Global Innovation Strategy of Tencent Holdings
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Global Innovation Strategy of Tencent Holdings

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Strategic analysis in a global setting involves competition in industries that extend across national boundaries and among firms with different national home bases that may tap into strategic ...

Strategic analysis in a global setting involves competition in industries that extend across national boundaries and among firms with different national home bases that may tap into strategic resources in more than one location. This is a brief introduction to the global expansion of Tencent Holdings.

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Global Innovation Strategy of Tencent Holdings Global Innovation Strategy of Tencent Holdings Presentation Transcript

  • Company  Profile:  Tencent  Holdings   by  Jeremy,  Irem,  Jonathan    
  • Agenda   The  Facts   Company  Strategy   Future  of  Tencent   Conclusion  
  • The  Facts   by  Jonathan  Loo  
  • The  Basics   Founded  in  1998   China’s  largest  Internet   service  portal     Tencent  went  public  on   HKSE  on  June  2004   990  million  QQ  users  
  • Mission   “...to  enhance  the  quality  of  human  life  through   Internet  services”   Vision:  “to  become  the  most  respected  Internet   enterprise”  
  • Products  &  Services     Tencent  has  established  seven  main  business  lines:   IM  (Instant  Messaging)  Service     Online  Media     Wireless  Internet  Value-­‐Added  Services   Interac9ve  Entertainment  Service     Internet  Value-­‐added  Service   E-­‐commerce  and  Online  Adver9sing  Service  
  • Corporate  Video   hVp://www.youtube.com/watch?v=12DIel6uLyk   (2:18)  
  • Research  &  Development   More  than  50%  of  staff  are  based  in  R&D   Tencent  Research  Insctute  (Beijing,  Shanghai,   and  Shenzhen)  
  • Company  Strategy   •  •  •  •  AVract    startup  founders  with  the  prospect  of  guidance  for  an  entry  into  the   China  market   Uses  investments  to  beVer  understand  the  U.S.  market   Looks  to  invest  in  companies  that  can  provide  with  technology  or  content  that   can  be  brought  to  China  through  licensing  or  partnerships   Takes  larger  stakes  of  30%  or  more  in  companies  
  • Culture   Values:  integrity,  proaccve,  collaboracon,   innovacon   Management  Philosophy:  “care  for  the   development  of  employees”   The  Tencent  Human  Resource  Training  System   Tencent  Charity  Foundacon  
  • Company  Strategy   by  Irem  
  • One-­‐Stop  Online  Living     Tencent  has  established  seven  main  business  lines:   IM  (Instant  Messaging)  Service     Online  Media     Wireless  Internet  Value-­‐Added  Services   Interac9ve  Entertainment  Service     Internet  Value-­‐added  Service   E-­‐commerce  and  Online  Adver9sing  Service  
  • Clients  
  • Company  Strategy   •  Gained  prominence  with  its  instant  messaging   •  •  system  called  QQ  that  targeted  Chinese  college   students   More  than  900  million  monthly  accve  users   Makes  money  by  service  fees     o  virtual  products  (40%)   o  charging  gaming  fees  (50%)   •  o  advercsing  (less  than  10%)   Investments  
  • Global  Strategy   “The  transforma.on  of  the  company   from  a  Chinese  firm  which   services  are  s.ll  accessed  through   desktop  computers  for  chat  and   games  to  an  Interna.onal  firm   providing  mobile  services”     https://www.youtube.com/watch?v=PCWEHEsJ7co
  • Dream  of  Being  The  Best   •  Rapid  growth  abroad   o  WeChat  user  doubled  from  50  million  users  to  100  million  within  May  to   September  of  2013  in  the  U.S.  
  • Global  Strategy   An  internaconal  version  of  its  cloud  storage  product  in  2014  offering  10TB  of  free   cloud  storage     •  •  •  •  10  cmes  more  than  1TB  being  offered  by  rival  Chinese  tech  giants  Baidu  and   Qihoo  360   7GB  available  on  Microsom’s  SkyDrive   15GB  giveaway  for  Google  Drive   5GB  of  DropBox  storage     An  English  version  of  a  new  Instagram-­‐like  image  app,  Story  Camera  (an  app  already   popular  in  China)  
