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AOL/Time Warner and WorldCom:Corporate Governance and the Effects of the Deregulation Paradox
Unformatted Document Text:  9 UNDERSTANDING THE ROLE OF STRATEGY As today’s media and telecommunication companies continue to grow and expand, the challenges of staying globally competitive become increasingly more difficult. The main role of strategy is to plan for the future as well as to react to changes in the marketplace. Strategic planning is the set of managerial decisions and actions that determine the long term performance of a company or organization. Researchers like Wheelen and Hunger (1998), suggest that the need for strategic planning is sometimes caused by triggering events. A triggering event can be caused by changes in the competitive marketplace, changes in the management structure of an organization or changes associated with internal performance and operations. Cross-Media Ownership There are several ways that a major corporation can strategically plan for its future. One common growth strategy is vertical integration, whereby, a company will control most or all of its operational phases. In principle, the transnational media corporation (TNMC) can control an idea from its appearance in a book or magazine, to its debut in domestic and foreign movie theaters as well as later distribution via cable, satellite or DVD. The rationale is that vertical integration will allow a large-sized company to be more efficient and creative by promoting combined synergies between (and among) its various operating divisions. One important substrategy for many of today’s TNMCs is to engage in cross-media ownership; that is, owning a combination of news, entertainment and enhanced information services. Cross-media ownership allows for a variety of efficiencies, such as:

Authors: Gershon, Richard. and Alhassan, Abubakar.
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9
UNDERSTANDING THE ROLE OF STRATEGY
As today’s media and telecommunication companies continue to grow and expand,
the challenges of staying globally competitive become increasingly more difficult. The main
role of strategy is to plan for the future as well as to react to changes in the marketplace.
Strategic planning is the set of managerial decisions and actions that determine the long term
performance of a company or organization. Researchers like Wheelen and Hunger (1998),
suggest that the need for strategic planning is sometimes caused by triggering events.
A triggering event can be caused by changes in the competitive marketplace, changes in the
management structure of an organization or changes associated with internal performance
and operations.

Cross-Media Ownership
There are several ways that a major corporation can strategically plan for its future.

One common growth strategy is vertical integration, whereby, a company will control most or

all of its operational phases. In principle, the transnational media corporation (TNMC) can

control an idea from its appearance in a book or magazine, to its debut in domestic and

foreign movie theaters as well as later distribution via cable, satellite or DVD. The rationale

is that vertical integration will allow a large-sized company to be more efficient and creative

by promoting combined synergies between (and among) its various operating divisions.

One important substrategy for many of today’s TNMCs is to engage in cross-media ownership;

that is, owning a combination of news, entertainment and enhanced information services.

Cross-media ownership allows for a variety of efficiencies, such as:


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