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An Analysis of International Business Strategies used by Xiaomi

International Business Strategies

As globalization expands, there is a need for companies to expand beyond the local market and meet the needs of the international market.  The International Business Strategies implement is critical to the success of any organization and therefore must be aligned with the strategic goals of the business. The international business strategies are localization and standardization. Standardization refers to the uniform representation of all aspects of a given product such as quality, brand name or materials used in the production of the product regardless of the location in the world. Localization is defined as the modification products or the marketing mix to meet the diverse needs of the new market. Another aspect of expanding internationally is the determination of the overall strategy which are transnational, global and multinational strategies. This paper will analyze the types of internal business strategies that can be adopted by organizations such as Xiaomi. 

Strategies that can be utilized by Xiaomi

Xiaomi is a rising Chinese Smartphone company that has attracted the attention of the market due to its cost leadership strategy. The company focuses on developing quality smartphones at a smaller price. Although the company makes a smaller profit from each phone, it has been able to increase its revenue generation by selling more smartphones rivaling established products from Samsung and Apple. 

According to Kan (2014) some of its products such as Mi3 sell for about half the prices of smartphones such as iPhone which attracts younger clients who are willing to purchase a quality phone but not at a high cost. Its discounting pricing has won the support of a large percentage of the market. In its expansion strategy, the most effective strategy for Xiaomi would be product standardization coupled with a cost leadership strategy. Standardization identifies that the marketing mix of the product does not change across various markets. Xiaomi is already an established brand in China, and it would be more beneficial to market it with the same standards to the International Business Strategies

Standardization

Standardization, as noted by consumers Ireland et al. (2008), would result in the development of a single and unified brand that has a greater identity worldwide. Xiaomi smartphones are already qualified and do not need any changes to appeal to the international market. Since it is already an established company standardization would reduce the costs associated with localization of brands resulting in increased losses. Smartphones work in the same way as long as users have experience of using them and the target market of Xiaomi which is the millennial and younger demographics fit this criterion.

Therefore the smartphone market shares a homogenized consumer needs making standardization the most practical and effective strategy for Xiaomi. Its cost leadership strategy would be of particular impact in international markets such as Africa which have a high number of middle-class groups and who need quality smartphones bit cannot afford Apple of Samsung products. The company has already found a niche and therefore can optimize its strategic advantage in the market by standardization of its products offering the same quality and low cost across international markets.

Overall strategy recommendation

The overall strategy necessary for Xiaomi is a global strategy. As noted by Ireland et al. (2008) the global strategy sacrifices responsiveness of the local markets and stresses the need to address the interest of the consumers by offering essentially the same product in the diverse markets. Since smartphones share the same similarities and the need of the consumers is universal in that smartphone customers want quality products that connect to the internet and provide them with the same services in different markets.

The market analysis identifies that the consumers’ preferences in regards to smartphones do not change much regardless of the culture of the region. Therefore a global strategy that provides the same product to the different consumer groups in different countries does not change would be more effective. For example consumers from Asia, Europe or America seek smartphones that take and record quality pictures and videos, access social media platforms and the internet and support the installation of different software. The only change necessary for these products would be the adjustment of the language programs to meet local languages. The variance in local preferences is therefore not necessary in the smartphone market and adjusting the product to meet individual local preferences would be expensive forcing Xiaomi to increase its prices losing its competitive advantage in the market.

Conclusion

The implementation of international business strategies is dependent on the characteristics of the product as well as the characteristics of the target market. If similarities in market preferences exist in regards to a given product, then a standardization and global strategy are necessary. The localization strategy is effective when there are distinct differences in the preferences of the consumers in different countries relating to a given product. Homework Help states that Xiaomi would be successful by implementing a standardized strategy as well as a global strategy. The implementation of these strategies would result in organizational success.

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