HARVARD CASE ANALYSIS

1
HARVARD CASE ANALYSIS

• STARMEDIA LAUNCHING A LATIN AMERICAN
  REVOLUTION
• Electronic Commerce
• Management 671
• Radford University
• Spring 2001
• Elizabeth Curl
• Karl Zartarian
• Mike Biscotte

2
Outline

• Description of company
• Analysis using Porters Five Competitive Forces,
  STEEP and SWOT
• Business Model and Target Markets
• Core Competencies
• Financials and Industry Comparisons
• Problem Statement
• Strategies
• Recommended Actions
• References

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Description

• An international integrated media company
• Significant first-mover advantage in Latin
  American internet market with 1.2 billion page
  views/quarter
• Active as
• Internet portal
• Wireless/cable provider
• Search engine
• Community builder
• E-commerce facilitator
• Content provider

4
Porters Model

• Suppliers
• ISPs
• Content providers
• Wireless/Mobile
• Cable
• Telephony
• RealNetworks

• Buyers
• Advertisers
• ISP users
• Wireless users
• E-tailers
• Content providers

5
Porters Model (contd)

• Industry Rivals
• Portals
• AOL Latin America
• Yahoo!
• Terra/Lycos
• El Sitio
• Natl sites w/ISP
• Telemex/Prodigy/MSN
• Universo Online
• Pan-Regional startups
• Media conglomerates

• New Entrants
• Internet startups
• Local providers
• Stiff barriers for new global industry entrants
• Negligible barriers for new local entrants

• Substitutes
• Land based v. wireless
• Alternate Interface
• (Neural chip)

6
STEEP Analysis

• Situation PLC (Internet E-commerce) Early
• Technology
• Early/Intro for telephony/computer
• Evolving communications infrastructure
• Economic
• Latin American economy exhibiting vigorous growth
  stimulated by privatisation of industry
• Latin American economy is dependent on the U.S.
  Economy
• Political
• Privitisation of government regulated industries
  (Telephone)
• NAFTA and Mercosur

7
SWOT Analysis
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Business Model

• E-Network
• Value chain integrator
• Information brokerage
• E-tail facilitator
• Virtual community
• Wireless Access Provider

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W.W.W
Information
Virtual Community
Transactions
StarMedia

• SCM to facilitate
• Online delivery (e.g. SkyLab)
• Virtual Store (e.g. HP)
• Credit (e.g. VISA)
• Hardware (e.g. DELL, wireless)

Companies
Consumer
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Target Markets

• Consumer
• Latinos ages 18-34
• Wealthiest 20 (100 Million people)
• Advertisers
• Consistent with consumer target
• Blue chip / Fortune 500
• E-tailers

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Core Competencies
Product Technology Web site development
Innovation / creativity Network development

• Visionary Management

CRM Supply chain integration Service company
Marketing Promotional ability Branding
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Financial Situation

• StarMedia has not made a profit since inception.
  
• Projecting profitability in 4Q2001
• Cash on hand 127M
• Revenues for 2000 were 50M
• 90 revenues from advertising
• 70 traditional companies/30 Dot.coms
• 10 revenues from access/subscription fees

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Historic Revenue and EPS
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Industry Comparisons
STRM StarMedia AOLA AOL Latin America LCTO
El Sitio YHOO Yahoo! TRLY Terra/Lycos
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Problem Statement

• How should StarMedia best position themselves to
  ACHIEVE PROFITABILITY while maintaining and
  expanding their presence in Latin America?