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Tom.com: Strategic Analysis of an Asian Internet Company

Executive summary

The purpose of this report is to discuss the strategic analysis of the Tom Com Valuation of an Asian Internet Company. The strategic models used in evaluating the business environment include SWOT, TOWs, and PESTEL to demonstrate the impact of internal and external aspects of the business environment in the operations of the business organization. Strategic management helps in evaluating internal and external business environment to help the management in identifying challenges and opportunities associated with the attainment of the set organizational goals and objectives. The business environment within the telecommunication industry is becoming increasingly competitive due to numerous factors. The report provides numerous recommendations based on the outcomes of the assessment, especially concerning the approaches that the company can adopt certain strategic direction in improving its overall growth and productivity. Some of the recommendations include improving its distribution network, enhancing control over the distribution of its products, establishing a strategic partnership with the consumers as well as leveraging modern technology to develop effective marketing strategies.

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Strategic management is critical in ensuring the success of business organizations as far as profitability and growth are concerned. Strategic management facilitates analysis of the internal and external business environment to facilitate the realization of organizational goals and objectives (Denning, 2017). The business environment within the telecommunication industry is becoming increasingly competitive due to numerous factors. Corporate management should conduct strategic analysis for evaluating the existing opportunities and challenges facing the business organization. Tom Com Valuation of an Asian Internet Company is facing numerous challenges associated with the strategic management, thus limiting its market penetration and retention of the targeted customers (Karimova & Kim, 2018). It is crucial to align business strategy with organizational goals and objectives. This report will discuss the strategic management of the business organization in light of the selected case scenario.

Description of the case

The selected case scenario depicts strategic management challenges facing Tom.Com Inc., a Hong Kong-based Internet Company. The business organization has been planning an initial public offering at the Hong Kong Stock Exchange. A portfolio manager for EuroGlobal Funds was expected to provide a professional opinion on the value of this investment and its viability for different investors. Valuing internet companies can be very challenging, especially depending on the valuation method. The management deliberated on the analysis method that would facilitate the evaluation of the potential growth rate that the internet companies had to achieve in the five years to justify the current valuations.

Business description and industry overview

Globally, telecommunication is the most competitive sectors due to rapid technological advancement. Conducting strategic analysis allow the management of the organization to identify potential threats and opportunities, including the changes in the legal environment. It is important for the company to critically examine its external factors with a view of improving its strategic positioning in the global market to spur the desired success and significant market penetration (Kumar, Sajid, & BIST, 2018). The ever-increasing entry of new service providers poses significant challenges in the provision of essential services to the consumers (Kumar, Sajid, & BIST, 2018). The Tom Com Valuation of an Asian Internet Company has continued to face insurmountable challenges in attaining desired market penetration and revenue growth due to the existence of stiff competition.

Quantitative and Qualitative Analysis

Tom Com Valuation of an Asian Internet Company Case is based on current management and strategic problem facing the organization—which much be solved tactful to allow for growth and maintaining a competitive position. Numerous strategic models are using in evaluating the identified case scenario—PESTEL, SWOT, and TOWS analyses. The analysis will be useful in helping the organization to identify feasible strategies and solutions for the selected business organization.

External Analysis

Strategic models are useful in providing in-depth insights concerning the opportunities and challenges facing the business organization. One of the theoretical model of understanding the external environment of the firm in Tom.com: Valuation of Asian Internet Company is to conduct PESTEL—Political, economic, social, technological, environmental, and legal analysis of the environment and factors that drive growth in the industry. It is critical to identify factors that have significant impacts on the organization, including factors that drive growth in the entire industry. PESTEL analysis helps in identifying the source of the firm’s competitive advantages and core competencies (Kumar, Sajid, & BIST, 2018). Usually, the theoretical model provides an overview of the anticipated market changes as far as the future performance of a business organization is concerned (Omsa, Ridwan, & Jayadi, 2017). The factors are present within the external environment, which may have significant implications for the management of business organizations. Therefore, the following is a PESTLE analysis for the company identified in the chosen case scenario.

Political Factors

It is important to assessment political factors when conducting a strategic analysis. Sound political leadership promote the goodwill, thus allowing the business organizations to thrive. The political climate in the respective countries where the Tom Com Valuation of an Asian Internet Company operates has significant impact in the performance of the business organization (Omsa, Ridwan, & Jayadi, 2017). Although the company has no significant influence over the political environment, the management should consider the implications of such factors in tandem with the set organizational goals and objectives.

