Pruhutjit Surjit surjitpj@gmail.

com

Agenda
1- Company History 2- Current Situation 3- Environmental Scanning 4- Corporate Strategies 5- Business Strategy 6- Functional Strategy 7- Implementation Plan

History
Marvel Entertainment Inc. originally started in the 1930s as Timely Comics by Martin Goodman. Produced first Marvel Comics series in 1939 following rival DC Comics. Stan Lee joins Timely Comics in 1940. The golden-age of comic books largely contributed to the rapid growth in the 30-40s.

History
Creation of Atlas News Co. as the national distribution system, and Timely Comics becoming Atlas Publishing. 1950s comic book industry slow down. Atlas Publishing forced into a distribution deal with DC Comics. With the re-emergence of superheroes in the 1960s, Marvels most recognizable character, Spider-Man was created in 1962.

History
After creating more successful ideas, now Marvel Comics group started merchandising their products in addition to starting the first superhero show on ABC. Drops in profitability due to increasing popularity of chain supermarkets. Atlas sold in 1968. 1970s market shrinkage followed 1980s growth.

History
Marvel sold in 1986. 1991 IPO followed by further growth and acquisitions. Marvel files for bankruptcy in 1996. Signing of toy licensing agreement with Hasbro in 2006. Marvel becomes a leader through 2008 features like Iron Man and Incredible Hulk).

Mission, Vision, CG & Board roles

Marvel has not specified neither vision nor mission statements for its operations, instead they pointed up on their website what they described as their strategy, which reads as Marvel's strategy is to leverage its franchises in a growing array of opportunities around the world, including features films, consumer products, toys, video games, animated television, direct-to DVD and online For the sake of our project, I choose to treat this statement as a Mission Statement and to apply the 9 factors tool as shown below;
Customers Products/ Service Yes Markets Technology Survival Growth Profit Yes Philosophy SelfConcept Public Image Employees

Yes

Yes

Yes

Yes

Mission, Vision, CG & Board roles

Marvel Inc. bears a complicated history of struggles & Bankruptcies since its beginning in the 1930s, we choose to list the most recent events. The company filed for a bankruptcy on December 1996 due to declining sales and mounting debts. In 1997, former owner Ron Perelman was accused/sued for diverting $553M from Marvel to his other companies and the case was settled when he agreed to pay the former shareholders $80M, he was also ousted by the board. In 1997, the courts appointed a Chapter 11 Trustee, later the company became a wholly-owned subsidiary of Toy Biz (1998) Additional Legal issues were resolved with movie studios and Marvel entered into a JV with Sony Pictures. Later on Marvel has changed its name to Marvel Entertainment Inc. (2005) The company stabilized from that time and was well on its way to become a leader in the entertainment industry.

Board of Directors
The below list illustrates the current companys Board of Directors Name Title Compensation (2007) Handel, Morton E. Chairman of the board $868,160 Perlmutter, Isaac * VC, CEO $3,872,797 Breyer, James W. Director $273,210 Charney, Laurence N. ** Director $192,180 Cuneo, F. Peter VC (Non-Executive) $387,984 Ganis, Sid Director $435,710 Halpin, James F. Director $298,210 Solar, Richard L. Director $312,984
* Hold over 37% of the company CSO (March 2008) ** Ex-E&Y partner, has the responsibility in ensuring compliance with global and local conflict of interest
policies for client and engagement acceptance across all services lines. Previously, he was Marvels audit partner for its 1999 through 2003 audits.

Internal Factor Analysis Summary-IFAS

Internal Factors Strengths Strong Financial Position Strong Distribution channels Wide range of successful products Strong/Popular Brands Strong Market Share Talented & Innovative employees Weaknesses Weak & Instability of management team Weak Legal experience Global Positioning Limited experience to selfproduce films Total Score Wt.
.10 .05 .07 .10 .10 .08

Rating
4 4 5 5 4 4

W.S.
.40 .20 .35 .50 .40 .32

Comments
FR shows good leverage over competitors. Use various methods to distribute prods, (online, shopping malls, giant retailers). Movies, DVDs, comic books, licensing (toys and trades) Over 5000 popular characters Market leader in publishing & licensing Able to retain public attention for characters that were established decades ago. Stability & performance is improving. Unable to fully protect the companys copyright and trademarks Over 70% of annual revenues are captured from One Market (USA) Able to produced 3 blockbusters

