Tencent Holdings Limited is a multinational investment holding company of China established in 1998, whose firms specialize in numerous Internet, connected products and services, technology, artificial intelligence, and entertainment in China and rest of the world. Its twin, skyscrapers head office that is Tencent Seafront Towers is established in Nanshan District, Shenzhen (Tencent, 2018a). Tencent is said to be one of the biggest social media and gaming company, also known as the most appreciated company in the world. Besides this, it is the largest venture capital company and Investment Corporation in the world. Numerous services of the company comprise web portals, mobile games, payment systems, social network, smartphones, e-commerce, multiplayer online games, music, and internet services, which are all included in the most successful and biggest services in the world. Services in China market comprise Tencent QQ the instant messenger and the major web portals that are QQ.com. The mobile chat service that is WeChat has supported the expansion of Tencent Company into the services of a smartphone and attributed as the most powerful applications in the world (Tencent, 2018b).
The society of China is stable and living standard of people is improving (Bardoloi, 2017). After country registered itself in the WTO is has opened out to different nations, that maximum number of foreign online games company can enter into the nation, such that Tencent Company has more competitive pressure.
The country possesses little legislative security related to the virtual products in online games, which has decreased the interest of numerous players. Because of this, the nation introduced the real-name verification in order to protect the interest of the customer.
People are ready to invest extra money on online games as the standard of living in China is improving. Today, we are living in the network economy era, so high profits can be earned through online shopping platforms. Considering this, Tencent is focused on improving the networks in the country.
As the lifestyle of people is changing, they are being involved in the internet chatting to communicate with each other. This offers a great opportunity to Tencent to offer Tencent QQ as an instant messenger to make the smooth flow of communication between people (Tencent, 2017).
The development of science and technology in the country has allowed Tencent Company to develop more and perfect technological products, which has become a great inspiration for the whole company.
Tencent is the foremost company of China that possess a strong position in the investment and technology and investment sector. Tencent offers as an umbrella brand to various sub-businesses, which comprises mass Media Web Portals, Payments system, social networking app QZone, E-Commerce, Web Brower, multiplayer Game development, Antivirus Software, Film production, Artificial Intelligence, and music app. On the music app of Tencent there are around 700 Million active users and correspondingly all the other fronts enjoy a same or more traction as well (MBA Skool, 2018).
As per the system of any conglomerate, the price for each product is based on the user and the investments made in order to create that front. Tencent is involved in different internet associated businesses and hence deals with huge competition. The strategy of pricing should be predatorily and must possess a competitive edge. In terms of services, the cost is maintained based on subscription. Users are allowed to pay up a one-time token amount and enjoy the services for a long time duration (MBA Skool, 2018).
All the products of Tencent are based on the Internet and most of them can only be retrieved by visiting the website or by an application. They even possess an e-commerce portal that is focused on dealing with different products in the inventories (MBA Skool, 2018).
Tencent makes use of different promotional strategies and most of them are done by public relations. Tencent also markets its offerings through offering various types of discounts on different applications. The varied portfolio of the product is comprised of mass media, online games, social networking websites, e-commerce, and software, etc. Freedom is provided to every subsidiary to exercise their strategies of promotion. For example, Riot Games promote its games at its discretion. The website of social networking possesses its own reach, which creates altogether a diverse audience. In fact, different brands with needs of advertising have touched doorsteps of Tencent to advertise (MBA Skool, 2018).
The product strategy to introduce WeChat in the market is of great success. It offered the company an advantage to cover the market outside China (Liao, 2018). This product has attained a flagship, as it is uniquely positioned to absorb the data of the users. Besides this, the mass media strategy of Tencent in order to promote its services in the market has been proved a great strategy that has covered a wide market.
The major disadvantage for Tencent is the wide product portfolio, as it hinders the capability of the management to expertise in one particular field. This will affect the productivity of the overall organization (Combe, 2014). Moreover, the company is not able to manage effectively all its units that can overall influence the productivity and profit of the company.
The goals and objectives of Tencent are to enhance the life’s quality by offering internet value-added services in the market. This is achieved by company offer integrated internet solutions. Moreover, it is aimed towards offering services and platform that connect everything (Tencent, 2018b).
