Strategy
Xiaomi Ansoff Matrix is a marketing planning model that helps the mobile internet company to determine its product and market strategy. Ansoff Matrix illustrates four different strategy options available for businesses. These are market penetration, product development, market development and diversification. Xiaomi Ansoff Matrix Within the scope of Ansoff Matrix, Xiaomi uses all four growth strategies in an integrated manner: 1. Market penetration. When using market penetration, companies focus on selling existing products to existing customers. Xiaomi successfully uses market penetration strategy in its home market in China. According to Q1, 2018 smartphone sales results in China, Mi smartphones ranked third with the local market share of 12,8% after Huawei (20,8%), Oppo (18,5%), iPhone (18,2%) and Vivo (14,6%). 2. Product development. This strategy option involves developing new products to sell to existing markets. Xiaomi has ever-increasing product portfolio ranging from smartphones to water purifiers and tooth brushes. Product development strategy is likely to be continued by Xiaomi. This is because Xiaomi positions itself as a “company that provides innovation to everyone at every level — from smartphones and technology to IoT connected smart products to the basic everyday tools like power banks, backpacks and pens”.[1] 3. Market development. Market development strategy is associated with finding new markets for existing products. Xiaomi started market development in 2014, only four years after the company was founded. In mid-2013, the company hired Hugo Barra away from Google and Android to work on international expansion.[2] Since that time, the electronics and software company has established its presence in rapidly developing markets such as India, Singapore and Russia. The mobile internet company also has plans to enter US market.[3] 4. Diversification. Diversification involves developing new products to sell to new markets. Xiaomi is engaged in an aggressive diversification strategy. Xiaomi ecosystem is vast and comprises 55 companies,…
Xiaomi business strategy can be classified as cost leadership. According to its founder and CEO Lei Jun, Xiaomi was founded on the belief that “high-quality technology doesn’t need to cost a fortune.”[1] Accordingly, the company offers smartphones and other internet-technology products and services for affordable prices. On a wider perspective, Xiaomi business strategy is based on the following four pillars: 1. Gathering and utilising a large fan base. Xiaomi has a large fan base involving millions of people across the globe. Fans spend countless hours online discussing Xiaomi products on various forums, thus increasing the level of brand awareness with no extra cost for the company. The mobile internet company enjoys cult-like following, the same way as its major competitor Apple. According to its business strategy, Xiaomi fosters, develops and encourages its fans via Mi Fan Festivals that involves discounts and gifts. The motto of the company is “Just for Fans” and the company is also known to recruit its new employees among Mi Fans. 2. Designing great products at a reasonable price. Xiaomi practices ‘design as you built’ philosophy, incorporating Mi Fans feedback in a constant manner at all stages of new product development. Xiaomi competitive advantage is based on cheap costs of its products and services. In simple terms, cheap costs of Xiaomi products and services is the main reason for consumers buying those products and services. 3. Constant optimization of products through eco-chain. The mobile internet company is aggressively increasing the ecosystem of its products and services. This is another important aspect of Xiaomi business strategy. Currently, Xiaomi ecosystem comprises 55 companies including 29 companies which were incubated from the ground up by Xiaomi.[2] The ecosystem produces ever-increasing range of products ranging from smartphones to rice cookers. 4. Xiaomi Triathlon: Hardware+New Retail+Internet. As it is illustrated in…
Samsung business strategy is marked with a high level of flexibility in a way that the company is determined in changing its strategy dramatically according to changes in external business environment. Few people know that the Samsung initially started as a grocery store in Korea in 1938, switched to noodle business in 1940 and moved to sugar production in 1950. Later, Samsung became engaged in woollen mill in 1954 and insurance and securities business in 1956. Samsung produced black and white TV as the first technological product in 1960 and since then the company emerged as one of the leaders in technology and electronics market segments in the global scale. Frequent change of direction and new product development persists as important features of Samsung business strategy to this day. Samsung business strategy consists of the following three pillars/elements/parts: 1. Effective market readership. A market reader can be defined as a company that closely observes the market and is fast in replicating new products and/or introducing new features in existing products, initially introduced by other companies. Specifically, Samsung has proved effective in replicating the design and important features of smartphones from its main competitor, Apple. It has been noted that “one internal Samsung presentation from 2010 provided a step-by-step process for Samsung engineers to follow in an effort to steal so much of what made the iPhone such a unique product”.