Company’s background Marvel entertainment, LLC is an American entertainment company classified under the entertainment business industry. The company was formerly known as Marvel Enterprises before the merging of the Marvel Entertainment group Inc and Toy biz Inc. The company is a wholly owned subsidiary of The Walt Disney Company, and is mainly known for its Marvel Comics, Marvel Animation, and Marvel Television units. Marvel Studios, formerly under the Marvel umbrella, became a subsidiary of The Walt Disney Studios, where it develops and produces a shared universe that shares continuity with shows produced by the television unit. The company was known to start functioning towards the end of the great depression and grew drastically during the late 1930s and the 1940s. In the 1950s, the industry suffered a setback, but eventually grew stronger in the 1960s due to the new crop of characters that appealed to children. In the 1970s, the company again suffered a setback, but rebounded back in the 1980s when it grew larger and became more popular. It is in the 1990s that the company began diversifying as it seeks to obtain full value from its steady characters through licensing arrangements and other diverse media outlets. The reorganization of the company and its entry in the motion pictures contributed to the company’s name changing from Marvel Entertainment group to Marvel entertainment Inc in the year 2005. Marvel entertainment, LLC is a large company that engaged in toy making, publishing, licensing and film production with a library of approximately 8,000 characters. Marvel Entertainment Company is known to operate in four diverse segments, which are licensing, toys, publishing and film production. The toy segment was eliminated in the year 2007 by signing a 3 toy licensing agreement with Hasbro. As the years continued, the company became one of the top leading entertainment companies in the entertainment industry. Over the years, Marvel Entertainment has entered in several partnerships and negotiations with other companies across a variety of businesses. As of 2017, Marvel has film licensing agreements with 20th Century Fox (X-Men and Fantastic Four) and Sony Pictures (Spider-Man), and a theme park licensing agreement with Universal Parks & Resorts (Islands of Adventure in Orlando, Florida and Universal Studios Japan in Osaka). Aside from their contract with Universal, Marvel’s characters and properties have also appeared at Walt Disney Parks and Resorts. Vision, Mission, Objective, and Strategies The company’s vision and mission statement are incorporated together as one statement; thus, gives a snapshot of the company’s operational status. The vision and mission statement, which also illustrate, the company’s objectives include; “With a library of over 8,000 characters, Marvel Entertainment, LLC. is one of the world’s most prominent character-based entertainment companies. Marvel’s operations are focused on utilizing its character franchises in licensing, entertainment, publishing and toys. Areas of emphasis include feature films, DVD/home video, consumer products, video games, action figures and role-playing toys, television and promotions. Marvel’s strategy is to leverage its character franchises in a growing array of opportunities around the world.” The strategies Marvel entertainment LLC uses to ensure its success include monetizing content library through licensing the diverse characters for the utilization of media products, as well as consumer products, which includes the motion pictures. The other strategy is that they ensure quality of the content that features all Marvel characters by retaining control over the 4 creative process and managing the library of all the Marvel characters with the intention of fostering long term value for each of the character. Corporate governance Corporate governance is defined as the set of diverse processes, policies, customs, laws and institutions affecting how a company is directed, controlled and administered. It ensures that the company is being managed and controlled efficiently and effectively in performing its daily business operations. Marvel entertainment LLC board of directors includes the chairman, Isaac Perlmutter who is also the Chief Executive Officer. Other key board of directors who are also the primary stakeholders of the company include Dan Buckley, Manmohan Shetty, Theo Paphitis, Hak Yung Yip, and James F. Halpin. Marvel entertainment, LLC corporate governance ensures the company is on the right track of its business operations. The board of directors ensures the company follows all the rules, policies and code ethics that contribute to the growth of the company. The corporate governance guidelines guide the board of directors on how to control, administer and direct the organization or corporation in an effectual and efficient way. The board of directors ensures that the company’s business operations are accountable of all the actions it performs by showing diverse records such as the financial statements. It also ensures transparency in its daily operations by conducting meetings regularly to inform the stakeholders of all the company’s happenings. The dissemination of the company’s records to the stakeholders also shows the transparency of the company. 