Xiaomi’s troubles and how to solve them

The Chinese internet company Xiaomi was founded in 2010. In 2014 and 2015 it was amongst the top five (sometimes even top three) smartphone makers world wide.   And with a valuation of over USD 46billion it is one of the world’s most valuable technology start-ups. Xiaomi might be known for its low-budget and stylish smartphones, targeting China’s middle class and its youth, but that is only part of what gave it that valuation. Investors believe that Xiaomi can build and ecosystem with its smartphones, smart home products and services consisting of games, apps and others. Its potential lies in bringing revenue through hardware-purchases as well as recurring purchases through services. Part of Xiaomi’s smart home portfolio (Source) Xiaomi’s portfolio represents that idea. Its offerings include a set-top box, rice cookers, a water and an air purifier, a drone, a fitness tracker,TVs, notebooks and a virtual reality headset as well as accessories such as power banks and audio devices. Xiaomi starts losing to competitors Ending 2015, however, it starting losing market share and ranks now below the top 5 smartphone producers. Instead of USD16 billion in sales revenues as predicted by the CEO Lei Jun, the company reached $12.5 billion, a miss of almost 13%.

Recall of Note 7 did not hurt Samsung's brand

Samsung has completely recalled its Galaxy Note 7 and stoped production due to risks of catching fire. As a consequence the company lost more than $19n of stock value. At the time of the recall, analysts worried about negative consequences on the firm’s credibility and trust. The concerns were not unjustified considering the gravity of the issue and what other companies were doing at the time of the recall. Actually there wer two rounds of recalls; in the first, which officially started on September 15, Samsung replaced faulty Note 7 with new handsets. The second recall, issued on October 10, was final and production of the Note 7 stopped. The dates are of these actions are interesting as Apple announced its new iPhone models, the iPhone 7 and iPhone 7 Plus on September 7, about a week before the first recall. Also, Google announced its new phones around these days; on October 4 the company presented its Google Pixel phones. With that in mind it is safe to assume that Samsung will not only incur costs from lost sales and recycling of the phones, but also due to damaged reputation. A recent poll, however, indicates otherwise. The poll conducted by Reuters/Ipsos revealed two things: Current Samsung smartphone owners are as loyal to their

Recall of Note 7 did not hurt Samsung’s brand

Samsung has completely recalled its Galaxy Note 7 and stoped production due to risks of catching fire. As a consequence the company lost more than $19n of stock value. At the time of the recall, analysts worried about negative consequences on the firm’s credibility and trust. The concerns were not unjustified considering the gravity of the issue and what other companies were doing at the time of the recall. Actually there wer two rounds of recalls; in the first, which officially started on September 15, Samsung replaced faulty Note 7 with new handsets. The second recall, issued on October 10, was final and production of the Note 7 stopped. The dates are of these actions are interesting as Apple announced its new iPhone models, the iPhone 7 and iPhone 7 Plus on September 7, about a week before the first recall. Also, Google announced its new phones around these days; on October 4 the company presented its Google Pixel phones. With that in mind it is safe to assume that Samsung will not only incur costs from lost sales and recycling of the phones, but also due to damaged reputation. A recent poll, however, indicates otherwise. The poll conducted by Reuters/Ipsos revealed two things: Current Samsung smartphone owners are as loyal to their

Peter Drucker’s five deadly sins in 2016

(Peter Drucker) In 1993 Peter Drucker published a column titled The Five Deadly Business Sins, a copy for download is available here. Here, I want to shortly summarize them and see how they relate to what is going on in our current business world. 1. Premium pricing and high profit margins Drucker criticizes that companies falsely assume that high profit margins equal maximum profits. The profit equation of course suggests otherwise: Total profit equals profit margin multiplied by amount of goods or services sold. Additionally he argues that premium pricing always creates a market for lower-end competitors. He gave two example for this sin: Xerox and GM. Xerox, over-engineered its copier and, therefore, raised its prices into the premium segment creating high profit margins for Xerox. However, as consumers only needed a basic version, Xerox lost significant market share to Canon who entered the market which such a basic copier. Further, Drucker argues that the U.S. automobile industry (including GM) lost market share due to its fixation on „big cars“ as opposed to Volkswagen and Japanese competitors with their small, fuel-efficient cars. U.S. competitors followed their competitors, but not soon enough, due to the low per car profit margins. This

Peter Drucker's five deadly sins in 2016

(Peter Drucker) In 1993 Peter Drucker published a column titled The Five Deadly Business Sins, a copy for download is available here. Here, I want to shortly summarize them and see how they relate to what is going on in our current business world. 1. Premium pricing and high profit margins Drucker criticizes that companies falsely assume that high profit margins equal maximum profits. The profit equation of course suggests otherwise: Total profit equals profit margin multiplied by amount of goods or services sold. Additionally he argues that premium pricing always creates a market for lower-end competitors. He gave two example for this sin: Xerox and GM. Xerox, over-engineered its copier and, therefore, raised its prices into the premium segment creating high profit margins for Xerox. However, as consumers only needed a basic version, Xerox lost significant market share to Canon who entered the market which such a basic copier. Further, Drucker argues that the U.S. automobile industry (including GM) lost market share due to its fixation on „big cars“ as opposed to Volkswagen and Japanese competitors with their small, fuel-efficient cars. U.S. competitors followed their competitors, but not soon enough, due to the low per car profit margins. This

Strategic implications for Netflix’s future

Source I am currently read Frank Rothaermel’s Strategic Management: Conceptsand also doing the “Chaptercases” (case studies at the end of each chapter) and posting them here on my blog. Chapter seven’s “Chaptercase” happens to be about Netflix, which is a nice coincidence as Netflix recently published its earnings for Q3 2016; its last quarter’s user growth exceed its expectations in the U.S. as well as in international markets. The streaming service currently has about 86,75 million users in total (see statistic below for details). Source: http://statista.com and personal calculations So, here are the questions from the case study: Netflix growth in the United States seems to be maturing. What other services can Netflix offer that might further demand in the United States? International expansion appears to be a major growth opportunity for Netflix. Elaborate on the challenges Netflix faces going beyond the U.S. market. What can Netflix do to address some of the challenges encountered when going internationally? Netflix growth in the United States seems to be maturing. What other services can Netflix offer that might further demand in the United States? Original content: The company has given that answer in the letter to shareholders. Netflix has been creating on content for four years now and user growth