Xiaomi in the Market of India - Case Study Example

Market Entry Proposal 2 Table of Contents Introduction 3 Brief Synopsis of the Issue 3 Background 3 Discussion 5 Analyse the market opportunities of India in relation to telecom industry 5 Country Attractiveness 6 Situational analysis of Xiaomi 7 Readiness to go overseas and global sourcing and production 9 Market Entry Strategy 10 Implementation of Market Entry Strategy 10 Recommendations 11 References 12 Introduction Brief Synopsis of the Issue In order to enhance the market share and customer base, the organization of Xiaomi expanded its wings to different developing countries or nations such as Thailand, Japan, Hong Kong, United States and many others. However, in order to increase its productivity and brand image, Xiaomi might try to capture the market of India. Only then, it might enhance its distinctiveness and market value that may improve the competitive position and sustainability of Xiaomi in the market of India among many other rival players. But in order to capture the market of India, Xiaomi might try to penetrate it through joint venture policies with Nokia. Background The telecommunication segment of India is zooming at a feverish rate that enhanced the economic growth of the nation of India. This is mainly due to the presence of numerous smart phone providers with high-ended features. Due to which the CAGR increased by 35 percent in the recent years that amplified the portfolio and image of the nation of India among others. However, along with numerous opportunities, varied types of challenges and threats are also present within the market of India (Beall, 2010, pp. 876-887). In order to resolve those issues, the strategy of joint venture is recognised as one of the best one for the new entrant, Xiaomi. This is because; with the help of the strategy of joint venture, the internal strengths and weaknesses of the organization of Xiaomi might be enhanced thereby declining the upcoming threats and risks within the market of India. Some of the threats or issues that may be easily resolved with the help of the strategy of joint venture are presented below: Excessive competitive rivalry: due to the presence of numerous rival players such as Nokia, Samsung, Motorola and many others the level of competitive rivalry is extremely high. In such a competitive environment, it’s almost impossible for any new entrant like Xiaomi to create its dominance and popularity. But in order to enhance its image and reputation in the market of India, the new entrant, Xiaomi need to maintain its operation by joint venturing with Nokia. Then, it might become effective for the organization of Xiaomi to enhance its market share and customer base to a considerable extent as compared to others. Underdeveloped rural areas: the rural areas of the country of India are extremely underdeveloped. It is extremely difficult for a new entrant to retain its prosperity in rural and undeveloped regions of India. However, in order to resolve such an issue of the developing country like India, joint venture with Nokia is most effective. This is because it might help the organization of Xiaomi to create its strong presence due to the strong presence of Nokia in both rural and urban areas. Price war between the service providers putting high pressure on margins: due to extensive price war within the service providers create huge pressure on margins. Due to which, it is almost impossible for a new entrant to retain its portfolio and image in the market of India among many other rival players. However, in order to mitigate such type of price wars between the service providers, joint venture with a dominant and popular contender like Nokia might prove worthy for the organization of Xiaomi in the market of India (Bradley, 2007, pp. 553-563). Thus, it might be clearly depicted that, implementation of the strategy of joint venture is recognised as the best one that may prove effective for the organization of Xiaomi in order to amplify its market share and brand value, in spite of varied above mentioned issues. Discussion Analyse the market opportunities of India in relation to telecom industry In order to analyse the mobile phone industry, PESTEL analysis is used. It is one of the most renowned analytical tools. Political: the demand of varied types of smart mobile phone features, are extremely high due to the presence of low tax policies and tax restrictions. Apart from this, the laws and regulations of the government of India are also extremely low that acted as a boon for the organizations operating in the segment of mobile phone providers. As a result, the total sale and customer base of the organization of Xiaomi might get increased to a significant extent as compare to many other rival players. Economic: as the per capita income of the target customers of the Indian market increased with a significant extent so the craze of varied types of smart mobile phones providers might get enhanced. As a result, the total sale and profitability of the organization of Xiaomi might also get enhanced thereby positioning itself as a dominant one. Social: the presence of varied types of trendy features such as android 4.2, 5.3 displays, 1.2 GHZ quadric core processor, 1 GB RAM and many more. Due to these features, the craze of smart phone brands is extremely high among the youths of the nation of India. Apart from this, change in life style of the individual also acted as a boon that enhanced the demand of the organization of Xiaomi in the