5 Strategic Positioning and Internal Resources Marvel Entertainment, LLC. reports in 4 different business segments licensing, publishing, toys, and movie production. Each business segment’s responsibility breaks down as follows: Licensing segment – This segment earns revenues from selling rights to movies, television production companies, producers of video games, and manufacturers of the various types of merchandise Marvel owns allowing the use of its character properties, as well as overseeing or managing how the characters are used. Publishing segment – The Publishing segment publishes, markets, and sells comic books and novels about the various Marvel characters. Marvel also licenses characters from other entities and turns them into graphic novels. Toys – Marvel’s Toy Biz division is a recognized creative force and leader in toy design, sales and marketing, developing and overseeing both licensee and in-house toy lines. Marvel no longer directly competes in the Toy business, as it has licensed the right to manufacture to Hasbro. Movie Production – The movie segment was started to produce films in house which would allow Marvel to retain revenues increasing their bottom line. In 2006, Marvel developed its new subsidiary, Marvel Studios, by borrowing over $500 million from Merrill Lynch in order to finance its own filmmaking projects, the first of which was Iron Man (Sampson, 2016). At the time, this reconstruction deal was seen by many industry critics as an incredibly risky move because the film industry as a whole was already experiencing a significant decline in ticket sales. 6 PORTER’S FIVE FORCES Intensity of Rivalry There are several rivals in this market but Marvel has had a consistent, longstanding rivalry with DC Comics owned by Time Warner (TWX). Marvels long history and market awareness is an extremely valuable asset that can be used in many ways with a built-up fan base that spans all ages. Practically everyone has an affinity for at least one of the characters. The Disney merger with Marvel gave a better chance at advancing in the market because of the deep pockets of Disney funding more Research and Development (R&D). This is a big competitive advantage that cannot be easily reproduced by a competitor. Threat of New Entry Saturation of the super-hero market could be a concern. In view of the fact that Marvel’s sole character base is super-heroes, there is an uneasiness in regards to the number of these types of movies that have been released and will continue to be released in the coming years. Rival DC Comics is making a great impact with the Batman and Superman movies and show no signs of slowing down on sequels. The threats of substitutes are much higher in the entertainment industry as compared to any other industry. The rival companies may come up with a new character which may increase the market share of these competing companies. Bargaining Power of Customers Buyers have the liberty to like or dislike a particular company. Their past experience helps them to decide whether they want to deal with the company or not. Buyer satisfaction ultimately leads to the popularity of the entertainment company. The customers today have a better bargaining power due to a wide choice available in the world of entertainment. Marvel 7 Enterprises should take the bargaining power of customers as a serious concern for a sustainable survival in future. Bargaining Power of Suppliers Marvel Toys is the toy division of Marvel Entertainment, a subsidiary of The Walt Disney Company. Scott and Sons (SNS) toyshop is the leading supplier for Marvel toys, Lego toys, DC Universe toys and transformer toys. All the aspects that go into the supplier power are all in the moderate scales. Many films being made means there are many suppliers, which means films have their options of who to hire. The higher the quality of workers and contractors, the better the film will appear to the consumer, which makes the importance of quality and cost on the stronger end of the scale. Marvel will want to make sure they have big name actors as well as the best equipment to ensure the highest quality. SWOT Analysis: External environment (O&T), Internal environment (S&W) The strengths of Marvel Entertainment, LLC include its brand name and marketability of its characters. The strong brand name of the company allows Marvel to charge premium prices for its products and remain popular in the eyes of the customers. The strong brand names also benefit the company’s stock value since many consumers’ associate strong brands with better quality products and strong stock. Among the renowned brands associated with Marvel Entertainment, LLC. Include Black Panther, Spider Man, and Captain America II. These and other products of the company are highly marketable. Among the weakness that Marvel Entertainment, Inc. has to contend with include a declining market share as occasioned by other players in the industry, lack of independence from its mother country, and lack of capital. There are threats in the industry that the company has to 8 contend with. The gaming and comic industry has for instance a very volatile macro environment. The entertainment trends are also very dynamic and unpredictable. There is also the growing risk of intellectual property. Marvel Entertainment, LLC business decisions are impacted by the numerous legal constraints that exist in the different areas of operation; at