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Electronic Arts:The Blockbuster Strategy
Group 9: Li Shuguo, Liu Yazhuo, Tanda Song, Han Jie
Summary:
 
Since resources and capabilities are the primary sources of profitability, we first
identify EA‟s resources and capabilities and find its competitive a
dvantagethrough primary and support activities.
EA‟s human resource and knowledge
management is their key advantage. EA make efforts to go across multiple
 platforms to make easier transplant and deploy globally. EA‟s in
-storedistribution helps to gain higher margin and better market awareness. EA has agood cooperation with other companies to work more effectively.
 
The main difficulties faced by EA to sustain the competitive advantage sourcedfrom two aspects. On one hand, from the external perspective, the first problem ishow to hold the talents in the acquisition company; even though the elitist can behold, the concretizing
of two different company‟s culture can still be
a criticalissue to handle. At last, it is so hard to find the right person with both theentertainment background knowledge and the experience in game industry. Andon the other hand, from the internal perspective, the communication within thecompany is still one of the biggest blocks to the development of the company,which cannot easily solved by email. In internal part, we analyze thecommunication and Intellectual capital.
 
To sustain the competitive advantage in the future, we propose analysis andimplementation in the following three ways,First, make it more efficiency and fully,Second, identify opportunities, online game and Asia
Third, correct the weakness, Wii
 
Considering the fact that the rules are partly sourced from the movie industry andthese two industries indeed have lots of characters in common, we decide toapply the rules to the movie industry. Because of the inherent advantages overcontent and marketing owned by the movie industries, we mainly focus on thepart of process management of the rules this time. Firstly, separating the rolesmore clearly by responsibility; secondly, setting up the milestone for thedeveloping process; and finally, increasing the feedback during the production
 
 process. These “rules” can be a new guide to the developing of movie; meanwhile,
to overcome the limitations of these measures, we have to balance all the factorsand make the right trade-off at the right time.
The source of EA’s competitive advantage
 
The video game industry is a hit-driven business, where small number of blockbustertitles generates most of the profits. No firm produced more hits than EA.
1
A firm‟s
resources and capabilities offer a more secure basis for strategy than market focus,they are the primary sources of profitability.
2
 
Step 1: Identify firm's resources and capabilities
We first identify firm's resources and capabilities in table1 and table 2.
Apprising EA’s Resources
 RESOURCE CHARACTERISTICS
Tangible Resources FinancialPhysical
 
Cost efficiently
 
Intangible Resources TechnologyReputation
 
Artist and Technical employees'the world's leading video game publisher'Good brand loyalty to customersHuman ResourcesTraining, experience, adaptabilityCommitment and loyalty of employeesTalented and creative producer & directorEA's experienceTraining rules
 
Table1
 
Identifying EA’s Organizational
CapabilitiesFUNCTION CAPABILITY
Corporate Management
 
Affiliated companiesCRM companiesMovie companiesMIS
 
Knowledge sharingR&D
 
Produce hit titles
 
Manufacturing
 
Multiple Platform FlexibilityDesign
 
Innovation
 
Marketing
 
EA LabelsSales, Distribution
 
In-store Distribution
 
Table 2
1
 
MICHAEL A. ROBERTO, GINA M. CARIOGGIA, Electronic Arts: The Blockbuster Strategy, 2004
 
2
 
Robin slide page 43
 
 
Step 2: Explore linkages between resources and capabilities to findcompetitive advantage
Michael Porter argues that an organization can enhance its competitive positioning byperforming key internal activities in the value chain at a lower cost and better than itscompetitors
3
. Since activities are basic units of competitive advantage, we use
Porter‟s value chain to look for EA‟s competitive advantage through major and
support activities and come to the following conclusion as source of competitiveadvantage:
 
Good Human Resource and Knowledge Management
 
EA‟s human resource and knowledge management is their key advantage. EA has very
good reputation for its talent executive small group. All of these cumulated successful
experiences are the huge treasure. Actually; EA‟s internal network is kind of an
informal but more opening organization which makes it easier and more convenientfor the employees to learn and share knowledge. The new releases of products aremainly due to the successful coordinating of human resource. In addition, EA alsolaunched the Field Guide Initiative- a project intended to leverage the knowledgepresent in EA studios so as to maintain and enhance its advantage furthermore.
4
They
develop an internal web site to share art and design tools and combine experts‟
knowledge in the way of listing rules for training and sharing. They also have amobile e-mail solution to make information access work better.
 
Multiple Platform to make easier transplant
As a global company, EA make games across PlayStation 2, XBOX 360, GameCubeto make easier transplant. Gibeau said: "Our basic competitive advantage is that wecan publish games across multiple platforms simultaneously in a cost effective wayand in multiple languages and deploy it globally better and bigger than anybody else"
5
 
 
In-store distribution (market & sales) to gain higher margin and betterawareness and reduce cost
EA distribute games directly to retailers and launched EA Affiliated Labels.EA's in-store distribution capability became one of the firm's distinctive capabilities.
6
 
 
Cooperation with other companies to work more effectively
Cooperating with RightNow® to optimize its customer relationship management(service), EA recently gained the Gartner CRM Excellence Award.
7
In order to work more effectively, EA usually make core productions itself such as sports games, andcooperate with other small companies to complete some other productions, which canturn complex jobs into simple ones.
3
 
Bartol et al, 1993: 211
 
4
 
MICHAEL A. ROBERTO, GINA M. CARIOGGIA, Electronic Arts: The Blockbuster Strategy, 2004
 
5
 
Jeffrey Fleming,
 
we see father: a history of EA, 2007
 
6
 
MICHAEL A. ROBERTO, GINA M. CARIOGGIA, Electronic Arts: The Blockbuster Strategy, 2004
 
7
 
Electronic Arts relies on RightNow® to cost-efficiently support global growth and brand dominance, RightNow®
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