Time Warner SWOT Analysis
Introduction
Time Warner is among world’s few largest entertainment and media companies if revenue is considered as the underlying factor. It has its headquarters in New York City. Time Warner is a merger of two old companies which were working separately before. It basically operates in the film, TV and entertainment world. And most importantly Time Warner is working within a very limited and unstable market. Although Time Warner has now gained much popularity and it is considered as one of the successful brands but still it faces few problems in the current business world (Drinkard, 2005). It has number of competitive edges which the competitors lack thus it is among highest revenue earning companies. New and alternate technologies are putting a new threat over the Time Warner but strategies are planned to avoid such problems. We would have a deep insight into all such problems by having a look at company’s SWOT analysis which is as follows.
Strengths
• Time Warner has dominated the US companies in media through its high financial performance.
• Time Warner’s websites got 75000 exclusive visitors in last year.
• Talking about strengths, first and the most important strength Time Warner’s posses is its highest Product Offerings.
• Along with the product offering it also gives an option for grouping up different products together which is called “Bundling Option” to make the client comfortable.
• Time Warner has gained huge brand recognition throughout its market and all around the world because of high product quality (Bearne, 2008).
• It offers one bill for one client after the purchasing for a specified period of time. This makes the payment options very safe and comfortable for clients.
• And its VOD and DVR are accessible for all of its clients.
• Although competition is very high in the marketing but still Time Warner has maintained a high repute and revenue shown in financial performance and statements.
• Profit margin of Time Warner is around 14.6% which is quite a stable ratio and thus serves as a big strength for the company and its upcoming revenues.
• While using the products of the company no additional HD tools are needed and this gives a competitive edge to the company (Ali, 2008).
• Increasing market share is also serving as a big strength for the company to attract more clients toward it.
• Current P/E ratio of the company is 16.6% which shows that company has good price to earning proportion.
Weaknesses
• Although company has its representation in several markets around the world but 80% of its revenue comes from the US market which is not a good sign, the company has to establish itself in other markets too.
• One of the major weaknesses which have been observed in a big giant company is the lack of advertisement campaigns.
• Current ration of Time Warner is 1.5 and leverage ratio is 2.0 which shows that company should work out its liquidity and leverage options because they are getting weaker (Pogue, 2007).
• Although it provides a huge number f products but its clients are unaware about the benefits of few products offered by the company like, DVR and VOD.
• Current Asset turnover ratio for the company is 0.4 which is again very low thus it shows that assets are not being utilized fully or properly and thus the capacity remains unutilized which serves as weakness for the company.
• Time Warner is far good than the customer’s perceive it to be, so company should work for its brand image which is becoming its major weakness now a days.
• Revenue although considered among high revenue generating companies but still the Time Warner’s revenue is facing a downturn as $4,165 in 2006 went down to $7, 786 million in 2008 and similar trends were observed till 2010.
Opportunities
• If customers would be given a complete knowledge and awareness about the benefits of VOD and DVR than revenues are going to have a boost.
• Similarly awareness of product bundling options, Internet phone services, and several other things in the far reaching markets could bring a huge customer base for the company in upcoming years.
• As recently few surveys showed that the purchasing power of Hispanic market got an immense increase so it is an opportunity for the company to raise its prices and to earn revenues (Dinger, 1998).
• Partnerships and mergers also serve as an opportunity for Time Warner to increase the customer base, resources and overall performance too.
• Internet marketing also serves as a huge working opportunity for companies to gain the online clients through websites and SEO.
Threats
• Increasing competitions can make the situation worse if the company would not be able to patch up the competitive requirements within its own market.
• Increasing threat of new entrants and decreasing entry barriers have made the market too competitive and survival difficult for existing firms.
• Trend of using cell phones and the decreasing trend of landline phones is threatening the existing operations of the company.
• Inventory turnover ratio of the company is equal to 4.2 which could bring a huge threat if not maintained in a stable situation. Basically inventory turnover shows that how many times the inventory is converting into the finished goods over a specified period of time. So if not maintained properly this could bring huge losses for the company (Siklos, 2009).
• Unauthorized content distribution sometimes become a huge threat for the company because once caught company would be in loss even if it is not doing it directly.
• As now we hear daily that the telecom companies are entering the world of TV and video content so again the position of Time Warner is in danger because lower costs if provided by such companies would make the survival difficult for this company (Arrington, 2010).
• Similarly an increased use of Wi-Fi s threatening the company operations and smooth running of functions.
References
• Siklos, Richard (2009). "Why Disney wants DreamWorks". CNN.
• Dinger, Ed (1998). "The Franklin Mint". International Directory of Company Histories. 69.
• Ali, Rafat (2008). "Time Inc. Strange Buy: Acquiring Reader’s Digest School Funding Raising Unit QSP For $110 Million". The Washington Post.
• Drinkard, Jim (2005). "Donors get good seats, great access this week". USA Today.
• Klein, Alec. Stealing Time: Steve Case, Jerry Levin, and the Collapse of AOL Time Warner. New York: Simon & Schuster.
• Pogue, David (2007). "Fewer excuses for not doing a PC backup". The New York Times.
• Bearne, Suzanne (2008). "AOL campaign explains behavioural targeting". NMA (Centaur Media).
• Arrington, Michael (2010). "Why We Sold Tech-Crunch to AOL and Where We Go From Here". Tech-Crunch.
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