Strategy Case Memo
To: Viacom CEO
465 words From: XX
Subject: Achieve international expansion in a two-folded way
From the historical experiences, it’s learned that the most important strategic focuses for media companies in international expansions are the access to customers as well as market shares. This applies too in the European market. Therefore Viacom should actively establish the distribution capabilities through vertical integration in the form of equity participation in new European satellite channels. Also Viacom should leverage the entire company against competitors rather than sending out individual divisions into the battle. The BSkyB story suggests that content companies could not count on the platform providers to secure positions in emerging markets nor expect sustained profits from the platforms. Also Murdoch has already moved into vertical integration and proved to Viacom that content loses to distribution in the latter’s expansion in Australia. As a matter of fact, holding equity interest in distributors in the European market will establish three major benefits for Viacom: 1) Due to the lack of information and experiences of operating in European market and the uncertainties concerning costs, technologies and demand, it’ll be hard for Viacom to enter any long-term contracts without sound estimates of the implied costs and benefits. By investing in the local platform, on the other hand, will enable Viacom to gain knowledge about European market and develop reasonable analysis before committed to major strategic initiatives. 2) Given the fact that European distribution is dominated by only four major players, the power of gatekeepers will be strong and the threat of their developing own content is tremendous. Therefore Viacom’s involvement through equity ownership in the local platform will eliminate the access risks and help Viacom to leverage its large amount of...
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