[1] 2. Scanning and utilising opportunities in the market. Samsung business strategy integrates constant search for gaps in the market and exploits the opportunity with positive implications on the bottom line for the business. For example, Samsung noticed that Asian-language speakers in particular wanted a device that they could hand-write on, because drawing characters is easier with a pen. The result was a development of series of Samsung Note devices as…
Google McKinsey 7S model illustrates how seven business elements can be aligned to increase effectiveness. Strategy, structure and systems are hard elements, whereas shared values, skills, style and staff represent soft elements. McKinsey 7S model attempts to illustrate that a change in one element causes changes in others. As it is illustrated in figure below, shared values are positioned at the core of Google McKinsey 7S model, since shared values guide employee behaviour with implications in their performance. Google McKinsey 7S model Hard Elements Strategy. Google core business strategy is business diversification and introduction of new products and services in a regular manner. Google business strategy is also based on the development of a closed eco-system to motivate customers to use greater range of products and services. Customers usually enter this ecosystem through using Chrome browser, watching YouTube videos or using Gmail. In no time, they are prompted to use additional services such as Drive, Play, Calendar, Blogger and others. Alphabet Inc., Google’s parent company also uses acquisitions business strategy extensively and more than 200 companies and 30 acquisitions were made in 2015 and 2016 alone. Structure. Google was restructured in 2015 to become a wholly owned subsidiary of a newly established parent company Alphabet Inc. Under the new structure, the company is divided into a number of divisions and each division is positioned as a separate brand such as Google, Calico, Nest, Access (Fiber) and others. The new structure helps the company to move beyond search engine business and to engage in diversification strategy to a greater extent. Systems. Google operations rely on a wide range of systems such as employee recruitment and selection system, team development and orientation system, transaction processing systems, customer relationship management system, business intelligence system, knowledge management system and others. Additionally, ranking of web-pages…
Alphabet (Google) business strategy is based on the following three elements: 1. Business diversification and introduction of new products and services in a regular manner. This constitutes the core of Alphabet business strategy (Google business strategy). Starting from search engine business in 1998, the product portfolio of the company has been consistently expanded. Today Alphabet Inc. offers the widest ranges of products and services including self-driving cars, indoor and outdoor cameras, learning thermostats, and smoke alarms and even products to stop mosquitoes in their tracks. First mover advantage is the main Alphabet (Google) competitive advantage in relation to the majority of these products and services. 2. Business acquisitions. Alphabet (Google) business strategy involves rapid growths via acquisitions. As of December 2016, Alphabet acquired more than 200 companies and 30 acquisitions were made in 2015 and 2016 alone. The efficiency of the internet giant to effectively integrate its corporate culture to new businesses it acquires is one of the solid sources of Alphabet (Google) competitive advantage. 3. Profit maximization through creation of a closed eco-system. Google has created a collection of inter-connected services and applications. Customers usually enter this ecosystem through using Chrome browser, watching YouTube videos or using Gmail. In no time, they are prompted to use additional services such as Drive, Play, Calendar, Blogger and others. A greater range of products a customer uses, the more profit Google earns via advertising in various formats. Moreover, machine learning and Artificial Intelligence (AI) has been focus of the business for the past several years with direct implications on Alphabet business strategy (Google business strategy). Introduction of Google Assistant and its integration into a new family of hardware devices like the Pixel and Google Home in 2016 is a big step for the company towards enhancing machine learning and AI. Alphabet Inc.…
