Globalization has a great impact on the world transforming social, political, cultural, and economic spheres of life. Innovations in transportation have been complemented by the swift development of communication technologies. The 20th-century arrival of mass-circulation newspapers and magazines, film, and television further enhanced a growing consciousness of a rapidly shrinking world. Globalization transforms the economic system of the world bringing new opportunities to less developed countries; it changes cultural and political spheres popularizing democratic values and principles and promulgating the western style of life. Globalization in the media sphere is influenced by changes in political and cultural spheres bringing new economic opportunities and financial capitals to media giants. These needs lead to digitalization, consolidation, and deregulation of the media environment around the globe.
Far-reaching changes are occurring in the social, economic, and political environments, affecting the strategies, structure, and management of media business. The notion of strategic alliances in media incorporates the need for considering the current economic context affecting the firm. Media companies use strategic alliances as one of the main tactics to compete in the global media market. Need to collaborate caused by changes occurring in the social, economic, and political environments. Strategic alliances allow media companies like AOL to meet new economic and legal challenges (MacGillivray 43). Increased use of public transportation systems may reduce the audiences of in-car radio and outdoor advertising. Media companies are interested in reaching the large percentage of the population that is English and Spanish speaking will need to develop new strategies (Emling 1). This factor could be interpreted as a strength but the globalization process and changing international relations show that cultural and social values become opportunities rather than strategies for global steel companies. A solid understanding of cultural preferences is important for any company that markets such products internationally. Media companies leverage superior cultural understanding to compete effectively with large foreign firms. It is possible to say that it has an advantage drawing from tradition. In recent years many people are concern about their health and the quality of water they use. The industry structure and market position of media companies suggest that the threat of entry is low (Osterhammel and Petersson 65).
Consolidation in the media industry is a direct result of new economic and cultural relations. The economic environment in America and Europe is very favorable creating enormous opportunities to increase sales and profitability. National and regional economic health and growth have become increasingly dependent upon export sales as an engine of growth and as a source of the foreign exchange necessary for the import of goods and services. In the media sector, collaborations and strategic alliances allow companies to effectively compete in today’s turbulent business environment. The future of Time Warner Inc lies in its ability to stand fast against foreign competition and to develop the goods and services that will be in demand in the twenty-first century (Osterhammel and Petersson 65). Emerging from great difficulties and embarking on an ambitious program to create products that will revolutionize entire industries, Time Warner Inc wastes no time in taking the steps necessary to seize its future. The strategy at Time Warner Inc was to develop known technologies into viable commercial products that could deliver value to customers. Thus Time Warner Inc was prepared to commence work on a project that would enhance its competitive advantage by establishing it as an industry leader in an emerging field. To be successful given this new set of ground rules, a new way of thinking must be instilled among all levels of management (Time Warner Inc Home Page 2007). This is no longer a luxury, but a necessity born out of a historically dismal track record. With each failure, the UK media sector becomes increasingly indebted and unable to compete against foreign companies. The executive must be able to create a dynamic management structure with an equal distribution of authority capable of responding to the unique requirements of combined business cultures. A shift from short- to long-term thinking when developing and implementing acquisition strategies is necessary to ensure that strategies are properly implemented before they are abandoned. This requires calculated risk-taking and, most importantly, streamlined channels of communication. The underlying argument presented is that there are significant opportunity costs associated with restructuring (Picard, 61).
Digitalization of media is caused by new technology and the availability of technological innovations in all countries. The attractiveness or the presumed merits of digitalization activity is the assumption that a given technology will enhance the growth potential of the company. Preferably, the goal is to acquire digital technology a complementary business unit with related lines of markets and products that would fit nicely into the firm’s long-term strategic direction, improving the acquiring firm’s overall growth potential and marketability (Osterhammel and Petersson 60). The selection of which company would fit best in the current corporate culture is based on many factors, and it varies from firm to firm. In fact, even firms competing within the same industry segment might have very different acquisition strategies. Media gains sustainable competitive advantage by conceiving new ways of conducting activities, employing new procedures, technologies, inputs, or channels of distribution. Managing the organization is therefore not just about managing functions, but managing linkages between those functions (Picard, 74; Time Warner Inc Home Page 2007).
Deregulation in the media industry is a result of global economic and political changes and weaknesses of international laws. For a modern state, it is difficult to control multinational media corporations and their financial flows. In order to compete in the global market and remain competitive, a media firm may choose to sell off a business unit in order to purge those divisions that exhibit either low growth potential or low relative market shares. As with the case of an acquisition, the desire is to improve the growth potential of a firm and thus its survival in the marketplace. A business unit exhibiting modest or negative cash flow and low growth potential should definitely be a candidate for divestiture. An appropriate strategy may also be to sell off businesses with high relative shares in high-growth markets to provide the necessary funding for investment in existing business units that the firm would rather concentrate its energies on. Of course, one reason for divestiture may simply be that the business unit is too expensive for the firm to fund, requiring too much cash to sustain its rate of growth (Picard 33). This type of business would also be a more attractive acquisition target. The point remains that a major motivating factor for strategic alliance activity is the potential for improved growth. The task, then, is to determine how well corporate acquirers have fared with their acquisition activities, and whether these firms have been better off from these activities (Picard, 83). In other words, how a target firm will perform in the long term and how well its corporate strategy coincides with the strategy of the acquiring company are more important than the acquired firm’s current financial performance. This is not to say that one must only locate an acquisition or alliance target that is on solid footing. Rather, it is more important to internally evaluate a firm’s internal needs and purpose before embarking on a strategy of acquisition. If the acquisition is the vehicle, it must be a structural component of the acquiring firm’s strategy. A business always has the option of expanding either internally through R&D efforts or externally through strategic alliances. If one firm acquires another and the combined entity’s returns cannot be significantly greater than the two separate companies would have been independently, then the acquisition was not based on a sound strategy.
In sum, the information mentioned above shows that globalization processes in the media industry are crucial for success and a strong market position of the media companies. Globalization involves the transfer of resources from the colonized global South in exchange for European manufactures. Developed nations spread their political system and cultural values across the globe. Like all social processes, globalization contains dimensions filled with a range of norms, claims, beliefs, and narratives about the phenomenon itself. However, it is not just rational economics that drives this selection: it helps that media organization tend to be staffed by highly trained people with an interest in new technologies, people who have been selected to embrace and develop new ideas. Of all the functions in a media organization, this is the one that should show the most natural inclination to embrace the new ideas of working within the media alliances can all be effective ways to improve the competitive position of an overall firm. However, any one of these processes must be an integral part of an ongoing corporate strategic plan. In addition, the evaluation process must shift its emphasis away from traditional financial performance criteria toward overall competitive dynamics.
References
Emling, S. May 4. AOL’s push to rev up Net service faces hurdles. Atlanta Journal-Constitution, 1F, 2002.
MacGillivray, A. Globalization. Carroll & Graf, 2005.
Osterhammel, Jurrgen, and Nieles P. Petersson. Globalization: A Short History. New Jersey: Princeton University Press, 2005.
Picard, R. The Economics of Financing of Media Companies (Business, Economics & Legal Studies). Fordham University Press; 1 edition, 2002.
Time Warner Inc Home Page 2007. Web.