TENCENT Holdings Ltd.
(腾讯)
Arranged By:
Matthew Huang / TP 058937
Yohandi Lisanjaya / TP058874
Hosam Mohamed Refaat Abdallah Ali / TP061889
Virgiawan Akmal Susanto / TP058616
Table of Contents
Introduction 3
External Factors and Stakeholders 3
External Factors
Socio-cultural Dimensions 3
Technological Dimensions 3
Legal-political Dimensions 4
Stakeholders
Competitors 4
Customers 4
Investors 5
Constrainment of the Components to the Organizations and Managers’ Decision
Making 6
Sociocultural Dimensions - Customers 6
Technological Dimensions - Competitors 7
Legal-Political Dimensions - Investors 7
Enhancing Organizations’ Efficiency and Effectiveness Through the Awareness and
Understanding of the Factors 8
Sociocultural Dimensions 8
Technological Dimensions 9
Legal-Political Dimensions 10
Competitors 10
Customers 10
Investors 11
References 12
Group Task Report 14
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I. Introduction
A company based on technology called Tencent Holdings Ltd, was first founded in
Shenzhen, China, in the year of 1998 by Ma Huateng, Xu Chenye, Chen Yidan, Zhang
Zhidong and Zeng Liqing. Its company first started when Tencent released an instant
messaging app called QQ with games platform, shows, and music included throughout
the year. Not only that, Tencent continued progressing with the release of another social
media platform known as WeiXin (WeChat) which exceeded 1 billion user accounts by
2018. Tencent, Inc. Also specializes in developing technology on artificial intelligence
(AI), Internet of Things (IoT), robotics, quantum computing and many others (Tencent,
n.d.).
II. External Factors and Stakeholders
A. External Factors
- Socio-Cultural Dimensions
Trends, traditions, lifestyles, beliefs, tastes are the things that affect how businesses
develop their products. These elements are vulnerable to changes, so it is one major key
for managers to monitor in order to keep the company growing. In 2020, watching short-
form video in the social media platform are currently a worldwide trend, many companies
are copying these ideas and apply them to their own social media platforms.
- Technological Dimensions
Almost every day, companies are rivals towards each other in the case of releasing
products and services, in order to stay ahead than the other, organizations need to keep up
with current technological developments and innovate through their products and
services. Applying the newest technology to its products will keep the company going.
These dimensions may affect the company’s ability to offer products and services that
reaches customers’ expectations as outdated products will not get any interest as soon as
there is something more advanced.
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- Legal-Political Dimensions
In businesses-term, legal-political dimension is everything related to the laws/rules
that are issued out by the government which specifies on how a company should operate
and functions. These dimensions are not meant to be violated by companies, otherwise
fines will be given to the company. As in recent times, China have come out with a new
antitrust law which are intended to stop monopoly activities done by the big-tech
companies like Alibaba and Tencent as they have controlled the market over the past few
years(Culpan, T., 2020).
B. Stakeholders
- Competitors
Why consider competitors as a stakeholder? Because they share the same target
customers as each company do, and by selling the same product with your competitor will
not guarantee the company to stay long in the business area. For a company to survive in
the business world, company should always innovate products and services in order to
stay ahead from other competitors. Having more beneficial value on your products will
make business go longer and by that, competitors, directly and indirectly, affect how
company produces their products and services.
- Customers
There are various types of what customers wanted or expected from a product. Smart
and innovative company will depend on customer trends, lifestyle, and behaviours to
match up with their expectation in purchasing products and services. Having insights of
what customer needs and wants to match with your products before releasing it, will sure
make a big difference on the profit the company will get in return. We think that this
stakeholder really affects how business works.
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- Investors
As Investors decided to invest its money towards some company, he/she indirectly
becomes a part of the company. Which means, through analysis, those investors have
interests and believes that the company that he/she invested in will be a profitable and
ongoing business for a long time which will benefit the investor in the form of return.
Investors also holds a voting right for making changes on the company components,
whether it is the nomination of board members or changes made by the company. This
clearly affects the business organizations inside out (Krosofsky, A., 2020).