.15 .15

3 2

.45 .30

.10 .10 1

2 4

.20 .40 3.52

External Factor Analysis Summary-EFAS

External Factors Opportunities audience current trend favors superheroes sequels Increasing usage of internet Creating oriental characters to attract Asians Producing more movies for different Marvel's characters Building Marvel Theme Park Threats Rising competition Bargaining power of the writers (WGA) Intellectual Piracy Economic Slowdown Score
1 3.12

Wt.
.08 .07 .08 .12 .15

Rating
4 4 3 4 4

W.S.
.32 .28 .24 .48 .60

Comments
Wide scale of characters that can be used to produce sequels Well developed division of Digital comics Recently created Manga comics for Japanese teens Successful-although limited experience in film Industry Solid financial position will allow to finance such giant project

.10 .10

4 2

.40 .20

Marvel is the first mover in most cases Subject to unions influence Managed to register its marks in Asia & MENA Would have serious Impact on its activates

.15 .15

3 1

.45 .15

Strategic Factor Analysis Summary (SFAS)

Strategic Factors Wt Rating W.S. S h o r t I n t r m X L Comments o n g

S1-Strong Financial Position S2-Strong Popular Brands S3-Strong Market Share

.10 4 .10 5 .10 4

.40 .50 .40

W1-Weak Management W2-Limited Movies experience

O1-Produce New/More Movies O2-Building Theme Park T1-Rising Competition T2-Intellectual Piracy Total Score

.08 3 .07 4
.10 4 .20 4 .15 4 .10 3 1

.24 .28
.40 .80 .60 .30 3.92

Good leverage over compt. X Over 5000 popular charct. X Market leader in publishing & Licensing Performance is improving X Prod. 3 successful movies X X Capable of prod. New movi. X To capitalize on its characters popularity Always have the 1st move Able to registered its marks in Asia and MENA

X X

TOWS Matrix
IFAS
Strength; 1-Strong Financial Position 2-Strong Distribution Channels 3- Popular Brands 4- Talented & Innovate employees Weaknesses; 1- Poor Management 2- Weak Legal Experience 3- Global Positioning 4- Limited experience in Movies production

EFAS
Opportunities; 1-Building Theme Park 2-Produce new movies 3-Create Oriental Characters 4-Increase use of Online arch. SOs; 1- Use finance & popularity to create Park 2-Use popular characters, talented staff To Produce new movies sequels 3- Use talented employees & distribution channels to attack Asians markets by creating new oriental characters 4- Use developed distribution channels to enhance the digital division

WOs; 1- Use professional offices to manage the Parks project 2- Use consultants to establish strong contracts to protect the interests of the company 3- Create oriental characters & enhance online dist. to increase international market share 4- Capitalize on the success of the existing movies to produce more WTs; 1- Move before competition to the Asian markets 2- Hire talented novelist from outside the USA 3- Register existing and new trades in all the world 4- Increase international market to allocate risks across the globe.

Threats; 1-Rising Competition 2-Bargining power of writers 3-Intellectual Piracy 4- Economic Slowdown

STs; 1- Use talented staff, popular characters & strong distribution channels to improve market share 2- Use strong financial position to close long term & fair deals with writers 3- Use strong dis. Channels to minimize piracy 4- Use the wide range of products to allocate risks among BUs/Regions

Corporate Strategies
The choice of direction of the firm as a whole and the management of its business or product portfolio. Recommended Corporate strategies: 1- Diversify their core business geographically. 2- Expanding the Film Production Operating Segment. 3- Constructing Theme Parks.

Choice 1: Diversify their core business geographically.

Directional Growth Horizontal Integration There is a great interest in Marvel characters internationally. Marvel should explore creating international characters in other markets like Japan.
Pros - Increase the publishing revenue from foreign markets - Licensing of international consumer product. - Possibility of partnering with Japanese anime companies to create animating movies. Cons - Risk from creating a non-successful characters. - Not able to find an interesting local partner. - Piracy of intellectual property in those new markets.

Choice 2: Expanding the Film Production Operation Segment

Directional Growth Vertical Integration Investing in self-production movies, Animation & Feature films. This should be combined with a strong owned distribution company. Pros Cons
- 5000 character to choose from. - Ability to perform a strategic alliance, with animation company(Like Pixar), that shown interest in working together. - Exclusive rights to superhero characters. - Building strong distribution company can retain the Profit - Marvel most important characters are already being controlled by other rival studios. (Sony Spiderman - Fox Daredevil, Fantastic 4 and X-men) - Distribution deals with Paramount for next 5 movies. With Universal for Hulk Movies. - The need of enough capital

Choice 3: Constructing Theme Parks

Directional Diversification Concentric Creating Theme parks with Marvel characters.

