Entrepreneur environment essay

Introduction

Tencent is among various firms experiencing a crucial phase of Chinese internet development. This is different from other internet giants such as Alibaba and Baidu operating in the same region.  The company is involved in Service Provision, e-commerce, portal website, online game, search engine, SNS, online video and mobile internet. The breakthrough began when the business began free online instant messaging software: The move allowed the business to gradually accumulate high activity, quantity, and interactive frequency of users. These factors have acted as the core resources. The company’s products vary in cash flow structure and in the business model. However, the firm has strategically revolved around QQ and continued consistent in product top-level design. This paper critically evaluates the reasons for Tencent’s success.

Reasons for Tencent’s success

Business model

Tencent has a unique business model similar to other internet giants.  The firm has diversified into web portals, social networks, multiplayer online games, and e-commerce.  A business determines how a company conducts business where it is able to gain sustainability. The company has the best business model compared to other technology-based firms in China. Many internet companies offer free give away to their customers, in return gaining profits through online advertising (Qiang, 2011).  This is common with companies such as Google.  Other companies offer e-commerce services and obtain some revenues in return.  However, Tencent operates differently and does not provide give away services. The company is focused on attracting million of customers worldwide. In order to achieve its success, Tencent utilizes the pillars of business model sustainability: value architecture, value proposition, and value equation.  Its effective business model has guided the company on how to offer its products so as to achieve expected revenues while making the customers happy. 

Value proposition

Tencent's value proposition is an important pillar of its business model.  The company has managed to line to its value proposition by offering users unique goods and services that satisfy their needs. QQ instant messaging has a large number of users. To achieve its Value preposition from Wechat service, the business requires users to pay in order to generate huge revenues. The firm places more emphasis on self-expression and personalities with differentiated membership levels. Internet users can have most of their solutions through Tencent’s main instant messaging platform, QQ. The business has added value to this service through its most critical application. This helps the business earn a lot of income from meeting its customer demands.  For example, QQ has an online communication functions, including voice chats, video, text messaging, transmissions and photo sharing.  It also ensures customer satisfaction by providing QQ enterprise service that promotes connectivity between business enterprises. 

Value architecture

Today’s business landscape varies a lot with the conventional landscape due to globalization and the technological advancements. To be successful, a business must work hard to change and adapt to the current business landscape so as to win the competitive advantage.  Strategic innovation has played an important role in Tencent’s success and sustainability. Tencent’s value architecture forms part of its model pillars that define how the company adapts to the changes and effectively manages its resources. The company redefined its value architecture and developed a unique business model that ensures that the business stands out amongst the competitors in the industry (Mao & Sha, 2016). 

Other companies in the social networking industry have attempted to employ other strategies to defeat Tencent.  The firm holds a place in the social networking market due to its exceptional product innovation, customer relations, technology, infrastructure management, and financial aspect and market considerations.

To improve its customer relations, the company highly exploits internet behavior and customer data in order to address its main customers and present them with essential innovations and services. Through this, the company has built better customer relations and gained more customers from their different referral programs. In addition, the firm offers widely sought out services that focus on current customer needs. Additionally, the company offers products that are innovative enough to improve its business landscape (Searls, 2016). These products are user-sensitive. It also determines the prevailing market trends through its Information Technology infrastructure and researches it carried out online.

Value equation

Successful organizations use value equation to determine the net value of obtained from using its products. Tencent is one of such and has achieved its total value through decrease in costs, incremental revenue and relationship value. The company generates a lot of revenues from its activities generating higher returns.

Branding and Improved strategic Customer relationship

Tencent implements strategic Customer relationship management solutions to help the company communicate accordingly and track customers’ actual behavior.  This has allowed the business to nurture and personalize relationships with customers. Various measures have been taken to allow the company to have an integrated, holistic view of its customers. Through the use of newer and comprehensive CRM tools, the company easily integrates data from many platforms and enhances customer engagement. Improved customer relations management has resulted in higher customer satisfaction from better interactions. In 2012, the firm entered the global market to expand its reach through its "WeChat" brand (Jinfang, 2015). The app adopted many of its apps’ popular chat functions.  Results were strong as it was marketed aggressively across Southeast Asia.  Within a short time, it gained more than 100 million users outside China and became one of the most downloaded apps in India in 2013 (Mao & Sha, 2016).

