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Case study - Business Model analysis

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Introduction

Case study - Business Model analysis 1) Can this site/business model be successful in China? In my opinion, this business model could be successful in China. During the recent years, the web-based services have showed great potential to further development, especially the online gaming business which is doing very well in countries like China and South Korea. 2) Why? To analyze the business environment and the competition, I mainly use the SWOT analysis, and then part of Porter's five forces analysis as a supplement. SWOT Analysis: > Strengths * The game industry had surpassed the movie industry and become the No.1 global NDP Group. The East Asia have already become the advanced region in the development of online gaming. After the rapid growth in 2002, China has been promoted to the core market. * The favor of games is human's nature. There is no limitation between sexes and nationalities. Online gaming is regarded as one of the most attractive entertainments suitable for everybody. * Compared with e-commerce businesses, the virtual world provided by the game is a relatively low-risk venture, since it doesn't physically manufacture anything. ...read more.

Middle

Since the Chinese network market tends to mature, the investors are searching for the new economic point. Therefore, besides the E-mail boxes and the web advertisements, the online gaming has become a new focus. * Furthermore, the prevalence of the ADSL and the popularization of the games based on mobile telecommunication will be a push to the rapid development of the industry. * The increasing number of the mobile phone users provides a prosperous foreground to the online game operators. > Threats * The biggest challenge in making the business work is maintaining an active online community, since the industry is highly dependent on high traffic volume because of the low prices. * The business requires constant research. It has to keep up with the latest trends. * It couldn't ignore the current events, either. Porter's Five Forces Analysis: > Suppliers * Many world-class manufacturer, such as Microsoft and Sony, have rolled out online services, they are increasing their investment in the business gradually. * The support from the China's telecom in the value chain. ...read more.

Conclusion

First of all, the investor should try to establish a more effective industrial value chain with good cooperation and coordination between the sectors. For example, some game operators have revenue sharing agreements with telecom operators in which they receive a percentage of the revenues from traffic generated by their online gamers. Good cooperation could create a win-win situation. While the traditional games have suffered from the serious piracy problem in China, the online games would avoid such problems to some extent, as most of the online games are based on the massive online communities. Besides, most of the Chinese online gamers are used to the free access. How much profit could online games bring if they are not free to the users? That's a main problem which should be considered carefully. Therefore, the operators should consider the situation and strengthen the extra functions or services to the payers. There are other issues which should also be taken into account, such as the product design, the users' classification, and so on. ...read more.

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