This will talk about the importance of doing an analysis in organizations in the internal and external spheres, but to a great extent the margin of importance of studying what we will call later as the Macro Environment. Because normally, when speaking of defining a strategy, it is defined by competition, but the current reality encompasses higher margins, such as lifestyles, values, which in reality have been undervalued, but which prevail in the Macro Environment, such as schemes that can affect the industry.
For this reason, next we will deal with the issue of competitiveness, such as having a real diagnosis of the affects of the Industry, but in addition to that the importance of carrying out a good strategy, with success, instead of developing excellent strategies but that are not in the interest of the industry to which it belongs, or worse, bad and unsubstantiated strategies.
Finally, I decided to put the framework of the study in three parts, internal part, external part, and competition, because the competition is so complex and broad, that it is clear as something external, but separate, giving it more relevance.
INDUSTRIAL AND COMPETITIVE ANALYSIS
According to the aforementioned, the following will be taken into account to see how the industry is in the television market, taking into account the following three points:
Macro Environment
Analysis of the Organization's external environment
Internal situation of the Organization
Due to the aforementioned, the following 7 questions will be developed as part of the investigation of the INDUSTRIAL AND COMPETITIVE ANALYSIS.
It should be clarified that it is mentioned as an industry, because it refers to companies that have similar attributes within themselves and compete in between, for position in the market, growth, buyers, etc.
FIRST QUESTION
WHAT ARE THE KEY CHARACTERISTICS IN THE INDUSTRY?
We will start by talking about the size of the current market: The average television market per year, invests around US $ 250 million, because it dedicates to Family entertainment programming, constantly requires new ideas to meet the needs of broad markets such as: Young people, housewives, children, news, sports, education, animation. Due to this, he invests a large amount of money, and likewise, this is reflected in the growth he has had, which I will talk about later.
Scope of Competitive Rivalry: The rivalry here in this market is very high in a very strong national level, but now according to level and economic means, a large part of the Hispanic population has emigrated to the USA, the rivalry is not only to arrive with means of entertainment for the Mexican population, currently includes the Hispanic community throughout Latin America, which is spoken of in numerical numbers around 25,000,000 million people in the USA and 100 million in Mexico, a market that is too large. The competition has great positioning at national and international level.
Market Growth Rate: It was 8% due to the acceleration in domestic demand that occurred since October in various economic sectors, such as the automotive, consumer products, domestic, tourism and telecommunications.
Our quality content was a key factor for sales, we took special care in providing the necessary gross rating points in the fourth quarter to satisfy the increase in demand due to the seasonal effect.
Number of Companies in the Industry: 5, based in the Federal District, which in turn cover parts of the province. Of these 5, the two strong companies with Televisa 55%, Tvazteca with 38%, channel 11 and 40 are very small and do not have a lucrative purpose in the middle as competition. We are talking about a market dominated by large companies that have been on the market for an average of 30 years.
Customers: The company's share of the television advertising market will grow to more than a third of what it has now (1,243 customers and approximately 3,000 brands.
TV Azteca programming focuses on the demographic segments of the socioeconomic levels ABC +, C and D +, which make up the commercial audience. These consumers have the income to purchase brand goods and services, and are therefore susceptible to advertising. The commercial audience represents 63% of the Mexican population and controls 92% of household income.
The sales force of television media is 95% advertising, the better programs are made that reach the population and obtain high ratings, hence the customers who want to make themselves known or make a new product known, decide to make them in high-profile programs. Riting, for example a mid-day program, are generally advertised by brands of toiletries, food, clothing, etc., and it is one of the markets with the highest rainfall and productivity.
Degree of Vertical Integration: Television has been profitable since before, for making certain products or services known to the world, and will continue to do so, except that as the market progresses, they rely on tools such as the Internet to always get information on time. This guarantees the growth of the clients in great proportion.
Ease of Entry Exit: Currently the possibility of an entrant is very difficult due to the high cost of the means necessary to have a channel, gain credibility and above all have the economic means involved in going on the air (Communication antennas, satellites, technology, infrastructure The barrier level is very high, the average cost is 125 Million Dollars.
Technology and Innovation: The technoogy here in the media sets the standard, because whoever has the best signal, digital technology, online programs, virtual offers, is the one who is managing to position himself in the market, according to the latest financial performance report Tvazteca invested in 2003 46% of capital to Technology.
