International Business Strategy Report: Xiaomi in the Polish Market

This report provides a comprehensive analysis of Xiaomi's potential market entry into Poland. It begins with an overview of Xiaomi's global performance, highlighting its successes and challenges, including the decline in sales and the impact of competition from other smartphone manufacturers. The report then focuses on the selection of Poland as a target market, comparing it with other European countries based on factors such as smartphone penetration rate, population demographics, and economic indicators. A detailed market overview of Poland is presented, including smartphone user forecasts, consumer preferences, and the competitive landscape. The core of the report consists of a critical analysis of Poland's business environment using PESTEL and Porter's Five Forces frameworks, along with a SWOT analysis of Xiaomi in the Polish market. Resource competency and consumer analyses are also included. The report concludes with strategic objectives, recommended strategies, and tactics for Xiaomi's successful entry and expansion in the Polish market.

RUNNING HEAD: International Business Strategy
International Business Strategy

International Business Strategy 1
Contents
Purpose............................................................................................................................................3
Scope................................................................................................................................................3
Limitation........................................................................................................................................3
Overview..........................................................................................................................................3
Selection of Countries......................................................................................................................5
Shortlisted Countries....................................................................................................................5
Poland Market’s Overview..............................................................................................................7
Critical Analysis on Poland.............................................................................................................8
Environmental Analysis...............................................................................................................8
PESTEL....................................................................................................................................8
Porter 5 Forces........................................................................................................................11
Radar Map..............................................................................................................................13
Resource Competency Analysis.................................................................................................13
Key Success Factor (KSK)........................................................................................................14
Consumer Analysis....................................................................................................................17
Competitive Analysis.................................................................................................................18
Positioning Map.....................................................................................................................18
Competitive Analysi...............................................................................................................18
Xiaomi SWOT in Poland...........................................................................................................19
Cultural Analysis- China Versus Poland...................................................................................21
Strategic Objective in Poland........................................................................................................21
Recommended Strategies...............................................................................................................21
Basic Strategy............................................................................................................................21
Generic Strategy.........................................................................................................................22

International Business Strategy 2
Entry Strategy............................................................................................................................22
Recommended Tactics...................................................................................................................22
Recommendations..........................................................................................................................22
Conclusion.....................................................................................................................................23
References......................................................................................................................................24

International Business Strategy 3
Purpose
The basic purpose of this report to assist Xiaomi management in their objective of expanding
their market in Europe with the help of appropriate consultation.
Scope
Methodologies framework such as PESTEL, Porter’s 5 forces, Porter’s generic strategy and
marketing mix strategy are covered under the scope of this report.
Limitation
This report does not make the use of primary data. The study and analysis of this report is based
on the secondary data.
Overview
The maintenance of global market sales may become a tough task for Xiaomi from October 2017
due to sales slump. The phone component order has been reduced by Xiaomi due to 10% decline
in its online sales.
Xiaomi is considered as the 3rd most-valuable tech-company in the world, worth USD 46 billion.
In the year 2014, Xiaomi achieved a growth rate of 227% and marked its name among the top 5
smartphones as a result of its low price smartphones and quality products (Santos & Williamson,
2015).
Moreover, Xiaomi’ ability in flash-sell lead it towards selling 2.11 million smartphones in a
single day and therefore has set a Guinness record (Zhu, 2018). The global market expansion of
Xiaomi was supported to a great extent by the global business vice president, Hugo Barra. His
efforts also made India the second largest market for Xiaomi (Tse, 2015).
The following figure depicts the global market share for smartphones.
Period Global Market Share
Samsung Apple Huawei OPPO Xiaomi
2014 24.70% 15.00% 5.80% 1.20% (Based on
Q3 2014 data) 4.80%
2015 22.50% 15.90% 8.40% 3.80% 5.60%