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III. Constrainment of the Components to the Organizations and
Managers’ Decision Making
- Socio-Cultural Dimensions – Customers
Trends are always everchanging, and there are inter-relations between socio-cultural
dimensions with its customers as people are the one who makes and control trends. For a
company to release products that will attract many customers, they first must understand
on-going trends on their market. Company known as ByteDance has released a social-
media platform called Douyin (Tiktok), have become a world-sensation trends with its
variety of short-form videos (ByteDance, n.d.).
Figure 3.1. Source: Huang, Z., 2020 cited in QuestMobile, n.d.
Based on the graphic above, Douyin (TikTok) time spent is drastically increasing, and
one might not expect, but it can soon go beyond time spent on WeChat. Tencent, Inc.
took a step back for not realizing the on-going trends. As it is functioned not only for
entertainment, it also serves as a place for advertisement which WeChat are also user for,
the only difference are TikTok make use of the trend which put WeChat in a tight
position to understand well its market insights on the customers’ needs and trends going.
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- Technological Dimensions – Competitors
As everybody know, it is very much needed to stay ahead of technological
developments for a company to survive in market. In the year of 2010 and so on, social
media platform such as Line, WhatsApp, Instagram, and WeChat started coming out one
by one and became popular due to its features and simplicity of a 2-way communication
application with others around the world. Competitors are the one who sets standards
whether the company are doing better than the competitor or not, having too many
competitors might decrease the company’s income from time to time. Under those
circumstances, company need to always improve its technological development onto their
product to always assure the top position amongst competitors.
- Legal-Political Dimensions – Investors
Laws or rules can be issued out whenever the governments think it is needed to
control the country and make it for the better. In recent cases, China has issued an
antitrust law (anti-monopoly law) which are intended to rule out any monopoly activities
done by the big-tech companies such as Alibaba Group, Tencent, Inc., [Link] and many
others (Choudhury, S. R., 2020.). Take Tencent. Huge data control benefits its company
by knowing more about its customer and markets. Using antitrust law, data flow will be
spread even out to any other small companies. This clearly made Tencent, Inc. need a
change towards its business management to adapt with the new law being issued out.
Being investors, some deciding factors are mandatory before investing into a
company, these can include as the performance of how well the company can comply
with the laws and rules given by the governments, are the company releasing some rule-
breaking developments and products, etc. Investment are needed to fund research on
technological development for the sake of the continuity of its business on the market.
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IV. Enhancing Organizations’ efficiency and Effectiveness
Through the Awareness and Understanding of the Factors
- Socio-Cultural Dimensions
The aspects in sociocultural dimension of an organization, such as lifestyle,
trends, beliefs, tradition, and appetite, are highly vulnerable to changes. By understanding
the flow of these aspects, organizations can prepare ahead of what kind of rough things
might happen in the future. As an example, Tencent, Inc. being aware of outgoing trend
which is “short-form video” of TikTok (Douyin), Tencent started following the trend and
added features of short-form visual content rather than focusing too much on text-articles
in its feed before (Huang, Z., 2020).
Figure 4.1. Source: WalktheChat, 2018
Figure 4.2. Source: Statista, 2020
This happened because Douyin and WeChat users are mostly from the same age
groups which are under 24, which are basically teens. That is why such “short-form
video” can be such a trend, and by understanding what is the trend among its customer
and what causes this trend, organization should adapt to it and add features to its own
platform.
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- Technological Dimensions
Though WeChat usage have been tremendously increasing its users when it first
started. By the year of 2014, other social media platforms such as WhatsApp,
Instagram, and many other are competing for users, soon enough WeChat can
be followed up by other starting company if WeChat doesn’t add innovations or
something new to its social media platform to attract more users on using WeChat rather
than other platforms.
Figure 4.3. Source: Ortiz-Ospina, E., 2019
By that, Tencent, Inc. have provided a one-stop service social media platform from
social networking to other various internet services (Hu, X., 2011). These services ranges
from instant messaging, e-payment system, hailing taxi and booking flight services,
mobile browsers, etc. (Boykiv, Y., 2015). Giving different kinds of services in one
platform might just be an advantage as it satisfies different users’ needs. Understanding
what technology can be added to its product might benefit for you than other companies.
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- Legal-Political Dimensions
The issuing out of the antitrust law are to dispose any political actions that can be
done by big-tech companies in China. This can be price-fixing, abuse of dominant market
position, misuse of users’ personal data, etc. By understanding the law, organizations can
anticipate of what action can they do and what they cannot do. On the other hand, not
being able to comply to the rules might risk your company on getting huge number of
fines, or even worse, getting bad reputation which will lead to the bankruptcy of the
company.
