SWOT of Tencent

Topics: Instant messaging, Multiprotocol instant messaging application, Tencent Pages: 5 (1144 words) Published: September 28, 2014
Company and Industry Description

Tencent, one of the largest online services portals in China, was founded in November, 1998 by Ma Huateng (Pony Ma), Zhang Zhidong (Tony Zhang) and Xu Chenye (Daniel Xu), and went public on 16 June, 2004 as Tencent Holdings Limited (Tencent, n.d.a). Led by the values including integrity, proactive, collaboration and innovation, the company insists on honesty and respect as its code of conduct, growing rapidly and astonishingly in the past 15 years (Tencent, n.d.b). According to the latest financial announcement, Tencent's total revenues of the first half of 2014 climbed to roughly GBP3, 807 million (RMB38, 146 million), and the second quarter revenues of 2014 (2Q2014) reached GBP1, 972.5 million (RMB19, 746 million) mainly generated by online games (56% of 2Q2014 revenues) and social network services (24% of 2Q2014 revenues) (Tencent, n.d.c). Particularly, QQ instant messaging application and Wechat social application were the most widely known products among its diversified income sources. To achieve its mission --- 'to enhance people's quality of life through Internet services' (Tencent, n.d.b) and to remain competitiveness towards its main competitor Alibaba, Tencent not only stayed prosperous in messaging services and games, but also expanded to other areas including online security, online research, online payment and even e-commerce, the main territory of Alibaba. In a long term, the company devotes itself to be 'the most respected Internet Company', earning respects from consumers, employees, industries as well as society (Tencent, n.d.b).

SWOT Grid of Tencent

Strengths

Weaknesses

Leading position in instant messaging in China

Diversified products and services with strong connections

Lack of specialization in its products and services

Long distance compared to Alibaba in e-commerce

Opportunities

Threats

Rosy increases in online advertising

Promising development in e-commerce

The rapid growth of Alibaba

SWOT Analysis of Tencent

Strengths

Leading position in instant messaging in China

Tencent is holding a huge scale of user base in instant messaging, staying in the leading position of the market in China. Referring to the research of iResearch Consulting Group, mobile QQ ranked first as the most popular instant messaging applications supported by mobile Internet in 2013, occupying the largest proportion of 82.6 per cent, followed by its fellow Wechat which accounted for 80.2 per cent, and far beyond the third application Wangxin by over 40 per cent (iResearch Consulting Group, 2014b). When it comes to the frequency of instant massaging usage, mobile QQ still owned the top place by 45.0 per cent, slightly higher than the second one Wechat (40.0 per cent) (iResearch Consulting Group, 2014b). The statistics revealed that Tencent has conquered Chinese mobile instant messaging market through its competitive products mobile QQ and Wechat, and enjoyed an extremely high level of user loyalty. In terms of user quantity, Tencent stated that in the 2Q2014, the monthly active users (MAU) of QQ (including mobile QQ and QQ used on computers) were 829 million, a decline of 2 per cent in comparison to last quarter but an growth of 1 per cent in contrast to the same period of last year (Tencent, 2014). Meanwhile, 2Q2014 witnessed 11 per cent and 57 per cent increases in MAU of Wechat compared to the last quarter and the same period of last year respectively (Tencent, 2014). This considerable user base has brought positive impacts on the company. For instance, during the Spring Festival of 2014 in China, Tencent managed to stir up a prevalence of sending messages with a little money among 4.82 million Wechat users (Feng Huang Ke Ji, 2014). By taking advantage of the traditional custom of giving luck money in China and the large user base, the company not only exploited potential users for Wechat but also promoted its payment services Tenpay...
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