Customer relationship management has also improved the company’s brand in the market. Positive branding is a relevant and genuine differentiator virtually in every market.  A brand image is related to the benefit that consumers derive. It is a sum of common impressions about a product received from different sources. All combined impressions form a general evaluation of different groups of users. Customers decide what to buy based on the factors they deem important (Searls, 2016). The judgment on what to buy takes into consideration the value of the product in relation to the price. When a customer considers a product to be equivalent to its value, the customer is likely to purchase the product. Of course, the judgment is made considering other competitive brands.

The company thrives on its excellent customer service. It makes a significant effort to satisfy its customers. The company has a high rating of emotional appeal by doing the right thing when faced with a customer crisis or complaint.  Today, the reputation of a company is closely tied to the customer services it offers. In addition to alienating existing customers with inferior service levels, persistent poor customer services can affect the business’ potential for attracting new customers. Customer relations set brands apart and make them exclusive (Searls, 2016). This has positively impacted Tencent’s earnings and prospects for growth. It has a good record of profitability and is considered by investors as a low-risk investment.  Thus, a positive image is a crucial and integral part of the brand image. Tencent is firmly established as a brand in the market. This factor can be attributed to the success of the company.

Responsiveness to market demand

It released its first version of WeChat in early 2011 during the revolution of messaging apps.  Of particular importance is the company’s innovative model. Tencent’s consumers have access to great products. The commitment to innovation is important to survive in the highly competitive market (Mao & Sha, 2016).  Therefore, Customer satisfaction and product quality are of extreme importance to Tencent. Through innovative products, the business is able to respond to increasing consumer demands.

The development of innovative products requires extensive research and development efforts on the part of the company.  This is of major importance to technological firms is they have to meet market demands.  This requires Tencent to offer superior products to increase its market share. The company largely invests in research and development activities. Hence, innovation is a critical factor in its success.  The firm has continued to innovate through the development of products such as WeChat (Mao & Sha, 2016).  In these efforts, Tencent also develops products and models to allow it generate more revenues. The responsiveness to market demand allows the business to boost profits.  The innovation aspect of the firm is evidenced in its financial performance.

The company differentiates its products from competitors through aspects of functionality, quality and pricing strategy (Searls, 2016). A range of products that allow the company to gain revenue in various ways includes QQ, portal websites, game, music, Wechat, and blog.  QQ successful top-level design has been a breakthrough.The range of products shows the company’s diversification in the product component aspect. The company continues to develop product as a part of growth strategy. Its range of products shows that the company’s has an intensive marketing mix as demonstrated by product variety to address diverse customers’ needs. 

For example, WeChat was able to beat the domestic competition by mounting in-demand features on tight schedule. In the first year of its rolling out, the app had moved from its simple voice- text-picture offerings to comprise video messaging in the form of a “shake” feature.  Through this, WeChat leveraged the company’s massive QQ user base. WeChat simply required a QQ account to log in while most services needed phone numbers or email addresses to login.  While dissatisfied customers are an inevitable part of the business life, Tencent has made an effort to ensure that users are satisfied (Yue, 2015).

Competitive strategies

Tencent employs combination competitive strategies to enable the business to acquire a competitive edge among its competitors. These strategies can be attributed to the success of the company.   Intensive growth and generic strategy are the most commonly used by the company.   These two strategies directly relate to the Tencent’s marketing, pricing, and other areas of the business. Being an innovative firm, its business strategy is a major determinant of competitiveness against major competitors. In addition, the company’s intensive strategy for growth leverages the firm’s ability to maintain its strong market position in the competitive market (Jinfang, 2015). With a focus on the distinction in product design and high rate of innovation, the company succeeds.