Product Features: They are actually similar, here ideas, programs, sales techniques are constantly copied. Etc. But regarding the characteristic of which is the product is to make training programs classified as follows:
Novels
News and sports
Realitys Shows.
Comedy shows
Education and children.
They are the same as the competition.
Economies of Scale: It is good because the organization has invested and has made a profit in the production of programs, which has attracted more clients that want to advertise and also shareholders. In turn, costs have decreased as a result of the increased size and efficiency of the market expansion, now also to the USA.
Capacity Utilization: High efficient compared to December 31, 2003 with expenses of 234 million against sales of 633 million, it is of solid profitability, in the last year it has focused on the efficiency of: Budget, Production with control parameters cost, according to EBITDA, Earnings Before Interests, Taxes, Deferreds and Amortizations (It is the result of a company before interest, taxes, deferred charges and amortizations.) That of Tvazteca was 48%.
Industry Profitability: The profitability of the industry is very high, with high rates of profit, it is a growing market, which requires high and competitive financial resources. The industry is strong also because practically the market is compacted by 2 rivals Tvazteca and Televisa, the others are not for profit, they are from the government and do not affect the market, they are too weak. For this reason, this makes this part of the industry powerful.
SECOND QUESTION
WHAT IS THE COMPETITION AND HOW POWERFUL ARE EACH OF THE 5 COMPETITIVE FORCES ?
| 1. Within central ring point between competing vendors, |
| The very marked type of rivalry is that it is a type of compact industry, that is, a smaller number of rivals, which makes them more powerful individually.
Second, the kind of powerful rivalry, in what way, that there is discontent when one television show is more rated than the other. Then, discontents are generated and it begins to improve at the expense of rivals, because what matters is to recover the market position. It could be said that the type of rivalry that is handled in the industry is to get a position in the market at the cost of anything, it is what they call in the book as ruthless or brutal, they are constantly attacking themselves and their tactics are aggressive. |
| 2. Within the Two Entry scheme of new competitors |
| In this sector it is very marked by economic barriers, it requires a large capital to enter.
There are major cost and resource disadvantages; As the market positioning, the great demand for technology that it must have and that is why they work as a team with giant suppliers, in the case of Tvazteca, it has an agreement at the Technology level, with Compaq and IB, very strong with years of anticipation. As mentioned previously, inability to equal technological knowledge, since at the television level, the highest income even 46% per year is made in technology. Finally, the government barriers because they have controlled this market. The only possible entry of a rival or competitor is one already established, such as TELEMUNDO and that decides to implement a channel nationally in Mexico, which already has the knowledge, technology, positioning, etc. |
| 3. Competitive Pressures of Substitute Products: |
| A determining factor has been marked on television, against magazines, newspapers, and the Internet, because news is found, customers can opt for this type of advertising that is cheaper. For this reason, Tvazteca and the industry have chosen to also release magazines with information on novels, sports, economic news, that is, for those who do not have access to television, there is an alternative to see it through magazines and the Internet, likewise, customers keep them because I sell them cheaper. This is an alternative that has been marked due to competition and rivalry. |
| 4. Competitive Pressures Emanating from the Negotiating Power of the Supplier and its support between him and the seller |
| The means of working with suppliers is to make contracts for a minimum of 5 years with the suppliers and work with him as one more member of the organization, the objective is to gain loyalty as the case of Compaq that for 8 years . Its purpose, to reduce costs, inventories, is an advantage for supplier and buyer. This here is not a problem of rivalry with the competition because there are too many technology providers. Today is what the industry invests most in. |
| 5. Competitive Pressures Emanating Buyer Negotiation and collaboration between seller and supplier |
| It is similar to the agreement with suppliers, nothing more than that at a television level the cost in this case of advertising is very high, for which contracts or blocks are managed with clients and everything must be paid in advance. There are agreements that favor the parties, to guarantee their fidelity. For example the case of Dove, is a customer for all its fixed products with a 5-year contract, great benefits and guidelines at the best times. It is a market in great demand and few competitors. |
QUESTION THREE
WHAT ARE THE DRIVERS OF CHANGE IN THE INDUSTRY AND WHAT IMPACT WILL THEY HAVE?It has a lot to do with the driving forces, they are very fluctuating changes that can affect the industry, as are, without a doubt, Globalization, rapid change in technology, etc.
