Which external environment dimensions were most relevant in this case? Why?
The most important external environment dimension is the technological. News Corps is a media company which has to evolve and adapt with all technological evolutions. The second is the socio-cultural factor, nowadays media are essential, technologies are progressing really quickly. People have higher expectations about communication and entertainment so companies have to satisfy the customers and respond to his needs. There is also the demographic factor, many people in the world are interested by entertainment media and consumers are more and more numerous, for instance people living in rural areas. About the economic factor, people in the world spend more and more money in media and communication which is favorable for News Corp. These four factors are most relevant in that case. 2. In which industry does DirecTV compete? Is this an attractive industry(Porter)? Threat of New Entrants (LOW) Extremely high fixed costs exist to enter the market.Satellite broadcasting competitors must either purchase or lease satellites. Ground-based cable TV competitors need lines in populated areas Bargaining Power of Buyers (LOW). Service pricing is fixed and not negotiable by consumers. Small businesses also have limited price negotiation power as there are fixed prices for business service packages. Large customers, such as airlines, have the ability to influence prices for services, but these services represent a small share of DTV’s overall revenue. Bargaining Power of Suppliers (MEDIUM) In some occasions content producers have the ability to set prices. Impact on providers varies depending on the nature of the content and the pricing terms. DirecTV’s largest capital expenditure, satellites, are owned by the company rather than leased, minimizing supplier power. The content is mainly provided by the major networks and their local affiliates (ABC, NBC,FOX, CBS), and premium movie channels (HBO, Cinemax, STARZ). Competitive Rivalry in the Industry (HIGH).The presence of Comcast and Time Warner Cable and other cable and satellite operators. All companies in the industry have one nearly identical product, cable television, which they offer their customers. A price war is not on the horizon, with companies instead opting to use sign-up specials and discounts. Threat of Substitutes (MEDIUM-HIGH) Live streaming in the Internet; Cable operators and other satellite operators; Pirated contents; Other kinds of leisure and recreational activities. While the market for TV subscription service is competitive in the United States, DirecTV has a strong market share. The industry itself is quite innovative in implementing new technologies and finding ways to derive revenue streams from excess capacity. The biggest threat to the industry is the risk of losing subscribers due to substitutes available on the internet. However, this is countered by offering subscriptions with emphasis on live content. DirecTV has an advantage when expanding into new markets over its competitors because they do not have to create additional infrastructure to service new geographic regions.
3. What factors are the firm’s primary competitors in the US? According to the case, how are they competing?
News Corp’s major competitors include Walt Disney, Concast, Viacom/CBS, Time Warner, and Bertelsmann among others (Fitzgerald, 2012, p 4). Walt Disney was ahead of the game based on the financial standing of 2009 (Walt Disney World Competitor Financial Analysis, 2010). News Corp has over 50, 000 workers in different parts of the world where it operates which is less than Walt Disney’s over 100, 000 by 2011. Murdoch has been in the CEO’s seat for decades, and his experience and strategies have seen the company become a success. This company’s advantage over competitors is the range of businesses with about 200 affiliates (News Corporation: Company Description, 2012; The Walt Disney...
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