International Business Strategy 4
2016 20.50% 14.40% 8.90% 5.70% 4.3% (Based on Q1
2016 data)
Global Market Share of smartphone makers.
Sources: (Bicheno 2015), (Lomas 2016), (Gartner 2015), (Miller 2017)
The effective global expansion of Xiaomi along with its competitive products has maintained its
position in the top 5 market players since the year 2014.
However, in the year 2016, Xiaomi faced tough completion from OPPO and lost its 4th position
due to 1.3% decline in the worldwide market share. Even Samsung scandals did not benefitted
the sales of Xiaomi. The smartphone share of Samsung was conquered by Huawei and OPPO
and achieved 2-3% growth in the market share (Glowik, 2016).
The following figure depicts the profits and revenue of the main smartphone makers.
Criteria
Smartphone Markers Profit from Smartphone Devices Related
Samsung
(Electronics) Apple Huawei OPPO Xiaomi (In Year
2014)
Revenue
(In Billion
USD)
91.350 157.330 25.900 20.070 4.410
Profit (In
Billion
USD)
18.530 61.480 1.830 0.440 0.566
Profit to
Revenue
Ratio
0.203 0.391 0.071 0.022 0.128
Global smartphone makers revenue and profit
Sources: (Samsung 2017), (Apple 2017), (Enterpriseitworld 2017), (Yarrow 2014), (Ghoshal
2016)

International Business Strategy 5
The above figure shows that the profit to revenue ratio of Xiaomi was recorded at 0.128 which
stands in 3rd place among the profit to revenue ratios. Even the market share of Xiaomi was
smaller in comparison to Huawei and OPPO, still it enjoyed similar market share .
However, such advantage was unsustainable. The online store model of Xiaomi was copied by
its competitors as a result of which Xiaomi started losing its advantage in online stores to them.
OPPO, which is one of the competitors of Xiaomi, somehow manage to exceed the market share
of Xiaomi by developing strong online and offline sales. 50% of the online sales of smartphones
in China is still held by Xiaomi (Yang & Wos, 2017).
The processor required for the production of Mi 6 created certain issues for Xiaomi as the same
processor was in high demand from the same supplier. Furthermore, the production cost of
Xiaomi was increased as a result of the purchase of patent from Microsoft due to the restriction
caused in sale of the Xiaomi smartphones in the Indian market (Paik & Zhu, 2013).
The maintenance of distinctive competency created issues for Xiaomi after quitting of Hugo
Barra who played a key role in global expansion (Gupta & Dhillon, 2014). This also created the
requirement for expansion in the new markets as the growth in the global market share was
significantly affected.
Selection of Countries
Shortlisted Countries
Out of the Europe’s 50 countries, Poland, United Kingdom and Romania was shortlisted.
Xiaomi took the decision on the basis of Ease-of-doing-Business-Index in which these countries
scored below 36. However, the risk to business was less as these countries had positive 0.2
political-stability-index.
The below figure depicts the determination of the country for expansion in Europe on the basis
of analysis among three countries.
Scale, 5 = Very Favorable, 4 = Favorable, 3 = Min in Favorable, 2 =unfavorable, 1= Very
Unfavorable
Criteria Weightage Poland Romania United Kingdom(UK)
Score, Scale Scale Score Scale Score Scale Score

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Smartphone
Penetration
Rate
0.3 4 1.2 3 0.9 5 1.5
Population of
age 25-54
years
0.3 4 1.2 4 1.2 3 0.9
Uncertainty
Avoidance 0.2 4 0.8 3 0.6 2 0.4
GDP Income
per capital 0.2 4 0.8 3 0.6 5 1.0
Total Score 1.0 4.0 3.3 3.8
Sources: (CIA 2017), (Newzoo 2017),
Shortlisted Countries Analysis
The score of Poland is 4.0 therefore should be the country for expansion for Xiaomi as the scores
of UK and Romania are just 3.8 and 3.3. The potential customers required for the growth of
Xiaomi are offered by Poland as indicated by its Smartphone-Penetration-Rate. However, the
higher penetration ability of UK has become a disadvantage for Xiaomi.
Also, the purchase power potential of the customers in Poland is favorable as indicated by its
GDP-Income-Per-Capital. Xiaomi’s market entrance in Romania will only bring limited profits
as the consumers have lowest income in comparison with the three countries and therefore
prefers cheapest smartphones (Gao & Tempesta, 2016).
Moreover, uncertainty can be easily avoided in Poland as in UK, the consumers prefer fancy new
products and are always willing to change.
Poland has sufficient population between the age group of 25-54 years which constitutes the
target market for Xiaomi. In cases where the age structure of the population is scattered, more
resources would have to be spent by Xiaomi due to their different spending behaviors.

