Case study of XiaoMi Essay Example

and is looking toward future Internet business instead of MI sales. Axiom currently has over 3,000 employees and is valued at over STUDIO lions. The company's slogan is "Just for fans," reflecting its core focus on catering to its hardcore fans to provide the best user experience possible. The report also includes a strategic analysis of Axiom's internal analysis, including determinants of strategic options and strategic strengths.Axiom's strategy is to target mobile device enthusiasts who are opinion leaders and likely to share with their friends. This customer group values good hardware and software, and Axiom has successfully built a following by providing customer-focused services and interaction with fans. The company relies on word-of-mouth advertising from loyal early adopters, which has been effective and cost-efficient. Axiom's innovative supply chain strategy minimizes inventory costs and marketing expenses by manufacturing products based on customer orders and selling them through the company's official website.Axiom's sales strategy is zero-cost and offers high-end smartness at an affordable price. To generate hype, they use the "hungry marketing" approach by limiting supply and creating anticipation. The only way to purchase Axiom handsets is through their website, which results in customers rushing to join the line-up out of fear of missing out. However, there are some strategic weaknesses and constraints such as supplier bargaining power, as Axiom is a small scale company compared to larger players in the smartened market. This makes it difficult for Axiom to bargain for a lower price or secure raw materials and delivery time on their schedule. In addition, the "Hungry Marketing" strategy can be easily imitated. With increasing demand for Axiom smartened, it remains to be seen if

they can meet this demand in the future.Whether intentional or not, companies who implement this strategy may eventually drive away some customers who will opt for similar providers with better supply in the long run. In terms of performance analysis, Axiom had a market share of over 10 million units in the China domestic smartened market in both 2012 and 2013, resulting in volume economy and stable pricing throughout their product life cycle. This enabled Axiom to earn more revenue and gain bargaining power when dealing with upstream component factories. Axiom plans to maintain a high shipment rate in the coming years, which will bring in more profit as it improves brand recognition, strengthens positions with suppliers, increases accessory sales, and attracts more traffic through their website hence keeping up with the trend of TIT (Internet of Things). However, the delay of their star product MI3 could impact their performance.

Despite its ambitious expansion plans, Axiom faces a number of significant challenges. The first challenge relates to production capability. Currently, Axiom outsources the production of its memos and has a production capacity of KICK per week. However, in order to meet its sales targets of MM in 2014 and MM in 2015, Axiom will need to increase this capacity to KICK per week in 2014 and MM per week in 2015. The second challenge for Axiom is managing component supply. Due to the dynamic nature of the market demand, the lead time required by suppliers exceeds the rate of demand changes. As a result, Axiom will run the risk of depleting its stock if it cannot come up with an efficient solution.

If

Axiom is unable to address these issues, it risks facing major shipment delays and potentially even product failure, similar to what occurred with the Google Phone, which lacked adequate after-sales service. Another challenge for Axiom is its small R&D team focusing on mobile phone design. A single project usually requires around 20-30 engineers (including REF, Layout, BIB, Mechanical, BSP, and Testing) over a six-month period. With only around 200 engineers currently in-house, Axiom's capacity for projects is limited to MM to MM per year, assuming best-case sales projections. Finally, there are legal challenges that must be addressed if Axiom is to achieve its targets by 2014 and 2015. As Mr. LEI June notes, expansion beyond China may be necessary to achieve these targets.Axiom must request IP indemnification from holders like Qualm, Ericson, and Monika, but their competitors have paid large sums to obtain it. Leno purchased Motto for 2.B IIS$ to bypass the IP barrier, while Hawaii and ZIT used their own IP to obtain cross licenses from the main IP holders. Additionally, Accolade paid huge fees to sign the GAP with Ericson and Qualm. Axiom will need to pay a significant sum if they want to sell the phone outside of China due to the absence of protocol stack related I in 26, 36, and 46. In terms of market analysis, the smartened shipment in China has almost quadrupled over previous years, making it the world's largest smartened market with a projected domestic demand of 422 million units in 2014 (up by 22.7% from 2013). Of these units, China-based vendors are expected to sell 278 million while international vendors will sell almost 144 million.

Although China has nearly one billion mobile phone users and only 40% are currently using smartness, hundreds of millions of traditional feature phone users are unlikely to switch due to additional costs. The growth rate in the Chinese market is forecasted to slow to about 10% beyond 2015.Despite the vastness of the Chinese market, replacement demand from existing smart phone users alone is too significant to disregard. Material costs for high-end smart phones remain considerably lower than their retail price, with component costs for phones with an average sales price of USED 650-700 sitting at around Just 200 USED, resulting in high margins for Apple. Vendors of lower-end models can reduce component costs by making use of more affordable materials, with costs typically ranging between 40 to 80 USED, depending on purchase volume and bargaining power with upstream suppliers. While barriers to entry are low for lower-end models, new market entrants may find it challenging to compete with leading global players like Samsung and Apple that possess advanced technological capabilities and a strong brand presence. Key factors for success among smart phone vendors in China include brand recognition, with foreign brands like Apple enjoying high levels of brand awareness among nonusers, alongside prominent domestic brands such as Leno, Hawaii, Maize and Axiom. User stickiness can also play a crucial role in product promotion and enhancing sales volume.2) Apple excels in technology innovation, both for hardware and software, delivering seamless upgrades. Samsung and Axiom are investing heavily in developing their own features based on the open-sourced Android system.
3) Distribution channels are leaning towards carriers' monthly plan offerings. This trend has led to around 40% of Hawaii

