Vivendi SA
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Introduction
Vivendi SA is an integrated media group that operates throughout its value chain and is focused of expanding its business in order to provide unlimited means of entertainment to its customers. The company owns the leading subsidiary businesses like Universal Music Group, Canal+ Group, Gameloft, Ubisoft, Daily motion and Radionomy. The current paper aims to conduct the Resource Based View Analysis, Value Chain Analysis and Core Competency Analysis in order enlighten the resources, efficient work processes and market standing of the company.
Tangible Resources
Financial
The Net Cash Position of Vivendi SA indicates that the company has 4,810 million euros for the year 2016, that equals the cash and cash equivalents of the company due to which the company possesses strong position to pay off its liabilities in an effective manner. The company has the total capital of 19,954 million of euros invested in the functional processes of the company. The company has the retained earnings of 8,701 million euros which eventually indicates the long-term trust of the investors in the business expansion of the company (Vivendi, 2016a). The company has the financial liabilities of 2,499 million euros, out of which long-term liabilities account for 2,499 million euros and short-term liabilities account for 796 million euros. The company has earned 228 million euros in the first quarter of the year 2016, as compared to 218 million euros in the year 2015 on a quarterly average. The company’s earnings per share has been increased by 30%, which eventually indicates the strong market position of the company (Vivendi, 2016b). The goodwill of the company accounts for 10,004 million euros, whereas the increasing trend of online streaming and online gaming has provided the vast prospects for the company to become a market leader in providing entertainment services to its customers.
The activity ratio indicates the extent to which the company has been utilizing its fixed assets in an efficient manner. In this instance, the asset turnover for the year 2015 is 0.30% which is better than the previous year’s turnover and it indicates the company is utilizing its assets resources more efficiently than its competitors as the industry average stands at 0.65. The cash conversion cycle of the company stood at -258.96 in the year 2015 and it is lower than the preceding year. However, the decreasing trend has been observed since 2013, which eventually indicates that the company has been taking more time in turning its investments to the production and then back to cash. The market average is observed to be -247.93, which indicates that the company has not been utilizing its investments as efficient as its competitors (Morning Star, 2016; Healy & Palepu, 2012).
The liquidity ratios indicate the company’s ability to pay its short-term liabilities and hence, the current ratio for the year 2013, 2014 and 2015 is estimated to be 0.92, 2.25 and 1.15, which is greater than 1. It indicates that the assets are greater than the liability and it is considered favorable for the company. The industry average is observed to be at 1.02, which eventually indicates that the company is performing better than its competitors. In 2013, cash ratio of the company was 1.27x and it has increased in 2014 to 1.30. Moreover, the cash ratio of the company is 1.27 in the year 2015, which is lower than the previous year. It indicates that the company has not been able to maintain its performance as its preceding year and hence, the company’s ability to convert its asset into cash has been decreased in the year 2105. The industry average stands at 0.34x and hence, it suggests that the company is doing far better than its competitors (Morning Star, 2016; Healy & Palepu, 2012).
The profitability ratios indicate the extent to which the company has been generating profits from its investments and work processes, and also indicate the increase in company’s assets. Therefore, in the year 2015, the return on asset ratio is 5.47, which is lower than the preceding year and higher than the year 2013. However, the industry average stands at 0.02 which indicates that the company has not been effective in reducing its financial liabilities as per its competitors and the company is encountered with a higher financial risk than its industry rivals. Moreover, the operating margin of the company incorporates the increasing trend and it stand at 11.4 in the year 2015, however, the industry average stands at 10.07, which eventually indicates that the company is earning returns higher than its competitors (Morning Star, 2016; Healy & Palepu, 2012).
Physical
The company has the total assets of 30.390 billion euros, which eventually indicates the long-term business prospects of the company. The company has developed a dozen CanalOlympia network in Africa and is using it as multi-avenues that incorporate as the movie theaters, venues and concert halls. It also acts as attracting talent for the company. The company owns 701 million euros’ worth of physical infrastructure, where the entertainment content is developed and produced. The company owns 57,000 digital radio stations that are also part of the vivendi village. The company owns L’Olympia, which is a renowned music venue in France and the company also utilize this venue in order to attract talent. The company owns 10 cinemas and theaters that are known as CanalOlympia and incorporates the outdoor concerts in an effective manner. The company also owns the Abbey Road Studios, which is the largest studio in London and utilizes it for production and recording processes (Birkinbine et al., 2016).
