Questions:

1. There have been several attempts to explain Marvel’s success via competitive strategy
but they fall flat: competitive strategy, with this specific case, neither predicts nor
explains the outcome. Why?
The attempt to explain Marvel’s success via their competitive strategy can not be realised for a
simple reason that Marvel wasn’t competing with any other companies, especially DC comics.
But at the opposite, they were trying to get back to industry after losing focus on their core
businesses, and diversifying their portfolio on different others sectors, which made them far
from competing with other big brands such as DC comics. The strategic moves, and the
repositioning that was always followed by Marvel in order to be in a blue ocean is the one that
allowed the company to be successful after facing the bankruptcy risk in 1996.
So basically, the industry situation was the same as the 60s when Marvel was successful, but the
management team and the value proposition that changed dramatically during the years is the
one that made the proposition value of the company going lower until it was rescued again.
Also, and in order to know how was the competitive environment of the company, and the
different external factors that are perceived to impact Marvel, we’ll use the 5 forces analysis

New entrants
(low)
requires high skills and
huge investments

Competitive
rivalry (high): Buyers (high):
Suppliers (low): - limited number Can switch easily for other
small number of studios of competitors genres
with high power
with high quality Motivated by creativity
productions.

Substitutes (high):
other offers are available
in the market

framework of Michael Porter.

 Exhibit 1: 5 forces of Michael Porter.
● New entrants: the risk for new entrants is low, and that’s due to the high and costly
investment required for entering both the cartoon industry and the movies industry, and
with such a diversification, and the quality of characters that were created by the brand
Marvel, and the value proposition that changed after the crisis of the 90s, the brand
made it hard for others to think about investing in the industry.
● Buyers: their impact is really high on the industry, and that’s because they can switch
easily from a book to another, a movie to another one, or a genre to another one, and
they can be motivated for these moves by the quality of the productions.
● Substitutes: with such a fragmented industry, the companies are finding themselves in
the obligation of producing some high-quality outputs that’ll maintain the customers
from going to substitutes, such as movies in others genres for examples.
● Suppliers: in either the cartoon or movies industries, suppliers can’t exercise a huge
impact on the companies, and that’s mainly due to the limited number of producers and
the high number of suppliers.
● Competitive rivalry: a highly risky one, and even if stayed the same, but if a certain
company had a bad year when it comes to production, then they’ll be sure that they’ll
lose profits to their competitors, DC in this case.

2. If Marvel had spent more to hire top-tier movie stars, well-known directors, and
moved forward the Hollywood Way, would the movies have performed better?
From a practical point of view, hiring top-tier movie stars and well-known directors will lead to
more requirements, when it comes to investment and financing that’ll reduce the profits
projections for the movies.
The business model that was followed by Marvel was unique in a way that didn’t follow the
standards followed by the other Hollywood producers, which made them at the end unique
even when it comes to the story telling.
Also, the well-known directors won’t accept to follow literally which story to tell and which
scenes to cut or to change in order to reduce the costs, which means that Marvel, that was at
that time struggling and willing to start from the scratch, won’t be able to afford all the money
needed for the production, and also will be risking a huge part of its capital which isn’t the
strategy that was specified by the management team.
Another point related to the movie stars, is that hiring a top-tier movie star won’t make your
movie successful by definition, but the interest that the actor has in the subject of the movie,
and the objectives is the main one, and that’s why Marvel studios, with their flexible
bureaucracy were able to recruit different actors in a short period of time.
Finally, hiring all the top-tier movies stars and directors will lead to an increase in the number of
workers, and especially in the middle management in order to take care of there specific needs,
which’ll have a huge impact on the financial performance of the productions.
And that’s why the Marvel studios, should stick to the same strategy that they were following,
because they were looking for actors that’ll fit their value proposition, and not others, outsiders
that can be, sometimes, not fit for their values that helped them to be always positioned in a
blue ocean.
3. Why do or don’t you think Marvel broke the value/cost trade-off?
Marvel made it possible starting from 2006 (after starting the Marvel studios) of breaking the
traditional value/cost trade-off because it was the only way of starting from the scratch since
that the company had difficulties during the late 1990s by following a unique business model
that wasn’t mutual either in the cartoon or the movies industries, and that was realised by
respecting the following factors:
● Hollywood style operation: that was highly eliminated compared to the other studios.
● Co-owned infrastructure: that was eliminated since that the company was an
independent studio.
● Top-tier movie stars: were reduced, which had a huge impact on the cost.
● Middle management: the company was flexible when it comes to taking decisions, they
had a flexible bureaucracy.
● Creative culture: having a highly creative culture that was enhanced after having the new
management team.
● Emotional connection with customers: they felt that the superheroes represented them.
● Creative committee: that enhanced creativity in the company.
● Unique financing scheme: a totally different one from the traditional ones in the market.
ERRC:

Eliminate: Raise:
Hollywood style operation Decisions taking process
Co-owned structure flexibility
Creative culture

Reduce: Create
Top-tier movie stars Emotional connection with
Middle management customers
Creative committee
Unique financing scheme

Exhibit 2: ERRC framework.