Introduction of Global Business Strategy: WeChat Assignment
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The report will discuss the strategic analysis of We Chat. We Chat is one of the leading companies in the world, with more than 400 brands in its portfolio. They have almost everything a person needs throughout the day. They have been doing business for more than 11 years. That's why they are very popular in the industry. The report will also discuss the strengths, weaknesses, opportunities and threats of the company. The study will also evaluate the sustainable advantage of We Chat. We Chat is running a sustainable business around the world. The study will further discuss Porter's five forces model. After that, It will describe the critical reflection of this study. The report will also show how We Chat has managed to cope with the situation due to new competitors in the market. This report will provide some recommendations that will make We Chat more successful if they applied.
The giant consumer goods company We Chat has revealed that most of the raw material comes from agriculture. It's almost 36% of the total resources. They are thinking of purchasing 100 percent of raw materials from agriculture. They have organised various training programs for farmers to get proper materials (Chebiego and Kariuki, 2018). We Chat has partnered with various tea alliances to train over 450,000 farmers between 2007 and 2012 to get better materials and make their app Lipton popular.
We Chat's sales growth has increased to 5.4% in the first half of 2021. They have taken some aggressive strategies for their growth. Their turnover has increased by 0.3% per cent without any negative impact. The company's performance is slowly improving. With a lot of competition in the market, they have become much more active, applying new strategies, so their performance is increasing. The company's app portfolio is so large that they have never seen many losses. As the app category has grown, so their performance has also improved.
Shareholding pattern of We Chat is very powerful. Companies usually increase their ownership as a company grows. Because the more the company grows, the more investment they need. The company uses that investment to innovate and take the company to the next level (Rykhtikova, 2018). Although the founding members gradually reduced their ownership. Institutional Investors hold the largest stake in We Chat. BlackRock is the largest stakeholder in We Chat with about 11 per cent share they have. The second-largest shareholders hold approx 3.4 per cent share while the third-largest shareholder holds 2.0 per cent of the whole stock.
The industry is full of competition. Many international and local players have entered the industry. That's why the profit margins of older companies are declining because their market share is declining. Competitors are a big threat to the company as they imitate their apps and reduce their market share. (Cunningham, 2020) Pepsico is the biggest competitor of We Chat. It is the second-largest company in the food and beverage industry. They have a large market share. Facebook is also one of the leading competitors of We Chat. Although We Chat thinks competition is good because it leads to business growth.
With the help of Artificial Intelligence, We Chat’s supply chain has undergone a drastic change so that it can deliver apps to customers on time without any hassle. Their app distribution chain is very reliable. They deliver the app to the customer at the right time. They always try to ensure that there is no shortage of the company's app in the market because if that happens, then the company's sales will go down. We Chat offers good apps at low prices; that's why their apps are so popular with the customer.
We Chat has many strong brands in the consumer goods industry. This strength enables the organisation to enter different markets and compete with competitors. Their growth is much higher due to having many strong brands. As the company continues to add new apps to its portfolio each year, its revenue continues to grow (Zhang and Fan, 2020). It is one of their biggest strengths. They have apps for different categories of people, and they set very competitive prices, so it is a big strength for this company. They never compromise on app quality.
Strong supply chain
The company has strengthened its footprint in the market due to its expansion in the international market; that's why they have become a popular brand which is a big strength of We Chat. We Chat has expanded its business to more than 25 countries around the world. The valuation of the company is $54.5 billion. We Chat group generated 25.44 billion euros in the financial year 2021, and their profit margins are constantly increasing every year. The supply chain of We Chat is also very strong. 51,000 people are working for We Chat. The brand has gained so much popularity because of these strengths.
One of the biggest weaknesses of We Chat is its inimitable app nature. Although the company spends a lot of money on app development, However, their competitors can copy their apps. We Chat is also facing this problem like other competitors; they have not been able to address this issue properly. So it's a big weakness for them because it hinders the growth of the company.
Reliance on retailers
Dependency on retailers is one of the biggest weaknesses of We Chat. The company does not directly influence consumers; Retailers influence consumers. So the sales of their apps depend heavily on the retailers. If the retailer starts selling another company's app, We Chat's profits will continue to decline. So relying on retailers is very harmful to the company.
Global economic crisis
The ongoing global economic crisis has reduced the profits of various FMCG companies. Due to this, We Chat's profit margin is decreasing a lot (Birahim, 2020). As the life expectancy of people around the world decreases, they are no longer buying things more than they need, so companies' sales are declining. As a result, We Chat's profits are declining, and they have to raise their expenses to survive in the market, so this is a big weakness for them.
