Market Entry of Xiaomi Company - Case Study Example

Market entry proposal to the Xiaomi Company: and Xiaomi SmartphoneCompany: Introduction: Market entry are activities associated with the bringing a certain product or a service to a significant targeted market. During the initial planning stage, a certain company always considers the barriers to the entry, sales, barriers to the entry and also, delivery and more, so the outcome of entering into the market (Doole, 2008 p. 83). In this case, my market entry proposal will greatly bring about exclusive results. The Xiaomi Smartphone Company is a company in China that it is taking great moves to invest globally. The idea of presenting my market entry proposal is simply because the company’s products are drastically spreading and also are highly competitive enough in the global market all over the world. Xiaomi has won itself a very big name in the global market with its very high profit performance With over 20 smart phones’ brands having very unique operating styles, sales of the Xiaomi smart phones have expanded rapidly. The market strategy will include a number of marketing strategies; the export strategy which is either being the market strategies such as in the domestic production and also the foreign production. From the time Xiaomi produced its first new Smartphone in august 2011, Xiaomi has really developed the market share in its homeland china and has also, expanded into the developing a bigger range of purchaser electronics. The direct or indirect exporting of products. Also the in the market proposal, there will be; Recommendations: Strengths that can influence the situation attainment presentation. Acquire customers - this is roughly always a factor in premeditated acquisitions. Some companies purchase a differentiator that is in the same industry in a different topography. They get to incorporate market existence, brand alertness, and market impetus. Operating influence - the major spotlight in this category of acquirement is to advance profit boundaries through superior exploitation tax for plant and paraphernalia. For example, Xiaomi buys a slighter similar producer, the acquired companys stand is sold, and all excluding two apparatus are sold, Capitalize on company potency - They are so brawny in so numerous areas, that the acquired company gets the advantage of many of an individual’s strengths. A very authoritative industry accelerator is to attain a company that has a harmonizing product that is also used by your installed purchaser base. Management profundity and skill, construction efficiency/aptitude, large pedestal of installed financial records, industrial sales and allocation channels, and trade name acknowledgment Barriers in the implementation of the recommendations: Increased deliberation and abridged competition are apparent demerit of a combination among two huge companies. Firms that merge may bring about diseconomies of degree, such as difficulties with synchronization and power. This can eventually increase cost even in the future life of the business, and reduce profitability. Higher prices are a likely effect of a combination since, with less opposition, stipulate is more inelastic and the issue of raising prices will raise revenue too. There may be less output of the merged firm, compared with collective productivity of the two companies included. Rationalization is most likely to bring about the lose jobs as the merged firms attempt to increase profitability. For example, two promotion agencies that come together could possibly dispense with two design departments, and share one instead. Consumers are most likely to be negatively affected by the reduced choice following a fusion of two related competitors. The economies of the specific scale and scope consequential from a combination may amplify barriers to access and make the bazaar much less contestable. In the case, of frontward perpendicular amalgamation, new entrants may be not allowed the access to outlets for its yield. With backward vertical integration, upcoming entrants find it hard get supplies. Many superior firms have recognized business expansion offices to implement commercial growth strategies throughout acquisition. These qualified buyers rummage around for companies that fit their distinct acquirement criteria. In nearly all cases, they are attempting to purchase companies that are not enthusiastically for trade. The win for the triumphant company acquire is to objective several candidates, purchase them in pecuniary assessment multiples, incorporate to potency and accomplish strategic presentation. Selected country; South Africa My selected country will be South Africa. In this country, there are so many opportunities since it’s a developing country. In this country, there is a lot of involvement; thus, making it possible for the company to invest there. Though there are other companies that provide the same products, but not with the same qualities, it will be a very pleasant place to invest. I will involve the main key issues in the market proposal, which will be the following: Strategic Alliances Strategic alliances are mutual simply agreements that are made between two corporations. These two firms each commits all of part of its products and services in order to come up with with the set expectations of the two companies. Therefore, this is one of the many business strategies (Telemann, 2010. p. 1). This strategy usually helps the combined companies to strongly face the market competition also it helps the companies to have a firm ground in supplementing critical knowledge and also assist in the crucial development projects. In this case, Xiaomi Company can mutually agree in a strategic alliance with a company that offers the same products and services. This way the two companies will be able to distribute, manufacture fund, expertise in the skills of product distribution and manufacturing. The advantages of forming a strategic alliance include: * Allowing each collaborator to reflect on their aggressive advantage. * Learning from associates and increasing competencies that may be more broadly subjugated elsewhere. Disadvantages of strategic alliance: * Increased