A Research On The Motivation And Performance Of The Diversification Of Xiaomi Inc.

Currently,the matter of improving corporate performance effectively through diversification is still worth exploring considering that no final conclusion has been reached on this matter for a long time.This paper selects an enterprise combining the Internet and traditional manufacturing as a case study,analyzes its diversification characteristics,and summarizes its diversification experience and lessons to provide a reference for enterprises which are about to conduct diversification.Xiaomi Inc.took less than ten years to develop from a company centering on mobile research and development to the enterprise covering the intelligent mobile phone hardware,software,smart home products,Internet services and consumer goods.However,the influence of its diversified development model has been controversial.Some people think that the company made remarkable achievements through adopting the diversification strategy to form business synergies.Some believe that rapid expansion split the limited resources due to the diversification strategy,leading to the loss of its competitiveness in the field of smart phones.In this way,its development is far from expectancy.Since Xiaomi is a fast-growing company less than ten years old,its diversified operation has been widely concerned by the community.The paper adopts the method of literature research to review the company's diversification and performance,utilizes the case study method to analyzes its diversification characteristics and motivation,and assesses the influence of its diversification from the perspective of financial performance and non-financial performance.Research finds that the diversity of millet group gradually spreads outward while centering on smartphones.Its diversification can be divided i nto three phases: the first phase is the diversification of spin-off products which are closely associated with the smartphone business.The second phase is to further extend the diversification of intelligent household products.The third phase is diversi fication of the Internet services.In terms of of financial performance,the diversified operation of Xiaomi effectively improves the overall profitability,disperses the operational risks and improves the development ability.From the perspective of non-financial performance,diversification expands the market of Xiaomi,improves the efficiency of resources utilization,enhances customer loyalty and enables Xiaomi to achieve the goal of building an ecosystem.Xiaomi greatly increases its sales revenues and global market share through diversifying businesses and regions respectively.The diversification of the Internet and hardware products opens up a new profit source and turns huge customer flows into cash flows.Based on the case study of Xiaomi's diversification,the following revelations can be obtained:(1)During the process of diversification,diversified operation should be carried out based on the core competitiveness and core business;(2)Diversification should be carried out at the right time.E nterprises should seize the opportunities brought by Internet of Everything and conduct diversified operation related to the Internet and Internet of things;(3)The way of incubating foreign investment can be utilized to conduct diversification,which is helpful to release the financial stress and reduce the cost of diversification.