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1. Introduction
Given the case study on Xiaomi clearly states the fact that Xiaomi within a short
period of time gained tremendous popularity across China and even in the oversea markets.
Brand’s success and popularity lies in the fact of constant innovation and increasing product
portfolio. Xiaomi maintained its pace of innovation and extended its series of products
starting from smartphones to music devices, headphones, TV, fitness kit, smart-watch etc.
The initial stage of Xiaomi seems to be challenging as the brand was even deprived from
adequate suppliers’ channels to sell and distribute its products but the scenario changed
overnight. Leveraging e-commerce channels Xiaomi penetrated Asian market with innovative
smartphone devices. However, it is worth stating that technology advances have made it easy
for all electronic goods manufacturing brands to make an equal presence in the market
through the same channels of distribution. Thus, this research report analyses and discusses
the future business scenario of Xiaomi and develops a suitable case for Business Innovation
Model.
2. Discussing the future that the corporation is facing
As put forward by Sjamsoedin and Saerang (2014), electronic goods sector
particularly in the developing nations under emerging economies have been competitive in
nature. The scenario clearly indicates the fact that the brand that gained success within a short
period came with innovative technology and features that customers have not experienced
before at an affordable price. For example, when Xiaomi entered the smartphone markets,
large brands like Samsung and Motorola back already were already dominating the market
but to differentiate itself in the crowd, Xiaomi launched a smartphone devices with unique
and innovative features supported by Google Android at the most cheapest price in the
market (Shih, Lin and Luarn 2014). Gupta and Dhillon (2014) argued that innovation at

affordable price is something that attracted the customers. Consequently, the brand within a
couple of years become the market leader in the smartphones category.
Particularly, in 2012, 500,000 phones were sold in 36 years. Nonetheless, in the field
of technology, market saturation is the most possible occurrence and here innovation works
as the remedy to prevent market saturation (Lee 2014). Thus, in the coming days, it can be
mentioned Xiaomi is most likely to face tough challenge in its core product category because
the markets that once given the maximum revenue are now occupied rival brands. The
competitor brands tap the market with similar offering at affordable price and this is where
the competition ignites. Glowik (2016) also mentioned that there can be a tough challenge in
all its product category because the newly launched product series such as smart TV in Asian
market is never a new product. There are several large brands like Sony and Samsung are
having large market share in all Asian markets. Thereby, the presence of such brands with
their R&D capability can certainly affect Xiaomi’s pace of manufacturing innovative
products. Thus, it can be mentioned that Xiaomi is most likely to face the innovation
challenge. The products that gained high range of customer attention and reached the peak
line of sales margin will go saturated soon (Rawal, Awasthi and Upadhayay 2017).
Developing a case for business model innovation
In order to retain its brand popularity and brand name in the market or retain its
growing customer base, Xiaomi needs to focus more on innovation. Presently, the
organisation has a strong and dominating market presence particularly in the Asian markets
like India, and therefore, it needs to tie up with widely popular and longstanding businesses
(Alverina 2019) For example, it can tie up with MoEFCC (Forest and Climate Change)
department because such as government agencies are in the need of innovative technology for
environment and weather forecast. In other Asian market, like in Singapore, the organization

can tie up with the Meteorological Service Singapore and such initiative can significantly
enhance the brand’s ability to stay active in the market. Xiaomi should pay attention to
innovative technology to help and run such agencies (Qi, Cheng and Wang 2020). This
innovative approach can be applied through a suitable business model.
Tie-up: Keeping the existing business model besides, the brand needs to create or
develop new business model. In this step, the organisation particularly needs to choose
among the large and longstanding businesses and thereby, after it can proceed once it decides
the kind of product the business wishes to develop through the new business framework
(Wan et al. 2016). For example, Xiaomi can manufacture Nowcasting technology and this
item should be manufactured in a way that the track radar echoes are more authentic. This
proposed product is an innovative attempt as it is next generation technology.
Business model Transformation:
The existing business model of Xiaomi needs to be expanded with the inclusion of
new offering. This means the existing business model needs to be innovated mixing up the
requirements after tying up with the suggested firm (Gu et al. 2017). Business transformation
must include the manufacturing network and thereby, there can be some changes in the
operation in relation to workforce management.
Business model Diversification:
This phase of the innovation model is just about keeping the additional business
model which is created after the tie-up. This means Xiaomi’s existing business model of
keeping the list of products at the peak and additional business model would help to keep the
demand of existing products as usual (Suwandhini, Suwarni and Usman 2019). Hence, the
additional model carries the base of diversification into technology based products for the
government agencies.