Market penetration forms a key component of Tencent’s competitive strategy. Market penetration is an essential intensive strategy to promote growth.  Tencent has expanded to other markets outside of China in efforts to gain a larger market share by making more sales on its current products. Particularly, the business attains more sales by recruiting more customers in the market. The approach is essential in penetrating markets where the Tencent has not has not yet attained a considerable position Also; the company utilizes promotion activities to inform, attract and retain users (Liu &Li, 2010). Different media outlets and websites encourage many users to purchase company’s products. The approach complements its differentiation strategy given that it addresses the requirement to capture the broad market. 

To stay competitive, Tencent first imitates successful product developed by other companies and make necessary adjustments to enhance user experience. This is the company’s enterprise philosophy for many years.  Tencent’s intensive growth strategy involves entering entirely new markets or developing new markets for new products.  The company has launched its products outside China to other countries such as India. Its intensive growth strategy is comparable to market penetration. However, it places emphasis on establishing a presence in novel markets outside China. It is therefore carried out in developing markets rather than already developed markets (Vedder, 2016). Through such developments, the Tencent has entered new markets. This has improved its revenues and profits, hence contributing to its success.

In the past, Tencent has implemented effective growth strategies that have enabled the company to achieve much within a short time. The firm has achieved a high growth rate than most of the firms in the same industry both in China and internationally. It has enhanced development by providing different innovations in order to introduce new brands in the market. This is a strategic move ahead of competitors. Additionally, the firm is a knowledge creating a business that prioritizes works through innovation and imagination, practice and experience, and focuses on key areas of competence so as to realize a higher growth rate.

A case in point is the firm’s move in December 2013 to provide instant messaging services and Internet to more than 480 million users in China. Throughout its existence, Tencent has made efforts to provide unique and cost effective services that have enabled it to overcome market competitors such as sohu.com Inc and SINA Corporation (Celly &Lo, 2013).. Additionally, the company provides a stiff competition mainly in social networking sites and instant messaging given that it is the biggest social media business in China. Tencent has also achieved substantial growth due to international expansion.

As a result of these strategies, the company has shown significant growth in profit, sales, customer base sectors and company expansion. The growth of any company is observed through changes in operations, marketing, finance and human resources. Financial growth is also a key indicator of any firm’s growth as it signals the amount of profits and revenues a business has achieved over a particular period of operation. International expansion has significantly contributed to Tencent's success.

Internet policies

Being a Chinese company, Tencent has some inherent advantages in that major internet giants do not operate in the country. The factor has contributed to the success of the company in China and Asia as a whole. Google retreated from China while Facebook is banned in the country. While Tencent's success cannot be entirely pinned on this factor, it has reduced the competition in China (Wu & Wan, 2014).  The business embraced mobile years before firms such as Facebook.  Its functionality is popular among users because it offers every popular service including Twitter, Facebook, Zynga and WhatsApp all wrapped up in one app.  New functions are added with time to meet new demands of users. The company is already exploring other markets beyond China's borders and outside Asia, with notable success in India and Southeast Asia.  Its customer experience also inspires a degree of customer loyalty as well as its success.

Conclusion

Tencent has achieved a high growth rate than most of the firms in the same industry both in China and internationally. There are different factors that can be attributed to its success.  The first factor is its flexible business model. A business model determines how a company conducts business where it is able to gain sustainability. Its effective business model has guided the company on how to offer its products so as to achieve expected revenues while making the customers happy. In order to achieve its success, Tencent utilizes the pillars of business model sustainability: value architecture, value preposition and value equation.  The second factor is its Branding and Customer relations. Tencent implements strategic Customer relationship management solutions to help the company communicate accordingly and track customers’ actual behavior.  This has allowed the business to nurture and personalize relationships with customers. The third factor is responsiveness to market demand.  It is of major importance to technological firms if they have to meet market demands. The fourth factor is its Competitive strategies. Tencent employs combination competitive strategies to enable the business to acquire a competitive edge among its competitors. Other factors include China’s internet policies. As a result of these factors, the company has shown significant growth in profit, sales, customer base sectors and company expansion.

References

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Sherry Roberts is the author of this paper. A senior editor at MeldaResearch.Com in custom nursing essay writing services services if you need a similar paper you can place your order for college essay writing services.