market of India among others. Due to these underlining features, the brand image and profitability of the organizations of smart phones might get increased resulting in amplification of its popularity and reputation as compared to many other rival contenders in Indian market (Drummond & Ensor, 2006, pp. 332-342). Technological: as the level of concentration over research and development is extremely high so the rate of introduction of various inventive techniques such as advanced technology to capture images, high light intensity during video filming, 3G technology, wireless local loop(WLL) etc are also quite high. Due to which, the demand of smart phones might get extremely increased in the market of India that may improve its profitability and market value. Environmental: as the industry of smart mobile phone providers offers more attention over the environmental performance by reducing emission of gases from the complementary equipments. Due to which, the portfolio and market value of the organization might get enhanced in the market of India among others (ESOMAR, 2008, pp. 977-990) Legal: as the wireless telegraph act of 1950 is extremely advantageous for the organizations of smart mobile phone providers, so it may increase its market value and popularity to a significant extent. Thus, it might be clearly revealed that demand of inventive features and techniques are extremely high within the youth-section of the market of India. This factor might act as a catalyst for the organizations operating in the segment of smart mobile phone providers thereby amplifying its profit margin and brand image to a significant extent. Along with this, introduction of varied types of new features within the smart phones might prove effective for the organizations that may amplify its total sales and reliability among others. Country Attractiveness After analysing the above mentioned PESTEL analysis, it might be evaluated that the nation of India is unique blend of opportunities and threats. The smart mobile phone providers might enhance their position and image to a considerable extent within the markets of India due to the presence of highly skilled and talented workforces (Guillén & García-Canal, 2012, pp. 676-687). Apart from this, high per capita income or disposable incomes of the citizens of India might also offer a significant impact thereby amplifying the growth and popularity of the mobile phone providers. Moreover, the high demand for the modern features of the smart mobile phones is also extremely advantageous that may improve its position in the market thereby declining the threat of extensive competition. Apart from this, in spite of numerous advantages, the extensive pressure created due to high regulatory charges may offer significant impact over the brand value and portfolio of the smart mobile phone providers like Xiaomi. Situational analysis of Xiaomi In order to analyse the present and past situation of the organization of Xiaomi, TOWS analysis is used. It is considered as one of the reputed analytical technique to evaluate the situation of any organization (Grant, 2005, pp. 445-456). Internal strengths of Xiaomi: High concentration over research and development: the Chinese organization of Xiaomi always desire to offer high concentration over research and development in order to develop high-ended features. So that, introduction of these features might prove effective for the organization to attract a wide range of customers of varying income groups and age-groups. By doing so, the profitability and productivity of the organization of Xiaomi might get enhanced significantly resulting in amplification of its portfolio and brand value. Highly creative and skilled workforces: the workforces of the organization of Xiaomi are extremely creative and skilled so they become capable to present varied types of modern features such as high value RAM, high quality of 1.2 GHZ quadric core processor and many others. Introduction of these features might prove effective for the organization of Xiaomi to amplify its market share and distinctiveness in the market of India among many other rival players. Internal weaknesses: Low distribution network: the distribution network of the organization of Xiaomi is quite low and due to which, the demand and reliability of the brand within the minds of the customers is reducing significantly. Moreover, as a result, the profitability and total sale of the product lines of Xiaomi declined sharply in the recent days. High salaried employees: the salaries of the employees within the organization of Xiaomi are quite high that offered a significant impact over its profitability and total revenue. External opportunities: Xiaomi comprises of high demand in developing markets: the demand of the products of Xiaomi is quite high in developing markets of Japan, Hong Kong, Thailand and many others. Due to which, the portfolio and brand value of the products of Xiaomi enhanced resulting in amplification of its prosperity and profitability (Gupta, 2004, pp. 765-778). High demand of fashionable and stylish handsets: as the young individual of recent age is extremely crazy for fashionable and stylish handsets, so the demand and distinctiveness of the product lines of Xiaomi increased. Asian cellular phone market is the fastest growing market: the markets of Asia are one of the fastest growing nations in the cellular phone market in the entire globe. SO strategies: Penetrate market with joint ventures and new features: the organization