Importance of SWOT Analysis Case Study
Importance of SWOT Analysis of Electronic Arts
A SWOT analysis might be very useful for Electronic Arts Company to assess its slippage in the video-game market for various reasons. For instance, it will point at the company’s strengths in the market so that the management can uphold the business’ dominance. This is important because the company strength in the market shows its competitive nature and ability to remain the most preferred to many customers.
Secondly, a SWOT analysis will outline the weaknesses that the company faces as it goes about the normal business operations. Understanding the weakness will help the management to review and change its strategies, where necessary, to enable the company become more competitive. It will also enable the managers of the company to identify faults that have resulted to the weaknesses evidenced. This is because having adequate knowledge of the root causes of the problem facilitates the finding of workable solution.
A SWOT analysis for the company will also help the organization discover opportunities that the company can exploit to boost its profits and ensure sustainability. A number of opportunities are ahead of the company, yet the management seems not to have discovered them in advance. It is mainly through carrying out an objective SWOT Analysis that the company might realize its full potential.
Finally, an effective SWOT analysis would point to the potential threats that the company should be aware of as it goes about the daily operations. Discovering and acknowledging the threats would make the company management avert most uncertainties before they befall the company. Some of the potential threats to the normal operation of the company include competition, government policies and market response to its products.
The Application of Porter’s Generic Strategies Theory to the Company
Using Porter’s generic strategies theory, Electronic Arts might have lost its leadership in the video-game market to Activision Blizzard (AB), the company, which adopted the “middle of the road” strategy. Indeed, Porter argued that adopting this strategy is common in various organizations yet it is not healthy for making the entity competitive. From the information given, EA did not practice cost leadership, which according to Porter, helps organizations to lower the cost of production and subsequent procure a low distribution system. If the company adopted this strategy, it would significantly reduce the cost of its video games and fixed them at affordable limits for more potential customers. Having pioneered in the sector, the company ought to have enhanced its production facility to produce large quantities using minimum expenses.
The company did not lower its production elements such as procurement of items used for making video games, labor costs and distribution expenses. Lowering the costs would make the products more affordable. In addition, this would make them appeal to many customers who prefer cheaper products. Cost leadership would also ensure that the company increases production and achieves economies of scale. Perhaps, Activision Blizzard might have adopted this strategy to lower its production cost in order to achieve competitive advantage over EA.
The company also lost to AB due to low application of differentiation strategy. The company did not have a variety of products to increase the extent to which consumers could make choices. According to Porter, this strategy makes an organization very competitive, because consumers are sure of getting almost every variety that they need. The other assumption is that EA might have lost to AB, because the former did not concentrate on its niche market and targeted segment. Indeed, being able to satisfy the needs of the niche market and targeted segment would make the company very competitive, meaning that EA did not capitalize on this strategy. Consequently, its niche market shifted attention to Activision Blizzard where they could find a variety of affordable products.
Using the Miles and Snow Typology Theory to Advise Activision Blizzard
As Activision worked towards being the leader in the video-game market and beat the ailing Electronic Arts, the company should use Miles and Snow Typology Theory to maintain its leadership in this sector. For instance, with a market capitalization of $13.3 billion, almost twice that of EA in 2009, the company has the potential to create a remarkable impact in producing video game by analyzing, defending, prospecting, and reacting to consumer demands and strategies of their competitors. The actions that the company takes to promote its productivity under different situations will depend on the pressure that it receives from external forces, for instance, those emanating from other players in the same industry.
As a defender, the company should only have few varieties of products, but with high quality and reduced costs to attract as many customers as possible. This is important as opposed having several products of low quality, because customers are always looking for quality for the money they spend on every product. Once the company adopts this strategy, it will realize increased influx of customer, thereby translating to improved sales and dominance in the market. The company will ultimately achieve efficiency in producing more affordable video games for a wide range of consumers it targets.
As a prospect, the company should increase its domain in the production of video games. By prospecting on market demands, AB should discover various means of improving quality based on the latest industry trends so that it satisfies its customers. Using this system, AB will act as a change agent in the video production sector and takes over from EA. This will ensure that the company becomes the most preferred video producer in the market.
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As a market analyzer, the company should concern itself with identifying market dynamics and needs to ensure that it tailors its production to it. This is important because it will ensure that the company follows the demand and supply of products to meet the equilibrium requirements and control prices of its products. This will also help the company become profitable and sustainable.
As a reactor in the market, the company should always monitor strategies that competitors use in producing and selling their products. Upon knowing strategies, the company should develop and implement counter strategies to beat the ones that their opponents employ. This is the best way to maintain leadership in the sector.
A Strategy for a Start-Up to Compete with EA and Activision Blizzard
It might prove challenging to beat two dominant companies in the production of video games. However, proper strategy can ensure that an entrant in the field competes fairly with opponents. Therefore, the best strategy for an entrant will be to determine market trends and consumer preferences. Ideally, these aspects always change, and existing companies might be reluctant to change their production systems to suit new trends. Once a start-up company identifies the existing gap, it should move with speed to produce video games that appeals to different categories of users and, consequently, fill the gap. This strategy is cost effective since it will only depend on the feedback that a company receives from potential video game users, their preferences and the amount they are willing to pay for such products. After a company has identified the industry trends, it would be able to predict the future changes and tailor its production in that line to meet the future needs of consumers. As a result, a start-up company will emerge as another preferred producer of high quality and cheaper video games in the industry and competes fairly with EA and AB.
Aspects of Activision’s Strategy that Led Me to Play More of Its Games
I am fond of playing Activision’s games. The company’s strategies that have led me to like playing its video games include creativity, level of user friendliness of games, and its commitment to a variety of games. The level of creativity that the company manifested in creating its video games was passionate and led to the production of thrilling video games that rocked the entire North America and Europe. I also became passionate about the company’s games and enjoyed playing them a lot. All the games are entertaining, and users achieve emotional satisfaction as they play. Moreover, the games are user friendly and even first-time players do not face difficulty when playing such games. This aspect also made me like most of the games that the company sold. The other factor was the company’s commitment to the production of a variety of games. I usually find several games that I like from the assortment of video games that the company produces, thus making me like the company.
On the other hand, if I was not a video game player, the aspects of Activision Blizzard’s strategy that might induce me to try a few of its games include the company’s commitment to a variety of games that make it easier for customers to choose. Moreover, the production of user-friendly video games that do not need someone to instruct a player makes the company appealing. Always, video game players prefer different types of games at various intervals. Therefore, the extent to which a company can match consumers’ needs would determine the level of preference of its products. The same also occurs when the video games are easier to use, thus the player may not need much technical assistance when playing. This increases consumers’ interest in the games; hence, he/she might become a potential customer to the company. Activision Blizzard seemed to have mastered these two strategies; thus, overpower EA in this sector.