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Economic Factors

Economic factors are the main determiners of future growth and sustained profitability of the business organization. They include aspects such as the purchasing powers of the targeted customers and the financial strength of the business organizations. The increasing rates of interests on loan and inflation in some countries present greatest challenges to the management of the Tom Com Valuation of an Asian Internet Company. However, since the advent of globalization, the company has continued to achieve greater market penetration in foreign nations, especially in Asian countries.

Social Factors

Social factors have direct implications on the performance of business organization. The management of the company should understand the implications of demographic and cultural factors in influencing the tastes and preferences of the customers in the targeted segment of the market (Omsa, Ridwan, & Jayadi, 2017). The products provided by the Tom Com Valuation of an Asian Internet Company appeal to different age sets. Young segments of the population are bound to demand more internet-related services. Thus, the government should targets the mostly the youths in its marketing campaigns to gain greater market penetration.

Technological Factors

Technological factors play critical roles in the use of internet services. Strategic analysis should involve the assessment of the effects of modern technology in the administration of internet services (Matovic, 2020). The Tom Com Valuation of an Asian Internet Company can adopt modern technology in developing its marketing strategies to attain improve customer base both locally and in international markets.

Environmental Factors

It is crucial for the business organization to abide by all environmental management regulation while producing products in the markets. E-waste management remains significant challenge in the telecommunication industry. Business organizations have primary responsibility in ensuring and maintaining ecological sustainability. Unregulated damping of e-wastes has far-reaching health implications on the users of internet services. The company has an elaborate internal policies to promote adherence with the existing policy frameworks associated with the protection of the environment. However, the company strategize on effective approaches of preventing or minimizing e-waste disposal.

Legal Factors

Legal environment has a direct impact on business operations. The company should strive to remain compliance with the existing legal and ethical frameworks associated with the provision of services in the telecommunication industry (Omsa, Ridwan, & Jayadi, 2017). The noncompliance with the regulations can lead to increased costs of operations, including fines and withdrawal of license. The management of the Company should put measures in place to address all the regulatory requirements.

SWOT Analysis

Conducting SWOT analysis is crucial in examining the internal business environment and its impact in providing essential services as far as internet services are concerned. The outcomes of the assessment is critical in influencing the corporate decisions concerning the management of the Tom com Inc., as discussed below.

Strengths

  • The corporation has effective marketing strategies based on the advanced technology..
  • The emerging markets in the Asians countries to sustain demand. The China growing population and those of other Asian countries are important for ensuring the continued success of the business organization.
  • The company provide customer-driven internet services to enhance differentiation of their products from those of the competitors.
  • Effective control over the production and distribution due to forward and integration

Weaknesses

  • Stiff competition from the rivals firms through product imitation. The corporation faces stiff competition from services providers who engage in increased product imitation to gain market share.
  • Overdependence on the country of origin as the major market for its services.
  • Inability to meet the ever-changing tastes and preferences of the targeted customers.

Opportunities

  • Market expansion to increase demand for the services. The markets in South and Pacific Asia are rapidly expanding.
  • The acquisition of medium size companies in developing countries to enhance access to essential services provided by the business organization.
  • The rapid growth of online marketing platforms presents unique opportunities for enhancing the success of the business organization, especially in its marketing efforts.

Threats

  • The increasing and saturated competition will have significant impact on the growth and profitability of the company.
  • The rising number of producers and marketers countering the efforts of the organization’s marketing departments and product campaigns.
  • The ever-increasing marketing campaigns from the competitors in the industry.

TOWS Analysis

TOWS analysis will allow Tom Com Valuation of an Asian Internet Company to identify and understand the implications of strategic choices and direction available for the company. The TOWS (Threats, Opportunities, Weaknesses and Strengths) analysis useful strategic management tools that help in identifying the strengths, weaknesses, opportunities, and threats by matching the strengths with opportunities and threats with weaknesses. It is a variant of SWOT analysis. It facilitate the identification of internal strengths, and external opportunities (SO) to create maxi-maxi strategies—it entails identifying factors with the greatest potential for the success of the business organization.