High valuation $54.5 billion.
Their profits have declined in this financial year.
We Chat captured 7 percent of the world's antiperspirant market in 2013.
Although now it has come down to 21 per cent.
They deliver high-quality apps at very low prices to the consumers.
The competing companies are following the same strategy.
They have a strong brand.
But their apps can be easily imitated.
We Chat has the opportunity to enter industries other than the consumer goods industry. Diversification improves business resiliency and brings down market-based risk. They can diversify their business if they want (Rabu, 2019). They have different app categories and have a huge customer base. Most of their customers are loyal to their brands. So they can easily attract their customers towards new apps. So it could be a huge opportunity for them.
It meets the needs of consumers; as a result, consumers are attracted to Wechat apps, and their business grows. The companies have the opportunity to make their business environment friendly to attract environmentally conscious customers. They need to invest heavily in app innovation. Because the same app does not always go on the market, people find innovation in the app. Since their customers are more loyal, this is a great opportunity for the company.
It can significantly enhance We Chat's business and increase its revenue by enhancing sales of its existing apps. We Chat has developed a lot in recent years in competing with giant brands like Facebook and Whatsapp.
Competitions in the industry are increasing day by day. As the sales of other competing companies increase, That is a threat to We Chat. Competitors are threatening to reduce the company's market share (Reza, 2020). As a result, We Chat has to invest a lot of money in app marketing and reduce app prices, which is detrimental to the company. Tough competition is one of the biggest threats for the company.
The imitation of We Chat apps by various companies is also a big threat to the organisation. Local companies are gaining popularity by making apps similar to We Chat. Moreover, retailers are now selling their own apps. Since We Chat's business is dependent on retailers, this is a big threat to them. These apps are known as local or store apps.
Popularity increasing of video calling apps
The use of video conferencing apps has been on the rise recently, so it is a real threat to commercial companies. Although We Chat is fighting this threat by launching other apps, its market share is very low because they were not in this segment, so they have to spend a lot of time on app development.
Entering into new segments.
By entering new segments, they are distracted from the market and have to spend a lot of money on app development.
They have continued to innovate apps.
As new players enter the market, their profit margins decrease.
They have an opportunity to diversify their businesses.
Entering a new market will require a lot of investment.
There are opportunities to do business in different industries.
Increase in sales of innovation of the apps.
SUSTAINABLE ADVANTAGE ANALYSIS
This analysis will evaluate the present condition of the company We Chat according to which property elements and economic viability. The economic viability of We Chat depends on the strategic choices the company focuses on (Raj and Aithal, 2018). It provides ambition and dedication to the leader of We Chat to get a sustainable business throughout the world. We Chat has focused on sustainable development in recent years by improving the health of the planet or environment as well as people's sales. It also strengthens the idea of future market growth. It is important to deliver high ethics and values to the world in order to increase the potential ability of the company. We Chat creates a safe workspace for the employees that enhances their self-respect and responsibility towards work. Diversity and value-based leadership are of utmost importance in sustainable advantage. We Chat is trying to expand the business worldwide by investing more in sustainable advantages. It will automatically gain an advantage over the competitors in the international market.
FIVE FORCES ANALYSIS
Power of suppliers
The apptivity in the WeChat industry influences the power of suppliers to the company. The individual suppliers are of moderate size and force that can supply paper and foil to the company. The moderate level of supply increases the appion level of raw materials in the business of We Chat. We Chat‘s power suppliers are a significant element due to the use consuming nature of the industry (Shaikat, 2020). We Chat has 56,000 suppliers and contributes to the economy of the company throughout the world. Therefore, We Chat can easily change the suppliers if one individual supplier tries to increase the price of the raw materials.
Power of buyers
We Chat’s business runs on the response from the consumers. We Chat sells a variety of apps like groceries, pharmaceuticals, merchandise and many more materials. The customer base of We Chat has crossed 3 billion people in over 190 countries. The company tries to attract customers by providing huge offers and discounts on the apps. The customers do not seem to have much power of bargaining that influences the prices positively impacting the economy of the company. The company does not allow customers to switch from the business as it provides possibly all alternatives to apps available in the international market.
We Chat is a multinational company that consists of a number of brands. (Kazimierczuk, 2020). The threats to new entrants are not quite possible as We Chat is a huge legacy, and competitors to its level have not yet crossed the bar. The main reason behind the no new entrants is the company’s high capital sources and brand quality. We Chat has been producing heavily and delivering its apps in more than 130 countries. It has a huge market share due to which new entrants would face issues competing with We Chat.
