51.com: Rise to the Top via Spin-Off
(9 pages of text)
Online social network service provider Five One Network Development Co. Ltd. (51.com) was founded in August 2005 and entered the online game industry in 2011, when browser games became popular in China. Although it continuously invested in developing online games, it had failed to reach its goal of becoming one of the top 10 companies in China. The online game industry had seen fierce competition and was finding it difficult to retain talented employees, who were leaving to start their own businesses. This problem, referred to as a “brain drain,” was also increasing the number of emerging profitable start-ups, especially in the mobile game segment. To overcome these internal and external challenges, 51.com decided to apply a new strategic approach: launching a series of new spin-off businesses from within the company. However, competition between the spin-offs seemed unavoidable. How would 51.com manage the relationships between the new spin-off businesses?
This case aims to generate discussions on business models and strategies for new start-ups, especially businesses in industries that are growing and changing rapidly. The case is suitable for MBA, EMBA, and senior executive programs. After completion of this case, students should be able to do the following:
- Assess the spin-off approach in the online game industry.
- Evaluate the founder’s leadership and spin-off strategy from an entrepreneur’s perspective and from an investor’s perspective.
- Understand the importance and intrinsic logic of the business model and adjust it to the corporate strategy and the specific industry.
Arts, Entertainment, Sports and Recreation
China, Small, 2014
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