International Business Strategy 7
Poland Market’s Overview
The entrance of Xiaomi in the Poland market can maximize its advantages as it provides a
favorable market and stands at 24th in the world and 6th in the Europe in terms of largest
smartphone market (Sun & Grimes, 2017).
The following figure indicates smartphone user forecast of Poland.
Poland shows a positive trend as far as smartphone business is concerned. Within 4 years
starting from 2017, 28% growth is expected which means additional 4.7 million smartphone
users.
The preferences of the consumers in Poland is positive for Xiaomi. The low to middle
smartphones of Samsung has dominated the market with 35% of the market share. This means
the Polish people are price conscious and Xiaomi can achieve success in the market by offering
low price smartphones (Seo, 2015).
Polish also welcomes Chinese smartphone as represented by Huawei’s success over western
brand Apple and attained second position (Kauerhof, 2015). The e-commerce sales of Xiaomi in

International Business Strategy 8
its home market is very strong which can also become its strength in Poland (Giachetti, 2018).
According to a study, Poland has 67% internet users and half of them make online purchases, the
trend is continuously increasing (Ma, 2016).
Critical Analysis on Poland
Environmental Analysis
PESTEL
The following figure shows the PESTEL analysis of Xiaomi under the smartphone industry of
Poland.
Factors Situation / Facts Impact on Industry Opportunity or
Threat to The Firm
Political
and Legal
EU will enforce the data
protection rules in 2018. A
communication device such
as smartphone is requiring
obeying high data security
need. (Ashford 2017)
Smartphone makers are
aware to enhance
smartphone security
features due to the
regulation. This would
incur extra production
cost.
Big opportunities –
Xiaomi can quickly
gain Poland market
by having a high
security smartphone
with its attractive
price and
performance
Poland government planned
to tighten the TV and radio
licenses. It involved collect
fees to private-owned TV
Box. (Polskie 2017)
High demand on
smartphone with
reasonable price. This
smartphone shall come
with sufficient screen size
and ability to play a
streaming video on
demand(VOD) with decent
sound quality
Big opportunities –
Ease for Xiaomi’s
smart phone to
penetrate as demand
increase
Economic Stable economic growth
rate in Poland promises a
sustainable income growth
High demands on
smartphone as more Polish
afford to buy.
Big Opportunities -
Ease for Xiaomi to
sell product with

International Business Strategy 9
to population (Worldbank
2017a).
demand increase
Poland e-economy growth
rapidly with 14% a year. It
boosts the Polish
digitization needs (Arak
and Bobiński 2016)
Smartphone makers are
aware and start selling
product via e-commerce
channel.
Medium Threats –
As Xiaomi lose
advantage on online
sales that Xiaomi is
good in.
Social and
Cultural
Impact
Polish disposable income
increased since 2004.
Quality and brand become
important to Polish. But
product discount is essential
to sell product. (JAP 2017,
Santander 2017)
Smartphone maker
manufacture quality
smartphone with low price.
Medium
Opportunities–
As Xiaomi, good in
manufacture a low-
cow smartphone
with quality
Polish is reasonable
spenders. They spent
mostly on utilities and load
repayment. Instalment
scheme can help Polish to
buy electronic items
(WarsawVoice 2016)
Smartphone maker co-
operate with financial
institute to give instalment
facility to encourage Polish
to buy smartphone
Small Threats –
As Xiaomi need to
find local partner to
provide instalment
scheme.
Technologi
cal
Due to Poland banks are
embracing fintech
technology. Poland
electronic payment is
advance than EU. (Coleman
2016)
Smartphone maker start
selling smartphone through
online support with
electronic payment system
Medium
Opportunities–
As Xiaomi, familiar
with online selling
Polish company familiar in
Big-data technology to
analysis market. (Polak
Smartphone makers start
analyze and promote
smartphone with help from
Small
Opportunities–
As Xiaomi is

