Electronic arts in 2007: retain its global lead in video game software - Essay Example

1. Internal Inimitability Analysis of Electronic Arts The inimitability analysis of Electronic Arts can be done through a value chain analysis of itsresources and capabilities. The various barriers which make a particular resource or capability inimitable are also discussed here.1.1. ResourcesElectronic Arts’ resources can be divided into tangible and intangible resources.1.1.1. Tangible Resources1. Large and diverse employee strengthEA has a large and diverse set of employees. It has a total of 7200 employees of which 4200 are outside U.S..

It has a design staff of 4100 people spread across various centers around the world. Tacit knowledge acts as a big barrier leading to inimitability because it is really a very complex process to accumulate such talent into a single organization.1.1.2. Intangible Resources1. Intellectual property rightsEA had a large number of patents, technology codes and trade secrets acquired over the years. In addition it had acquired many companies and got access to their rights as well. Path dependence, time-compression diseconomies and tacit knowledge all act as barriers for any other organization to acquire these resources.1.2.

Capabilities1.2.1. Internal processesEA’s internal processes are very robust. These processes allow the company to launch games in multiple countries in multiple languages and platforms. Social complexity acts a barrier for other firms in imitating this capability.1.2.2. Efficient DistributionEA has a very efficient distribution network. It uses a combination of retailers, online sellers, cellular handsets and other manufacturers to cover all sources of distribution. Path dependence and time compression diseconomies act as obstacles to imitate these capabilities because it requires a lot of time, effort and dependencies to design such a distribution network.1.2.3. Creating high brand valueMost of the products manufactured by EA went on to become big brands in the market and covered entire product range.

Creating such a brand values requires a number of dependent activities and hence path dependence is a barrier to imitate this capability.1.2.4. Partnership with all major playersEA had partnership with the top 3 major market players in video games. In effect, it had covered the entire video game market. To create such capability is a humongous task and all the barriers to inimitability fit in here.2. Analysis of bargaining power of suppliersThe suppliers to Electronic Arts had a low bargaining power.

As mentioned in the case, EA used 2 types of suppliers. Firstly, there were suppliers preapproved by EA’s 3 big customers. These suppliers had a very low bargaining power since the video game market was an oligopoly and the suppliers had nowhere to go except the big 3. Therefore, these suppliers were under the control of EA’s customers.Secondly there were third party vendors who were mostly employed for peripheral activities such as packaging and pressing CDs and not the core activities. Again these suppliers could be easily substituted and had low bargaining power.

Due to a low bargaining power of suppliers, EA used a very large number of suppliers and also negotiated considerable discounts with them.