Global Competitive Strategy at Time Warner Company - Case Study Example

GLOBAL COMPETITIVE ADVANTAGE: THE CASE OF TIME WARNER COMPANY By Location Global Competitive Advantage: The Case of Time Warner Company Introduction The Time Warner Company is an entertainment conglomerate based in Manhattan New York. Its Manhattan offices define the headquarters of the head company. The company operates in more than 30 countries and has a diverse range of product in the market. Its leading business activities include motion picture, home entertainment/ DVD, animations, live theatres, multiplexes, online media libraries, and television. Some of the company’s famous products include the Harry Potter Film series, Tom and Jerry, Superman, Batman, The Matrix Series, Sherlock Holmes, and the Rush Hour. In the United States, the company ranks as the third entertainment company. It owns brands such as CNN, TBS, TNT, HBO, Cinemax, Essence, Tru TV, Cartoon Networks, CNN Money, InStyle, and Zuda. The company is a leading filmmaker releasing a range of 20 to 25 films on an annual basis. This paper will focus on describing the four components of the star analysis in relation to the Time Warner Company. Home Country As highlighted above, Time Warner has its headquarters in the United States, and specifically in New York. The New York City is famous for its high levels of technology. Moreover, its location in one of the most developed countries in the globe, explains why the company has proven to be highly successful. Notably, the entertainment industry emerged after technological waves, introduced industries, and progressed to transform different forms of media. From the 1950s, technology in the entertainment industry has registered immense effects. The United States is one of the leading countries that have served to integrate technology and entertainment (AOL Time Warner tries for diversity 2002, p. 60). This explains why entertainment industries in the United States have adopted the 3D technology, online media platforms, mobile phone access, and have made remarkable progress in the quality of films, music, and television content because of embracing technology. Entertainment industries in the world’s leading economy have embraced innovation and creativity and serve as an example to other countries (Bercovici 2012, p. 75). The fact that Time Warner has its headquarters in the United States means that it has access to new realms of technology that can serve to transform its business immensely. Notably, executives of the company have identified innovation as one of the core strategies in ensuring that the company releases premium products into the market. The company’s premium products have penetrated the global market because technology has enabled the company to ensure that its content is available everywhere across the globe. Its latest innovation named TV everywhere is accessible in many parts of the globe. Moreover, the United States has the highest levels of media freedom, explaining why the company produces a diverse range of products with minimal regulation from the government. Since the Hollywood industry has been highly popularized and associated with glamour, the company benefits from accessing Hollywood actors for its films. This advantage results from the fact that the Hollywood industry is American based. Moreover, the American culture supports an increased consumption of media products (Britt 2007, p. 17). This explains why the company has a high home market. This means that a remarkable percentage of its products end up in the American market. Moreover, there are competition and rivalry within the United States, especially from Walt Disney, a factor that compels Time Warner to be highly innovative. These factors associates with the home country are of critical importance in the strategic management of the Time Warner Company. The United States has four critical factors that make a nation present competitive advantage to a company. The four determinants of competitive advantage include demand conditions, related and supporting industries, factor conditions such as infrastructure and skill labour as well as firm strategy structure and rivalry (Foster 2001, p. 50). A close analysis of the United States reveals that these four determinants are of critical importance to companies with headquarters in the country. Available at https://hbr.org/1990/03/the-competitive-advantage-of-nations Customer Countries Any company that seeks to succeed in global business must seek to understand the factors that define customer behaviour in different countries. Customer preferences vary across countries. Therefore, Time Warner has remained vigilant in identifying customer preferences in different countries. Moreover, the level of media regulation in customer countries is a critical consideration for the company. For example, the Asian market experiences government regulation, especially in countries such as China. This determines the range of products that can penetrate these markets. Countries that have stringent media regulations also have strict laws governing foreign businesses in the entertainment