Economics Assignment Report on CNN: Market Structure, Competitive Strategies and Economic Power

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Economics Assignment
Report
7/20/2018
Student Name

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Contents
Introduction................................................................................................................................1
Structure, conduct, and performance of the firm.......................................................................1
Porters 5 Forces Model...........................................................................................................2
Nonprice Competition................................................................................................................4
Market Structure.........................................................................................................................5
CNN profitability.......................................................................................................................6
Economic Power........................................................................................................................8
Competitive strategies................................................................................................................9
Porter’s Generic Strategies.....................................................................................................9
VRIO.................................................................................................................................11
Conclusion................................................................................................................................13
References................................................................................................................................14

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Introduction
CNN (Cable News Network) considered among the world’s largest leader in online
news and information delivery. The company is a private and independent company and
registered under the law. The company is available 24hours and seven days a week. CNN
headquartered are located in Atlanta, Georgia and in bureaus worldwide. The company has
globally a staff of 4000 news professional who is reporting the latest news to the company.
CNN.com features the latest media technologies from live video streaming to audio packages
to searchable archives of news features and background information. This site is available
throughout the day to provide the updated news. CNN was the first news television channel
in the United States (CNN, 2016).
The top competitors of CNN Company found to be the New York Times, Fox News,
News Corp, Vox Media. The company earned the highest revenues of $3.2 billion and it
found highest among all its competitors (Owler, 2018). Currently, the company has acquired
the Beme. Inc. is a mobile application platform that allows the users to share the short video
or clips with an amount of $25M in 2016 (CNN Press Room, 2016). The company is playing
in the oligopoly market in which few sellers are available in the market which make the entry
of new entrants difficult by applying barriers in the form of investment.
Structure, conduct, and performance of the firm
The global environment in which the business operates affects the structure of the
company. There are many internal and external forces, which makes the operations of the
business difficult. The company is surviving in the monopolistic market, where there are
large numbers of buyers and sellers are present and providing the close substitutes to their
clients. The entire news channels are providing almost the same news, which is happening in

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the environment, so the company have to face large competition from the market. The
company’s conduct and performance will also depend on its rivalry function. Then also, the
company is recording the highest profits among all its competitors due to its uniqueness and
premium services given to their clients (University of Cambridge, 2016).
CNN International Accounts for 20% of the revenues globally. Around half of the
revenues in CNN come from fee from cable and satellite distributors (Atlantic, 2018). The
CNN success lies when the business gets globalization as almost 265 million households
across more than 200 countries are watching and preferring the CNN and this is the reason to
get the high revenues for the company. The CEO of Time Warner, CNN’s parent company
shared that the company has $600 million shareholders in its international success (TV
Newser, 2017).
Porters 5 Forces Model
Internal Rivalry
CNN assess the market through the competition whether the company is competing in price
or non-price competition. The price rivalry in the case of CNN is finding intense among the
competitors, as there are many sellers present in the market. All the news channels are selling
the same or homogeneous services in the market and consumer can easily switch to other
rivals due to less switching cost (CNN, 2016).
Substitutes and complements
In the market for providing the news, there are many substitutes available in the market.
Some industries are related or some are unrelated to the specific stream. For example, some
companies provide the news about the business details whereas some channels are giving the