risk * Target too large or too small * Overly optimistic appraisal of synergies Licensing Licensing is a market strategy that is basically used by the companies that already have a component of a certain intellectual asset in their products though it also can be put in use by any other type of a company, which always depend on what they want to license. Franchising Franchising is an ongoing business relationship where one party (‘the franchisor’) grants to another (‘the franchisee’) the right to distribute goods and services using the franchisor’s brand and system in exchange for a fee. The process of franchise agreement usually requires the franchisee to compulsory follow the specified business format and always operates under the specific common customer interests in the whole network. The this method commonly assists businesses to get into the rapid market, increasing using the intellectual property of the indigenous franchisor and also, use the funds and the capital, the enthusiasm of the owner network operators. Franchising is usually not a strongly optional market entry strategy because if a company does not have a solid brand name acknowledgment in your individual country or your product is racially biased. Franchising brings a combine of divergent issues for diminutive forms, using this approach to increase the market admittance in the market. I. That one is potentially making own contest by philosophy the franchisee how to maneuver the type of production in their bazaar. Also, in my market proposal to branch the Xiaomi Company in South Africa, I will be able to use the international trade theories to enable me market the smart phones and other appliances in the country. A classical trade theory is a theory that usually helps countries to benefit if each of the devotees resources to the specific production of the goods and services. In this case, the market proposal will eventually will be able to meet the targeted results. Recommendations I suggest above strategies are the main entry options to the Xiaomi. But, by looking at the competitive strength inorganic growth, such as: mergers and acquisitions and Strategic alliances are the best way to enter into the market. Because, if Xiaomi merged or acquisition with another company or make an agreement with a company which, is manufacturing and marketing smart phones and other accessories that will decrease time to access and penetrate target market as the existing company already has a product line to be exploited and a distribution network, prevents increase in the number of competitors in the market, also, can overcome entry barriers including restrictions on skills, technology, materials supply and patents. Merging with another company is a very crucial idea and also a strategy that has so many advantages compared to the demerits that it might pose to the company. In case of risks, the two companies can come together and have a common solving power or even prevent the risks from happening, thus, the risks can be predicted. In South Africa, during this business venture one may encounter certain business risks which are among many risks encountered in business ventures (Lymbersky, 2008 p. 53); which include the following; Knowledge inadequacy Us as the Xiaomi Company we are very much into expanding our company in different countries, there may be a risk of lack of knowledge. A company may not be aware of the risk of the new products in a certain country in this case South Africa. Lack of knowledge can bring a downfall to the Xiaomi Company. Buyers acceptance risk This refers to a customer not accepting the Xiaomi products for a specific reason. Acceptance of the goods may impact to a capita problem to the company. Lack of customers accepting the products can cause an alarming problem to the company since the company can also experience dead stock in the market. Cultural risk Different countries often have different culture and beliefs. The inability to appreciate the cultural differences can be a very big problem and can pose a risk to the company capital. For instance, South Africa and Chinese culture is far much different. In this case, the employees can however be in difficulty to adopt the foreign culture and that, can bring some capital hitches to the company. Foreign exchange risks The company since sometimes it will be dealing with foreign currency, thus, in South Africa and china my encounter fluctuations in the foreign exchange market, which may result in paying more money or even receiving less (Lymbersky, 2010 p. 24). In this case, it can cause an alarm in the capital of the company. Economic risk In this case, there might be a problem of the economy in South Africa, which will make it difficult for customers to purchase the products. This may make it difficult to produce products or even shipping the goods from China to South Africa. Benefits to trade in South Africa with the Xiaomi Company: Among these are reasons why companies, trade internationally with so much enthusiasm (Tielemann, 2010 p. 2). The following are some of them: The benefits of this international trade in South Africa can be reaped further if in any case there is a considerable decrease in many risks as explained above. One of the benefits the company can have in South Africa is, it can enhance the domestic competitiveness. This way the company has an advantage to trade overseas since the competition locally is reduced. Another advantage is that trading internationally, especially in South Africa; the company takes the most advantage of the international trade technology. Also the company will be able to increase its profits in a more expanded way by trading not only in China but in other countries that are developing. Also the company in South Africa will be able to gain the global market share also like other companies who offer the same products, for instance, the Apple Company. In my market proposal to branch the Xiaomi Company in South Africa, I will be able to use the international trade theories to enable me market the smart phones and other appliances in the country. A classical trade theory is a theory that usually helps countries to benefit if each of the devotees resources