TENCENT

TENCENT

Executive Summary

The Gaming industry which is simply an entertainment industry, serves customers of different interests who not only play the games but also watch them. One of the leading companies in the industry is Tencent, which not only centers in gaming but also invests in technology, artificial intelligence, and social media. Over the years, through sound management and an effective corporate strategy, it has created a niche for itself in the gaming industry through the use of its strategic resources that include its strong financial reserves, skilled employees, and distribution network. The company uses the strategic move of buying out and owning stakes in leading gaming companies. This provides further cementing to its position in the Gaming Industry. Below is a comprehensive analysis of the company.

1. SWOT Analysis of the Company.

A SWOT analysis refers to a study that an organization ventures into which is used in the identification of the organizations’ internal strengths and weaknesses along with its external opportunities and threats. Companies usually use this analysis to strengthen their positions in their respective industries.

Ten cent’s strengths

• The distribution network of Tencent is very strong thus enabling the company’s products to reach a wide range of customers at any time.
• The low cost structure of the company enables it to produce its products at low costs hence sell them at low prices. The low prices attract many customers.
• The financial position of the company is strong because of many profits it has realized in recent years, hence there are no difficulties when it comes to financing the production of its products.
• The extensive skilled labour that the company has enables it to produce high quality products.

Ten cent’s weaknesses

• The use of rented properties. As most of the properties that Tencent uses are rented and not purchased, the company is forced to incur a lot of costs when paying the rents.
• Centralized decision making reduces the company’s efficiency in its operations.

Ten cent’s Opportunities

• E-commerce. Due to the recent increase in the number of people doing online purchases and sales. The company can boost its profits by opening online stores.
• As many people from all over the world use the internet, the company can make use of it, to strengthen its connection with customers.
• Technological developments. The company can use the diverse technological developments to conduct adequate researches about its customers and come up with methods of reaching them.

Ten cent’s Threats

• Political uncertainties. The political uncertainties of China pose a big problem to the development and the wellbeing of the company.
• Fluctuation of interest rates. The frequent fluctuation of the interest rates leads to the creation of an unstable economic and social environment.
• Stiff competition. The company faces stiff competition from other gaming companies like Sony, Apple and Nintendo

2. The nature of the company.

Tencent operates in the Gaming Industry, where it boasts as the globe’s biggest gaming company. Gaming is associated with playing video games as a hobby. Apart from Tencent, other key players in this industry include Activision Blizzard, Microsoft, Nintendo, Sony, Apple, and many more. According to (More, 2019), Projection on the growth of the Gaming Industry speculates that in the period 2020-2024, the industry will experience a CAGR of 10.5%. The leading markets for the Gaming products of Tencent are found in North America, Asia-Pacific, Europe, Middles East, South America, and Africa. Asia-Pacific makes the largest market for the gaming products as it takes up to 46.94% of the products. Therefore, Asia-Pacific countries such as China, India, Pakistan, Bangladesh and Indonesia provide the main market for the company’s products.

Customers for Gaming products of the company are drawn from various ages and gender. According to (Morris, 2018), almost $91.5 billion was used to purchase video games and gaming products globally in 2015, with the US taking a larger portion of the purchases. The Gaming industry is mostly associated with teenagers, but it has a diverse audience that covers older adults, children, and niche interest groups. Individuals aged 18-24 make the most purchases of game-related products. Men are more likely than women to purchase such products, which means that Gaming companies like Tencent align their marketing strategies using such information.

3. Strategic Alliances of the Company.

Tencent has the best corporate strategy when it comes to telecommunication companies like Google. Other companies in the industry provide e-commerce services in their platforms that generate immense revenue from publicity, but this only translates to small profits, which prevent these companies from growing at exceptional levels. Tencent has a different strategy that incorporates the value equation, value proposition, and value architecture pillars in ensuring business sustainability. Value proposition allows the company to offer value for its products and services; value architecture allows the company to manage its resources so that it can respond effectively to its external environment, and allows the company to determine the value that it gets when customers use its products.

The business that is important to Tencent is WeChat, which is also known as Weixin in China. This platform has transformed from just a messaging app to offering services that offer more revenues to the company apart from messaging (Huang, 2019). The platform has attracted over 1 billion users; this translates to massive revenues. WeChat also acts as a loyalty program management and mobile advertisement channel. Luxury brands use this service for marketing, driving traffic to offline locations, and offering customer service.

4. Corporate Social responsibility of the Company

Apart from boosting the growth of the company, the processes and operations of the company are designed in such a way that they don’t hinder the health and wellbeing of the people. This enables the company’s management team to make sure that a sustainable business growth has been met via coming up with goals and ambitions that can help the community. Below is a list of three major goals that the company often works towards, that have made it thrive.

1. To improve the standards of living of people by providing employment opportunities.
2. To reduce its environmental footprint by allowing the legislation regarding the production and release of carbon.
3. To boost the health and wellbeing of communities by working closely with them.
4. Success and failure of the company

Just like any other company, Tencent has thrived and languished in the industry at some point due to particular factors. Below are separate lists of factors that have led to both the success and the failure of the company.

6. Factors that have led to the success of the company

The use of WeChat. Equipping of the WeChat messaging app with a variety of effective services by the company has made many customers to shift their attention from other messaging apps. As a result, this has widened the market for the company’s products.

• The production of blockbuster games. The company has managed to produce powerful games in recent years, which have been loved by many people. This has helped the company to defeat their rivals and expand their markets.
• Technological advancements. Advancements in technology, have made the company adopt faster advertisement and promotion methods. This has boosted their market, thus their profits.

7. Factors that have led to the failure of the company.

• Fluctuation of interest rates. The frequent fluctuation of the interest rates has led to the creation of an unstable economic and social environment, reducing the company’s profits.
• The use of more advanced technologies by its rivals. The kind of technology that a company like Alibaba uses in e-commerce is advanced by far. Thus with competition from such rival, the company has lost many of its customers.

Conclusively, I will with no doubt recommend to anyone the blockbuster games of Tencent. Games such as the League of Legends and the Honor of Kings, which are products of the company, are skillfully designed to provide a comfortable and enjoyable experience to the player.