industry. This means that entry into such countries may prove to be difficult. Moreover, Time Warner must take into consideration competition from local companies in customer countries. For example, Time Warner faces competitors in Europe, such as Dynamo and United International Pictures. In each of Time Warner’s foreign markets such as Asia, Australia, Latin America, and South Africa, the company face competition from local entertainment companies (Marketing Enhancements 2001, p. 39). The level of brand recognition and reputation of the Time Warner products in customer countries should serve as a critical consideration of entry into such regions. In addition, Time Warner should consider the culture of customer countries. Evidently, cultures exhibit a close relationship with the level of media consumption. Conservatists cultures, especially in the Arab countries mean that there is minimal media consumption and Time Warner products may have limited markets. The Hofstede cultural framework is of critical importance in understanding the culture of a target market. The most critical aspects of the culture of Time Warner’s business are the collectivist cultures. This is because collectivist cultures such as those in Asian countries are very different from the American individualistic culture. Therefore, the belief systems in these countries are very different. This affects the business in collectivist countries (Marketing Enhancements 2001, p. 43). Evidently, most of the Time Warner products portray the American individualistic culture, which may serve as a threat to collectivist cultures in such countries. In the recent past, there is a registered emergence of the middle class individual in the developing world. Time Warner has taken notice of this and is seeking opportunities of introducing its products to these consumers. This is because Time Warner’s premium products only fir the idle class and the upper class of the society. There is a salient need for Time Warner to understand the demographic of customers from different countries (Zhang, Hong, & Zhang 2012, p. 56). Factors such as age, income, level of education, and access to technology are of critical consideration if Time Warner is to succeed in such markets. Supplier Countries The Time Warner Company has ventured into ensuring that it adopts a diverse supplier strategy. This is important for its business goals in an ear where diversity promotes a company’s reputation. However, the fact that the company has adopted a supplier diversity strategy does not limit its concentrations of the supplier country factors. Suppliers from the developed world are more likely to be at par with Time Warner in terms of technology. This is of critical importance because the company’s business relies entirely on technology. Therefore, supplier countries should have embraced technology. This is because Time Warner needs the suppliers for different goods and services (Marketwired 2013, p. 62). The performance of the suppliers is dependent on the level of technology. Moreover, supplier performance has the potential of affecting the company’s business. Notably, the operating costs in the supplier country are of critical importance. This is because suppliers based in countries with high operational cost are likely to charge more for their goods and services. This will reduce the profitability of the Time Warner Company. Other factors that Time Warner should consider before accepting supplier from different countries are the political and legal structures as well as the business regulatory climate. In its dealings with the suppliers, Time Warner must conform to all the political, legal and the regulatory policies in existence. Therefore, it is critical to understand the policies that operate in each supplier country. Whereas some supplier countries, especially those based in Asia may present low operating costs, the numerous stringent regulations may hinder Time Warner from engaging with those suppliers (Spulber 2007, p. 87). The level of finance capital in the supplier country is a critical consideration in the identification of potential suppliers. This is because Time Warner produces premium products, a factor that requires suppliers to invest in quality and innovation. Evidently, this translates to higher capital requirements in supplier countries. Moreover, the performance of suppliers is highly dependent on the financial capital in that country (PR 2012, p. 71). The level of infrastructure and skills in supplier countries is of critical consideration as well. This is because Time Warner suppliers must conform to the expected quality of products and goods in an effort to maintain the company’s reputation of premium product. Therefore, the company opts for those suppliers exhibiting expertise in their specific activity. Partner Countries The Time Warner Company has numerous partners in different countries. A close analysis of the partner country can help the company develop effective strategies that can present it with a competitive advantage. For example, it is important for the company to analyse the demand for its products in partner countries. It