Among the most important are:
Changes in the industry's long-term growth rate:
In previous months, a protest movement was generated by several legislators who, motivated by the political ideas that sustain the world summit of the information society, sought to organize a block of Mexican legislators to obtain important modifications in the Federal Radio and Television Law, This is troubling and should be alert. I believe that as in any industrial or service activity, the most important challenge is to offer the highest quality product or services at competitive prices.
In general, it could specify that the challenge of the industry lies in constant modernization, renovating our technologies and organization systems (marketing, administration, sales and programming), to keep up with the demand.
Attached Graph of growth of the television medium taken by the National Chamber of the Radio and Television Industry
There is no doubt that television has been a fundamental engine of change and progress in recent decades. Industry has complied with society, has been a decisive factor in its development and has become an instrument of growth and representation and image.
Product innovations
40 Cellular Television signals, in South Korea since 2002 it is possible to receive TV programs on cell phones through the telephone signal itself. Starting in the third quarter of this year, mobile phones will be available that will be able to receive satellite TV signals, along with the appropriate service. It is one of the latest technologies launched on the market and that will be seen soon in the industry to obtain exclusivity.
One of the parts of the product innovation has also been the Reality Shows, which have doubled the ratings of Television and also the advertising of the brands, since for example a product is spoken at the time of transmission of the program has been of great success, for the channel that transmits it as for the company that pays for the commercial.
Likewise, by law, television networks must present innovation plans for children. Tvazteca in this case has the Disney exclusive of all its films in the children's field, this generates growth, image, advertising.
Increase in globalization in the industry
The State has become a progressively weaker reality that does not have the capacity to direct Mexican society towards its own and autonomous cultural project.
After the entry of the free trade agreement, the industry has been affected by the idea of generating capital, attracting more investment to the country, and one way to do it is by increasing the television advertising that it generates in order to sell the goods to speed up the process of circulation of capital, is to finely prostitute the image of women to present it fundamentally as an object of sexual use, to add false qualities or "fetishize" products to make them more attractive, to create artificial needs in consumers to encourage buying, to make people believe that the value of people derives from the brand they choose and the progressive acquisition of more transnational products, etc.
National values such as ecological protection, food production, care for marginalized sectors, promotion of women, acceptance of indigenous groups, care of the elderly, etc. have been left in the background, unfortunately although this left a high profit margin globalization has only generated bringing money for money, I would say programs like Brig Brother that teaching or education bring benefits to society, of course it leaves exaggerated profit margins for industry and society and the culture where they are, someone really cares about this.
QUESTION FOUR
QUESTION FIVE
WHAT STRATEGIC MEASURES ARE RIVALS LIKELY TO TAKE?
In this market it is a fact that the competitors are very aware of each other, in general it was mentioned previously the type of rivalry is brutal or ruthless because, because programs are usually copied, in the field of talk shows programs, they attack the type of programs or strategies that the competition has.
As for the market they want to cover is national and international, to gain ground and more audience, and that in addition to this attracts strong clients who advertise, according to statistics, reality shows, such as Big Brother, the academy, etc., have It had a surprising success, which is that chains will follow this pattern for the next two years, Customers for their part, according to statistics carried out and published by Kodak thanks to a hedge program in which it had exclusivity and all the time there was talk of magnetic roll Asa 4oo, sales increased by 17% nationwide. For this reason the rivalry is very closed and what one does the other copies. Television channels have a specific area or department that constantly reviews the steps and strategies of the competition.
QUESTION SIX
WHAT ARE THE KEY SUCCESS FACTORS?
TECHNOLOGICAL SCOPE: It is undoubtedly one of the strongest, due to this and the aforementioned to all the work, most of the investment goes to Technology, because it depends on the speed, the effectiveness of transmission, innovation in Spot, digital media, satellite media to cover more areas of the republic, from this technological point emanate a good relationship with the customer, you can access all your information, billing, remotely. Currently, the use of the Internet at the television level sets the tone, access to news, information, sales and balance reports, 30% of Success negotiations are currently done on the Internet.
PRODUCTION: From the previous point depends the quality of the production of programs, commercials, that the information is transmitted on time, that high quality prevails, the backing of the information, keep up-to-date technology, as it is currently, everything It has to do with digital television, better sound.
PRODUCTION: At this point, the fact of having good technology, due to the delivery service, for example, of an advertising Spot, lies in having a good signal, antennas, satellites working, if you have high quality, this is not- fails, the message arrives on time, so this will speak well of the distribution of information or sending messages to the public / audience.
