Executive Summary
Time Warner is one of the largest media and entertainment houses in the world with interests in almost all type media and form. The most unique thing about the company is the very local nature of it services. It uses its experiences of several other markets especially that of Europe in developing new markets either through joint ventures or buying out an established entity (Time Warner, 2008). The company despite its global presence offers a very customized products to its customers depending on the market type and the technology that can be easily observed but still the international flavor of its service clearly makes its a rival and every other local player vulnerable.
Time Warner’s customer centric approach can be understood from the fact which clearly mentions of ten business principles that the company has developed for guiding its employees in making communication with the customers. Through Porter’s Five Forces analysis, the alternatives have been developed (Exhibit A). The proposed alternatives have its expanse over the global market and with massive input for the entertainment industry. The analysis has been set against following criteria: the time to implement, Time Warner’s corporate culture and synergy, cost of implementation, and the revenue potential. The outcome of the report ends with recommendation related with global expansion of the company in order realizes unexplored markets.
The report highlights the following
- Time Warner’s aims
- Time Warner’s vision
- Time Warner’s core business
- Growth opportunities
- Future options
- Strategic choices
This report highlights issues related to the market condition in US along with Time Warner’s option in this market and how the same is planning to expand further in several other markets where it has got some presence and also in developing nations where it desires to be a major player.
Introduction
Time Warner is the world’s 2nd largest media and entertainment corporation with a market cap of 56.40 billion USD (on May 1, 2008). The company was established in the year 1972 and in this thirty five years have become one of the most valuable entertainment companies in the world with current employee strength around 85000 (Time Warner, 2008; Value Wiki, 2007 ).
Vision
To be the world’s entertainment leader enriching our customers’ lives through the unique power of communications, information and entertainment.
Values
- Passion for customers: “Our customers have chosen to trust us. In return, we must strive to anticipate and understand their needs and delight them with our service.”
- Passion for our people: “Outstanding people working together make Time Warner exceptionally successful.”
- Passion for results: “We are action-oriented and driven by a desire to be the best.”
- Passion for the world around us: “We will help the people of the world to have fuller lives – both through the services we provide and through the impact we have on the world around us.
Organization Goals
- To maintain high ethical standards
- To understand and respond to our stakeholders’ priorities
- To ensure our operating standards are consistent across the Group
- To deliver on our promises in three key areas: responsibility to our customers; providing information with an unbiased approach as well as quality entertainment.
- To capture the potential of media to bring socio-economic value through access to communications.
Core Business
Time Warner has basically been a media and entertainment service provider right from its inception in 1972 and movie publishing and presentation is going to be its core business. It’s much focused approach on entertainment and related service has made Time Warner the world’s one of the most valuable entertainment service provider with presence in almost all forms of media. But in the last 35 years, the technology is no longer the same; the new age technology on the platform of internet doesn’t believe in segregation and has actually integrated the whole digital world. Summing up things, Time Warner has been paling as a major player in Cable Business, Network & Film Entertainment and Publishing Businesses (Time Warner, 2008).
The Copyright Issue with ORC
Rights of Technology of Digital Optical Audio Recording were secured be Optical Recording Corporation (ORC). During the time of negotiations for technology transfer, ORC was aware of the fact that major electronic manufacturers including Sony Corporation and Philips were developing players that could read the recorded digital optical audio signals from compact discs. ORC was later advised that the compact discs players and compact discs released in recent days are actually infringing the patent rights of ORC. This information was quite helpful for ORC and it finally proceeded with licensing agreements.
The two large corporations mentioned above went on have successful negotiation with ORC. But the third largest manufacturer, WEA Manufacturing, a subsidiary of Time Warner, continues with its stand of non-infringement. As the U S. Patent expiry was approaching its end; John Adamson, President of Optical Recording Corporation (ORC) in July 1992 was giving every possible thought and guessing about his Company’s decision to go for patent infringement economic offence case against Time Warner Inc. Though Time Warner had had a very strong argument laced with credible defense; ORC successfully won more than $30 million from Time Warner and the company finally received 6 cents for every CD the company manufactured from 1986 to 1991 (Dudley, 2004).
PEST analysis
Political
Major markets for Time Warner have been the United States, Europe especially UK and Japan. All these regions are economically liberal and least political interference. The major challenge is going to be when Vodafone is going to expand in developing nations. The company is now positioning itself to make an entry in India and other democratic and developing markets. So the Time Warner’s real test is how it actually performs in various developing markets where extent of liberalization is limited with high political and bureaucratic interference (Time Warner, 2008).
Economical
Customers from developed nation have been found to be much mature than their counterparts from developing nations and hence are more demanding. The operating losses in developed market are on a continuous rise and at the same time the industry suffers from high spectrum license fees. So the matter of fact is that customer retention through warding off stiff competition can only be achieved through better services at least possible cost while considering the economy of the nation. Hence whatever revenue that Time Warner earns from its Western Market is simply not going to get repeated in developing nations including India where piracy is extremely high. Though these nations are developing at a rate of almost 7% per annum and have lower tele-density, hence the mantra for business in these places is the volume which will finally make way for higher revenue (Time Warner, 2008).
Socio-Cultural
Again the matter starts from developed nations which have literacy rate with mature customer and higher incidence of customer’s interest in entertainment. The entertainment media is a necessity and has actually become a part of life and perhaps the most elementary information transfer service. Countries have higher GDP as well as Per Capita Income. Hence revenue collection per user is quite high.
