Generic Strategy & Competitive Advantage
Identify one of TNC’s businesses and describe and discuss the bases of their competitive strategy (generic strategy that it pursues in order to achieve and sustain competitive advantage) offering plenty of examples to support the argument. News Corporation was created in 1979 by Rupert Murdoch, is the world’s third-largest media conglomerate as of 2008, and the world’s third largest in entertainment as of 2009.
The media conglomerate incorporates almost 300 business holdings including over 50 newspapers and 25 magazines spread across 3 continents. (www.sky. com) In the first section of this assignment I will be identifying and discussing one area of their business, which will be broadcasting. Sky Television was launched in the UK on February 1989. This was a multi-million pound venture that was a direct -to-home satellite broadcasting television network. Sky Television products were offered through traditional channels and newly developed household satellite dishes. Along with new encryption technology to restrict the content to only Sky subscribers opened up the possibility of viable business model.
However, there were not many subscribers so this resulted in lower revenues, and Sky Television began experiencing financial consequences. In 1990 British Sky Broadcasting was formed by the equal merger of Sky Television and British
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British Sky broadcasting managed to gain immense competitive advantage, an advantage that a firm has over its competitors, allowing it to generate greater sales or margins and/or retain more customers than its competition (Exploring corporate strategy, 8th edition, pg3) By doing this they used a good Generic strategy, Basic approaches to strategic planning that can be adopted by any firm in any market or industry to improve its competitive performance. (Exploring corporate strategy, 8th edition, pg7)
Porter’s strategy model shown on the following page shows best how the broadcasting business managed to excel. (Source: Porter (1985) socialmediamarketinguk. com) The strategy from Porter’s model that BSkyB has followed, would be the Focus Strategy. Sky was first marketed mainly to subscribers as movie channels, but in September 1992 BSkyB launched Sky Sports channel and within less than six weeks, a million new subscribers were added, this is also known as “Narrow Casting Strategy” a broadcast medium to appeal to audiences with special interests (Lynch R, 2009)
So by them launching Sky Sports they were specifically focusing on a particular type of audience which is obviously very popular and it is something that the population take a huge interest in and no one had done it as yet. “Companies employ this strategy by focusing on the areas in a market where there is the least amount of competition” (Pearson, 1999). (Organisations can make use of the focus strategy by focusing on a specific niche in the market and offering specialised products for that niche.
This is why the focus strategy is also sometimes referred to as the niche strategy) (Lynch, 2003). Therefore, competitive advantage can be achieved only in the company’s target segments by employing the focus strategy. BSkyB follows a clear market focus they produce content and programs specific to market and consumers for example when people’s taste changed and they started appreciating movies with specialized content News Corp created a company called Fox Searchlight Pictures without diluting the 20th century Fox Brand.
BSkyB represents a relatively customer focused company, although somewhat product focused, it has spent heavily on knowledge capture, and has developed a sophisticated marketing machine. It has also been extremely careful to develop a platform that caters to the tastes of all its customers, by offering an unprecedented amount of choice and functionality on its platform. Sustaining Issues The British television industry is a competitive industry with long-term players such as the BBC. However BskyB has proved to its consumers and to the industry of the immense power and firm hold it sustains.
We can understand this by highlighting the advantages it has: The best selling point and advantage of BSkyB is that they have a great choice of channels available for viewing. Interactive services such as shopping and banking also give them competitive advantage. The sound and picture you receive from digital TV is of a better quality. BSKYB is a vertically intergraded broadcaster, which means they use “A business strategy in which a company expands its operations to offer similar goods and services at a different point on the supply chain. ” (Financial dictionary) which buys TV rights for example sporting events.
Apart from some small niche channels BSKB is currently the only provider of sports premium channels. It holds broadcasting rights to the leading football leagues in Britain and Scotland, and has minority stakes in several clubs. They also are owners of Manchester United Football Club. They make some of their own programmes and package programmes from a range of sources into various channels. These are then distributed to its subscribers using its direct to home satellite as well as selling the wholesale to other relaters using different distribution platforms.
Sky Box Office is a good incentive as it offers the subscriber the choice to watch recent movies first on Sky. They are shown as often as every 15 minutes. Viewers can choose up to 20 movies a day. Sky Box Office movies are available at the touch of a button. They are always in stock, there is no need for them to be returned to the video shop and there are no queues such as the pay per view options and the advantage of personalizing an individual’s use such as personal security pins for certain channels i. e. channel x.
Sky has also entered the music category with the same passion it has for sport and other entertainment. Their channels are highly interactive with a unique mix of music, lifestyle and entertainment that reflects on their audience’s. BSKYB have launched a new ITV gambling channel called Sky Vegas Live. The channel broadcasts a variety of gambling programmes, including computerised horse racing and a Super Keno draw, with further options, such as virtual dog racing, to be delivered in the coming months. The bets are made through the Sky bet system via their remote controls.
Consumers are very demanding in terms of what they want to watch for example many would want to eliminate commercial slots. BSKYB have met the consumers demand by introducing Sky plus, which is big advantage over the terrestrial channels. Sky plus allows channels to be recorded and played back individually. The programmes are stored on the hard drive and can be accessed in the future using the simple on screen menu via the remote control. The viewer can then watch the programmes they have recorded in any order at any time.