Samsung McKinsey 7S model attempts to explain how seven individual elements of the business can be aligned to increase effectiveness. According to this model strategy, structure and systems represent hard elements, whereas shared values, skills, style and staff are soft elements. McKinsey 7S model argues that there are strong links between elements in a way that a change in one element causes changes in others. As it is illustrated in figure below, shared values are positioned at the core of Samsung McKinsey 7S model, since shared values guide employee behaviour with implications in their performance. Samsung McKinsey 7S model Hard Elements Strategy. Samsung business strategy is mainly based on market readership, i.e. replicating innovations made by market leaders in terms of introducing new products and/or adding innovative features to new products. Samsung’s major competitor, Apple can be specified as company Samsung mainly replicates from. Moreover, Samsung business strategy is based upon scanning and utilising opportunities in the market and new product development on a regular basis. Structure. Samsung organizational structure is divisional and the company is divided into three divisions on the basis of products: IT & Mobile Communications (IM), Consumer Electronics (CE), and Device Solutions (DS). Each division is managed separately according to unique aspects and characteristics of its products. As the outcome of review of optimal organizational structure completed on April 2017, the senior management decided not to shift to holding pattern of organizational structure. Nevertheless, Samsung organizational structure may change in medium term perspective. This is due to a series of scandals the company had to deal with recently, including the imprisonment of Jay Y. Lee, a former Samsung executive and founding family member for his role in bribery and embezzlement. Systems. Samsung’s long-term growth prospects depend on smooth running of a wide range of systems. These…
Facebook McKinsey 7S framework illustrates how seven individual elements of businesses can be aligned to increase effectiveness. According to McKinsey 7S model, structure and systems represent hard elements, whereas shared values, skills, style and staff are soft elements. The framework stresses the presence of strong links between elements in a way that a change in one element causes changes in others. As it is illustrated in figure below, shared values are positioned at the core of Facebook McKinsey 7S framework, since shared values guide employee behaviour with implications in their performance. Facebook McKinsey 7S Framework Hard Elements Strategy. Facebook follows cost leadership business strategy with a particular focus on user experience. According to its mantra “1% is finished”, the social media company develops new products and services and improves its current range of products and services in a continuous manner. Additionally, important elements of Facebook Inc. business strategy include growth via acquisitions and continuous exploration of new ways of site monetization with positive implications for the bottom line. Structure. Facebook Inc. has a hybrid organizational structure that integrates important elements of hierarchical and divisional organizational structures. Elements of hierarchical structure are expressed via presence of multiple levels of management in the company, whereas elements of divisional or matrix organisational structure are evident on the formation of product-based teams on the global scale. The founder, Chairman of the Board and CEO Mark Zuckerberg is the main driving force and the ultimate operational and strategic decision maker in the company. Systems. Facebook Inc. business operations rely on a wide range of organizational systems. The ranges of systems that are the most critical for the social media company include HR system, information system, security system and others. Security system in particular is a critical success factor and it relates to both, company’s own security, as…
Facebook business strategy integrates the following four principles: 1. Extensive and continuous focus on user experience. Facebook did not have a first mover advantage in online social networking segment, as it was launched after Friendster and MySpace. Nevertheless, an uncompromised approach on user experience and an adequate balance between standardisation and customization of the website resulted Facebook becoming the most popular social networking site within a matter of a couple of years. 2. Growth via acquisitions. Facebook business strategy focuses on establishing presence in various branches of e-commerce via acquiring relevant businesses. In 2014, the company purchased Oculus VR, Inc. (Oculus), a company developing virtual reality technology and WhatsApp Inc. (WhatsApp) messenger application for mobile devices. Earlier in 2012, Facebook bought Instagram a popular photo-sharing application for USD 1 billion cash and stock.