An Analysis Of The Economic Consequences Of Xiaomi's Diversification Strategy

The process of global economic integration is still accelerating,and the Internet era will become more mature.As the current economic situation is often both risks and opportunities,the internal and external environment of the company is changing all the time.In order to adapt to the changes of the industry and seize the development opportunities,many enterprises have begun to gradually explore the way of diversified operation in line with their own development.However,since the diversification strategy was put forward by scholars,there has been no conclusion in the research on the impact of diversification performance.Some people support and oppose the three views of diversification performance discount,premium or no correlation between the two.Therefore,how to implement the diversification strategy can have a positive impact on business performance,and how to reduce risks and hidden dangers need more careful consideration by the leadership.This paper selects Xiaomi,which has both the characteristics of the Internet industry and the nature of traditional manufacturing,as a case study.Xiaomi's initial development relied on cost-effective Xiaomi phones and a unique Internet marketing model,and it quickly gained a certain influence in the smartphone market.In order to diversify the risks and help it gain higher value,Xiaomi follows the development of the Internet of Things and the Internet era and carries out diversified operations.Its various businesses have achieved good results in their respective fields at present.However,there are also some hidden dangers behind the excellent performance,such as the need for a strong supply chain management system behind a large ecological chain and the neglect of the core business of mobile phones due to diversification.So while Xiaomi's diversification looks good,it is still controversial.Then,what is the impact of the diversification strategy implemented by Xiaomi on its economic consequences and how to evaluate it? This paper will make a specific study around these issues,hoping that by summarizing the characteristics of its successful path,it can be used as a reference template for the diversification development of similar companies in some aspects.This paper summarizes the views of domestic and foreign scholars on diversification strategy,analyzes the overall diversification strategy of Xiaomi,including the process,business characteristics and driving factors,and carries out a case study on the diversification strategy of Xiaomi based on this.In addition,this paper will comprehensively study the economic consequences of Xiaomi's diversification strategy from relevant financial indicators,EVA value and other economic indicators as well as non-economic indicators.It is mainly divided into the overall vertical financial comparison and horizontal comparison of Xiaomi,so as to more comprehensively reflect the operating status and trend of Xiaomi after diversification.Economic indicators show that diversification has indeed improved Xiaomi's overall earnings in the short term and greatly helped its growth,but the trend of indicators has also hinted at weak growth in recent years.Rather than an economic perspective,it shows that pluralism has broadened the market range of Xiaomi's business and produced synergies,which have dispersed the business risks of Xiaomi to some extent.In summary,the exploration of Xiaomi's overall diversification strategy can provide the following enlightenment: in the early stage of diversification promotion,it is necessary to start from the core products and outwards,choose the appropriate operation mode according to its own situation,keep up with the trend of the Internet and the Internet of Things,and persist in technological innovation and management innovation.