Last time we saw the Business Model of Jio, today let’s learn the SWOT analysis of Tencent.
Tencent is a China-based technology company that is mainly focused on serving the Internet’s various services and products. Its various subsidiary companies include Tencent Music Entertainment, Tencent Sports, and Tencent AI.
One of the main drawbacks the company has is its weak marketing strategies. Marketing is an essential factor for the success of any business, to know more about marketing and its different attributes, do check out IIDE Free Digital Marketing Masterclass by Karan Shah the founder and CEO of IIDE.
In this case study, we will have a look at the SWOT analysis of Tencent, before that let’s know more about the company.
About Tencent
Tencent was founded in 1998 and it was incorporated in the Cayman Islands. In 1999, Tencent launched OICQ, and the company’s name was changed to QQ.
In 2018, Tencent became the first Asian tech company to reach the US$500 billion mark, and it became the world’s most valuable publicly-traded company. It has since also been ranked among the top 50 most innovative companies globally.
Tencent is China’s leading Internet company that provides a variety of value-added services to its users. These include mobile platforms, online advertising, and gaming. Tencent’s core business is focused on providing users with a one-stop online lifestyle service. Tencent means galloping fast information.
Tencent has a large number of users, WeChat hit 939 million monthly users and the Chinese government has played a huge role in Tencent’s growth. Not only that companies like Google and Facebook banned, but e-commerce was also a big part of the Communist Party’s five-year plan spanning from 2011 to 2015. Combine that with a huge population that embraces tech more readily than many western markets, and you get a company that has become China’s half-trillion-dollar company.
| Founder | Ma Huateng, Zhang Zhidong, Chen Yidan, Kney, Daniel |
|---|---|
| Year Founded | 1998 |
| Origin | China |
| No. of Employees | 85,858 (2020) |
| Company Type | Public |
| Market Cap | $ 571.918 Billion (2021) |
| Annual Revenue | $ 73.6 Billion (2020) |
| Net Income/ Profit | $ 24.43 Billion (2020) |
Services Provided by Tencent:
There are multiple products provided by Tencent.
- Artificial Intelligence
- Cloud Computing
- Automation
- Social Networking
- Online Services
Competitors of Tencent:
- IAC
- NetEase
- Agora
- Meta
- Meituan
Let us now have a look at the SWOT analysis of Tencent.
SWOT Analysis of Tencent
We use SWOT Analysis to identify what you have and what opportunities exist for you in the business. Doing so will allow you to minimize risks and improve your chances of success.
Let us now look at the strength of Tencent.
1. Strengths of Tencent
Tencent has numerous advantages that allow it to thrive in the market. These include its strong competitive advantage and the ability to expand its reach in new markets.
- Brand Portfolio – It has a strong Brand Portfolio which is very useful for an organization that wants to expand into new products and categories.
- New Revenue Streams – Tencent has been very successful in developing new revenue streams through the execution of various projects.
- Differentiation – Tencent adopts another way to make a profit, which is membership, and the fee is not very high. QQ members can enjoy many special rights that general users can’t use, these services involve you can pick up the ID number by yourself, storing data and information into the QQ server.
2. Weaknesses of Tencent
The weaknesses of a company are those that can affect its growth and its process of achieving its goals.
- Poor Marketing – The marketing of the products is not ideal. Even though they were a success in terms of sales, they did not clearly define their unique selling propositions which could be used by the competitors.
- Success only from the Core Business – Despite being one of the largest companies in its industry, Tencent has limited success outside its core business. This is largely due to its culture and current business model.
- Need of Investments – With the company’s plan to expand into various regions and different types of technology, Tencent needs to increase its investment in new technologies.
- Poor Planning – Not very good at predicting product demand. This is causing a high rate of missed opportunities and higher inventory levels compared to its competitors. And they are highly dependent on gaming revenues.
3. Opportunities of Tencent
Opportunities are external factors that can contribute to the growth and success of the company if identified and grabbed at the right time.
- Advancing Technology – The new technology provides an opportunity to the company which will enable the firm to maintain its customers with great service.
- Changing Trends – Coming up with new trends in consumer behavior can provide a great opportunity to build new revenue streams.
- Shift to Online – Ecommerce is a great opportunity for strategic expansion leveraging its substantial user base and deep knowledge of its users’ preferences and interests.
4. Threats of Tencent
Threats are the factors that cause harm to the company, if not rectified at the correct time.
- Lack of Innovation – Over the years the company has developed numerous products but those are often responses to the development by other players, this happens due to no regular supply of innovative products.
- Stringent Regulations – Rising the pay level i.e movements such as $15 an hour and increasing the prices in China can lead to a serious effect on the profitability of Tencent.
- High Competition – The growth of local distributors also leads to threats in some markets as the competition pays higher margins to the local distributors.
Conclusion
Tencent has promised that its technology will do good as its mission is to improvise the quality of life through internet value-added services. Its strategic objective is to strengthen its market-leading position and become the hub for fulfilling internet users.
It has a strong brand portfolio, reliable suppliers, a strong dealer community, and excellent performance in new markets.
It is seen that it has limited success outside the core business even after being a leading organization, High grinding rate in the workforce and also financial is done efficiently. These are some of the weaknesses of Tencent that it has to work on.
The company can work on its marketing strategies to further improve its visibility and reach among people. IIDE provides top-class courses in digital marketing which can help you upskill your knowledge.
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