to the specific production of the goods and services. In this case, the market proposal will eventually will be able to meet the targeted results. Conventional trade speculation countries expand if each devotes assets to the creation of goods and also, services Ricardo (1817) in which it has a benefit smith (1776) aspect quantity presumption countries will be likely to concentrate on the construction of commodities and also services that Hecksher and Ohlin (1933) Utilize their most abundant resources Product life cycle theory. The life cycle theory states that: a certain country’s export powerful point builds; venom (1966, 1971foreign production becomes competitive in export markets; and Wells (1968, 1969) Import competition emerges in the country’s home market Foreign direct investment theories Market imperfections theory the firm’s decision of investing in foreign countries is explained as an aim to capitalize on Hymer (1970). Certain issues are never shared by competitors in a specific foreign country worldwide invention hypothesis the predisposition of a firm to initiate foreign production usually at most time depend on the actual Dunning; (1980) Attractions of its abode nation compared with supply implications and also the Faye weather (1982 Internalization theory Internalization concerns extending the direct operations of the firm and bringing Buckley (1982, 1988 Under the same possession and also, the control of the activities conducted by transitional Buckley and Casson \Markets that link the firm to customers. Companies will eventually gain in creating their own (1976, 1985) Internal market such that transactions can be carried out at a lower cost within Market entry strategy In this case of Xiaomi Company, there are a variety of market strategies one can use which include; alliance marketing In this strategy, two or even more entities come together and pool their resources in order to promote and also purchase tier products which not only benefits the stakeholders, but even the put a great impact on the market of the products Ambush marketing This strategy is more common to the advertisers to capitalize and get associated with a specific event even without any fee or any payment and in that order bringing down the value of sponsorship. This strategy is usually divided into two categories; direct and indirect ambushing. Affininity marketing This links complementary brands, thus creating a common partnership that benefits both companies and it generates more income and also builds more customer good relationships. Licensing Licensing, as a market entry strategy which is always best is best used by companies that usually have a section of logical property only in their produce, even though it can be used by any type of company. For illustration, Xiaomi can license machinery, an industrialized progression. Strategic alliances I would recommend the Xiaomi Company to implement the Strategic Alliance, which is usually significant agreements between firms in which each normally commits assets to accomplish a general situate of objectives. Xiaomi can make an agreement with a company who involving same products and services. Strengths of alliance strategy Allowing each colleague to contemplate on their aggressive advantage. Erudition from partners and increasing competencies that also may be more and widely subjugated elsewhere. Sufficient appropriateness of the property and competencies of an association for it to continue to exist. To lessen narrow-minded risk while in going into a new market. Weaknesses of the alliance strategy Poor or slow post-merger integration Target too large or too small Overly optimistic appraisal of synergies Overestimation of market potential Inadequate due diligence Incompatible corporate cultures Implementing the alliance strategy in Xiaomi Company. Xiaomi Company can come together with another company offering the same products; like Apple Company to provide with quality products. The Xiaomi Company has a strategy of developing its Smartphone to be high quality android smart phones; in this case the two companies come suggest on what to do or go about it, corporate ideas and come up with sophisticated good quality Android smart phones. Conclusion: The alliances strategy is a strategy that will completely fit in this Xiaomi Company giving it a diver’s exposure in South Africa and also, other interested countries. The different market entry strategies usually help in improving the business and it also assists in the implementation of the company’s entries. Xiaomi Company is seen to be a very sophisticated Smartphone company that is capable of getting into the competitive accessories world with other big companies too. Allowing the company to enter additional lines with other companies will help the two companies to develop the diversification strategy. This way the company is able to effectively reach its customers and on the other hand acquire more new customers. For instance, if Xiaomi Company may partner with the apple company which is very widely known, the Xiaomi Company has very great chances of venturing so widely since it will also be famous thus creating curiosity among customers and also new customers worldwide. Diversification can be a very useful business tool or any sector and the location of the economy (Doole, 2008. P. 20). However, the company can be able to thrive in the high competition with its high quality Smartphone in relatively lower prices. However, recently, big multinational companies have challenged this statement with substantial profits that they achieved by diversifying in unrelated industries. Bibliographies Hiriyappa, B. (2013). Corporate Strategy Managing the Business. Authorhouse. Tielmann, V. (2010). Market Entry Strategies International Marketing Management. München, grin Verlag GmbH. http://nbn-resolving.de/urn:nbn:de:101:1-201011221310. Doole, i., & lowe, R. (2008). International marketing strategy: analysis, development and implementation. London, Cengage Learning. Root, f. R. (1998). Entry strategies for international markets. San Francisco, Jossey-Bass. Lymbersky, C. (2008). Market entry strategies text, Hamburg, Management Laboratory Press. Read More