Download ADMINISTRATIVE STRATEGY and POLICY

College of Business Administration
CASE ANALYSIS
Presented by:
Abdulrahman Al-Mutlaq 200901480
Abdullah Al Zahrani 200700660
Ghalib Al Hammad 200901806
Current Situation
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one of the world’s most famous character-based entertainment companies
with over 8,000 characters featured in various forms of media.
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formed from the merger of Marvel Entertainment Group and Toy Biz Inc.
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holds the record of highest grossing movie of all time at $4.75 billion.
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uses its character franchises in entertainment, licensing and publishing.
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the number one comic book publisher with a 40% market share.
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earns toy licensing revenues through a deal with Hasbro. Other licensing
fees come from character use in consumer products such as clothing and
video games.
adopted the name Marvel Entertainment in 2005 to reflect the
corporation’s expansion into financing its own movie productions.
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faces strong competition from DC Entertainment,
Sony Pictures Entertainment and Warner Bros.
has only few comparable companies or direct
competitor because of the company’s licensing
business model.
copyright piracy is one of the challenges the
company is facing nowadays.
In 2009, The Walt Disney Company acquired
Marvel Entertainment in a stock and cash
transaction for a total of $4.24 billion deal.
was delisted from the New York Stock Exchange.
Four Segments:
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Licensing- earns revenues
from selling rights to
movies, television
production companies,
video game publishers, and
merchandise
manufacturers.
Publication- produces,
markets, and sells comic
books.
Toys- collect royalties and
service fees from Hasbro.
Movie Production - set up
to independently produce
films and grow revenues.
Societal Environment
1. Economic
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Entertainment industry is fragmented into different market segments.
The global economic recession registered negative impact to Marvel
Entertainment’s operations.
People all over the world have particular and specific need for
entertainment regardless of economic condition.
Most consumers particularly children and pre-teen age groups are easily
lured by advertisement of characters through all forms of media.
Consumers loyalty to brand makes them pay the cost of the product.
Societal Environment
2. Technological
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Entertainment is available in variety of ways including online, cell phone and other
platforms.
Sales in traditional formats dropped.
Recent technological inventions like tablets and Xbox. Wide range of information
technology in the industry
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Innovation and more trendy entertainment medium are accessible.
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Movies, films and other entertainment are all shown on television and on the net
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Production employs high technology in creating digital image of characters.
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Youtube is a very popular, effective and cost-efficient platform for advertising and
promotion.
Societal Environment
3. Political-legal
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Entertainment industry is regulated through government censorship.
Entertainment companies are facing lawsuits from consumer groups for violent contents
of films and movies produced.
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The threat of piracy and illegal licensing is imminent in entertainment industry.
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The industry is lobbying for government law to protect intellectual property rights.
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Parental guidance is necessary for the entertainment industry.
4. Socio-cultural
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Entertainment industry is a powerful medium to reach consumers.
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It has extreme influence on the community’s culture, beliefs and traditions.
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It is a means of educating children and influences their well being.
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Entertainment by any means is one thing everybody desires
Task Environment
1. Threat of New entrants
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The possibility of new entrants in the entertainment industry is high.
Employees and key personnel who has gained experienced in the industry breaks
away and established their own entertainment outfit
2. Bargaining powers of buyer
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Consumers have the power to choose any form of entertainment where they enjoy
most. They have the ability to patronize or not to patronize an entertainment
outlet.
Consumers are sensitive to the entertainment value of the product or service.
Once dissatisfied you cannot convince them to try again, they will definitely seek
other forms of entertainment. Price can also be a factor.
Bargaining power of buyers is high.
Task Environment
3. Threat of substitute product or services
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The threat of any substitute in entertainment industry is high. It comes during
holiday seasons and is seasonal. Movie releases are timing during vacations and
holiday seasons.
Entertainment comes in many forms and is competing with the limited money of
consumers.
4. Bargaining power of suppliers
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Through advances in technology, suppliers are creating new outlets for the
entertainment industry.
The winner is usually the company who has the most partners. Leveraging
through partnership tapping the distribution networks provide competitive
advantages to the competing firms.