Considering the above specified advantages and disadvantages of Tencent Strategies reflects that business does not focus towards any specific product or service in its wide product portfolio. Therefore, it is required to change their objective from enhancing the quality of life to focusing towards customer base and specific product or service.
Generic strategies of Porter define how a business follows competitive advantage across its selected scope of the market. There are three types of generic strategies, that are focus, differentiated, and cost. A business selects to follow anyone or two types of competitive advantage. The generic strategy reproduces the selections made about the type of competitive advantage and the scope. Michael Porter defined the concept in 1980 (Zoephel and Zapf, 2011).
A competitive advantage helps an organization to makes its services and products superior in comparison to other products present in the market. The term is generally utilized for businesses. The plans work for any individual, organization, or country in a competitive environment (Rao, 2017).
The three key strategies outlined by Porter to create a competitive advantage in the market and attain a sustainable advantage.
Cost leadership is the strategy adopted by businesses to offer affordable value at a lower price. Business does this through continuous enhancement in their operational competence. This directly reflects that business pays less to its workers. Some of the businesses recompense by posing intangible benefits like benefits, promotional opportunities, or stock options (Zoephel and Zapf, 2011). Others take benefits of untrained labor. In addition, these companies develop; they can utilize economies of scale and bulk purchase. Costco and Wal-Mart are some of the goods instances of cost leadership. However, occasionally they pay less to their employees than the living cost.
Differentiation means businesses deliver superior profits as compared to its competitors in the market. A business can attain differentiation by offering an exclusive or excellent quality product. Another technique is to distribute it quicker. A third is to advertise in a manner that helps business in reaching the customers easily. A business with the strategy of differentiation can alter a premium price. This reflects that the business possesses a superior profit margin (Zoephel and Zapf, 2011).
Focus means the leaders of the business comprehend and serve their target audience in a superior manner in comparison to anyone else in the market. The main agenda of focusing is to select a particular target market (Amadeo, 2018).
From the above analysis about Tencent Company, it has been identified that the company is involved in different types of businesses such as e-commerce, music app, film production, artificial intelligence, mass media portals, etc. In its place, the company must be focused towards any specific part of the business such that it can effectively manage all its operations and earn more profit in the market. Presently, the company is majorly known in the market due to its WeChat application, which has also become the flagship of the business. This application is being widely used in the market; therefore, the company must focus towards this subsidiary and offer different innovations in the same business line. Moreover, the company can introduce a similar type of social media applications that support people in interacting with their friends and relatives very conveniently.
According to the reports, WeChat has reached to 1 billion users for the very first time, which resulted in increasing 55% of its revenue in the market (BBC News, 2018). This reflects that if the company will shift its focus towards WeChat application, it will increase its revenue to 60% that will be around 17.10 billion.
Implementation of a leading strategy requires a balancing act that is the capability to operate effectively with the partners to form cohesion and support for the strategy of the firm while upholding the objectivity essential to make tough decisions. Implementation of the strategy regularly fails because of weak leadership, proven by the leaders of the firm unwilling to carry out the tough decisions settled upon in the plan (Despacho, 2010).
In the process of strategic planning, the absence of honest and realistic firm assessment will result in the development of an inappropriate, potentially unachievable, or week strategy. A weak strategy can also be the consequence of excessively aspirational or impractical firm partners or leaders who accept an ill-fitting strategy in the current market of the company or competitive market. Deprived of a feasible strategy, companies struggle in taking actions towards efficiently executing the identified plan (Despacho, 2010).
The struggle of driving important change in the industry entrenched in self-sufficiency and individual lawyer behaviors is not to be undervalued. Mostly, implementing a strategy requires accepting a change in terms of new ways of performing a task (Gland, 2015).
Brainstorming is said to be the group creativity techniques through which efforts are made in order to get a conclusion for a precise problem by collecting ideas to list impulsively backed by the members. In other words, brainstorming is a condition where a group encounter to find out innovative ideas and solutions related to a particular interest domain by eliminating inhibitions (Wilson, 2013). Group members are capable to think freely and propose numerous impulsive new ideas as much as possible. The presented ideas in the meeting are recorded or noted, criticism is avoided at the highest level, and after the session of brainstorming, all the noted ideas are assessed. The term brainstorming promoted in 1953 by Alex Faickney Osborn in his book Applied Imagination (Siegel, 2014).