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Table 1: TOWS Matrix Visual Representation

  • Internal Factors
  • External Factors
  • Strengths
  • Effective marketing strategies based on the advanced technology.
  • The emerging markets in the Asians countries to sustain demand.
  • The company provide customer-driven internet services.
  • Effective control over the production and distribution due to forward and integration
  • Weaknesses
  • Stiff competition from the rivals firms through product imitation.
  • Overdependence on the country of origin as the major market for its services.
  • Inability to meet the ever-changing tastes and preferences of the targeted customers.
  • Opportunities
  • Market expansion to increase demand for the services. The markets in South and Pacific Asia are rapidly expanding.
  • The acquisition of medium size companies in developing countries.
  • The rapid growth of online marketing platforms.
  • SO
  • Employ modern technology to improve marketing efforts.
  • Increase market penetration to tap into the growing market.
  • Enhance merge processes to tape into markets in developing countries.
  • OW
  • Enhance market research to capture customers’ tastes and preferences.
  • Increase marketing campaigns to counter competition from rival firms.
  • Use modern technology in producing products that appeal to the targeted customers.
  • Threats
  • The increasing and saturated competition.
  • The rising number of producers and marketers.
  • The ever-increasing marketing campaigns from the competitors in the industry.
  • ST
  • Leverage modern technology to enhance marketing campaigns.
  • Lower pricing for its products to attract more customers.
  • Enhance control over the production processes to limit unfair competition.
  • TW
  • Capture customer preferences in product design and development.
  • Increase more stores outside the country of origin.
  • Increase budgetary allocation for marketing departments.

Recommendation

The outcomes of the external and internal analysis of the business environment will enable Tom Com Valuation of an Asian Internet Company to take strategic direction in enhancing the provision of essential services to sustain the business growth and profitability. Some of the recommendations include the following;

  • It is imperative for the business organization to strengthen its distribution network of the organization. The approach is crucial in allowing the company to gain greater control and placement of its products in different markets.
  • The improvement of the distribution networks will enable the company to enhance its relation with the end-consumers (Tubtimcharoon, 2019). The company will reach the targeted market with high-quality products.
  • The company should leverage the technology in developing effective marketing strategies to enhance market penetration.
  • It is also imperative to form strategic partnership with the consumers through market research to capture their tastes and preferences during product development and production.

Conclusion

Therefore, it is important to note that strategic management remains one of the critical management tools for addressing challenges associated with running of business corporations. Strategic models such as SWOT, TOWS, and PESTEL are effective in enabling the corporate leadership to evaluate the impacts of external and internal business environment and their impacts on the organization. The outcomes of the this report emphasize the need of the top management of the Tom Com Valuation of an Asian Internet Company to take strategic direction in enhancing its growth and profitability in the increasingly becoming competitive business environment. Despite the current challenges facing the business organization, the adoption of strategic management is critical in attaining a faster turnaround as far as its marketing campaigns and improved market penetration are concerned.

References

Çitilci, T., & Akbalık, M. (2020). The Importance of PESTEL Analysis for Environmental Scanning Process. In Handbook of Research on Decision-Making Techniques in Financial Marketing. IGI Global.

David, F., & David, F. R. (2016). Strategic management: A competitive advantage approach, concepts and cases. Florence: Pearson–Prentice Hall.

Denning, S. (2017). The next frontier for Agile: strategic management. Strategy & Leadership.

Hitt, M., & Duane Ireland, R. (2017). The intersection of entrepreneurship and strategic management research. The Blackwell handbook of entrepreneurship, 45-63.

Karimova, G. Z., & Kim, Y. (2018). Practical Recommendation for the Use of Big Data in Strategic Management: Case Study of a Kazakh Telecommunications Company. Journal of Management and Strategy, 9(3), 88-102.

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Kumar, S. P., Sajid, M. D., & BIST, B. (2018). A Project On Business Development, SWOT Analysis and Customer Retention activities in existing Potential within a limited territory At Reliance Communication, Pune. International Journal of Pure and Applied M. International Journal of Pure and Applied Mathematics, 119(12), 5843-5864.

Matovic, I. M. (2020). PESTEL Analysis of External Environment as a Success Factor of Startup Business. ConScienS, 96.

Omsa, S., Ridwan, M., & Jayadi, M. (2017). The effect of strategic management practices on SME performances in Makassar, Indonesia. American Journal of Theoretical and Applied Business, 3(4), 71-80.

Tubtimcharoon, N. (2019). Situation Analysis for the Business of Small Hotels in Digital Economy Age in Thailand. WMS Journal of Management, 8(1), 1-9.

Wu, J., Guo, S., Huang, H., Liu, W., & Xiang, Y. (2018). Information and communications technologies for sustainable development goals: state-of-the-art, needs and perspectives. IEEE Communications Surveys & Tutorials, 20(3), 2389-2406.

Yaseen, S. G., Dajani, D., & Hasan, Y. (2016). The impact of intellectual capital on the competitive advantage: Applied study in Jordanian telecommunication companies. Computers in Human Behavior, 62, 168-175.

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