2020). Some of countries in which Xiaomi is the leading smartphone vendor include India, Belarus and Ukraine with market shares of 26%, 31.95% and 31.17% respectively.
Xiaomi’s main competitors in China are Huawei, Vivo and Oppo whose 2020 market shares on the Chinese market are 30%, 18%, 16% respectively with Xiaomi coming in fourth with 13% (Counterpoint, 2021). In the third quarter of 2020, Samsung raised revenue of KRW 66.96 trillion (about $59 billion) and made a profit of KRW 12.35 trillion (about $10.6 billion), Apple reported revenue of $59.7 billion and profit of $11.25 billion and Huawei made CNY 671.3, a 9.9% increase in revenue. Xiaomi raised RMB 72.2 billion (about $10.9 billion) in revenue and RMB 4.1 billion (about $622 million) in profit. Revenue growth for Samsung, Apple and Xiaomi was 8%, 11% and 34.5% respectively.
Using PESTLE and SWOT framework, we will examine all these factors in the Chinese external macro environment as well as internationnally, that are affecting Xiaomi including the American ban. We end the analysis with examining how Xiaomi is mitigating these issues and recovering some ground on rivals.
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