The company has 16,396 employees, out of which 65% are located in Europe, whereas the rest of the employees are located at the sites in Africa. The company has managed equal employment opportunities and hence, 48% employees are female. The company has incorporated work teams and each team is comprised of high potential employees, who have adequate experience and academic knowledge. The company offers training to its existing employees in order to keep them motivated, committed and focused on their work objectives. The company offers group and individual training programs for its employees. In 2011, the total headcount of the company was observed to be 15,691 and hence, an extensive level of hiring in the company is incorporated. The employee turnover rate accounted for 3.25%, which is slightly higher than the acceptable range of 2% turnover. The company has provided 43.2 average hours of training per employee, which eventually indicates the company’s high inclination towards training (Vivendi, 2016b).
Technological
The company is using the enterprise resource planning system in order to carry out its internal functions. The company is providing streaming services with the available content of 10,000 units. It is also offering MyCanal services to its subscribers with a cloud technology, where the 10,000 programs are presented to 1 million users on a daily basis. The company owns Dailymotion with the 80% of shareholdings and has doubled its investments in the Research and Development function in order to acquire technological advantage over its competitors. The company also has a strong stock position in the Gameloft and Ubisoft due to which it also holds a stake in the gaming industry and its technological equipment (Vivendi, 2016b).
Intangible Resources
Human Resources
The company has been providing its employees with the competitive compensation packages that keeps its employees motivated. The work teams are objective or project oriented which keeps the work related activities intriguing and challenging for employees due to which they remain motivated. The employee morale is observed to be high because the employees are thrilled to be working with the second largest company is the entertainment industry. The company has integrated its corporate social responsibility within the organizational culture in order to enhance its prevalence in the industry. the company incorporates the learning, creative, social and challenging culture in order to keep its employees innovative and competitive (Vivendi, 2016b).
Innovation and Creativity
The company has revitalized the entertainment industry by incorporating the online video streaming and online gaming platforms. The company has a creative approach towards hiring its employees and the company appreciates the creativity among the employees due to its entertainment business (Vivendi Talent, 2016). The prevalence of innovation is incorporated by using the creative means of attracting and hiring creative employees in order to ensure that the company’s media content is created by the professionals and creative work artists. The company has acquired Gameloft and Unisoft and hence, the company is aimed towards entertaining its customers by offering them with the highly interactive and creative means of entertainment (Vivendi, 2016d).
Reputation
The company is operating as the 2 largest entertainment provider in Europe and owns the renowned musical avenues in France. Moreover, it also owns the Canal+ Group, which is the leading television group in France. Similarly, the StudioCanal is the market leader in European industry in TV and films production. The company owns the Universal Music Group, which is also a world leader in music production and distribution. The company owns the Abbey Road Studios and L’Olympia, which are the one of the largest music avenues in France. In this manner, the company has the reputation of offering the entertainment services exclusively and the company owns numerous infrastructures and avenues that indicate the company’s position as being the market leader (Vivendi, 2016a).
Value Chain Analysis
Primary
Inbound Logistics
The company acquires talent from its theatres that are located in France, London and Africa. The company also discovers the talent via online talent discovery mechanism, in which artists send their projects, films and creative startups and the media counselors incorporated by the company provide advice to artists and determine the adequate talent for their future productions. In this manner, the company acquires the creative talent and utilizes the acquired talent in its media content and production. The company has also developed a Digital Creation Hub by which the company provides opportunity to the young talent in order to increase their audience by developing short films and movies that are posted on websites. It helps the company to identify the most prominent talent and hence, the company acquires that talent by making production contracts with the artists. The company has also launched an MDR project, in which the identifies the talent and provides them with the adequate training in order to enhance their performance skills (Vivendi Talents, 2016).
Operations
The operations of the company are comprised of the production of audio and video media content that takes place in the production house of the Canal+ Group. The in-house filming and production of media content takes place at the theatres and avenues that the company owns. The production house of Vivendi is equipped with advanced technology to enhance the graphics and sound quality of the media content, and the operations take place under the prevalence of experienced producers and counselors. The development of interactive games takes place at the sites of Uniloft and Gameloft by the technicians (Vivendi, 2016b).
Outbound Logistics
The company distributes its media content via the Canal+ Group, which is the largest pay television in France. The media content is premiered and on-aired on its TV channels. Similarly, the audio content and music is distributed worldwide by the Universal Music Group. The company also promotes theatre shows and concerts at its theatre halls and avenues that are attended by a large number of audience. It also provides exposure to the discovered talent via theatres and concerts, whereas also launches its media for the audience that requires entertainment activities via theatres. The company also distributes its audio content via Radionomy, which is the largest Radio Channel with 57,000 radio stations (Vivendi, 2016b). Moreover, the company also publishes its media content via daily-motion, which is an online streaming website. The entertainment media incorporating the interactive games by Gameloft and Unisoft is distributed online and customers can download and purchase these games from the official websites of the games (Kumar, 2012).
