Curating a Media Business Strategy Through the perspectives of the Resource‐based theory and the Agency theory
As an organization or business entity, it is imperative to have an effective and well-curated strategy to create and implement a vision and a mission to direct the whole organization on a path to success. However, what is a strategy? Omalaja (2011) defines strategy as “a broad determination of the goals of an undertaking and the specification of alternative courses of action to be taken to achieve the predetermined goal of the undertaking.” By this definition, one can deduce that strategy is an essential ingredient when dealing with product‐market positioning and the overall implementation and execution of the organization’s deliverables to reap impactful results in the economic and social sphere. Having explained the term strategy in some detail, how then can one explain or describe strategic management?
Concisely, the process in which organizations/firms develop effective planning and policy designs to effectively allocate, utilize and monitor the organization’s resources to evaluate and achieve the stipulated objectives and goals is considered strategic management. By extension, Bracker (1980), postulates that strategic management entails the analysis of the internal and external environments of firms to maximize the utilization of resources concerning objectives. Moreover, Omalaja (2011) explains that strategic management involves understanding the strategic position of an organization, strategic choices for the future and managing strategy in action. However, it is safe to input that the methodology/process behind the curation of an effective strategy can be unique to an organization. Globally speaking, organizations’ strategic management processes might differ given the technicalities in internal forces such as operational efficiency, organizational structure and infrastructure. Thus the need for the incorporation of strategic management theories to effectively justify the difference in approaches and explain the origin, evolution, principles and applications of these varying strategic management approaches. Given the explanations of both the terms strategic management and strategic management theory, this paper will now proceed in briefly describing two types of strategic management theories which are; the resource‐based theory and the agency theory and explain how one of these theories mentioned above might have influenced the creation of media strategy.
Strategic management theorist and contributor to the resource-based theory, Barney, (1995) postulates that “the resource-based theory stems from the management philosophy that the resource of firms’ competitive advantage lies in their internal resources, as opposed to their positioning in the external environment.” Extensively, he noted that such advantage can be sustained over long periods to the extent that the firm can protect itself from resource limitation, transfer or substitution. Moreover, Barney, (1991) elaborated on the RBV theory by highlighting Firm-based resources into two categories, which are; tangible and intangible. Tangible resources include physical assets such as; financial resources and human resources, including real estate, raw materials machinery, plant, inventory, brands, patents and trademarks and cash. Also, intangible resources may be embedded in organizational routines or practices, such as an organization’s reputation, culture, knowledge or know-how, accumulated experience, and relationships with customers, suppliers or other key stakeholders. Furthermore, RBV theory also speaks of competencies/capabilities, which are resources that are deemed special or “specifically an organizationally embedded, a non-transferable firm-specific resource whose purpose is to improve the productivity of the other resources possessed by the firm.”(Makadok, 2001,p.387–401). Additionally, such competencies can confer a competitive advantage for the respective firm. Barney, (2001) defined competitive advantage as “when a firm can implement a value-creating strategy not simultaneously being implemented by any current or potential competitors. Other contributors like Fahy & Smithee, (1999) posit that “the resource-based view offers strategists a means of evaluating potential factors that can be deployed to confer a competitive edge”. In summary, The resource-based view (RBV) is a managerial framework used to determine the strategic resources a firm can exploit to achieve sustainable competitive advantage.
Contrastingly, the agency theory is a management approach where one individual (the agent) acts on behalf of another (the principal) and is supposed to advance the principal’s goals (Laffton et al 2002). The theory holds the view that there should be proper synergy between the management and its stakeholders to work towards a common goal. The Agency Theory has also been described as the central approach to managerial behaviour. Moreover, two key assumptions underlie agency theory. The first assumption is that all individuals are egoists. This means that everyone is assumed to act in their self-interest. That is, the agent will act or make decisions that are likely to benefit them and similarly, principals would expect particular actions or decisions that would work to their advantage. With that being said, if the interests of each party are not aligned, this will lead to agency costs. Shankmann (1999) postulates that Agency theory leads to agency costs which could be high expenses to the organization. Additionally, Agency costs, including fees associated with managing the needs of conflicting parties, are called agency risk. In summary, the agency theory stresses the underlying importance of the particular relationship between the shareholders (or company owners) and the agents (or company managers) in ensuring the success of the organization.
Moreover, given the description of each theory, it is safe to take this opportunity to highlight the applicability of one of these theories, more specifically, the RBV theory and its impact/influence on The Walt Disney Company media strategy. Through analysis, one can deduce that Disney, under the Resources Based View (RBV), strategically allocated an organization-specific resource that provides a sustained competitive advantage. Disney’s product, the character Mickey Mouse shows that an organization can sustain a competitive advantage if it has resource/s that is/are inimitable and non-substitutable. Disney uses product differentiation as its generic strategy for competitive advantage. Here one can witness the convergence of Michael Porter’s model and the teachings of Barney’s RBV theory as Disney’s media strategy involves curating a unique product offered to many market segments. For example, the corporation offers its entertainment products to practically every person in the world. However, its product Mickey Mouse caters to mainly toddlers, preschoolers and young children in the 2–5-year-old demographic. The core emphasis is on family-oriented programming, for example (Micky Mouse Club House). In this generic competitive strategy, quality and uniqueness through innovation differentiate the company’s products from competitors. Moreover, it is safe also to note the uniqueness of the Disney experience (Value added). Such as theme park products also market the Micky Mouse character and other famous characters known by the market niche. This strategy aids in enhancing Brand uniqueness and helps in achieving industry leadership.
Overall, this article briefly described two types of strategic management theories: resource‐based and agency theories and explained how Barney’s RBV theory influenced the creation of Disney’s media strategy. Considering the differentiation of generic competitive strategy in Porter’s model, intensive strategies must involve differentiation to grow the business. Also, By witnessing Disney’s media strategy, which contains a vivid influence of Barney’s RBV along with the use of an Integrated Marketing Communications approach whereby Disney utilizes multiple channels of media such as the advertising of Micky Mouse(unique resource) augmented products and its television programme Micky Mouse Club House via social media and analogue television and social/theme park events. All of which are components of Disney’s media strategy.
References
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