Pros -Expand in Europe, Asia and MiddleEast, targeting the fans world wide.

Cons - Conflict with Universal, that hold a license for some of Marvels Characters in Orlando, Osaka and Japan. - Can not use characters assigned to Universal studios - The need of enough capital

Business Strategies
Based on choice #2:
Expanding the Film Production Operating Segment Business Strategy: Focuses on improving the competitive position of companys or business units products or services within the specific industry or market segment it serve. Competitive Differentiation For a company to make a movie bases on one of Marvel Superheroes characters, it has to get permission first from Marvel in return of royalty fee. To maximize the profit, self-produced films will result in enormous returns. Ex: the 1st Marvel movie, Iron Man results in $585M, 45% from non-US Markets.

In the absence of a distribution business unit, Marvel will continue relying on Paramount Picture, in return of a fee of 8 to 10% fee.
Another alliance may be perform with an anime company for animation movies production.

Functional Strategies
It is the approach a functional area takes to achieve corporate and business unit objectives and strategies by maximizing resource productivity. Marketing Strategy Using the Product development strategy, Marvel can produce new movies with different characters. With a Pull marketing strategy to advertise the movies through the distribution channels Financing Strategy The corporate and business strategies requires huge capital that is not currently available. Equity financing strategy which is preferred in Marvels related diversification. Managing Dividends; Marvel may not declare dividends at the beginning using the money to finance growth, or buying back the right of the important characters.

Functional Strategies
Research and Development Marvels comics arm is now viewed as its R&D unit for film. New Characters can be created and tested in the publishing division, and if there is any potential it can be moved to the silver screen. Operations Strategy As the manufacturing strategy is affected by the product life cycle, by Continuous Improvement of movie making techniques and technologies that attract the viewers. Human Resource As Marvel business depends on creativity and innovation, we believe that hiring Skilled employees with some racial diversity workforce will acquire higher productivity.

Implementation plan
The CEO of Marvel entertainment will be heading the strategic plan. The CEO's is to communicate a vision and to guide strategic planning. There will be a strategic planning committee consisting the senior management and board should involve. The senior management team must come together to review, discuss, challenge, and finally agree on the strategic direction and key components of the plan.

Developing program
The company should not licensed movie rights to third party production companies, Marvel will make its own films through its new movie production segment. However, in some businesses - toys, for instance - Marvel will continue to outsource production. Through unique structure, Marvel has secured increased participations in all revenue streams, including the retention of all profits. -In addition, Marvel will receive a gross participation in the form of a producer fee. -Marvel will retain all related licensing and merchandising revenue. -Marvel will own a library of completed films.

Budget allocation
The company holds a $525 million dollar credit facility with which to finance their film production, from which about $250 million is drawn. Interest coverage is a more than acceptable 20 times. Historical free cash flow margin is over 35%.

Organizational Structure
The organizational structure of Marvel including 13 main executives.

CEO

CFO

Digital Media group

Office of the president

Marketing

Consumer & marvel animation n

Organizational Structure
The organizational structure is functional in nature so the new production unit should be included in the organization chart to achieve synergy. Lower uncertainty and more stability

CEO

CFO

Digital Media group

Office of the president

Marketing

Consumer & marvel animation n

Film production

R&D

Decision process
Information and decision process Coordination and integration through structure, rules, planning and budgeting Use of integrating roles for project activity across functions Centralized functional Top control of strategic decisions Delegation of operations through plans and procedures

Human resource factor

Marvel continues to face challenges in industries that require creative talent. These industries are risky not only because of the difficulty of producing quality content, but because of the fickle nature of consumers . So marvel should hire the best talent in the film production and R& D to align its ability and to increase the organizational development level. Creating the Marvel experience is largely dependent upon the staff members. They are responsible for translating the Team Marvel approach into action. The Marvel should employs one of the most sophisticated employee training programs in the world.

Monitor
Implementation of balance score card system Development of KPI for Finance-ROI,PE Ratio Customer-Customer satisfaction, Churn rate Quality-Personal development, Employee attitude, Quality of the product, Leadership Market-Sales and Market share Reward and punishment system by implementing Carrot and stick policy.

Incentive scheme

Variable cost base

Responds to extra performance Links to corporate goals Flexibility in design and implementation

Evaluation
Assessing the result of the current strategy with the previous one with the help of KPI adjustment will be made if any change needed to achieve the objective.

Thank You Thank You