Marketing and Sales
The company uses its own TV channel, that is incorporated under the brand name of Canal+ Group, in order to advertise its media content. The music content, films and TV series is marketed via its TV channel, radio and daily motion. The company also advertises its content via billboards, however, the media content is also advertised at the theater shows and musical concerts which eventually acquires the attention of a large number of audience. The company also uses social media and daily motion to advertise its interactive games in order to attract a large number of customers. The company has 2 million subscribers for its media channel and hence, the company determines the demographics and preferences of its customers and sends the promotional ads and information about the upcoming release of media content (Kumar, 2012).
Services
The company engages in the effective means of rating system for the talent that is provided with the opportunity to perform at theatres. The media content published to promote and increase the number of audience for talent is also evaluated on the basis of customer ratings and hence, the company uses these reviews and ratings to determine its future course of action with the respective talent. The company also incorporates the on-demand mechanism for video and audio content that is presented to the customers via its own TV channels and Radio. The company determines the most viewed and most liked media content and utilizes in an effective manner by means of organizing the concerts and fan shows. Moreover, the company provides interactive gaming services the technology savvy customers and hence, the company provides live support to its customers and incorporate adequate maintenance to ensure the quality services provided to its customers (Vivendi, 2016b).
Secondary
Procurement
The company acquires talent and selects the most creative and competitive talent on the basis of their skills. The company also trains the acquired talent to enhance their level of performance. Afterwards, the company engages in a formal contract for a minimum of three years in order to ensure that the selected talent works with the company and incorporates in the production of media content. Moreover, the company hires the content writers, game developers, creative studio designers and graphic developers in a similar manner. The company also hires the technical talent on the basis of their creative portfolio and hence, utilizes their competencies in producing the media content (Vivendi Talents, 2016).
Technology Development
The company invests heavily in Research and Development Department in order to enhance the quality of media content by means of picture quality, sound quality and graphics. The company incorporates the functions of Dailymotion in which manner that it provides robust entertainment solution to its audience. The company is highly focused towards innovation and changing the dynamics of entertainment by incorporating the on-demand channels like Canal Plus and Radionomy. The company ensures that the quality of interactive games by means of 3D effects and sound quality is enhanced in order to enhance the target audience in an effective manner. The company owns the infrastructure, mainly comprising of Vivendi village, where the production mechanism takes place in accordance with the process innovations incorporated by the use of advanced digitization (Vivendi, 2016c).
Human Resource Management
The company recruits its employees on the by determining the need of future positions and currently the company is expanding its operations and hence, the growth in the new recruits has been observed by 5.3%. The company selects the recruits on the basis of their academic qualification, creativity and experience. The company also provides employment opportunity to the candidates with less or no experience and hence, creativity and qualification is preferred while selecting the employees. The company incorporates the diversity by welcoming employees from different cultural backgrounds and provides equal employment opportunities. The company encompasses the collective bargaining system and ensures the prevalence of gender equality, quality of life, work-life balance and financial assistance to its employees. The company provides adequate succession planning, functional training, operational training and safety training to its employees and hence, every employee is provided with 43.2 average hours of training on a yearly basis. The company evaluates the performance of its employees on the achievement of individual and team objectives and hence, the compensation plan accounts for the intrinsic and extrinsic rewards which also includes benefits and performance allowance for the employees. The company ensures that the employees are provided with the friendly and challenging environment in order to make their high level of work engagement and reduce the prevalence of absenteeism (Vivendi, 2016b).
General Administration
The company has incorporated the long-term planning mechanisms that integrate with the company’s growth strategy. The company actively engages in the long-term investments in order to enhance the company operations and increase its standing in the entertainment industry. The administration of the company actively analyzes the environmental trends and considering these trends, the company’s future investments are considered. The increasing trend of online streaming intrigued the company to incorporate the aggressive acquisition of Dailymotion. Similarly, the increasing trend of interactive games and P2P games also intrigued the company to acquire Gameloft and Ubisoft. These strategic decisions are based on the company’s strategic vision of expansion and hence, these initiatives are adequately planned by the administration of the company (IFM, 2016).