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2015) big-data technology familiar with big
data application to
figure out user need
Environme
ntal
Disadvantage to Poland
business-environment,
which depending on coal-
fired type energy. Because,
EU plans to price carbon
oxides emission. (Follett
2017)
Markers increase
smartphone selling price to
offset the increase of
operation cost.
Small
Opportunities–
As Xiaomi is known
as good quality with
low price
smartphone
Because high air pollution.
Polish want a greener
product with low-carbon
footprint.
Smartphone manufacturers
reduce carbon footprint by
having greener in supply
chain and manufacturing
Small threats–
As Xiaomi
manufacture
smartphone in China
and distribute it to
worldwide. The
“Made in China”
always being said as
environment
unfriendly products.
Poland’s socio-cultural impact, economic and environmental factors offers both opportunities
and threats to Xiaomi while technological, political and legal aspects are favorable (Wiechoczek,
2016).
Political and legal aspects are a big advantage for Xiaomi. Xiaomi provides low structure
smartphones with excellent quality. Therefore, data security regulation can be easily absorbed
only with little additional cost.
Small to medium advantage is provided to Xiaomi by technological environment as it is familiar
with online sales. It made easier for Xiaomi to duplicate the online success approach adopted in

International Business Strategy 11
the home market in Poland. The experience in relation to the big data analytics provided
opportunity for gaining market shares (Tan & Zhan, 2017). The feedback of the Poland
customers can be utilized for customizing the features and prices of the smartphones like it have
done in its home market (Li, Y., Zhang, et. al. 2015).
Both opportunities and threats are provided by the economic aspect. Xiaomi is benefitted due the
popularity of low-to-medium smartphone among Polish (Lu, 2017). However, the competitors
are more familiar with the setting up of online sales channel in e-commerce which is a threat to
Xiaomi (Turban, et. al., 2017). Therefore, the requirement arises for spending a huge amount for
the purpose of acquiring the market share in order to deal with the competition under online sales
(Pon, 2015).
The social and cultural aspects offers similar opportunities and threats to Xiaomi. Low prices and
quality products are the strengths of Xiaomi (Giachetti, 2018). However the people residing in
Poland prefers making purchases with installment plans which can create hurdle for Xiaomi.
Failing in arranging a local partner for proving installment facility can result in losing their
potential buyers to the competitors (Mass & Madaus, 2014).
In the environmental aspect, some opportunities and threats are offered to Xiaomi. The prices of
the phones may be increased by the smartphone manufactures in Poland in order to balance the
operation costs. While manufacturing phones in China, Xiaomi has an opportunity due to EU
plans to price carbon oxides emission. However, there is threat from the customers who prefer
greener products that Xiaomi will not be their choice as it creates a lot of pollution and is
unfriendly to earth (Satya & Irna, 2017).
Porter 5 Forces
The following figure provides the analysis of Poland’s smartphone industry.
Key, Threats, 5 = Big Threats, 4 = Medium Threats, 3=Small Threats, 2 = Min.
Threats, 1 = No to Min. Threats,
5 Forces Facts Findings
New
Entrants
Threat
Low threat from new entrants. Smartphone is a capital-intensive
industry that required investment in R&D, manufacturing plants,
marketing and sale channel. It required new entrant to have
2