Analysis of Business Strategies of Xiaomi

Abstract

The Smartphone manufacturer from China has a very novel business model wherein they manufacture cell phones in batches thereby keeping the inventory costs on a very low side. The company has really challenged the brick and mortar model and sell online, thereby cutting down the intermediaries and keeping the costs down for the company. The company sells smartphones almost on the cost price. The profit margin is very thin, and the company believes that they will make money by selling accessories and other complementary things. The problem which ascends now is that how Xiaomi would be able to adjust to the increased competition from other players like Huawei and ZUK from Lenovo who have imitated the same model. The second issue which has come to time light is that would this business model be sustainable over the long period. The third issue is how the company would react to the decline in the smartphone sales in China which has been one the main driving forces responsible for companies growth.