GREE CASE ANALYSIS Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

INTRODUCTION

Gree Incorporation began its operations in the year 2004. The company was initiated as a social networking organization. When the initial prototype for Gree was developed it had no gaming functions. This was the first social networking service in Japan which had dominated for many initial years. Later, Naoki Aoyagi became the chief financial officer of Gree who had made a strategic alliance with the second largest mobile operator of Japan, KDDI, which was something that changed the business model of Gree in Japan...By 2007, however, the growth of mobile advertising revenues was getting lower, therefore, the company had to come up with a new business model.

The company began to increase its revenue and the company started to grow as a result of introduction of social games which was combined with aggressive advertising on TV. The company had also come up with an idea to spread its business by opening a platform for the external game developers. These external game developers used the software development tools and the user data to provide the services to the 18 million registered users of Gree.

The business model of Gree Incorporation was based on paid services and the advertising. The contribution in revenues of the advertising side was just about 10% when compared to 90% contribution in revenue being generated by the paid services area. The paid services area included the sales virtual games under in-house mobile games of Gree, sales of avatars and the sales of platform services to the external service providers.

By the mid of 2010 the company’s sales growth had reached to a saturation point in its domestic market. Its users had exceeded almost 20 million in its domestic market. People were now more interested in the smartphone technology and the concept of feature phones had started to erode.Also there was a great threat of competition on Gree in its domestic market as many of its competitors had launched operations in the Gree’s domestic market. Two main of these competitors were the Facebook and Zynga. Therefore, in order to overcome these obstacles and hindrances that were coming in the place of the business model of Gree and its growth, the company needed to develop a new business strategy. The company had various routes to counter these problems.

EXTERNAL ANALYSIS OF GREE, INC

The external environment of Gree, Inc. can be easily analyzed by using the Porter’s Five Forces framework. This framework consists of five forces that can pose a serious threat to the company operating in any specific industry. These five forces are competitive rivalry, buyer power, supplier power, threat of new entrants and threat of substitute products.

If we talk about the competitive rivalry force it can be said that the Gree is operating under duopoly... Along with Gree, the other competitor is DeNa that is also a strong player in this industry.DeNa had captured the market through its competitive strategies and the target market. Apart from this competitor there were also other competitors in the industry and these included Facebook, Zynga and Steam. However, these competitors were not in a strong strategic position as compared to Gree at that period of time.

The other force of the framework is the buyer power in the industry. Looking at the factors and the nature of the product that is being offered in this industry, the customer power is high. The main reasons for this low customer power are that, the products of all the companies differ slightly, the switching costs in the industry are low, easy accessibility to the products of the competitor and also that this is a leisurely product. One of the other factors contributing to this higher customer power is that it is very easy for the customers to acquire information and also the mobility of the offered games. This connects with the other force of this framework which is the supplier power. This is currently low, but if the company pursues the above strategies that it might have a strong supplier power.

If we look at the fourth force of this framework, the threat of new entrants, it seems that this threat is low because of the huge capital investment and the human resource capabilities that are required in the market. However, the threat of substitute products is relatively high in this industry. The products of all the competitors operating in this industry are almost identical. The company will have to thoroughly assess the degree of rivalry in international industries and the power of the buyers to influence the suppliers.

INTERNAL ANALYSIS OF GREE, INC

The company’s competitive advantage is based upon certain strengths. The company has certain capabilities and resources which would also help the company to expand globally.

The first most important resource..................

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