Firm Analysis
Established in 1959 by the cartoonist Mauricio de Sousa, the Mauricio de Sousa Productions (MSP) is a Brazilian animation company famous for its excellent and widespread comic characters. Different from common audiovisual companies, Mauricio de Sousa has no business partner when running the MSP, for he values more on personal freedom as well as to protect his copyrights.
The company has a series of classical cartoon characters and comics using these characters, of which “Monica and Friends” is the predominant set of comic series. Before MSP’s marching into international market, MSP has cooperated with domestic publishers for more than fifty years. Thanks to the opportunities provided by the updating technologies that make companies much easier to reach foreign animation markets (Rossi, 2007). On the other hand, expanding foreign market could reduce production costs. Since the product, especially cartoons, of MSP is very expensive, the company can only make profited after selling to at least ten countries (Aguillar Pinho et al, 2017). In addition, the small size of the domestic market and the unique products of MPS, as well as Mauricio’s ambition to get more audiences reach his work, are the internal rationales for its internationalization (Barbosa, 2011).
MSP has a number of strategic alliances during its international marketing. The MSP has a long-term of fifty-year cooperation with Brazilian publishers and the multinational Panini Group, which has business in the majority of the Europe and some Asian countries. The Panini Group once served as the exclusive publisher for all comic books produced by MSP. Ehapa Verlag, the German publisher, was also MSP’s alliance, opening the European market for MSP (Sousa, 1997).
One of the unique characters of MSP are its potential to reflect a series of important issues, such as culture, education, health, and ecology issues. Mauricio de Sousa founded a special cultural institute to draw public attention concerning these issues. The effort of the institution enabled Mauricio de Sousa to cooperate with several influential organizations from both Brazil and overseas, including the world UNICEF, UNESCO, and the WHO, which has largely enhanced its international influences.
Aiming at enhancing MSP’s digital presence, the company also built an e-commerce site, selling licensed products using MSP characters’ trademark. The limitations of MSP in the process of internationalization are its relatively limited financial capacity, especially when compared with industry giants. Currently, 90% of MSP’s profits come from licensing (Aguillar Pinho et al, 2017). MSP has signed more than 150 contracts with companies from different regions for the use of MSP characters and entailed more than 2,500 licensed products (Jankavski, 2014). Another peculiarity is that MSP yet had no special plan for its internationalization process; the company also faces challenges from lacking in professional international business mangers.
Products Analysis
The core values of MSP products are the classical cartoon characters and their stories created by Mauricio, for instance, Monica and her friends. These characters and stories are presented in the forms of comic strips and books. During the process of internationalization, MSP embraced diversified media forms so that enable its cartoon characters reach more audiences, either through books, newspapers, or though new media such as films, digital games, entertainment shows, and internet platforms (Inagaki, 2014). In addition, MSP licensed a number of other products using MPS’ characters trademark.
In order to keep up with the IT era, MSP built an e-commerce site in 2014, and launched a mobile app in 2015, so as to made it much easier for audiences to reach MSP products. Furthermore, Mauricio also cooperate with both domestic and international organizations to discuss serious social issues using its wide accepted cartoon comics to draw people’s attention, which has greatly enhanced the influence of MSP characters. In order to maintain audiences in the global market, MPS continuously release new comics and shaping growing characters (Lito, 2014). For instance, in 2008, MPS launched the comic book Monica Teen, in which Monica and her friends grew up into teenagers, this comic book earned Mauricio numerous teenager readers (Lito, 2014). In 2013, MPS released a new 18-year-old character Young Chunk Billy, who was a college student, targeting older readers.
One of the strengths of MSP products are that characters such as Monica and Friends have already been recognized and appreciated by audience from international market, which unquestionably increased MSP products’ competitiveness. By cooperating with influential international agencies and domestic large organizations enhanced the positive image of the company and its products, as well as enhancing its influences. Due to the development of accessible technologies, characters created by Mauricio can perform in diversified forms of medias, especially the cartoon and animation. In addition, MSP products yet were translated to more than 32 languages and sold to over 50 countries by 2011 (Barbosa, 2011).