of Xiaomi might try to develop new features so as to increase its demand for fashionable and stylish handsets Increase presence in Asian Countries: as the nation of Asia is the fastest growing nation, so the organization of Xiaomi might try to penetrate the markets of Asia. This might improve its presence and position in the globe among others. WO strategies: Increase profit by penetrating new markets: in order to enhance the profitability of the organization of Xiaomi, it needs to penetrate new markets. Improvement of customer services: the organization of Xiaomi might try to enhance the customer services so as to increase its portfolio and reliability. External Threats: Change of taste and preferences: the organization of Xiaomi is facing a serious threat due to the changing taste and preferences of the customers. Due to which, the demand and brand image is also declining (Hill, 2010, pp. 337-345). Extensive competition: due to the presence numerous rival players, the level of competition is extremely high. Due to which, the organization had to offer varied types of features to retain its portfolio in the market of India and others. ST Strategies: Offering customer preferred products: in order to increase the level of demand, the organization is offering customer oriented products. WT Strategies: Present periodical discounts: to improve the portfolio, the organization of Xiaomi might offer periodical discounts (Johnson & et.al. 2011, p. 115). Readiness to go overseas and global sourcing and production In this age, each and every organization desire to penetrate foreign markets in order to amplify the brand image and profitability. However, for the organization of Xiaomi, joint venture strategy might be the most effective one. This is because; by following this strategy, the organization might enhance its portfolio and reputation but its threats and risks may be reduced to a significant extent. Moreover, any sort of liability might be easily shared by the two partners so the strategy of joint venture is recognised as the best one (Johansson, 1997, pp. 342-355). Other than this, in order to improve the position, the organization of Xiaomi might try to attain the resources and manufacture their product lines in the market of India as it comprises of skilled and low waged workers, raw material in quite lower cost due to the presence of numerous suppliers etc. Due to these above mentioned reasons, Xiaomi might enter into the market of India by joint venturing with Nokia. Market Entry Strategy There are varied types of market entry strategies like joint venture, licensing, strategic alliance, franchising etc (Kolb, 2008, pp. 256-267). However, among the best one for Xiaomi is joint venture. This is because; joint venture creates a separate legal entity of the organization. Moreover, joint venture offers the facility to understand and analyse the host country in an effective way thereby reducing the risks of upcoming threats. Other than this, in every aspect such as technology, machinery, workforces, strategies etc both the partners offer extensive control and decision-making power (Keegan, 2002, pp. 231-244). Due to which the level of risks or threats is quite less as compared to other strategies. Moreover, with the help of the strategy of joint venture, the organization of Xiaomi might analyse and understand the preferences and tastes of the customers as well. This is extremely essential for any new entrant, entering a new market. However, the one important weaknesses of joint venture is that, both the partners need to accept it, so as to make it effective in long run (Kotler & Keller, 2012, pp. 123-134). Implementation of Market Entry Strategy Recommendations In order to amplify the profitability and market share of the organization of Xiaomi, it might try to offer high-ended technologies or features within the product lines. Only then, the brand image and total sale of the organization of Xiaomi might be enhanced. Apart from this, in order to amplify the position and equity in the market of India, the organization might implement the strategy of competitive pricing so as to attract a wide range of customers. This might amplify its profitability and productivity. Moreover, it might improve its distribution networks so as to enhance the availability of product lines in the market. References Beall, A, E. 2010. Strategic Market Research: A Guide to Conducting Research to solve problems. Boston: Harvard Business School Press. Bradley, N. 2007. Marketing Research: Tools & Techniques. New York: McGraw-Hill. Drummond, G. & Ensor, J. 2006. Introduction to Marketing Concepts. New York: Cengage Learning. ESOMAR. 2008. Market Research Handbook. London: Sage. Guillén, M. F., & García-Canal, E. 2012. Execution as Strategy. Harvard Business Review Vol. 90(10). Grant, R, M. 2005. Contemporary Strategy Analysis. London: Sage. Gupta, S, L. 2004. Marketing Research. New York: McGraw-Hill. Hill, C. 2010. International Business Mc Graw Hill 8th International Edition. New York: McGraw-Hill. Johnson, G. & et.al. 2011. Exploring Strategy: Text and Cases. (9th edn). London: Harlow Pearson Education Limited. P: 115. Johansson, J, K. 1997. “Global Marketing: Foreign Entry, Local Marketing, and Global Management”. New York: McGraw-Hill. Kolb, B. 2008. Marketing Research: A Practical Approach. London: Sage. Keegan, 2002. Global Marketing Management. London: Pearson Education. Kotler, P., & Keller, K. 2012. Marketing management. Harlow, NJ: Pearson Education. Read More