MARKETING: It is one of the most relevant points here, one of the main guiding means to know the profitability of television, it is he I publish, for that reason, constantly, surveys are made at national and international level, he manages routes to find out if a program is of interest to society. The role of marketing plays a very important role in this environment, for example, during holidays, the industry generates brainstorming, to generate interesting and educational programs for children.
Unquestionably, here the competition is stronger, in fact the other three chains marked on the map as competitive and rivalry, such as channel 11, 40, and channel 4, since it has an exclusive channel or ample space for children something that Tvazteca does not own, and it is a large lost market.
QUESTION SEVEN
THE INDUSTRY IS ATTRACTIVE AND WHAT ARE ITS PROSPECTS FOR SUPERIOR PERFORMANCE
Growth potential: It is high, for several reasons, the first is a market dominated by 2 organizations, at the government level it is very difficult to enter the market, therefore, what is already positioned even if it is small can grow.
Within the framework of the industry, in this area several years are spent before being able to market, that is to say, being able to sell, so in the case of Tvazteca, it started marketing until the year 91, from then on it has had strong growth and gained Strong positioning at national, and international level.
| nineteen ninety six | 1997 | 1998 | 1999 | 2000 | 2001 (e) | |
| TV | 75% | 74% | 75% | 75% | 74% | 72% |
| Radio | 9% | 10% | 10% | 10% | 10% | eleven% |
| Press | 7% | 7% | 6% | 6% | 6% | 7% |
| Magazine | 4% | 4% | 4% | 4% | 4% | 5% |
| Others | 5% | 5% | 5% | 4% | 4% | 4% |
| Internet | ND | ND | ND | one% | two% | one% |
Current Profitability: High, see the attached graph "Growth graph of the television medium taken by the National Chamber of the Radio and Television Industry 'which denotes the growth and profitability of television. Likewise, the driving forces currently favor due to marked growth, television advertising strategies and with the opening of the FTA, the investment of Hispanic Television has also been favored.
Severity of problems in the Industry: One of the problems that can indirectly come to the industry is employment because the technology unseated many people, constantly as the technology is so complete the work that three did one does due to the support of very good software. For this reason, the increase in restructuring has been very marked and the population affects, the staff turnover rate is high.
Stable foreign investment, but at the same time has generated strong changes in the industry, it is important to note that the positioning of the television market is growing, but the strategies in this case of sales have been affected in the case of liquor by law government, these can not advertise in the morning, this affects the market on both sides, a second is the measure taken by cigarette companies not to do more advertising and in the media, is this a strategy?
A problem has also been, not directly from the industry but that if it affects it, is the agreement with suppliers, in this case at the Technology level, I cite an example, recently Tvazteca bought a server to back up the digital tape information, and this generated losses to him, because the supplier with matrix in Spain had problems in the import of the equipment. MACRO - ENVIRONMENT measures influence and affect the industry.
CONCLUSION
In the development and research of this work, I have had the opportunity to understand the importance of the study of the Industry in its maximum detail, regardless of the industry or business that is. That is why, in my research, I investigated topics that I did not imagine affected, such as the case of a weak company, which I believed to be weak, but when investigating weaknesses and strengths, I saw that it is not really weak and that it has a you respectable market.
For this reason, it is very important to be aware of all the forces that can affect or stagnate the growth of the industry, but specifically of the organization. Likewise, in the study of Industrial and competitive Analysis, I arrived at economic schemes that likewise, do not imagine that they were so strategic for the medium, as is the case, the economic level of the magazines, or the level of investment that requires to start a business at the Television level.
Something that indisputably, I see is that at present, it is if the forces that affect the industry and the competitiveness are not well broken, both internally and externally, positivist industry conclusions can be reached, develop good strategies, but not will be effective to the organization.
That is, the misconception was that he only believed that strategies can be good or bad and nothing else, but, he did not believe that something good could be developed in which time and money are invested, but it will not be effective. Hence, the importance of always starting an investigation in the industry, in order to obtain a very accurate diagnosis, to make sound decisions when developing a strategy, see where in the market it is, what growth options are available. It has, how the organization can be positioned in a strong, effective and lasting way with truly visionary strategies.
BIBLIOGRAPHY
Books:
Strategic Administration Studies and cases. 13th Edition.
By Thompson Strickland
Edited by Mc GrawHill
Internet:
Magazines, reports:
- AZTECA AMERICA INVADES SPANISH BROADCAST MARKETTHE HERALD, November 18, 2002, Section: Business Monday
Edition: Final Page: 7G