Business model Acquisition: This remains the final stage of the business model innovation
in which the new model is identified, acquired and integrated. This additional business model
needs to be associated with the existing one and this would certainly boosts the operational
ability of the organization.
Business Model Innovation
Tie-up Business Model
Transformation Business Model
Diversification
Business model
Acquisition

3. Discussing the product, services, and business model that Xiaomi should
get into to respond to challenges/ opportunities
As discussed above the brand Xiaomi significantly needs to focus on innovative
technology but coupled with existing scope of developing products. At present, Xiaomi
undoubtedly has a good market reputation due to its increasing list of products and quality.
However, to retain this market reputation, the business should develop products that can be
used for governments’ interest. For example, as suggested in the above case scenario, the
organization Xiaomi needs to develop or manufacture Nowcasting technology. Nowcast
system can range in complexity; this means some track radar echoes as well as apply
extrapolation to manufacture 0 to 1 hour Newcast but more complex system sometimes needs
to apply a set of combination of NWP output and uncertainty forecast system to particularly
increase up Newcast time horizon (Sjamsoedin and Saerang 2014). Thus, Xiaomi needs to
manufacture other remote-sensing platforms and this must include satellite as well as lighting
data.
The prime opportunity that Xioami finds here is that presently, many of these systems
are presently vulnerable and challenged to optimize the role of forecaster in the nowcasting
system techniques. Thus, the organization needs to treat this as the opportunity and
manufacture this remote-sensing platform and the key focus should be about incorporating
real-time verification and feedback process for the forecasters. The brand needs to
particularly focus on the weakest areas of the existing Newcast system, when tying up with
the government agencies, manufacturing needs to revolve around the initiative of
significantly generating hydrometeorological forecast items and this should be disseminated
particularly in different formats. According to Shih, Lin and Luarn (2014), Xiaomi finds this

outstanding opportunity market opportunity of tying up with the government agencies
because hardly any organization among the competitors have joined the race.
Marketing approach of proposed product item:
In order to market the proposed item, Xiaomi needs to apply the strategy of lobbying.
As put forward by Lee (2014), lobbying is about the private interest groups to significantly
influence the decision government. Hence, Xiaomi stands as the private interest group and
through the process of lobbying the organization may be able to derive special attention in the
market where it operates and hence the group representatives would work as the legislative
committees. Hence, Xiaomi Corporate Groups to influence the direction of legislative policy
and this should be done in a manner to bring a set of benefits and particularly safeguard their
interest. Glowik (2016) argued that making lobbying with the government agencies is most
likely to bring forward open debates and discussion on all possible platforms.
Marketing challenges to implement new business model:
When it comes to lobbying with the government agencies to justify the marketing
approach, there can be many rivals in the queue to do the same. Especially in the electronic
goods manufacturing sector, major players, like Sony and Samsung already built
outstanding market reputation. Thereby, whenever governments publishes the tender notice,
persistent debate goes on following the opportunity of government lobbying. Therefore, it can
be mentioned that implementing lobbying can be challenging for the organisation. In addition
to this, it is worth stating that as Xiaomi’s physical presence in Asian market is very limited
and Alverina (2019) mentioned that business with limited physical presence in the market
may not be governments’ first choice.
Another significant challenge, the organization Xiaomi might face in the present days
is that there have been many players in the consumer electronics sector in Asia and all of the

businesses are following the trends of accessing the customer base through e-commerce
channels. Each category of Xioami’s products soon going to be saturated because it is certain
that besides the smartphone devices, all other categories of Xiaomi’s products such as
headphones, TVs are not new to customers. The stated categories are already sourced by
existing brands.
4. Conclusion/Recommending how the innovation initiatives need to be
implemented
For the all dollars spent by consumer electronic brands on Research & Development
mostly remains a persistent or troubling gap between inherent value of technology they
develop as well as the ability to put the work in place. This means that managers of the
organizations Xiaomi should take the responsibility for spreading a technical innovation into
routine use are significantly better equipped by experience and education to lead the
innovation and eventually manage the implementation. However, to avoid the errors or
failures, there needs to be complete and clear flow of communication between managers and
R&D, or manufacturing staff, while the external alliance parties also need to be associated
with the initiative of product development.
To implement the innovative initiative, changing organization’s culture direction
should be linked to focus of innovation. Wan et al. (2016) mentioned that changing culture
remains simple but it is hard to carry out particularly for the organisation like Xiaomi where
the efficiency holds the priority over innovation due to company’s scale. This is often found
to be true because in large organisation, plenty of energy is invested on sustaining the status
quo. Thus, to make it easy for implementation, the organization might hire an Agile
Consultant or the organisation might go for the choice of creating its own innovation
department. The brand needs to create a separate department in the organization that should

be focused on innovation only. This can be done if the organization manages to implement a
particular innovation-specific ‘pocket-culture’ in its R&D department. This means when the
organization is going for innovation, all members of the departments in the organisation
should know the matter. When all members of the organization knows about the
transformation, the workforce as a whole may work towards the same. So, when the
workforce keeps a supportive undertones towards the change, the implementation can be easy
to be performed.

References
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purchase intention of Xiaomi smartphone in Indonesia (Doctoral dissertation, Widya
Mandala Catholic University Surabaya).
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