5. Rivalry among competing firms
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The entertainment industry is fragmented and a lot of products from different
companies are offered to satisfy the consumers need for entertainment.
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Strategic Alliances- continue to make strategic alliances, joint ventures, and
licensing deals.
Innovation- should make 3D movies and films
Online- products and services are continued to be offered online for easy
accessibility and wider market reach.
Product and services expansion- expand target market and try different segment,
like creating characters for young girls.
Takeovers- the company can ask a bigger and more stable company to take like
Walt Disney Company.
Licensing- expand licensing deals to leverage global market opportunities
New business ventures- creating their own TV network like Cartoon Network and
create TV series for their characters.
Market development in untapped countries - penetrate and introduce the products
to countries where Marvel Entertainment has never been before.
Diversification- to minimize risk the company can venture into a different
business.
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Competition- strong multi-media competitors; Marvel
Entertainment faces strong competition from DC Entertainment,
Sony Pictures Entertainment and Warner Bros.
Economic slowdown- the global economic crisis affects
consumer’s buying behavior decreasing sales of the product.
Piracy- copyright piracy is one of the challenges the company is
facing nowadays.
Changing consumer taste and preferences- Marvel customers may
seek other means of entertainment.
Price wars- the entertainment industry is vast and differentiated
each competing for limited market leads to prices wars causing
the company’s sales to decline.
EXTERNAL FACTORS
Weight Rating Weight
Comments
OPPORTUNITIES
Strategic Alliance
Innovation
0.05
0.04
4.5
4.5
0.225
0.18
Intensify partnership
Improve design & creative story line
Licensing
Expansion
Diversification
0.05
0.1
0.04
4.5
4
4.5
0.225
0.4
0.18
Increase licensing deals
Penetrate untapped Market
Utilize the opportunity
0.04
0.3
0.3
0.05
3.5
1.5
2
1.5
0.14
0.45
0.6
0.075
Innovate products
Consider pricing strategy
Intensify security
Research new trends
0.03
1
2.5
0.075
2.55
Consider production efficiencies
Not affected by the threats
THREATS
Competition
Economic Slowdown
Piracy
Changing Consumer
Taste
Price Wars
TOTAL SCORES
1. Corporate Structure
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Marvel’s structure has a well defined roles and functions.
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Follows a single line of command from the top to the bottom
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Strong conviction to succeed and perform the objectives
2. Corporate Culture
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Marvel Entertainment has developed positive and creative culture among its
people
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Total quality management prevails in the whole management.
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Commitment and loyalty to company products
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Creativity and innovative minds in working
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Management and employee’s commitment to support to the company’s goals
3. Corporate Resources
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Marketing- Effective, efficient and well defined strategic market
plan.
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Financial- Declining annual revenues.
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Research and Development - Creative design is well funded by
the company. On-going discoveries and testing on what characters
the consumers will find more appealing and interesting.
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Operations and Logistics- Partnership with distribution networks
Products are sold to different production outfits.
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Information- subscribes to the availability of Information
Technology Utilizes the internet for advertising and promotion.
Has state-of-the-art imaging technology
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Strong Brand Recognition and Loyalty- is one of the most popular names
in entertainment industry.
Film production- Marvel Studios is set up to independently produce films
to increase revenues capitalizing on its popular characters.
Asset Leverage and Cost advantage- the company’s nearly 70 years of
character history is an extremely valuable intangible asset that produces
unlimited revenues with little maintenance cost.
Portfolio of characters- has over 8,000 popular characters featured in
various forms of media.
Licensing- the company earns toy licensing revenues through a deal with
Hasbro. Other licensing fees come from character use in consumer
products such as clothing and video games
Publishing- through Marvel Worldwide, the company is the number one
comic book publisher with a 40% market share.
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Box office success- each Marvel character based film have taken in an
average close to 400 million in worldwide box office receipts.
Competencies in Sales and Marketing Strategies- the company’s proven
sales and marketing strategies has driven sales volume.
Toy business- Marvel has entered a licensing deal with Hasbro for its toy
business, capitalizing Hasbro’s competitive advantage in this area.
