Acting on a Strategic Mission - Case Study Example

Acting on a Strategic Mission Q1 Electronic Arts would have been able to assess its slippage in the game industry by undertaking a company SWOT analysis. A SWOT analysis would make it possible for EA to identify its strengths and opportunities and capitalize on them to increase market share, employee morale, and customer loyalty. It would also help to identify the company’s weaknesses and threats and try to eliminate them or adapt to them positively. One of the strengths is EA’s generous profit sharing policy that helped it to attract some of the best development talent in the gaming industry. EA should have utilized this human resource advantage to grow its market share by providing the developers with attractive incentives that would help to retain them and prevent them from switching to competitors such as Activision Blizzard (Griffin, 37). One of the weaknesses that a SWOT analysis would have revealed is the disparity between objectives of the management and those of developers. Management focused on maximizing productivity and profit whereas developers were motivated by imagination and creativity. EA could have easily eliminated this weakness by allowing developers more autonomy and, therefore, harmonized objectives of management and developers. The major opportunity and threat include a growing market and strong competitors respectively. EA should have realized early on that the video game industry market was on a steady growth pattern and sought new ways of tapping into this market. For example, EA should have developed games tailored for new market segments such as adults. EA could minimize the threat of strong competition by producing high quality games that would improve its brand name (Griffin, 36 – 41). Q2 Porter’s generic strategies encompass three strategies, product differentiation strategy, cost leadership and market segmentation strategy, which businesses commonly use to attain and maintain competitive advantage. EA focused on the cost leadership strategy to gain and maintain competitive advantage from the onset. The main objective of the management was the maximization of productivity and profit. Thus, they acquired new profitable studios at a very high frequency and pushed the new teams to fast track development of a new profitable game at the expense of quality. Although this strategy resulted in high asset turnover and lower costs than its rivals, it killed developer autonomy and motivation (Eldring, 56). Activision Blizzard identified this niche and set on gaining competitive advantage over EA by focusing on promoting developer autonomy and providing them with financial and distribution muscle that enabled them to benefit more than previously from their innovations. This approach basically meant that Activision Blizzard now focused on the product differentiation strategy. Developer autonomy promoted product differentiation by facilitating the creation of very popular games with a high level of uniqueness that drastically increased Activision’s market share. Furthermore, it helped Activision to attract the industry’s best developers, including those working for EA. Consequently, EA lost the most important resource in the gaming industry to EA, creative talent (Eldring, 62). Q3 The Miles-Snow typology is a classification of business strategies into four main categories: prospector, defender, analyzer, and reactor strategies. The strategy that Activision Blizzard ought to adopt should have a strong basis on market dynamics and strength of the competition. The video-game industry is characterized by a very dynamic and unpredictable market environment, with new market opportunities constantly arising. Developers keep on coming up with new ideas based on prevailing events and situations. Games that have a connection with current or recent events that customers are familiar with tend to be very popular and they take advantage of new market opportunities. In order for Activision Blizzard to maintain its market leadership, it should operate with an analyzer business strategy. An analyzer organization focuses on maintaining current markets but also places moderate emphasis on innovation. Maintaining market share is vital in helping Activision to maintain customer loyalty and achieve steady revenue and profit margins. However, due to the unpredictability of the video-game industry, Activision should also moderately integrate aspects of innovation in its strategy in order to increase its market share and remain competitive in an ever-changing business environment. This is especially important since smaller players in the industry are constantly looking for new market opportunities and may increase their market share at the expense of Activision if the company emphasizes only on maintaining current markets (Clegg, Kornberger and Pitsis, 36 – 55). Q4 A small video-game start-up cannot utilize cost leadership strategies to compete against major players in the industry such as Electronic Arts and Activision Blizzard. This is because small organizations have a small market share and, consequently, small volume of output and do not enjoy economies of scale. Therefore, the best method for a small video game start-up to compete with EA and Activision Blizzard should comprise a mix between the market segmentation strategy and the production differentiation strategy as stipulated by Porter’s generic strategies. Small organizations tend to have a narrow market scope due to limited financing of marketing activities and small volume of output. Therefore, they best maximize their limited resources by focusing on a selected area of the market and tailoring their products to meet specific customer needs and requirements (Eldring, 56). As a manager in a small start-up, I would target specific market segments such as children’s video games or concentrate on producing certain types of games such as sports games. This will result in high product quality which will attract customer loyalty. Product differentiation entails developing unique games that provide higher customer satisfaction than the established players such as EA and Activision whose strategies focus on volume of output while compromising product quality. In this way, the small start-up will be able to attract customers who are not satisfied by the quality of the products provided by the established market players. In the long run, the business’ brand image will grow, and so will its market share. Q5 As a gamer, the aspect of Activision’s strategy that would have me playing more of their games is the company’s policy of promoting developer autonomy. The company’s developers are able to churn out games that connect with the customer since Activision allows them sufficient time to perfect the product in accordance with customer needs. In addition, Activision provides its affiliate developers with financial and distribution muscle which enables them communicate to customers aspects of their games that they would find appealing. Thus, I would play more of Activision’s games due to the fact that their products have a high level of uniqueness and the company uses a reliable strategy to communicate this benefit to customers (Griffin, 45). As a non-player of video games, the aspect of Activision’s strategy that might entice me to try their games is their tendency to maintain close contact with the customer. Activision maintains close customer contact by using its affiliate developers who target specific, small market segments and focus on satisfying the needs of this market segment. These developers are able to communicate directly with the customer, find out their needs, and relay to them the specifics of the games which they develop to satisfy their gaming needs. As a result, Activision’s customers get the perception that the company values them. Therefore, I would try out some of Activision’s games because the company reaches out to me directly to communicate to me the benefits of playing their games. Q6 As a consultant, three strategic goals I would suggest to Electronic Arts to repair their image include: Changing the organization’s culture from focus on profit and productivity maximization to focus on employee motivation. This move will enable Electronic Arts to retain its best developers and, in addition, attract the best development talent in the industry. Ultimately, EA will be able to develop high quality games that will improve its brand image. Increasing EA’s use of product differentiation strategy so as to provide products with high uniqueness competency. This will enable EA to satisfy unmet consumer needs and increase customer loyalty (Clegg, Kornberger and Pitsis, 108). Communicating directly with the customer so as to identify their unmet needs and satisfy them appropriately. This will enable EA to conform its business strategy to consumer wants and needs. A six-month tactical plan for implementing the first objective will entail carrying out a complete overhaul of the company’s culture. This will involve allowing developers more autonomy and say in the rolling out of their products. In the first three months, affiliate developers will be educated on strategies of communicating with the customer, identifying unmet needs and developing products that meet these needs. In the remaining three months, EA will focus on financing affiliate developers to implement their own promotion strategies and distribute their products to consumers through the appropriate distribution channels. Works Cited Clegg, Stewart, Kornberger, Martin and Pitsis, Tyrone. Managing and organizations: an introduction to theory and practice. London: Sage Publications Ltd, 2011. Eldring, Jan. Generic strategies: performance and risk. Hamburg: Diplomica Verlag, 2009. Griffin, Ricky. Fundamentals of management. New York: McGraw Hill Companies, 2013. Read More