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APPLICATIONS OF STRATEGIC MANAGEMENT CONCEPTS TO MEDIA PRODUCTS

The strategic management frameworks and constructs discussed thus far present a fertile ground for both theoretical propositions and empiri- cal investigations from media management and economics scholars who are interested in studying firm behavior and performance. Consid- ering the economic properties reviewed in chapter 1, although some of the concepts might be applicable, some would need to be modified. For
instance, “intangible,” “content-based” media products may be stored and presented in various formats. A strategy of “related product diversi- fication,” which extends a media firm’s product lines into related con- tent formats (e.g., print and online content), typically benefits firms by enabling content repurposing, marketing know-how, and sharing of production resources and thus is likely to be preferred over many man- ufactured tangible products. It is also logical for media firms to seek out distribution products and content products that complement each other because the two are inseparable in consumption. Furthermore, because of the importance of cultural sensitivity and understanding of the regu- latory environment, media firms are more inclined to diversify into re- lated product and geographic markets to take advantage of their acquired local knowledge and relationships. The dependency on local communication and media infrastructure may also lead to a strategy that is geographically related (i.e., regionalized). This is because geo- graphically clustered markets are often at similar stages of infrastruc- ture development, and clusters of media distribution systems may lead to cost- and resource-sharing benefits. The dual-revenue source mecha- nism and the public-goods characteristic of media content products also drive firms to offer media content that appeals to the largest possible group of marketable consumers. This is because a larger number of sub- scribers or bigger audience adds to the value of advertising spots or space with minimal incremental costs for the firms. On the other hand, because of the heterogeneous, nonstandardizable, creative characteris- tic of media content products, intangible resources become especially es- sential in building competitive advantages. As a result, small firms that do not have access to a mass audience but that possess unique creative resources still have the opportunity to achieve superior performance. Next, some examples of applying strategic management concepts on media products are presented.
Resource Typology in Media Industries
The property–knowledge resource typology presents a meaningful sys- tem for classifying and analyzing media firms’ resources because knowledge-related resources are particularly important in developing competitive advantages in a media industry where the end product is mostly in the form of “intangible content,” where “creativity” and “in- dustry knowledge” remain the essential elements in the production of the content product, and where “content” is often seen as the key to suc- cess in any media distribution system. Furthermore, because of the fact that today’s media industries are entering a period of unprecedented changes brought about by emerging new technologies such as the Internet and digitization, examinations of knowledge-based resources for media firms are becoming more critical. For example, applying the property–knowledge resource typology, Landers and Chan-Olmsted (2002) studied the broadcast television networks’ changing strategies
longitudinally as the broadcast market becomes less stable due to many technological developments. The notion of market uncertainty might be another important factor to investigate. As Miller and Shamsie (1996) discovered in their study of Hollywood film studios, both discrete and systemic property-based resources led to superior performance in the stable environment, whereas knowledge-based resources led to superior performance in the uncertain environment.
Landers and Chan-Olmsted (2002) suggested that resources such as affiliate contracts (or franchise agreements for cable television), station ownership, top content or news properties, and content or product copyright might be considered property-based resources, whereas tech- nology management, audience expertise, talent pools, and content multipurposing expertise might be viewed as knowledge-based re- sources. Logically, the list of resources would be somewhat different de- pending on the nature and the value chain of the particular media market. For example, for the newspaper sector, distribution and print- ing properties represent essential property-based resources. Note that knowledge is a difficult resource to measure because of its fluidity. Most strategy studies have used proxies for knowledge-related variables un- der the assumption that firms acquire more knowledge about activities they invest or engage in to a greater extent (McEvily & Chakravarthy, 2002). In the case of media industries, film and television program awards as well as managers’ average tenures have been used as proxy measures for such a variable (Landers & Chan-Olmsted, 2002).
Media Product Taxonomy
