Internal analysis of competitive advantage using VRIO framwork, analyze competitive position of your selected company and perform SWOT analysis of the company. Which resources will help sustain a competitive position of your selected company and what are core competencies of the company
Time Warner Internal Analysis
Time Warner Inc. is one of the leading companies in media and entertainment industry globally. The company operates in television networks, film and TV entertainment. There are three business segments within Timer Warner Company: Home Box Office (HBO), Warner Bros and Turner. The Warner Bros business segment offers television, home video, feature film and video game services to its consumers. HBO primarily deals with television and video services that deliver content to the customers over the internet (Time Warner Inc., 2017). Turner business segment handles cable networks and digital media properties. Through the three business segments, the company has managed to remain profitable and competitive in the media and entertainment industry. The aim of this study is to conduct an internal analysis of Time Warner Company using VRIO framework to determine its competitive position and completing a SWOT analysis on the company.
VRIO Framework on Time Warner Company
The VRIO framework is based on the argument that, for a company to attain competitive advantage, the firm’s resources must possess four attributes. The first quality that should be determined if a resource is valuable. The value of a resource is determined by its ability to enable a firm to exploit an external opportunity or resolve an external threat. By examining Time Warner Company’s strategy under each segment, technology and exclusivity are two significant resources that create value for the company. The media and entertainment industry is always defined by technological development.
By adapting and responding to new technologies, Time Warner Inc. has been able to reach out to several groups of consumers. As noted above, a valuable resource exploits opportunities or eliminates the external threat. Technological innovation in the past few years has disrupted and revolutionized the manner in which film and TV programs are being distributed. Personal computers, smart television, and mobile devices have steadily become common household goods. On the same note, film and television program consumers through internet users are increasing content consumption. Internet use in the distribution of film and TV programs has not only increased demand, but also led to the unique demands among consumers. Additionally, internet distribution channels are less costly to exploit and maintain as compared to traditional cable channels (Business Intelligence, 2017).
In response to recent technological advancements in the media and entertainment industry, Time Warner Inc. has continuously sought digital strategies. In April 2015, the company launched HBO streaming services. The company describes HBO as the most successful pay TV service in the world. There are over 134 million subscriptions to HBO products (Business Intelligence, 2017). The most impactful product of this business segment is the network’s purely internet streaming service HBO NOW. Within the United States, HBO NOW enables consumers with instant access to a broad range of programs.
By creating internet enabled channels for its consumer, Time Warner, a player in the media and entertainment industry does not automatically gain competitive advantage. Other players offering premium and non-premium services are also heavily targeting and exploiting online streaming to gain an advantage. However, Timer Warner Company has achieved a sustainable competitive advantage by total exploitation of technology. The company has aggressively increased consumption channels that do not necessarily require a subscription to pay TV. Dish Sling TV, AT&T, PlayStation Vue, and Hulu Live TV are some of the channels under the HBO segment that consumers can access without a subscription to pay TV (Time Warner Inc., 2017). Even with such diversifications, the company has taken some measures to maintain revenue. A user who has subscribed to regular HBO pay TV is guaranteed exclusive access to all other channels, depending on their availability within the customer’s locality.
Exclusivity is another resource that Time Warner has used to gain the competitive advantage over its competitors in the industry. Time Warner Inc. does not only concentrate on the technology of distributing its digital products, but also the quality of its content. First, the company limits access to its best content, only to subscribed customers. To maintain a subscription, the company creates an excellent quality of content that cannot be accessed through other channels. The quality of programming in content creation attracts consumers to continue subscribing. In the first quarter of the year 2017, Timer Warner reported a 5% increase in subscription revenues under the HBO business segment, and 8% increase in revenues generated from theater and television products (Time Warner Inc, 2017). As much as many people undermine Time Warner’s exclusivity, it is evident that the company continues to realize an increase in subscription, hence, growth in revenue.
SWOT Analysis of Time Warner Inc.
SWOT analysis is a common and important tool in business. In conjunction with the VRIO framework and another tool, the SWOT analysis can be used to determine competitive advantage of the business. SWOT tool explores strengths, weaknesses, opportunities, and threats within the corporate environment. To determine the competitive position of Time Warner Inc., the analysis focuses on the internal and external forces in the business climate.
Time Warner’s strengths include internal capabilities that propel the company’s performance against other opposing factors. The strong nature of the brand can be viewed as a strength. Since its incorporation in 2004, Time Warner has built a remarkable brand image in the media and entertainment industries. Its business segments i.e. HBO Time Warner and CNN are considerably popular in their various fields. There are also signature products like Game of Thrones, Kong Skull Island, and The LEGO Batman Movie that have not only contributed to the timely financial performance of the company, but also global recognition of its brand. The company has also managed to acquire a dominant market share of the Film and TV Industry. Other strengths include excellent product and service provision, higher revenues and strong partnerships in the Film and TV industry.
Time Warner’s weaknesses entail underperformances that undermine its general performance and competitive advantage in the industry. The company’s brand name is considered to be one of its most significant weakness. Especially in international markets, the brand Time Warner Inc. is not well recognized as opposed to its subsidiaries; Warner Bros and HBO. Time Warner’s independence in the United States film and TV markets is a weakness that bears the financial implication. Over 70% of its revenue is attributed to its markets within the United States. The company has also failed to exploit well delivery channels (Time Warner Inc., 2017).
The Film and TV industry presents several opportunities for Time Warne Inc. to improve its product and service delivery. They are steadily growing opportunities in markets beyond the United States. The advent and growth of the internet have eliminated physical and other barriers that undermined the growth of the Film and TV industry. The company should aggressively increase its market presence in foreign markets like Nigeria, Britain, Malaysia, and Mexico. There is an excellent opportunity for the company to market its products and services in the latter listed companies following its digital strategy. Time Warner Inc. is also facing great opportunities of eliminating competition and other threats by partnering with multinational TV and Film media giants like CBS and FLIX. There is also a notable opportunity for the company to collaborate with AT&T to exploit the mobile platform. Mobile devices are currently crucial film and TV channels.
Time Warner’s threats are factors in the external business environment that bear the potential to affect its performance negatively. Analysis of threats contributes to the formulation of better strategies and redirecting resources towards particular strengths and opportunities to sustain and improve competitive advantages. The company is facing fresh threats from new entrants into the market. Bright House Network and Akamai Hosted are some of the many competitors that Time Warner Inc. is currently facing substitution threats from. Over-reliance on TV and film products and services renders Time Warner vulnerable. As the privacy problem remains persistent, Time Warner is more likely to experience a decline in sales, considering its exclusivity approach.
The VRIO framework analysis reveals that product and service exclusivity and technology are the major resources that can sustain competitive advantage of Time Warner Inc. The SWOT analysis shows that the company faces threats from new entrants and illegal channels of accessing film content. Technology offers several alternatives to combat such problems. For instance, the use of the internet to access markets infiltrated by piracy will offer the consumer with best quality products. The internet offers a solution for the company to improve its brand image in the international world. Core competencies based on the discussion above include higher revenues and excellent products and services.
Business Intelligence. (2017, February 9). Time Warner turns to digital and pay-tv deals to buck the cord-cutting trend. Retrieved from businessintelligence.com: http://www.businessinsider.com/time-warner-turns-to-digital-pay-tv-deals-to-buck-cord-cutting-trend-2017-2?IR=T
Time Warner Inc. (2017). First Quarter 2017 Results. Time Warner Inc.
Time Warner Inc. (2017, July 18). Home Box Office; The World’s Most Successful Premium Television Company. Retrieved from Timewarner.com: http://www.timewarner.com/company/operating-divisions/home-box-office