Strategy for Tencent, China Internet Leader (extract 1)
- 1. Strategies for value creation in fast-paced environments © author: internetfuture2020@gmail.com Free Extract! 1 The Case of Tencent A Report of 61 Slides internetfuture2020 February 2011 1 @gmail.com
- 2. Strategies for value creation in fast-paced environments © author: internetfuture2020@gmail.com 1. The Firm 2. External Analysis 3. Internal Analysis 4. Strategy Mix for transformation and expansion 5. Conclusion internetfuture2020 February 2011 2 @gmail.com
- 3. Strategies for value creation in fast-paced environments © author: internetfuture2020@gmail.com 1998: creation of Tencent 1999: launch of a core application, instant messenger 2003: beginning of offering QQ games services 2004: listed on Hong Kong Stock Exchange 2005: launch of Qzone, Tencent social network 2009: creation of QQ International internetfuture2020 Source: Tencent Corporate site February 2011 3 @gmail.com
- 4. Strategies for value creation in fast-paced environments © author: internetfuture2020@gmail.com Vision Be the most respected Internet company. Enhance people's quality of life through Mission Internet value added services. Source: Tencent Corporate site internetfuture2020 February 2011 4 @gmail.com
- 5. Strategies for value creation in fast-paced environments © author: internetfuture2020@gmail.com China's largest and most used Internet service portal Steady and fast-paced growthTencent 1998: creation of Largest customer base in the world: 568.6 m active IM accounts in March 2004: listed on Hong Kong Stock Exchange 2010 105.3 m user simultaneous online Exceptional net profit margin of 40% Revenues by Segment Last Year Growth in Search (in RMB Million) (in percent) 14000 12000 10000 Others 8000 Advertising 6000 Internet VAS 4000 Mobile & Telecom VAS 2000 0 2005 2006 2007 2008 2009 Source: Tencent Corporate site Source: Alexa site internetfuture2020 February 2011 5 @gmail.com
- 6. Strategies for value creation in fast-paced environments © author: internetfuture2020@gmail.com Communication & Community Online Games IM QQ PC Mini-Casual Games IM QQ Mobile Advanced-Casual Qzone Games PC QQShow MMOG QQPet E-Commerce Contents C2C News & Search B2C Music, Video, Radio B2B MMS, IVR, CRBT Mobile Online Payment internetfuture2020 February 2011 6 @gmail.com Source: Tencent Corporate site
- 7. Strategies for value creation in fast-paced environments © author: internetfuture2020@gmail.com 50% 45% 40% 35% 30% 2008 25% 20% 2009 15% 10% 5% 0% Net Profit Margin Return on Equity Return on Total Return on Capital Assets Employed The net profit margin is exceptional -around 40% on average - with the rate of 34% for year 2005 being the lowest rate and the rate for 2009, 42% the highest (profit of $ 761 m or RMB 5,221 m in 2009) internetfuture2020 Source: Tencent Corporate Annual Report 2009 February 2011 7 @gmail.com
- 8. Strategies for value creation in fast-paced environments © author: internetfuture2020@gmail.com 4 8 3 7 3 6 2 2008 5 2008 2 2009 4 2009 3 1 2 1 1 0 0 Gearing Current Ratio Total Asset Turnover Receivables Turnover Yearly revenue cannot cover total assets value Less than 2 months of revenue is necessary to cover receivables Current liabilities are largely covered by current assets Tencent is not using financial leverage (gearing is very low) ⇨ The company is generating a lot of cash. The firm is able to invest a part of it now internetfuture2020 Source: Tencent Corporate site February 2011 8 @gmail.com
- 9. Strategies for value creation in fast-paced environments © author: internetfuture2020@gmail.com Offices: China and the U.S.A. Direct operations: China, South Africa, Vietnam, Korea Partnerships: India, U.S.A, Italy Overseas Chinese If Tencent wants to be a truly global Internet company, it must be present in countries other than China Which strategy is advisable to expand international? ISSUE How to monitor development and future issues? internetfuture2020 February 2011 9 @gmail.com
- 10. Strategies for value creation in fast-paced environments © author: internetfuture2020@gmail.com 1. The Firm 2. External Analysis 3. Internal Analysis 4. Strategy Mix for transformation and expansion 5. Conclusion internetfuture2020 February 2011 10 @gmail.com
- 11. Strategies for value creation in fast-paced environments © author: internetfuture2020@gmail.com Rankings and Categories of Internet Applications Comparison in Age Characteristics of Mobile Internet Users and All Users End of extract 1 Would you like to know more about my report on Tencent? Contact: internetfuture2020@gmail.com 2009 Source: CNNIC, June Source: CNNIC, June 2009 Source: CNNIC, June 2009 ⇨ In China, Instant Messaging is the most ⇨ Young Chinese use more widely used Internet-based application often a mobile than a PC internetfuture2020 SLIDE 11 / 61 February 2011 11 @gmail.com