and Leno's domestic shipments coming from carriers' sales channels.
4) Successful supply chain management is crucial for mass production as smart phones require numerous key components. Most vendors outsource production to Memos.
4.2 Environmental Analysis:
4.2.1 Pursuant to the "12th Five-Year Plan," New IT is one of the seven priority industries, focusing on developing broadband networks, internet security infrastructure, and network convergence.
On 12 October 2007, the Central Government cancelled and adjusted administration approval items, including the prior approval requirement of smartphones.Once a smart device has obtained the "Network Access License", it can be publicly sold under its own brand. The Plan also prioritizes "Resources Sharing" in e-commerce for smart devices. However, it is important to note that enforcing regulations for internet security and preventing counterfeit products relies on public awareness and self-discipline, which needs improvement in China. The trend in smart device technology shows higher performance with faster speeds and more memory capacity at lower costs, making it a plus for the industry. There is a global expectation for continuous innovation through various applications that appeal to changing customer preferences. Establishing and promoting e-platforms for communication, upgrade, and global online purchasing are relevant moves. To keep up with constantly upgrading technology, R and management teams should be a core business strategy for smart device providers.Smartphone providers should consider themselves as top-of-the-line, open-platform devices targeting younger generations, white-collar workers, and those who desire phone upgrades. However, to appeal to all customers, integration of both online and offline channels is vital. The expansion of the demographic base in China calls for a fast and efficient e-commerce sales model. Furthermore, users look for the ability to personalize their operating systems and

features. Therefore, to succeed, smartphone providers must clearly define their market positioning by involving users in the creation of their operating systems and valuing their contributions at reduced prices.The ecological trend calls for companies to meet LU Environment standards in environmentally sensitive materials, manufacturing, and operation. By 2017, it is expected that 400 million green cell phones made with at least 50% recycled content will be shipped worldwide. To support this effort, companies provide customers options to return old devices for environmentally safe disposal or recycling to eliminate toxic substances. They also offer products with toxic-free retardants, extended warranty periods, and coverage. Common e-platforms allow users to download digital content, reducing wastage of packaging materials and logistic transportation. Customer segmentation considers the "power-users" or "cellophane super fans" as a niche group targeted by Axiom's "Just for fans" slogan. The company gained popularity by catering to this demographic who continuously seek out richer features and new experiences for their phones.Axiom phones cater to a specific group of consumers - young, highly educated individuals who value product functionality and price efficiency. A majority of Axiom's customers are between the ages of 16 to 28, with a higher education background and belonging to the humble or medium income level. They spend their free time playing games, listening to music, and connecting with friends on social media through their smartphones. However, there are also customers who desire Apple or Samsung products but cannot afford them. Axiom aims to bridge this gap by offering affordable devices. A survey has revealed that Axiom's customers prioritize product functionality, price, and appearance. Many of them are salespersons or clerks from companies. They are

part of the "cult of Axiom" - energetic individuals with an active online community who enthusiastically participate in high-profile media events.

Our survey group asked Axiom users about their switch to the first Axiom phone. Some stated that they switched because Axiom met their requirements for high processing speed and had a distribution and promotion pattern that attracted them. Others were influenced by their peers. Price sensitivity was noted among early adopters, but not among followers. One interviewee stated that "other phones are Just phones, but an Axiom phone is very human-friendly." Another interviewee preferred not to use Apple due to concerns about it being a luxury product. We found that over 60% of users bought or are willing to buy a second Axiom, while only 10% expressed desire to switch to a premium device like a powerful MILD system and its APS. Compared to other systems, MILD is more user friendly and open to feedback and criticisms. Most of the APS for Axiom are free for downloading. However, the stability of the device and system is the main reason why some users wish to change their Axiom phone.

Customers' satisfaction is primarily influenced by two key issues: production volume and the quality of Axiom's productions and integration between its devices. The initial stages of business expansion are hindered by production volume, which has resulted in potential customers being dissatisfied due to unsuccessful registration attempts. Additionally, in some cases, Axiom's "Hungry Marketing" mode has led to scalpers in cities, thereby hiking up product unit prices. Most users attest to the fact that while Axiom's hardware and software use are not as stable as high-end brands,

connection between devices is not as integrated and user-friendly as Apple's products. These issues are the main factors prompting customers to part ways with Axiom. With numerous players in the smart phone arena, competition is high.