However, the weaknesses of MSP products also are evident that its products still cannot occupy major market such as the United States, Central and Eastern European countries, and China. The relatively weak financial performance if MSP limited its competitiveness, especially when compared with industry giants. The development of information technology and creative economy business, as well as the relatively peaceful international relationship, provide MSP opportunities to enter and develop in the international markets. Nevertheless, culture differences, cross-national management, and competition from robust developed conglomerates and local audiovisual companies are inevitable challenges for MSP.
MSP marched into the European markets as early as 1970s thanks to the success of the character Pelezinho. MSP developed smoothly in European countries, especially Germany, but it was once failed to compete with Japanese and North American groups with strong financial capacities. It now has cooperation with a number of Europe companies and is work to expanding its influence in European market.
The fast developed manga market in Japan and Maurico’s close relationship towards Japanese culture contributed largely to MSP’s robust performance in Japan (Made in Japan, 2013). Although the Chinese markets are extremely competitive, MSP has established long-term cooperation with Chinese companies on child educational project, animation production, and etc. MSP entered the US market in 2013 with TV cartoons (Caldas, 2013), and registered the Monica and Friends trademark and licensed other products in 2014 (Naliato, 2014). Yer the future prospect of MSP in the American market is full of potential as well as uncertainty.
Competitor Analysis
The rapid growth of the Internet based service and the relevant peaceful international atmosphere, has enabled products made from human creativity from different countries reach global digital market arenas (2017). As an notable part of creative economy, comics and animation now spreading through various kind of media (Lee, 2010), including publications, movies, Television, computers, and self-media.
By the year 2011, the creative economy trade in global market reached US $624 billion, in which the animation trade took US $300 billion, almost a half of the global creative economy trade market. Among all global players, the players from the United States take the leading roles, takes up 45% of the market in 2015, followed by Canada, French, and the United Kingdom (Lima, 2016; Wescott, 2011). Despite that the developing countries yet account for a relatively small market share in global creative economy market, the average annual growth rate of exports on creative economy from developing economies from 2002 to 2011 was at 12.1% to 8.8% of global average growth rate (UNDP, 2013).
Moving close to the Brazilian animation market, due to oligarch structure of Brazilan domestic television studios, the animation industry did not exist in Brazil before the 1980s, at that time, the Brazilian animation market was dominated by foreign producers (Aguillar Pinho et.al, 2017). Brazil’s restriction on imports also indirectly restrained domestic animation development, for these strategies restrained the available technological resources for domestic producers. Currently, despite the animation industries have been developed, holding 4% of the Brazilian audiovisual production in 2014 (ANCINE, 2014), foreign animation productions yet take large proportion of Brazilian animation market (Paiva et al, 2016).
There is fierce competition in animation industries. In terms of the Brazilian animation market, the MSP faced fierce competition from the world animation giant Walt Disney. According to the Brazilian weekly comic book sales during the past decades, though the MSP always has been taking the majority of the Brazilian comic book market, the Walt Disney’s competitiveness in Brazilian market enjoys a increasing tendency (Aguillar Pinho et.al, 2017).
For international market, MPS faces competition from conglomerates such as Walt Disney, Times Warner, Viacom, One Entertainment, and other small local enterprises. The first three are giants from the United States, all of which are multinational mass media/entertainment conglomerates with strong financial performance and matured international marketing strategies. Founded in 1973, the One Entertainment is a multinational conglomerate based in Canada, due to the openness of Canadian and the nation’s adequate financial and technological resources, the company experienced rapid development. Regarding the MPS’s ambition to march into the international market, factors such as culture difference, local protectionism and costs on cross-nation administration might higher MPS’s development, and it has to compete with local audiovisual producers.
Environmental Analysis
As a comic company based in Brazil, so the status of Brazil in the international affairs would affect MSP’s international marketing. Given that government intervention on markets various over time in different nations, the MSP should be sensitive to the political scene of the host nation. As a company producing educational and entertaining products that has once cooperated with authoritative international agencies, the overall political environments to the MSP are warm, but the variation of animation policies in different countries/regions would impact on MSP’s development in local markets. For instance, the animation policies and political stability in the United Sates, Japan, Korea, and French are relatively positive and steady, MSP is encouraged to march into these markets.