[1] In 2015 the company generated revenues of USD17.93 billion, which is an increase of 44% year-over-year and ad revenue was of USD17.08 billion, which is an increase of 49% compared to the previous year.[2] Solid financial position that can enable more strategic acquisitions in the future is one of the key sources of Facebook competitive advantage. 3. New product development. Development of new products and services is placed at the core of Facebook business strategy with positive implications on the numbers of its user base. Currently, Facebook product portfolio includes Profile, News Feed, Messenger, Groups, Events, Video, Photos, Search, Pages, Instagram and others. The ability to develop new products and services according to its mission statement “to give people the power to share and make the world more open and connected”[3] is one of the key competitive advantages of Facebook. 4. Continuously exploring new ways of monetization. Facebook constantly experiments with different strategies finding and utilizing news ways of monetization in a regular manner. Recently, mobile user…
Gap Inc. McKinsey 7S model explains how seven elements of businesses can be aligned to increase the overall effectiveness. According to McKinsey 7S framework strategy, structure and systems represent hard elements, whereas shared values, skills, style and staff are soft elements. The essence of this model is this: there are links between elements in a way that a change in one element causes changes in others. As it is illustrated in figure below, shared values are positioned at the core of Gap Inc. McKinsey 7S framework, since shared values guide employee behavior with implications in their performance. Gap Inc. McKinsey 7S Framework Hard Elements Strategy. Gap Inc. uses cost leadership business strategy for all five brands within its portfolio – Gap, Banana Republic, Old Navy, Athleta, and Intermix. The company offers fashion, apparel and accessories products for much cheaper prices compared to the prices of premium fashion brands such as Prada, Dolce & Gabbana and Gucci. In other words, Gap Inc. business strategy capitalizes on the willingness of consumers to express themselves via clothes, to feel stylish, ‘cool’ and trendy in the cost effective manner. Structure. Gap organizational structure is hybrid and it integrates certain elements of divisional and hierarchical organizational structures. Gap organizational structure is divided into five divisions with each division representing a separate brand and headed by a president. At the same time, the organizational structure of each division is highly hierarchical and there are multiple levels of management between the president of the division and a shop floor assistant. Systems. There is a wide range of systems such as supply-chain system, quality control system, sales system, finance system, employee selection and recruitment system and others that facilitate Gap Inc. business operations. The company subjects the level of efficiency of its system into a critical analysis in…
Gap Inc. business strategy in the global market of fashion, style and accessories can be classified as cost leadership. The retailer offers stylish and fashionable clothing items and accessories for competitive prices. In simple terms, Gap business strategy is associated with offering people the opportunities of being ‘cool’ and ‘stylish’ for affordable prices. Gap Inc. portfolio comprises Gap, Banana Republic, Old Navy, Athleta, and Intermix brands. Gap competitive advantage has been traditionally associated with innovative casual design of clothing items and accessories and the variety of choice that enables the opportunities for self-reflection for a wider range of customer segment. For the past few years, the fashion retailer has been facing challenges in terms of maintaining its US and global market share and ensuring the growth of revenues. During the fiscal year of 2015, Gap Inc. experienced a decline of both, sales and gross profit. Net sales for fiscal 2015 decreased 4 percent to USD 15.8 billion compared with USD 16.4 billion for fiscal 2014. Gross profit for fiscal 2015 was USD 5.7 billion compared with USD 6.3 billion for fiscal 2014.[1] Gap business strategy to deal with the issue of declining sales as announced by CEO Art Peck includes the following plans and initiatives. Focusing on its Gap’s core products that contributed to the global success of the company. Specifically, the senior management has expressed a commitment to return Gap iconic denim, including a rich assortment of on-trend silhouettes, washes and fabrications. Start selling on Amazon. The company has shun association with online retailers for more than a decade mainly because online stores are not able to convey attractive store desing and the point of purchase marketing efforts of the brand. However, in a most recent meeting with shareholders CEO Art Peck announced that “Gap is open to selling…