both domestic and international level. There are for instance serious intellectual property violation of Marvel Entertainment, LLC’s products especially in Africa and Asia. Marvel is also threatened by DC Comics. The company has opportunities that are currently exploiting. On top of the list is a 5 Year licensing plan with toy manufactures, Hasbro. Marvel Entertainment, it could take advantage of Hasbro’s expertise in toy manufacture to ward of the intense competition especially from DC Comics. There also exists unlimited opportunities in the strategic partnership that the company can venture into especially on the licensing and rights front. The emerging technological trends such as digital media and advanced technology also provide promising channels for reaching out to clients. Company’s Digital Business Strategy With the arrival of the digital age, the expectation was that this 78-year-old company, whose very business is completely ingrained in traditional print media, would just be left to wrinkle. However, Marvel has played a huge part in the push to build a bridge between print and digital content since mid-2012 by revolutionizing, through innovative app design and comprehensive online and offline access to its brand new and vintage comics. Marvel has also shown incredible skill in rebuilding its own brand through expert content marketing and becoming a peerless heavyweight in the summer blockbuster market. 9 Marvel markets its huge amount of content online through its many and varied social media channels each offering unique content, tailored to the respective platform. These include Google+, Pinterest, Instagram and Twitter. Marvel’s Strategic IT Alignment Marvel Enterprise has aligned and standardized its entire enterprise on the Oracle EBusiness Suite and Oracle Technology, enabling the company to streamline rights and royalties’ operations for its more than 8,000 characters. The implementation has provided a foundation for all of the company’s business groups including entertainment, toys, licensing, and publishing. It implemented rights and royalties management software solution (RRM) utilizing the Oracle EBusiness Suite 11i. The RRM software helps Marvel improve revenue projection and cash management and increase financial return on intellectual property rights. By automating the manual processes with the RRM software and the Oracle Applications, Marvel has structured rights configurations and tracking, efficient royalty processing and an integrated contract management and financials solution. The implementation provides Marvel with more precise tracking of licensee information and rights utilization, faster posting of incoming royalties and better business insight through the use of business intelligence and reporting. Strategic Challenges & Recommendation Marvel has to deal with the problem of staying novel and relevant in the dynamic and unpredictable entertainment industry. To confront these challenges, Marvel needs to incorporate into its strategies the retention of old and loyal readers and viewers while seeking to bring new consumers into their fold. As generations change, Marvel has to keep innovating and strategizing 10 in order to capture the interests of the changing generations. Marvel targets the teenagers who are the largest consumers of summer blockbusters and avid readers of comic books. Marvel needs to address many factors in its strategy formulation. The entertainment industry has become politicized and therefore Marvel needs to be vigilant in its themes so that it does not antagonize consumers of various political, ethnic or racial groups in the depiction of its characters. The population in the United States and internationally has become more diversified and therefore more tact is required when creating entertainment for mass audiences. There are also technological issues to be addressed. Marvel’s movies are very technologically intensive, utilizing a wide variety of computer technologies to come up with their stunning visual effects. To stay ahead of other entertainment companies, Marvel needs to be current with its technology arsenal in order to produce animated and blockbuster movies faster and at a higher quality. The company has handled these issues well although there are still some issued that need to be ironed out if Marvel is going to avoid going into bankruptcy again in the future. The licensing model, which Marvel extensively uses in its revenue generation, has been very successful in taking Marvel out of bankruptcy into a profit-making company. It is however questionable whether this business model is going to be continuously successful in the future. Compared to its competitors, Marvel is under the greatest threat if the success of their Hollywood movies is not secured. This is because most of their revenues are reliant on the revenues made in the box office with the exception of its comics business. This means that if a movie made by Marvel does not make high revenues in the box office then most of its other strategic sectors are bound to suffer. Lastly, Marvel should keep a close eye on other big companies in the blockbuster business such as DC comics since they might increase their super hero movie output, leading to a 11 saturation of the market and consequently the possible loss of interest in super hero movies by moviegoers.