- Competitors
It is necessary for Tencent to be aware of who their competitors are. Decisions made
by an organization will always be affected by their competitors because they share the
same target customer and most likely competitors will try to outstand and take away
buyer from the company with its own product. By knowing who they are competing
with, company have the ability to adapt to what kind of products its competitor has and
what can the company do to keep up and release products that have more benefits that its
competitor.
- Customers
In order to keep the continuity of the company on the market, Tencent strategy on
earning customers’ trust and loyalty includes as the customers’ need, products and
services. Tencent’s R&D teams are constantly innovating products and services to always
provide users with newest and trending technologies. Also, Tencent ensures its service
quality by following regulations and rules by guaranteeing network safety and users’
privacy. Understanding the market and building trust among past users is one of the keys
to keep your business going as customers are one of the major stakeholders.
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- Investors
Understanding the purpose of why investment is needed for a company and what kind
of company typically investors will invest in are essentials for its organizations to build
up good reputations and strong foundation because investors only looks towards company
that have good profile of profitability which also will benefit the investors through return.
Therefore, for a company to secure funds they need to have a good reputation of work,
products and services of its company with the result of the interest from investors towards
your company.
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References
Boykiv, Y., 2015. 8 Reasons WeChat Is the Present and Future of Mobile
MarketingWeChat's social-networking success can benefit your mobile marketing plan. Inc.
[Online]
Available at: <[Link]
[Link]>
[Accessed 29 November 2020].
ByteDance, (n.d.) [online] Available at:< [Link] >
[Access 1 December 2020]
Choudhury, S. R., 2020. Morgan Stanley names internet companies that will be hit by
China’s proposed anti-monopoly rules. CNBC. [Online]
Available at:< [Link]
[Link] >
[Accessed 1 December 2020].
Culpan, T., 2020. Beijing Just Tore Up China's Giant Internet Playbook. Bloomberg. [Online]
Available at: < [Link]
rules-will-threaten-alibaba-tencent-rivals>
[Accessed 1 December 2020].
Graziani, T., 2018. How Douyin became China’s top short-video App in 500 days. Walk The
Chat. [Online]
Available at: <[Link]
days/>
[Accessed 2 December 2020].
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Hu, X., 2011. Social Media Business Model Analysis - Case Tencent, facebook, and
MySpace. Aalto University School of Economics. [pdf]
Available at:
<[Link]
sequence=1&isAllowed=y>
[Accessed 29 November 2020].
Huang, Z., 2020. Tencent Responds to ByteDance With WeChat Short-Video Trial.
Bloomberg. [Online]
Available at: < [Link]
at-bytedance-with-wechat-short-video-trial>
[Accessed 28 November 2020].
Krosofsky, A., 2020. What's the Difference Between an Investor and a Stakeholder?. Market
Realist [Online] Available at: <[Link]
[Accessed 25 November 2020].
Mark J. Greeven, 2019. Emerging from the shadows: The new Chinese giants aiming to
unseat Alibaba and Tencent. Institute for Management Development. [Online]
Available at:< [Link]
shadows-the-new-chinese-giants-aiming-to-unseat-alibaba-and-tencent/>
[Accessed 24 November 2020].
Ortiz-Ospina, E., 2019. The Rise of Social Media. [Online]
Available at: < [Link]
[Accessed 1 December 2020].
Statista, 2020. Distribution of WeChat Users in China as of June 2019, by Age. [online]
Available at:< [Link]
[Accessed 1 December 2020]
Tencent. Inc, (n.d.). [online] Available at: <
[Link] >
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[Accessed 30 November 2020]
Group Task report
Area of Responsibility Name and Signature of
Member
Introduction - External Factors - Stakeholders - Sociocultural Matthew Huang
Dimensions – Technological Dimensions - Referencing
Legal-Political Dimension Yohandi Lisanjaya
- Sociocultural Dimension - Competitors- Referencing
Technological Dimension - External Factors Hossam Mohamed
- Stakeholders - Referencing
Technological Dimension - Legal-Political Dimension - Tables of Virgiawan Akmal
content - Referencing
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