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Activity: Analysis of International Expansion Strategies: The Xiaomi case.

Description of the activity

In Unit 5.2 we have seen that many companies are adopting international expansion strategies that, with the help of the enabling tools of the digital age, allow them to maintain their competitiveness. By internationalizing, the company extends its business model to countries other than its country of origin.

In particular, we have studied the different modes and strategic options to enter and compete in foreign markets, ranked according to the intensity of export activity, on the one hand, and to the level of risk and control capacity at destination, on the other hand (Figure 1 in Unit 5.2).

One example of an internationalization process of a digital company is Xiaomi Technology Corporation Ltd. After recognizing numerous opportunities in the global market, Xiaomi, based in Beijing, charted its overseas market strategy in 2013. However, opportunities came with challenges, and during the internationalization process, Xiaomi encountered many problems. By 2016, after three years of hard work, Xiaomi had gained more experience than profits. Compared with Xiaomi's domestic success, Xiaomi's internationalization strategy was unsatisfactory. In the case you will have to analyze how Xiaomi could meet its international goals in 2016.

In this activity you will have to discuss about the following, based on the Xiaomi case:

  1. Analyze why Xiaomi should enter international markets, in particular Hong Kong, Taiwan, India and South Asia.
  2. Explain how Xiaomi entered the international market. What entry mode/s did they use?
  3. Analyze advantages and disadvantages of the following three entry modes: export mode, contractual agreement mode and foreign direct investment, in the context of the case.
  4. What strategy should Jun Lei choose?

You should base your reasoning on Unit 5 materials, but the following sources of information should be also used in your discussion:

  • Online book chapter Global Strategic Choicesoffering strategic perspectives on going global.
  • Online book chapter that surveys International Expansion Entry Modes.
  • A good article from magazine describing 5 Reasons You Shouldn’t Go Global.

Please include all relevant references in your document.

Objectives:

  • To apply the theoretical knowledge in Unit 5 to a case study.
  • To learn about different modes and strategic options to enter foreign markets.
  • To apply the concept of globalization.

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