Things in developing nations are very different. Entertainment is still a luxury for the major part of the population. With some areas where daily wage workers are earning even less that $1 a day, maintaining a communication device like mobile is no less than a dream. But still the liberalization have brought large amount of capital through Foreign Direct Investment and the middle class is getting stronger and stronger. These are some of the silver linings which have become a reason for many multi-nationals firms to invest while depending on rising purchasing power capacity of the people and local resources for operation (Time Warner, 2008).
Technological
Western markets are the major places where the most advance technology are being implemented first while the developing nations always have to rely on foreign direct investments for technology transfer. Though resources available might be an able substitute but in most of the countries it’s the imported materials which have been given higher preference. So irrespective of the market place or type, one will find either or some of these companies while implementing technology (Malik, 2006).
SWOT Analysis
Strengths
- As being the world 2nd largest in media and entertainment, Time Warner being a very big brand in media has a strategic psychological advantage over its competitors who are mostly local players with limited scope outside the country.
- Strong as well world’s widest media footprint and therefore the news communication and entertainment coverage is one of the widest and best in the world.
- With innumerable collaborations with various entertainment companies all around the world, Tim Warner further expands its global reach with roaming facilities and satellite coverage being made available even in technically inaccessible regions.
- Aggressive marketing strategy amplified with innovative customer service and higher brand value, Time Warner carries forward its name and logo to every corner of the country or better to say world and has a good and stable Brand Equity.
- The financial stability of the organization often gets reflected from its annual reports. But the value of this stability gets into view when the current investments are given a look. Time Warner is aggressively looking into various developing markets for its future expansion.
- Quality customer service has helped in building Strong Public Relations over the years.
- Technology leadership with highest level of innovation through the use of latest technical invention.
- Higher level of investors’ confidence with continuous progressive annual report through responsible management and higher stock prices.
- Greater level of customer satisfaction while following the guidelines from Time Warner’s 10 business principle.
- Well established customer base in developed markets and is strong enough to make new in developing nation.
- Technological superiority in providing product of every range and type.
- Management team being one of the best in the world guiding highly skilled workforce.
Weaknesses
- No Clear focus for a newer market that is the developing one even though there is a huge investment on acquisition and value addition through technical innovation.
- Expecting higher return from news communication despite the fact that it is one of the complex business sector both technology as well customer satisfaction. Hence the technology integration might not give the result in terms of revenue as has been expected.
- Lack of innovation in product pricing for further boost in revenue from developed markets where saturation point is approaching fast.
- Falling rate of growth in developed market and paying high amount for entering new market through partnership or acquisition.
- Delays in the further development of handsets and their network compatibility so that developing markets can be captured through cheaper options as against those of competitors.
- World wide presence and related expanse of the company actually may create similar nature of administration undermining local traditions ad cultures and hence loss of business.
Opportunities
- Entertainment is one of the fastest growing sectors in developing nations and these markets are now going to be the growth engine for second phase of media revolution.
- Possible ad revenue through the use of Media as a device of advertisement.
- Continuous development of the communication industry through technological as well as process integration.
- Low tele-density in developing nations makes these markets the best place to invest.
- Further improvement in services with the introduction of new generation of services and more than hundred percent integration of internet , computer and Mobile will create further avenues in both developed as well as developing countries.
- Strategic partnership with operators of unexplored market.
- Potential to reap benefits of supply chain basics and technology integrated work culture.
Threats
- Innovative competitors in almost every market where Vodafone and its partner are providing services.
- Computer telephony is going pose a serious challenge which provides phone services at cheapest rate.
- Developing markets are mostly third world nations where approach is not service oriented but volume oriented.
- New markets have established players who are well aware of customer’s psyche and need.
- Fight for cost leadership may take away revenues from new value added services
- Due to customer awareness the rapid change in customer preferences and their growing needs.
Recommendation and Conclusion
After looking into all selected criteria and possibilities, it would be good for Time Warner to make massive global expansion. It could come up with a strategy which could help it in expanding into underexplored market of fast developing countries (ICSA Software International, 2005).
Expanding globally actually may increase the problem of massiveness but will help Time Warner to grow and expand in a number of untapped foreign markets. By making greater presence in various foreign markets, Time Warner will increase revenue and become more profitable.
Time Warner has the potential to reach each and every nation in the world. The company has successfully used its experiences in making presence in several other markets especially that of Europe and now developing new markets either through joint ventures or buying out an established entity. The company has been observing continuous customer centric approach and has offered services depending on the market type and the technology that can be easily observed. The very vast presence and international color of its service clearly makes it a clear and tough rival to every other local and international player (Time Warner, 2008).
The last few years have been very depressing for almost all media and network companies in develop markets and the current industry requirement is exploration and innovation. This is where Time Warner has succeeded and has been successful in warding off factors like slackness in market growth, rising and have satisfied its ever demanding customers with superior quality of service and widest possible coverage. Though it has not been able to make considerable gain in highly competitive US market which has been its parent market too but the company has aggressively behaved in other markets and is investing a lot to make massive entry into developing markets of India. The company has expanded to several other value added services through technology integration and is raring to provide several revolutionary services in current scenario and in future (Time Warner, 2008).
Reference
Dudley, B. (2004). Scientist’s invention was let go for a song; Seattle Times technology reporter.
ICSA Software International (2005) Time Warner: Blue print One World.
Malik, O (2006). How to fix Time Warner. Web.
Time Warner (2008). Time Warner: Digital Initiatives. Web.
Time Warner (2008). Time Warner: Businesses. Web.
Time Warner (2008). Time Warner: Global Media Group. Web.
Value Wiki (2007) :TIME WARNER INC. Web.
Time Warner (2008). Time Warner: Investor Relation. Web.