Tencent can make use of Brainstorming as an analytical tool in order to avoid all the above presented weakness or challenges to adapt focus strategy in the organization. Through brainstorming, Tencent can arrange a meeting and can present the benefits of adopting a focus strategy in the organization. Moreover, through brainstorming all the members of the group can represent their opinion that will offer more and innovative ideas to the business for the future growth in the market.
WeChat offers the best features of WhatsApp and Facebook into a single application. Tencent has taken this application as a Swiss-Army knife and has extra features that have created WeChat a vital constituent of life of the users. For example, in China, all the activities are done with the help of WeChat. Besides messaging, WeChat also provide voice calling, gaming, blog posts, video calling, geolocation searching, mobile commerce, QR coding and capture, brand channels, emotions/stickers, etc. (WeChat, 2018)
According to the news, the recent merger news between different messaging applications such as Viber and WhatsApp, a major concentration has been shifted to the worth of messaging application in the mobile space. The feature of WeChat that is mobile commerce has been ahead from all other things. TenPay has been created by the WeChat mobile commerce platform. With the help of TenPay, customers have to coordinate with the real-world bank account to add credits and make transactions through the application. This information reflects that WeChat possesses a strong basis through which it can give tough competition to its competitors in the market, therefore it will be viable to invest and focus on WeChat (WeChat, 2018).
Television advertising provides a chance to influence mass audience since watching Television is the most common activity in the country. Radio audiences incline to be segmented due to the major number of local stations in comparison to television. Because local television stations are very less in number, audiences are funneled into bigger segments who are interested in the advertisement (Leonard, 2018). Besides this, companies are capable to influence the targeted market by buying advertisement spots during television shows their envisioned demographic is probable to be watching.
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Key Partners ü Content Providers ü Developers ü Twenty subsidiaries and four foreign owned enterprises ü Joint Ventures ü Investors |
Key Activities ü Entertainment ü Web Portals ü Online Game ü Identifying need of the users ü Social Network ü Designing relevant services ü Media |
Value Proposition ü One-stop Services ü Differentiate membership levels ü Diverse services mix |
Customer Relationship ü Personalized ü Community ü Exploit information of the customer ü Social ü Digital ü Analyze internet behavior ü Self Service ü Co-creation ü Automated |
Customer Segments ü All individual citizens ü Advertisers ü Corporates |
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Key Resources ü Brand Image ü Algorithms ü Human Capital ü Intellectual Property ü Big Data ü Values ü Reputation |
Channels ü Digital device ü Websites ü Utilities ü Payment (QQ Wallet, Tenpay) ü Third Party integration |
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Cost Structure ü Legal ü Traffic acquisition cost ü R&D ü General and administrative ü Offices ü Personnel (Vizologi, 2018) |
Revenue Streams ü Trademark licensing ü Digital content subscription services ü Development of software ü Social Network Business ü Sale of Software |
Tencent is focused towards product engagement, which is a principle that has been understood by the company, which is essential for the survival of the company.
The company has attained this growth due to its skilled and experienced management, which are capable enough to take important business decisions for short-term as well as long-term.
The advanced technology used by the company support it in offering the best services to its customers in the market.
Conclusion
The above report has effectively provided the analysis of Tencent Company which is a conglomerate to operating its business operations in numerous areas. One of the strengths of Tencent is its mobile application WeChat, which has offered the company the market growth of 55% in the market. The report has performed a detailed analysis of the strategies used by the company in the market to deal with the competition in the market. Focus strategy from Porter’s Generic model has been suggested for Tencent, such that it can focus on some specific areas of business such as WeChat in order to earn increase growth and profit in the market. The report has projected the future revenue for the company if it follows the focus strategy in the market. Besides this, an analytical tool that is Brainstorming has been suggested for the company to use in order to overcome the challenges of prescribed strategy. In the end, the report has evaluated Tencent’s current product, market, as well as market to evaluate the performance of the business.
References
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