would be a business risk to collaborate with companies from countries where Time Warner products have a low marker. The relationship of Time Warner with different partners should ensure that the company’s products register higher sales increasing profitability (The Associated 2013, p. 89). Therefore, Time Warner should look out for partners from countries that exhibit a higher demand for its products. Such partners are likely to add value to the Time Warner’s business. In addition, the company should consider the complementary of products between Time Warner and the partners. Partner countries should be able to produce products that are complimentary to those produced by Time Warner. This can allow Time Warner and the partners to venture into successful partnerships. The complementarity in technology cannot receive any form of underestimation. Many of the Time Warners partners are from countries that have embraced technology. This is because the company’s products are highly dependent on technology. Moreover, only countries that have embraced technology consume media contents of modern media forms such as online media platforms. This explains why Time Warner has collaborated with companies from the developed world and is only beginning to venture into developing countries in search for partners (Time Warner Cable Inc. to Merge with Comcast Corporation to Create a WorldClass Technology and Media Company Conference Call - Final n.d.) Market knowledge is an additional factor that requires consideration. Some partner countries such as European countries exhibit a high level of market knowledge concerning Time Warner products. This is an advantage for Time Warner when collaborating with companies or businesses from those countries. Moreover, time Warner should consider the political and legal frameworks of partner countries before establishing partnerships. This is because the stringency of the political and legal frameworks may hide the successful partnerships. For example, the European Union (EU) has a set of requirements for partnerships and business practices (Time Warner Inc. SWOT Analysis 2014, p. 28). Since Time Warner is an American Company, were different businesses prevail, it is important to understand the legal frameworks in the EU before collaborating with companies in this region. Conclusion Evidently, Time Warner has to define effective strategies that can present it with a competitive advantage over other companies in the industry. One way of doing this is by ensuring that the company exploits the competitive advantage presented by geographical location. Each geographical location has a unique set of features that either favour business or discourage growth. Therefore, a critical analysis of the home country, the customer countries, supplier countries, as well as the partner countries can help the company develop effective strategies. Understanding these four components is the key to achieving the global competitive advantage, which will translate to higher profitability for the company. Bibliography AOL Time Warner tries for diversity 2002, Advertising Age, 73, 2, p. 60, Business Source Complete, EBSCOhost, viewed 28 November 2014. Bercovici, J 2012, Time Warners New Strategy For CNN: To Find a New Strategy, Forbes.Com, p. 75, Business Source Complete, EBSCOhost, viewed 28 November 2014. Britt, G 2007, Diversifying the Supply Chain, Multichannel News, 17 September, Business Source Complete, EBSCOhost, viewed 28 November 2014. Foster, D 2001, Time Inc.s Unmatched Access to Customers, Folio: The Magazine For Magazine Management, 30, 2, p. 50, Business Source Complete, EBSCOhost, viewed 28 November 2014. Marketing Enhancements 2001, Black Book - AOL Time Warner: Opportunity Everywhere, pp. 38-46, Business Source Complete, EBSCOhost, viewed 28 November 2014. Marketwired 2013, NaviSite(R) Formalizes Partner Program, Expands Existing Time Warner Cable Business Services Program, Marketwire (English), 11 September, Regional Business News, EBSCOhost, viewed 28 November 2014. PR, N 2012, Top Five Global Media and Entertainment Companies: Performance, Strategies and Competitive Analysis, PR Newswire US, 31 October, Regional Business News, EBSCOhost, viewed 28 November 2014. Spulber, DF 2007, Global Competitive Strategy, Cambridge : Cambridge University Press, 2007., OhioLINK Library Catalog – LR, EBSCOhost, viewed 28 November 2014. The Associated, P 2013, Time Warner and China Media Capital partner up, AP Financial News, Regional Business News, EBSCOhost, viewed 28 November 2014. Time Warner Cable Inc. to Merge with Comcast Corporation to Create a WorldClass Technology and Media Company Conference Call - Final n.d., Fair Disclosure Wire (Quarterly Earnings Reports), Regional Business News, EBSCOhost, viewed 28 November 2014. Time Warner Inc. SWOT Analysis 2014, Time Warner, Inc. SWOT Analysis, pp. 1-8, Business Source Complete, EBSCOhost, viewed 28 November 2014. Zhang, J, Hong, L, & Zhang, R 2012, Fighting strategies in a market with counterfeits, Annals Of Operations Research, 192, 1, pp. 49-66, Computers & Applied Sciences Complete, EBSCOhost, viewed 28 November 2014. Read More