As discussed earlier, technological development is constantly changing the degree of substitutability between different types of media products. For example, the increasing application of digitization is blurring radio product consumption patterns as more and more audiences begin lis- tening to radio stations on the Internet. As a result, it might be fruitful to examine the audio product or the providers of the product from the perspective of the consumer rather than of the radio industry. In other words, as technology shifts more control and power to consumers, me- dia strategies and “competitive dynamics” may be evaluated based on consumer rather than industry factors or definitions.
One example would be to review the relative positions of different media firms using consumer-based concepts such as “risk involved” (i.e., time and cost invested) and “degree of involvement.” Chan-Olmsted (2006) proposed such a media product taxonomy. Media products like the Internet, broadcast radio and television, cable televi- sion, books, and magazines are classified based on how involved a typi- cal consumer might be with the specific media product and how much time and cost are required to consume the product (see Fig. 2.1). These factors influence consumers’ perceived risk and thus their assessment of the value of that product. For instance, whereas the Internet, by nature, is a relatively more involved product than broadcast television, pay ca- ble is often perceived to involve more risks and is, therefore, subject to different value scales than the mostly free Internet content product. On the other hand, paid Internet content product is evaluated differently as it moves to the right on the “risks” scale. The taxonomy may be used to assess the competitive dynamics of various firms in a particular media market or a mixture of media markets. It may also be used as a tool for analyzing corporate strategy portfolios. The integrated factors of risks and involvement are only one example of a consumer-based framework for analyzing media products and firms. As technology continues to re- shape the media landscape, strategy scholars need to construct more theoretically sound taxonomies to reflect the changing nature of media products and to take into consideration the factor of consumer choice and consumers’ changing degree of control over the media products they consume.
A Media Strategy Research Framework
Incorporating both the IO and RBV concepts, Chan-Olmsted (2006) pro- posed a system of factors that might affect the formulation and imple-mentation of strategy in the media industries. This analytical framework integrates both exogenous and endogenous variables and serves as a be- ginning point to stimulate more media strategy inquiries (see Fig. 2.2). Theoretically, a media firm’s strategy (formulation) and its ability to exe- cute that strategy (implementation) are influenced by a combination of external characteristics relating to the general environment and a partic- ular media market in which the media firm operates. General exogenous factors, such as the economy and technological advancement, affect the interplay of the six forces present in a specific media industry (i.e., audi- ence preferences, substitutability between different media products, sup- plier–buyer relationship, in-market competition, and threats from potential entrants), ultimately impacting the strategic behavior of a me- dia firm. The environmental complexity is further complicated by a series of firm capabilities and resources at the business and corporate level, which shape the firm’s strategy. Either property or knowledge based, a media firm’s corporate structure (e.g., its degree of vertical and horizon- tal integration with other media properties, its product and geographical diversification, and its windowing and resource alignment corporate ca- pabilities) along with its specific business unit resources and capabilities (e.g., cross-media integration and marketing) directly determine the type of strategy formulated and implemented. Adding the essential factors of strategic leadership and entrepreneurship, along with the consideration of competitive dynamics in an industry, the framework presents a useful starting point for analyzing the antecedents of strategic behavior and predictors of performance.

FINAL THOUGHTS

This chapter has examined an array of strategic management theories for further applications to media products. For research ideas, media man- agement and economics researchers may also want to survey the schol- arly work published in the top strategy research academic journals: Strategic Management Journal, Academy of Management Journal, Academy


of Management Review, the Journal of Management, and the Journal of Management Studies (Park & Gordon, 1996). The fluidity of media indus- tries, due to the continuous changes in communication technology, cre- ative development, and audience preferences, encourages the introduction, incorporation, and testing of new paradigms. In fact, we believe that a multiplicity of theories is needed in this area of study be- cause media management and economics, by nature, are multidimen- sional disciplines. Chapters 5 to 9 empirically showcase some additional applications of the concepts discussed here in a media industry setting.