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 framework of Michael Porter.

New entrants
(low)
• requires high skills
and huge
investments

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

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

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.