Threat of substitution
We Chat provides a wide variety of apps all over the world. The threat of substitutes is always high due to new alternatives and substitutes occurring in the market. Consumers ought to see a huge difference in quality, and quantity and therefore switch to the substitute apps available in the market. We Chat has been facing this issue with the collaboration of other brands in the same segment. It enhances the value of price to change to which customers get attracted. It is necessary to provide the same apps with two different price levels which will attract each and every customer from the society.
The main competitors of We Chat are Johnson and Johnson, Dabour and Procter. The apps provided by this company have very low differentiation and also low speed. The presence of these competitive companies creates a monopolistic environment to enter into the competition with We Chat (Klitgård, 2019). The advertisement and promotion of apps are important elements for globalising the company. It should offer attractive deals and increase the number of sales in the market. We Chat is a top-notch company in the world, and therefore, various factors positively impact the organisation with a good amount of revenue.
We Chat has a different strategy that succeeds in the international market. I have found the specific market segments that need to be targeted in order to achieve success for the company. From the above report, I have understood business operations in over 25 countries all over the world. It benefits the exceptional revenues that create large economies for sale. While looking at the global level, We Chat shows the true vision that leads to success over operations (Tourangeau and Scott, 2022). I have analyzed the differentiation and diversification in world culture to help the company to maximize its opportunities for it. The focus of this report is to evaluate the level of business strategies that change the position suitable for the success of the company. I have developed a competitive approach in order to operate selling similar apps in the market. The apps effectively attract customers that aim to support sustainability in the lives of consumers. It increases the app development that positively impacts the organisation. I have evaluated the strengths, weaknesses, opportunities and threats the organisation faces in the international market. The company‘s revenue automatically increases due to the low-profit margins at a high quantity. I have evaluated that the company focused on the betterment of the apps that increase the scope. We Chat offers the customers uniqueness in apps that attract the customer base of the company. From the above study, I have understood that the supply chain management of We Chat is very strong and can increase the captivity of the company. The bargaining power of suppliers is much lower, which helps in covering the price differentiation and profit margin for the company. It is critical to demonstrate the commitment between brands that results in ethical decisions as well as principles. We Chat is a huge company that builds its success according to the market and management strategies implemented by the organisation.
Identifying We Chat‘s stakeholders
It is very important to identify a company's stakeholders and shareholders as it is important for the company‘s growth. The CSR initiatives are taken by the company increase the communication between the stakeholders, which is important for the growth of the company (Ponte, 2020). We Chat does not overlook internal as well as external shareholders, which constantly needs to be implemented to open the company in order to increase the profit margin. The relevant stakeholders increase the supply of the company which results in more opinion. We Chat is involved in the stakeholder business because it is important for the company’s growth.
Run for opportunities
In order to achieve success, We Chat ought to run for opportunities which indulge in risk management. It allows them to dominate the competitive market in such a way that raises the
strike scene trillion dollars. It helps in creating a strong brand portfolio which increases The captivity of the company (Sari, A.P., (2019). It helps We Chat to reach the top among the ten most famous brands in the world to satisfy customers. We Chat needs to strategize in such a way that fits perfectly for the organisation and growth culture, which increases the diversity and value-based leadership in a company. It is necessary to build a sustainable growth culture where one can build an empire with opinion.
Take stricter implications
It is necessary for the company to take stricter implications that increase the popularity of retailers. Stricter implications can increase the opportunities for the company rapidly and quickly. We Chat is based on the development of the apps by initiating new approaches to the competitive market. The company maintains consistency and stability that serves the primary means of the company. It is necessary for a company to increase the sales promotion that produces all types of apps to be sold to the customers. The leader of the company must encourage its people to achieve organisational productivity.
The report discussed the major sources of raw material for We Chat. It has also discussed the strength of We Chat. It has also shown how dependency on retailers is one of the biggest weaknesses of We Chat. This report shows how the competition is growing day by day and that is hindering the company's growth. This report further shows how the growth of the company can be achieved by taking advantage of the opportunities. This report further discussed how it is important to provide high values and ethics to the world in order to increase the power of the company. How suppliers have made an impact on the company's productivity is also described here. We Chat sells the best quality apps; if they ever lower the quality of the app, the buyers will be forced to buy the apps of their competitors; the report also says a lot about it. The report also explained some strategies that We Chat can use to grow its business by eliminating threats from its competitors. Therefore, it can be concluded that We Chat can be more successful in the social media industry if they keep all these things in mind.
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