The company has the complete control over its value chain, in which the company acquires the talent, produces the media content and distributes to the audience via its broadcasting channels and online streaming. The company has managed the cost of its value chain by means of an effective vertical integration, in which the company acquires the talent from the industry in an effective manner and hence, its operations are not effected by any supplier. The company screens the talent on the basis of their creativity and selects the talent that meets the company’s requirements. Moreover, the company distributes its media content via Daily Motion, Canal+ Group, MyCanal, L’Olympia and Universal Music Group. In this way, the company’s business processes and profitability is not effected by any other entity comprising of suppliers and distributors hence, the cost of distribution is hindered due to the complete control over the value chain ((IFM, 2016)).
Core Competency Analysis
Organizational Capabilities
Specific Knowledge, Skills and Abilities
Vivendi is the second largest entity in the entertainment industry and has been operating since 1853, which eventually enhances the learning curve of the company. The company understands the market and its customers due to its prominent history of operations in the industry. The skills incorporated by the company mainly comprise of innovative and adaptability, because the company has been very responsive to the environmental trends and customer preferences over the period of years. The company changed its entertainment prospects from theatre and concerts to media broadcasting and in the current decade, the company has adapted and enhanced its business operations towards online media streaming. The company also possesses the effective and competitive management which is able to plan and execute the strategic decisions that support the company’s vision of global expansion. The company possesses the adequate capital, infrastructure and liquid assets in order to support its business operations by means of acquiring emerging companies, enhancing its production quality and retaining customers in an effective manner. The company has been utilizing its infrastructure and technologies by means of developing synergies in the production of media content and making the media content specifically designed for the customer demand (Vivendi, 2016b).
VRIN Analysis
VRIN analysis helps in evaluating the resources and competitiveness of the company by means of determining the extent to which the company is able to hinder the external threats, provide rare services, hinder the competitor’s ability to imitate and able to invest accordingly. The core competencies that will be analyzed by VRIO analysis are listed below:
The company has adequate expertise in integrating the technology in order to create new media content and products.
The company is able to introduce innovative and next-generation products to the market.
The company possesses the adequate skills to offer quality products.
Key Success Factors
The key success factors of Vivendi are as follows:
The company has the adequate infrastructure and talent to produce the quality media content and broadcast in an effective manner.
The company also has the state-of-the-art avenues where the company organizes theatre and musical shows in order to introduce talent and provide the audience with the live entertainment programs.
The company has contracts with the renowned singers and entertainers due to which the company provides the quality entertainment to its customers.
The company has been actively engaged in CSR activities due to which the company’s brand image is high as the company enjoys being the largest distributor or audio content and second largest producer of video content.
Conclusion
Vivendi SA has been observed to be using its resources in an efficient manner and its work processes and in accordance with the company’s inclination towards business growth. The company possesses the adequate resources and has been operating throughout the value chain, which eventually makes the company sustainable and competitive. The company has the adequate resources and talent to enhance its business profitability by addressing the customer preferences, which eventually indicates the growth prospects for the company.
References
Birkinbine, B., Gómez, R., & Wasko, J. (Eds.). (2016). Global Media Giants. Routledge.
Healy, P. M., & Palepu, K. G. (2012). Business Analysis Valuation: Using Financial Statements. Cengage Learning.
IFM. (2016). Vivendi SA. Institute of Media and Communications Policy. Available from: http://www.mediadb.eu/en/data-base/international-media-corporations/vivendi-sa.html
Kumar, B. R. (2012). Mega mergers and acquisitions: case studies from key industries. Palgrave Macmillan.
Morning Star. (2016). Vivendi SA ADR VIVHY. Morning Star. Available from: http://financials.morningstar.com/ratios/r.html?t=VIVHY
Vivendi (2016a). Vivendi in Brief. Vivendi. Available from: http://www.vivendi.com/vivendi-en/vivendi-in-brief-2/
Vivendi. (2016b). Vivendi Annual Report Fiscal Year 2015. Available from: http://www.vivendi.com/wp-content/uploads/2016/03/20160331_Vivendi_Annual_Report_Fiscal_Year_2015.pdf
Vivendi. (2016c). Financial Report and Unaudited Condensed Financial Statements for the first quarter ended March 31, 2016. Vivendi. Available from: http://www.vivendi.com/wp-content/uploads/2016/05/20160511_Vivendi_Financial_Report_and_Statements_Q1.pdf
Vivendi. (2016d). Innovative young talent. Vivendi. Available from: http://www.vivendi.com/talents-en/passion-for-our-businesses/jeune-talents-innovateurs-en/
Vivendi Talents. (2016). Living and creating together. Vivendi Talents. Available from: http://vivenditalents.com/en/
