Center571500 Essays - Economy Of China, World Wide Web, Economy

Center571500 Essays - Economy Of China, World Wide Web, Economy center571500 TENCENT Location: Astana Course Code: MGMT621 Course Name: Strategic Management Professor: Stephan J. Wirtz , MA, MBA, DDA Student(s) Name(s) : Nurzhan Sikhimov Identify and explain Tencent's value-creating capabilities and core competencies. By being able to gather over 780 million users in the course of a decade and a half, Tencent demonstrated that the company had superior capabilities to innovate and integrate its activities. By 2010, Tencent grew to be the third largest internet company in the world by market capitalisation , after Google Inc. and Amazon.com Inc. Unlike Google, whose core competency was based on a single business unit and their vast bulk of revenues came from online advertisements, Tencent's core businesses offered two major services: communications and online entertainment. As such, Tencent charged the direct users two types of fees, communication service fees (bundled with fees collected by telecommunication providers) and entertainment service fees (pay-as-you-go). Payment to the company could be done through banks, internet cafes, telecom operators and broadband service providers, as well as via prepaid cards and the notable Q coins. Q coins were accepted by mo re and more online stores and gaming sites. The broad range of payment methods enabled by various financial institutions was a key indication of Tencent's leverage on strategic partnerships Analyze the causes and driving forces that motivated Tencent to launch its e-commerce strategy. According to Penrose, motivations for diversifications can be categorized into internal and external inducements of growth. Internal inducements are certain conditions or characteristics within a firm that were unused, such as unused productive services, resources, and special knowledge. External inducements, on the other hand, are new opportunities that arise from the changes in the external environment, such as technological changes, policy changes, institutional and cultural changes that drive and demand the firm to grow. Furthermore, growing competencies and knowledge among staff gave the firm strong incentives to grow too. "That the knowledge possessed by a firm's personnel tends to increase automatically with experience means, therefore, that the available productive services from a firm's resources will also tend to change." The rationale behind Tencent's business diversification can be summarized as follows: Capitalizing on core competencies Based on a record of outstanding financial performance and excellent cash reserves, Tencent invested strategically in games, from games developers to popular titles, to leapfrog ahead of former leading firms. Increasing market power Maintaining growth The excellent financial performance and cash reserves represented an existence of unused resources, supporting the company as it developed its capabilities in a specific functional area, RD, resulting in the opening of localized RD facilities in different regions of China to continue the company's development in its service localization strategy. Reducing risks Tencent was distracted by unexpected external challenges. The gold rush atmosphere surrounding the internet began to be tamed by an increase in the number of regulatory measures by the Chinese government. An unpredictable and intermittent government crackdown on spam and anti-social content compelled the company's management to examine threats to its core instant message business. China Mobile, a crucial partner for Tencent's operations, followed the government directives to filter "bad" content by blocking certain content providers from sending text messages. The episode was an early warning that China's strict censorship regime could start to have an adverse impact on the country's internet boom. The company's president, Martin Lau, commented that the company might feel a negative impact from the regulatory environment, and that China Mobile's action had produced collateral damage for the industry. Analyze the rationale for business diversification, especially in the rapidly changing internet industry in China. E-commerce market is booming, due to the existence of multiple factors which stimulate the development In 2015 in China,penetration rate of online shopping reached to 56%. This means there is a huge space to further development comparing with the most-developed countries, anda great opportunity to companies coming to China. Although there are many factors which are promoting the trend, the main reasons can be summarized in a set of main points: Population : Until June 2015, China has 668 million netizens, 594 million mobile phone users and 374 million online shoppers. This leads us to a great size of online shoppers and a strong demand in domestic market.