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Capitalize Video Games -has entered licensing agreement for video games.
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Worldwide audience- the company has a worldwide presence
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Creative Writing – they have their own creative style of story writing,
their Stories are based on characters.
Online - products and services are offered online, a marketing and selling
strategy.
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Limited target market- primary target market for its comic books
has been male teenagers and young adults in the 13 to 23 age
group.
Smaller than competitor- DC Entertainment, Sony Pictures
Entertainment and Warner Bros are bigger in size and operation
compare to Marvel Entertainment.
Weak management team – the company suffered major setbacks
because of departure of key leaders.
Weak, damaged brand- had been into bankruptcy and has a
damaged reputation.
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Declining sales- sales has been declining
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Fluctuating financials- the company assumes high financial risk.
INTERNAL FACTORS
STRENGTHS
Strong Brand Equity
Asset Leverage/Cost
Advantage
Comprehensive Strategy
Licensing
Highly innovative and creative
WEAKNESSES
Limited market
Relatively small in size
Fluctuating Financials
Damaged brand
TOTAL
Weight
Rating
Weight
0.03
0.05
4.5
5
0.135
0.25
Popular and established
Exploit opportunity
0.3
0.3
0.04
5
4.5
4
1.5
1.35
0.16
Monitor the execution
Excellent opportunity
Maintain good performances
0.04
0.05
0.04
0.15
3.5
3.5
4.5
4.5
0.14
0.175
0.18
0.675
Study possible expansion
Increase production
Examine the root causes
Press release
Reputation buildup
Higher than the acceptable
level of 3
1
4.565
COMMENTS
STRATEGIC FACTOR
W
R
WS
1
2
3
4
DURATION
S
I
COMMENTS
L
S1 Strong Brand Equity
0.05
5.00
0.25
x
S4 Licensing
0.05
5.00
0.25
x
S5 Highly innovative and
creative
0.04
4.50
0.18
x
W1 Damaged Brand
0.04
3.50
0.14
x
Change company image
W3 Fluctuating Financials
0.04
3.50
0.14
x
O1 Strategic Alliance
0.10
4.50
0.45
x
Intensify sales and
marketing
Leverage partnership
O4 Expansion
0.30
5.00
1.50
x
Seek untapped markets
O5 Diversification
0.05
4.50
0.23
x
Consider other businesses
T1 Competition
0.30
4.50
1.35
x
Intensify marketing
T3 Piracy
0.03
5.00
0.15
x
Intensify security
TOTAL
1.00
4.64
Maintain company
structure
Increase licensing contracts
Creative story lines and
images
Level is high for the
external
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As Marvel Entertainment bids itself to becoming the leader in the
entertainment industry through strategic alliances, joint ventures,
and partnership, there is no doubt that the company is guided by
its mission and objectives.
Judging from the point of view of the internal and external
analysis, Marvel Entertainment has gained improvements and
annual growth based on their strategic management and
marketing strategy.
The weaknesses of the company have been strengthened,
opportunities were exploited, and strengths were maintained.
The impending threats of competition and piracy are always there
but the company is aware and has prepared for it.
INTERNAL
EXTERNAL
OPPORTUNITIES
Strategic Alliance
Innovation
Licensing
Expansion
STRENGTHS
Strong Brand Equity
Asset Leverage/Cost Advantage
Comprehensive Strategy
Licensing
Highly innovative and creative
SO STRATEGIES
1. Partnership for distribution
2. Enter untapped market
3. Increasing licensing deals
4. Maintain quality
products/service
WEAKNESSES
Limited market
Relatively small in size
Fluctuating Financials
Damaged brand
WO STRATEGIES
1. Expand target market
2. Intensify sales
3. Brand reputation buildup
4. Increase distribution/
production
Diversification
THREATS
Competition
5. More creative writing/innovation
ST STRATEGIES
WT STRATEGIES
1. Increase security of intellectual
1. Expand target market
property
Economic Slowdown
2. Review pricing strategy
2. Increase security of
intellectual property
Piracy
Changing Consumer Taste
3. Improve advertizing campaign
4. Offer something new and
different
3. Review pricing strategy
4. Improve advertizing
campaign
Price Wars
5. Alliance with competitors
5. Alliance with competitors
Recommended Strategy
1.
