Harpo Inc., Oprah

1
Harpo Inc., Oprah

• By
• John Mosher
• Martha Munoz

2
Corporate Message

• You Are Responsible For Your Own Life
• After 9-11 event, an updated change to
• Are You Living Your Best Life?
• Are You Living Your Life With Passion?
• Her life is the Brand!!!

3
Oprahs Business Focus

• Women
• Children
• Education

4
Harpos Estimated worth of 575 million

• The Oprah Winfrey Show No. 1 daytime talk show,
  300 million in annual revenues
• O, The Oprah Magazine In 2nd year, 2.5 million
  readers, 140 million in annual revenues.
• Harpo Films One film per year, special theme,
  4 million in annual revenues.
• Live Your Best Life Tour Oprah-style
  motivation, 4 cities-one day, 1.6 million in
  revenues.

5
Corporate Culture

• Employees
• High pay and great benefits
• Average of six weeks vacation for first year
  employees
• Unusual worker contracts lifetime
  confidentiality agreements.
• Oprah
• oversees all written work and shows before they
  are released and before endorsing it.

6
The Corporation

• Its Concentration Using the media to communicate
  Oprahs message of self improvement
• Confined to the media business with few
  exceptions
• Concentrated Resources are
• Managerial Gayle King the magazines editor.
  Jeff Jacobs the strategic advisor, serves as
  agent so that she doesnt give up 25 of her pay.
  His idea for making money, Its not how much
  you make, its how much you keep.
• Technological Oprah uses the Internet to chat
  with people and advertise
• Financial The company is in the millions, Oprah
  herself is worth 537 million
• Physical Resources The top people that make
  decisions.

7
Business strategies used by Harpo, Inc.

• Diversification
• Horizontal Integration
• Internal New Venturing
• Strategic Alliance
• Joint Venturing

8
Diversification in Harpo Inc.

• Related Oprah Talk Show, Oxygen Cable Show,
  Films, Magazine, Self Motivation Seminars, Book
  Club
• Unrelated Viacom, Real Estate, Investments

9
Creating Value Through Diversification By

• Superior Internal Governance- The manner in which
  executives manage or govern sub units. In a
  diversified company, it relates to how effective
  management manages a business.
• Transferring Competencies Companies seek out
  new businesses related to their existing business
  by one or more value creations functions.
• Economies of Scope (related to Economies of
  Scale) Sharing of resources (e.g.,distribution
  channels, advertising campaigns, RD costs), by
  two or more business units. They invest less in
  the shared function.

10
Reasons to Use Diversification

• The company gets to keep all the profits.
• Companies share the costs.
• Transfer of competencies
• Economies of scope

11
Bureaucratic Cost the Limits of Diversification

• Number of Businesses
• Coordination among businesses
• Limits of Diversification

12
The Value of Integration

• Building Barriers to Entry
• Harpo Inc. is unique, it is based on Oprah.
• It is horizontally integrated to maintain control
  over distribution channels.
• Facilitating Investments in Specialized Assets
  Technical Knowledge This allows the company to
  lower cost of value creations. Such as the Talk
  Show - Magazine- Oxygen Cable Shoe-Internet
  Web Page discusses and advertises on all. MUTUAL
  DEPENDENCE EXISTS.
• Protecting Product Quality
• Improving Scheduling By ownership Oprah controls
  when everything will take place and communicate
  it to her consumers through advertising on the
  Web (e.g., movie specials, discussions, article
  topics.)

13
Strategic Alliance and Joint Venture

• Why use it?
• Is an alternative to Diversification due to the
  Bureaucratic costs associated with implementing
  it.
• Valuable when transferring competencies. Transfer
  competencies or sharing resources between
  diversified businesses in order to realize
  economies of scope.

• Why not use it?
• Profits must be split.
• Example, Oxygen Media may not succeed and Oprah
  feels uneasy. She traded off the rights to
  re-runs of her talk show.
• The company runs the risk of giving away the
  know-how to its partner, and they may use it to
  compete directly with the company.

14
Business Ventures Under Consideration

• Licensing of her name Similar to Paul Newman,
  not like Martha Stewart. Purpose is to raise
  money for charity, not for additional income.
• Cosmetics Interested in working with a
  cosmetics company, talked with Estee Lauder.
• Education Building a school for girls in South
  Africa. Has plans for building a dozen or more
  schools and perhaps some medical clinics too.
• Multimedia productions ??
• Seminars on the Internet ??

15
Greatest Strength and Potential Downfall?

• Oprah is the business, If she as a person does
  something to undermine the trust of her customer,
  her brand could quickly fizzle.

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It Reminds Me

• Wal-Mart Low Cost Always Southwest No
  Frills, Low Cost Oprah You Are Responsible
  For Your Own Life
• They have created a Brand Name, Customer Loyalty
  and Symbol Recognition (Oprahs book club
  insignia, books that have it -- sell more).
• BMG Its in the entertainment business. The film
  unit (SBU) bases its hits on one big hit. Harpo
  limits the number of movies to one release per
  year. It uses technology, the Internet to
  advertise.

17
Summary

• Importance of Internal New Venturing
• Stick To Your Knitting
• Create Value through Diversification
• When your name is the Brand, choose your New
  Ventures Wisely
• A change in the Macroenvironment can be a way to
  revive your corporate message