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Essential Of Strategic Management Essay

2448 words - 10 pages

The External Environment Analysis Of Online Games Industry In China

Prepared for MGT 382 Assessment

Name: Xia Mengyao(夏萌遥)
CSU ID: 11605393
YZU ID:132413131
Major: International Business
Class: Class 1301
Date: 3/23/2016


2.Dominant Economic Characteristics1
2.1. Virtual Goods And Industry Chain2
2.2. Recent Status2

3. Driving Forces3
3.1. A Large Number Of Internet Users3
3.2. The Development Of Peripheral Industries4
3.3. Mobile Games Create New Heights4

4.Key Factors Of Competitive Success5
4.1.Technology-related KSFs6
4.2.Marketing-related KSFs6
4.3.Other Types Of KSFs7

5.Overall Assessment Of Industry Attractiveness7


Abstract: ...view middle of the document...

Considering such factors as market size and growth rate, number of rival sellers, scope of competitive rivalry, the pace of technological change, degree of vertical integration, need for economies of scale…and so on.
The diagram above illustrated how big is the industry in recent years and how fast is it growing.
2.1 Virtual goods and industry chain
The rise of online games push forward the virtual goods, which become one of the most primary sources of revenue for online game suppliers. Functional props and decorative props are the two types of virtual goods. Functional props enhance the competency of the game user while decorative props that change the in-game appearance of the game user. A significant number of internet users play online games. Virtual goods have become a major source of income for online game suppliers. Online game users purchase virtual goods to increase their character’s competence, improve their character’s appearance, or enhance their character’s relationship with other characters in the online game. That’s to say, virtual goods have functional, emotional and social qualities that could affect customer purchasing behavior and customer purchasing decisions. If an industry had something to build a brand loyalty, they must have set up a mature industry chain.
Industry chain is a system that combine related economic activities, process, production or services together. In the past ten decades, China has set a completely online game industry chain consists of game developers, game operator, game seller, telecom operators and game players.
The industry chain is given below:
Sign the contract
Supply relationship
Server dealer Game developer
Optimize and update
Daily maintenance of server

Game operator
Internet service provider
Get market information
Connecting and running games

Online interacti-on

Game player Game Media

2.2 Recent Status
Based on the industry chain above, the producer of online games have their own advantages in order to steadily growth. As a country that have long history and deep cultural deposits, China has a great deal of expressive hero which can be used as the material of online games’ background or world view. So in the aspect of the plot, Chinese online games may be more attractive compared with the other county’s as to native people. However, in the whole world, such cultural setting also have strong competitiveness because of unique characters. After years of effort, China has enough independent research and development strength. In 2015, independent research online games made 986.7 billion yuan and had 35.8% year-on-year growth. As a result, domestic online games put up a moderate profitable ability. According to the marketing scale, a relatively stable trapezoidal frame has already came into being. The diagram below shows the market scale of Chinese online games company in 2014. It is obviously that Tencent is far ahead among all the online games...

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