  • Global  &  Local  Investments   •  Invested  early  in •  In  2011,  company  announced  $760  million  fund  for  emerging  companies   •  Made  investments  in  venture-­‐capital  firms   •         and     Acquired  Comsenz  (Pinterest  +  forum)  to  grow  online  advercsing  plaqorm  on   instant-­‐messaging  service,  QQ  
  • Innovacon  Strategy       “We  are  very  focused  on  building  user  experience.”   “When  you  have  the  best  experience  users  will  stay,  and  when   users  stay  they  keep  each  other,  and  that’s  the  biggest  value   of  a  social  network.”  
  • Innovacon  Strategy   Strategic  Partnership  with  -­‐  $448  Million  stake  in  Sogou  &  Sohu   “reinforces  "open,  win-­‐win"  philosophy  of  working  with  leading  teams  to  create  innova.ve  products  for  users,   and  build  a  healthy,  diversified  ecosystem  for  the  industry”   •  •  •  Sogou's  strong  innovacon  capabilices     Successful  execucon  track  record   Superior  search  experiences  to  users  on  social,  browser  and  content  plaqorms,  especially  on  the  mobile   front  
  • Future  of  Tencent   by  Jeremy  Gan  
  • Is  Tencent  Innovacve?   •  •  Voted  as  “World’s  Most  Innovacve  Social  Media  Company”  by  Fast  Company   o  WeChat  suite     §  Aggressive  internaconal  rollout  is  “rare”  for  a  Chinese  company   Voted  #2  as  “Most  Innovacve  Gaming  Company”  by  Fast  Company   o  Subject  to  intense  debate  due  to  numerous  allegacons    
  • Tencent  Different  Today   •  In  the  past…   o  Kin  to  Microsom  back  in  90’s   §  “Copy  &  develop”  strategy   Spot  new  technology  innovacon,  reverse  engineer,  leverage  on  its   massive  resources  and  user  base   o  ICQ  -­‐>  OICQ  -­‐>  QQ   Today…   o  Rethinking  “innovacon”   §  Leveraging  core  strengths  and  relocacng  resources     •  Combining  messaging  with  social  media,  gaming     plaqorm,  mobile  payment,  and  cloud  storage   o  WeChat   •  • 
  • Metanaconal  Innovacon  Process   Locate innovation team near key market knowledge to experience context firsthand and transfer knowledge on-site:●  Technology Complexity LOW ●  Market Complexity HIGH
  • Dream  of  Represencng  The  World  
  • Rapid  Expansion  (Home)   •  Partnering  with  global  brands  on  internaconal  campaign   o  Nike  Fescval  of  Sports  2012     o  hVp://vimeo.com/48589953  
  • WeChat’s  Rivals  Globally  
  • Global  Advercsing  Strategy  #1  
  • Global  Advercsing  Strategy  #2  
  • Set  #2  (Answers)   Parineeti Chopra Neymar Jr. Varun Dahwan Rainee Yang Lionel Messi
  • Set  #1  =  LINE    
  • Set  #2  =  WeChat  
  • Quesconable  Advercsing  Strategy  
  • Investment  Porqolio  (in  U.S.)   •  •  •  •  •  e-­‐Commerce   o  Fab.com     Gaming   o  Epic  Games  (Gears  of  War,  Infinity  Blade)   o  Riot  Games  (League  of  Legends)   Photo  Sharing   o  Loom   o  Waddle   Social  Networking   o  Ark   Mobile  messaging   o  Snapchat  (Potencally  at  $4  Billion  USD)  
  • Snapchat  
  • Sccking  Point   •  •  •  •  “U.S.  is  a  very  tough  market  to  compete  and  crack.”  -­‐  Marcn  Lau   Free  SMS  -­‐  takes  away  cost  appeal   o  Compeccon  an  all-­‐cme  high     §  Local  favorite   iMessage   Whatsapp   Viber   “BBM  realizacon”   o  Lack  of  “true  innovacon”   o  Switching  barrier  too  high   Unfair  advantage   o  Western  compectors  are  blocked  out  of  Chinese  market   •  •  • 
  • Crowded  Compeccon   •  China  -­‐  “Mobile  First”  Market:  3X  More  Usage  on  Mobile  than  on  PC     o  Baidu   §  Expansion  path  through  acquisicon   NetDragon  Websom  ($1.85  Billion  USD)     o  Alibaba   §  Expected  IPO  valued  at  $100  Billion  USD   §  Banned  its  employee  from  using  Tencent’s  WeChat     Silicon  Valley     o  Facebook     §  Concnues  to  capitalize  on  social  networking  via  advercsing   o  TwiVer     §  Experimencng  with  “firehose”  -­‐  selling  public  data  (tweets)   •  • 
  • Quescons