Read Management at Work, Chapter 8 (pg 233) and complete the Case Questions 1-4 (pg 234)

Project description
Read Management at Work, Chapter 8 (pg
233) and complete the Case Questions 1-4 (pg 234)
the question are;
1. How might a SWOT analysis have helped Electronic
Arts assess its slippage in the video-game market?
2. How might Porters generic strategies theory help to
explain why Electronic Arts lost its leadership in the
video-game market to Activision Blizzard?
3. How would you use the Miles and Snow typology theory
to advise Activision Blizzard on the best way to maintain
its leadership in the video-game market?
4. If you ran a small video-game start-up, what would be
your strategy for competing with EA and Activision
Blizzard?
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Added on 17.04.2015 03:22
Management at Work
Acting on a Strategic Vision
Established as Amazin Software in 1982 by an
ex-Apple marketing executive named Trip Hawkins,
Electronic Arts (EA) was a pioneer in the homecomputer
games industry. From the outset, EA published
games created by outside developersa strategy that offered
higher profit margins and forced the new company to stay in
close contact with its market. By 1984, having built the largest
sales force in the industry, EA had generated revenue of
$18 million. Crediting its developers as software artists, EA
regularly gave game creators photo credits on packaging and
advertising spreads and, whats more important, developed a
generous profit-sharing policy that helped it to attract some
of the industrys best development talent.
By 1986, the company had become the countrys largest
supplier of entertainment software. It went public in 1989,
and net revenue took off in the early 1990s, climbing from
$113 million in 1991 to $298 million in 1993. In the next
13 years, the company continued to grow by developing two
key strategies:
Acquiring independent game makers (at the rate of 1.2
studios per year between 1995 and 2006).
Rolling out products in series, such as John Madden
Football, Harry Potter, and Need for Speed.
Activisions path to success in the industry wasnt quite as
smooth as EAs. Activision was founded in 1979 as a haven for
game developers unhappy with prevailing industry policy. At
the time, systems providers like Atari hired developers to create
games only for their own systems; in-house developers were paid
straight salaries and denied credit for individual contributions,
and there was no channel at all for would-be independents.
Positioning itself as the industrys first third-party developer,
Activision began promoting creators as well as games. The
company went public in 1983 and successfully rode the crest
of a booming market until the mid-1980s. Between 1986 and
1990, however, Activisions growth strategiesacquisitions and
commitment to a broader product linefizzled, and it had
become, as Forbes magazine put it, a company with a sorry
balance sheet but a storied history.
Enter Robert Kotick, a serial entrepreneur with no particular
passion for video games, who bought one-fourth of
the firm in December 1990 and became CEO two months
later. Kotick looked immediately to Electronic Arts for a
survey of best practices in the industry. What he discovered
was a company whose culture was disrupted by internal
conflictnamely, between managers motivated by productivity
and profit and developers driven by independence and
imagination. It seems that EAs strategy for acquiring and
managing a burgeoning portfolio of studios had slipped into
a counterproductive pattern: Identify an extremely popular
game, buy the developer, delegate the original creative
team to churn out sequels until either the team burned out
or the franchise fizzled, and then close down or absorb what
was left.
On the other hand, EA still sold a lot of video games,
and to Kotick, the basic tension in EA culture wasnt entirely
surprising: Clearly the business of making and marketing
video games succeeded when the creative side of the enterprise
was supported by financing and distribution muscle,
but it was equally true that a steady stream of successful
games came from a companys creative people. The key to
getting Activision back in the game, Kotick decided, was
managing this complex of essential resources better than his
competition did.
So the next year Kotick moved the company to Los
Angeles and began to recruit the people who could furnish
the resources that he needed mostcreative expertise and
a connection with the passion that its customers brought to
the video-game industry. Activision, he promised prospective
developers, would not manage its human resources the
way that EA did: EA, he argued, has commoditized development.
We wont absorb you into a big Death Star culture.
Between 1997 and 2003, Kotick proceeded to buy no
fewer than nine studios, but his concept of a video-game studio
system was quite different from that of EA, which was
determined to make production more efficient by centralizing
groups of designers and programmers into regional
offices. Kotick allows his studios to keep their own names,
often lets them stay where they are, and further encourages
autonomy by providing seed money for Activision alumni
who want to launch out on their own. Each studio draws
up its own financial statements and draws on its own bonus
pool, and the paychecks of studio heads reflect companywide
profits and losses.
The strategy paid off big time. For calendar year 2007,
the company, now known as Activision Blizzard, estimated
CHAPTER 8 Managing Strategy and Strategic Planning 233
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234 PART 3 Planning and Decision Making
compiled revenues of $3.8 billionjust enough to squeeze
past EAs $3.7 billion and sneak into the top spot as the
best-selling video-game publisher in the world not affiliated
with a maker of game consoles (such as Nintendo and
Microsoft). Revenues for calendar year 2010 were $4.4 billion,
up more than 20 percent over 2009, making Activision
Blizzard the number one video-game publisher in North
America and Europe. Today, its market capitalization of
$13.3 billion is nearly twice that of EA.
Kotick attributes the firms success to a focus on a
select number of proven franchises and genres where we
have proven development expertise. . . . We look for ways to
broaden the footprints of our franchises, and where appropriate,
we develop innovative business models like subscription-
based online gaming.