Marvel Enterprises

1. SWOT Analysis:

Strengths:

* Intellectual Property Value through the "Marvel Universe"

* Minimal financial risk exposure through licensing the use of their intellectual property to other companies

* Retaining creative control over product development and the marketing of their characters

Weaknesses:

* Limited set of prominent characters

* Difficult to leverage lesser known characters

* They are only entitled to a small percentage of revenue on their intellectual property as compared to their licensing partners

Opportunities:

* Develop lesser known characters to increase revenue growth

* Taking control of content creation, production and distribution activities (movies, internet, home video & video games) to increase revenue growth

* Expand international licensing activities Threats:

* Loss of consumer interest in main characters

* Competition from rivals comic book and toy companies

* Significant declining interest in the publishing/print industry

2. In your view, what strategic direction should Marvel pursue? Why? How?

Marvel should pursue a strategic approach that maximizes the use of their many characters to expand their revenue generating potential. As of 2004, Marvel was only utilizing a select few characters to generate revenue in their toy and licensing businesses. They have a relatively large untapped library of over 4,700 characters at their disposal to brand and market for toy and licensing business ventures. Marvel needs to take advantage of this intellectual property to increase their efforts on expanding their Licensing Division. They should particularly focus on increasing international licensing efforts.

The Licensing Division generates the most revenue out of the 3 Marvel business divisions, accounting for 54% of net sales in 2003. Overall, licensing sales have spiked 137% in 2003 over 2002, and for toys specifically, they jumped 225%. In addition, licensing revenue is all profit. The downside is that domestically, the toy industry has gotten even more competitive, with much of the power shifting to the retailers.

To capitalize on global potential, Marvel signed a multi-year licensing agreement with a Hong Kong firm, and similar agreements could be accomplished in other parts of the world. Licensing would allow Marvel to minimize their risk and maximize profits by focusing on creating new content and further developing lesser known characters in order to increase their popularity.

3. Why was Marvel's turn-around so successful? Would you call it "fluke"? Or do you believe it is sustainable?" Why? How?

Marvel's success is not a fluke because its business model is sustainable. We believe the turn-around was successful because the management team from 1997 - 1998, also referred to as the "Bankruptcy years," spent much of its efforts trying to meet its bankruptcy contracts. During this time the management team was not only in the midst of fixing obviously broken parts of the company, but also was shedding as many unprofitable or non-core businesses as quickly as possible to save and generate cash. They renegotiated all major business contracts and articulated a clear and coherent vision of the company to set future investment direction. The management team also kept as much of the business going as possible by maintaining its comic-book, licensing and toy businesses and by entering into contracts with a variety of media, including feature films, television programs, video games, animation and destination-based entertainment (such as theme parks).

We believe that their business model is