The most popular typologies of the strategic frameworks comprise Porter’s and Mile and Show’s systems. Both of them are reasonably important for understanding the choices of corporations’ top managers as to intended and implied strategies that shape the modern market. For the purpose of discussion, Xiaomi, the recently emerged company, has been chosen. The firm is specialized in the spheres of electronics production and has gained popularity in several parts of the world. Xiaomi presents an enterprise that uses a low-cost strategy while being a prospector in the technology industry.
First of all, the Xiaomi brand should proceed with a low-cost strategy for several reasons. The process implies the mass production of goods in an industry that can provide low manufacturing expenses (Parnell, 2014). Xiaomi has handled this task already: due to the cheap work price in China, the output can be generated with little demand for capital. As a result, the devices created by the company are numerous and affordable for a great audience with a wide range of financial capacity (Bush, 2019). Additionally, the quality of the products is notable, thus making the gadgets and other tools among the most popular in Europe and Asia and competing even with Apple (Writer, 2020). The possible strategical move to be initiated by the corporation is widening the market share and enhancing the shipment system so that it benefit from being an economy-of-scale type company. The enterprise should consider developing a functional strategy to procure the identity needed for competition with rivals (Parnell, 2014). Therefore, the low-cost plan seems to fit the existing prerequisites of the company for further growth reasonably adequately.
Next, the Mile and Snow strategy framework shows that Xiaomi is of a prospector type. This notion contradicts Parnell’s (2014) observation that companies adhering to the low-cost policy tend to be defenders that do not produce any innovations but rather adopt other firms’ achievements. The strategy might seem practical as it allows corporations to avoid the risk of losses. Nevertheless, Xiaomi is a well-established brand with significant revenues that can afford technological advances. An example of such is a recent extension of the company’s products based on the Artificial Intelligence of Things. The economists doubted these innovations, but the strategy has proved successful (Saha, 2020). Thus, the Chinese smartphone producer has broadened its commodities range, making a financial accomplishment and illustrating the effectiveness of the prospector-type technique.
Finally, the similarities and differences between Porter’s and Mile and Show’s strategic typologies could be seen. Both systems involve the level of adaptation of a company that defines its intended strategy. For example, the mass orientation of a firm means significant reliance on public needs, which is intrinsic to low-cost and defenders types of enterprises. Regardless of these analogies, the typologies differ in their main points. Porter’s strategies are concerning the order of budget use and emanating from its differentiation stage. Meanwhile, Mile and Show articulate the distinctive approaches of companies to production (Parnell, 2014). Hence, the methodologies may seem alike, although they emphasize different concepts of a firm’s internal structure and top managers’ decisions.
To conclude, Porter’s and Mile and Show’s typologies are essential for comprehending current economic matters, management, and business maintenance. The example of Xiaomi demonstrates the contradiction in Parnell’s statement about low-cost and defender’s types of strategies correlation since it rather pertains to the prospector category. Additionally, the differences between the typologies are more significant than their similarities: the authors promote various concepts of equal importance for strategic organization.
References
Bush, T. (2019). SWOT analysis of Xiaomi. PESTLE Analysis. Web.
Parnell, J. A. (2014). Business unit strategies. In Strategic Management: Theory and Practice. SAGE Publications.
Saha, R. (2020). Xiaomi is storming the globe with its innovative products. TechnoSports. Web.
Writer, S. (2020). China’s Xiaomi surpasses Apple as the world’s No. 3 smartphone maker. Nikkei Asia. Web.