Strategic alliance- Marvel Entertainment can outsource
its distribution to its partners. Distribution channels
must be expanded for global reach and cost efficiency.
2. Increase licensing and security- maintain control over
characters through licensing deals and improve security
against piracy.
3. Merger - consider partnership with big time
entertainment companies like Warner and DC Comics.
(Marvel was recently acquired by Walt Disney, Hasbro
for its toy business)
4. Expand target market- expand video games licensing,
create new characters for new markets, enter untapped
market overseas.
All strategies and strategic plans are useless if not properly implemented.
The implementation of any marketing plan must be a bi-product of the time
table set for the achievement of the company’s objectives.
To implement company plans and strategies, all responsible people who
were assigned to a specific task must coordinate as often as they can to
regularly monitor the progress of the plans.
Strategy #1: Strategic Alliance
Implementation: Management must talk to local and
international distribution companies and enter into contracts
with them. The contract should include a provision on
commission basis computation of service fees. International
marketing of products increases to a great extent the income
of Marvel Entertainment.
Strategy #2: Increase licensing and security
Implementation: Marvel characters must be registered under its
name to avoid copyright infringements. The company should
invest in state-of-the art security technology to address problems
against piracy and intellectual property rights. Pursue cases
against pirates for punishment.
Strategy #3 Merger and Consolidation
Implementation: Marvel Entertainment can enter a deal to merge
with Walt Disney, DC Comics and Warner Bros. for cash or stock
acquisition.
Strategy #4 Expand Target Market
Implementation: hire a creative group to focus on creating new
characters, develop or hire new writers to create new story lines,
develop or hire new graphic artists to enhance the design of the
characters. Marvel can conduct research on new markets overseas.
The company can enter into contracts with video games creators
allowing them to use its characters.
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The end part of marketing plans and strategic management planning is
the evaluation and control.
This is usually done after the first quarter, then moves on to the mid-year
period and summarizes everything in the annual progress report.
By doing so, the person responsible for the given task keeps on evaluating
and recording all data that were gathered during the implementation of
the program.
The importance of evaluation is to assess whether the plans and
objectives were met.
Controls must always be in place to make sure plans and objectives are
carried out as designed and redirect the activities towards the plan.
Total Profit Approach
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The total profit approach to evaluating business strategic
plans requires forecasts of potential sales and costs during
the life of the plan to estimate profitability and feasibility.
Looking at total profit over a five-year span is a way to
compare strategies that bring short run profits that fade
away with alternatives that build profitability over time.
Marvel Entertainment must prepare a projected financial
statement over 5 to 10 years.
The projections must include the impact of the strategies to
the sales and expenses of the company.
A comparison of the actual versus the plan is made yearly to
assess and evaluate the success of the strategy.
Responsibility Accounting
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A planning grid is a way to develop strategic plans for every
different business and to balance the plans and needed resources
in such a way that the whole company reaches its objectives.
Marvel must set specific objectives for its different divisions
aligned with the main objective of the company as a whole.
Each division is evaluated based on its performance.
Control
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The control function provides feedback that will give Marvel the
opportunity to modify their marketing strategies.
To maintain control, Marvel should use a number of tools--like
computer sales analysis, marketing research surveys, and financial
statement analysis and profits, variance analysis and SWOT
analysis.
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Marvel’s marketing manager must be concerned about the competitive
environment; economic and technological environment; political and
legal environment; cultural and social environment; and the resources
and objectives of the firm.
Clearly, the environment in which the marketing manager operates
affects strategic planning.
Marvel’s marketing managers must engage in a more creative strategic
marketing plan which is becoming even more important because firms
today can no longer win profits just by spending more money on plant
and equipment.
Increased competition threatens those who can't create more satisfying
goods and services.
New markets, new customers, and new ways of doing things must be
found if companies are to operate profitably in the future.
Thank you for listening!