Week 2 seminar MYSpace

Week 2 seminar: MySpaceGeneral observations of the case:  News corporation appears to following the stance of Chandler in its deliberate definition of its long-run goals and objective

Strategic concepts

3BM020 – week 2 seminar

Week 2 seminar: MySpace

General observations of the case:

 News corporation appears to following the stance of

Chandler in its deliberate definition of its long-run goals and objective (‘a leading and profitable internet

presence’) and its actions to carry these out (the

acquisition and subsequent investment in the technology platform)

 The positioning of MySpace is distinct from Facebook and reflects Porter in its concern for uniqueness

 On the other hand, the entrepreneurial spirit of the

founders, being reluctant to prioritise and trying many initiatives, is reflective of Mintzberg, allowing the

dominant strategic direction to ‘emerge’ from what turns out to work

General observations of the case:

Conflict of focus is apparent in that the founders seem more interested in launching a new film studio, their new owners, News Corporation, are more focussed on the more short term target of for increasing advertising revenues

Arguably, MySpace is concerned with business-level strategy, specifically in how to compete

against Facebook

News Corporation’s issues however are more

focussed on Corporate level strategy: how to

manage the whole portfolio of different

businesses, including MySpace

Question 1:

Consider the business level strategy issues:

The competition from Facebook at the time of the case scenario and in the future – (no

doubt you all use Facebook now) what are

your views and opinions on this?

Think about value in terms of the potential to earn profit, not just in terms of what you like

to use as consumers

We will explore this later in the lecture series

by linking into the VRIN/VRIO framework

(Value, Rarity, Inimitability, Non substitutable)

Question 2:

This question is related more to the corporate

level strategy, especially the implementation

issues

Some of you may support the entrepreneurial

spirit and free-wheeling approach to strategy of the MySpace founders – emergent strategy

Others may support the Chandlerian approach of News Corporation definitive approach to strategy formulation – prescriptive/planned/ deliberate

approach

Which approaches do you think were sensible or required, and which were less so?

 Alan Van Natta was fired by News Corporation in February 2010,

less than a year after his arrival By this point Facebook had four times as many users as MySpace The rest, as they say, is

history….look at Facebook now and look at MySpace now.

 January 2015 Facebook reports fourth quarter profit of $701m

(£462m), a 34% increase on the same period of 2014

 Total profits for the year were $2.9bn, almost double the total from 2013

 Advertising revenue grew by 53% to $3.59bn, approximately 70% coming from mobile ad sales

 The amount of profit made on each dollar of revenue decreased

from 44% to 29% from a year earlier, as the social network invested more heavily in marketing and research and development

 Facebook users approximately 1.39 billion active users each month