The economic environment, including the foreign countries’ economic scale, economic structure, market system, and cross-national business economic policies, should be took into consideration before marching into these countries, so that the company can design its business and marketing campaigns target specifically at the foreign market (Kotabe & Helsen, 2014). The emerging economies, such as South Korea, China, and India, tend to have great potential and the MSP would better grasp these opportunities and to gain fist mover advantages (Hoskisson, Eden & Lau). Currently, some nations’ animation are still under the control of governments (such as China) while some other’s are under market allocation systems (such as Japan and the United Sates), the MSP should be cautious when deciding whether and how to march into a foreign market.
On the other side, the potential of animation market various in different nations, suppose there are two countries with similar economic strength, but one of them animation only accounts for less than 0.5% of the nations’ GDP while the in the other nation, the animation market contributes 20% GDP. Even though both nations have developmental opportunities, MSP should bet more on the second market. The economy of MSP’s homeland also affects the companies internationalization campaign.
Social environment is of significant for cultural industries, and one of the biggest barriers for MSP to expand its influences worldwide are culture differences, including language, religion, value system, and social institutions (Kroeber & Kluckhohn, 1952). Culture represents the collective programming of the mind in a society (Hofstede, 1980), whether MSP’s products can be popular in a foreign market largely dependent on the closeness of the two’s culture. The demographic structure should also be taken into consideration, as the MSP products’ target on children, teenagers, and young adults.
Technological development provides the fundamental elements for internationalization. The rapid development of information technology, especially the Internet, driven the process of globalization, which made it possible for companies like MSP to reach foreign markets more easily. The transmission of creative economy is fully relied on modern technologies. Thirty years ago, the MSP cannot build its e-commerce website, neither could the company manage to develop mobile applications to spread its products. The diversified media forms, including Television, films, video game, and cartoons freed MSP characters from printed comics and enables them to broadcast around the world.
There can be many legal implications upon the animation industry. The MSP business is about creative economy, hence, the intellectual property is crucial to MSP. The WTO in Intellectual Property issued a set of regulation to protect intellectual property in the international market. The United States set a series of laws to regulate its animation industries. The Civic Copyright Act protects the copyrights of cultural products, including animation; the National Arts and Humanities Fund Act stipulates the proportion of the State’s annual investment in cultural arts; while the Contract Law and the Labor Law regulate the business order in the United States markets.
In addition, the Anti-Unfair Competition Law, together with the Anti-trust law ensure the vitality and creativity of small and medium sized animation enterprises. These laws are important to the animation/comic companies like MSP, given that more than 90% of MSP’s revenue comes from licensing. Few countries have as impeccable law system as the United Sates to protect intellectual property and to regulate the market. The MSP should invest and cooperate more with countries that have relatively sound legal system.
Discussion
One of the challenges the company during its marching into international market is that there yet has no specifically designed plan for the internationalization process. However, a specifically designed plan is important for MSP (Forsgren, 2015; Gankema & Snuif, 2000), especially when it want to compete in the extremely competitive American market. Although, according to Mauricio, even without a specifically designed plan, he found things processed smoothly, the global market is changeable and full of uncertainty.
As Mauricio intends to spread his cartoon characters in more foreign nations, and to compete for more market shares from the international animation market, a specifically designed plan is of significance. Even though Monica and Friends has been translated to more than 30 languages and sold to more than 50 countries, there are still many countries whose animation markets are full of potential waiting to be explored. In addition, a company’s role in a society is far more than doing business, for instance, companies are also supposed to develop corporate social responsibility.
Conclusion
As a cartoon company based in Brazil, the MSP is in its process of internationalization. Though Mauricio has no business partner, MSP has a number of strategic alliances during its international marketing. Mauricio’s cartoon was considered to be educational as well as entertaining, one of the unique characters of MSP are its potential to reflect a series of important issues. This character helped MSP established cooperation with a number of authoritative international and region agencies.
There are opportunities as well as challenges during MSP’s process of internationalization. During this process, MSP should fully realize the potential opportunities and risks in the international market, taking into consideration the political, economic, social, technological, and legal environment when structuring its business plan. Given that the international market is full of uncertainty and opportunities, the MSP is recommended to specifically design a plan for the internationalization process, especially when it want to compete in the extremely competitive American market.
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