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Answer & Explanation:Case #3 Game Not Over, Not YetAlthough
their expertise lies in creating games, it’s definitely serious business
for the video game industry. The computer and video game industry has
struggled over the last couple of years as game makers looked for new
sources of revenues and worked to hold down costs. And nipping at the
industry’s heels were companies like Zynga that saw the opportunities
and jumped in on the burgeoning social gaming revolution. One company,
Electronics Arts (EA), exemplifies the challenges of this industry,
where customers are fickle and demanding and competition is intense. As
one of the world’s top three interactive entertainment software
companies, EA lives and dies by its innovations. Its product lineup
includes more than 100 titles such as Battlefield, Madden NFL, FIFA
Soccer, Rock Band, Need for Speed, and The Simpsons. The company has
created more than 50 best-sellers (each with more than 1 million copies
sold) since 1998. In 2011, revenues were almost $3.6 billion—a decrease
of almost 2 percent from the previous year—and the company had a net
loss of $276 million. The last three years have been quite challenging
as the company lowered its sales and profit projections because of
changes in the behavior of consumers and retailers. In addition, EA
missed the initial social gaming trend, but is now pushing hard to
develop digital platforms for many of its popular games. As a result,
its Sims Social is the number 2 game on Facebook, behind Zynga’s
CityVille.EA continues to look for ways to prosper. Paranoia has
been a critical part of EA’s strategy for success. A top game title
takes anywhere from 12 to 36 months to produce and costs between $5
million and $10 million. That’s a significant investment risk riding on
the company’s ability to be innovative. John Riccitello (former
president and chief operating officer who left the company in 2004 to
start a private equity firm but then returned in 2007 as CEO) has guided
much of the company’s game design accomplishments. He said, “The
forgotten aspect of creativity is discipline.” The hard part, and the
part that EA pursues relentlessly, “is identifying the right idea,
assembling the best development team, solving the i

nevitable technical
problems, creating a game that people want to play, getting all of the
work done on schedule, getting it to market at the right time, and
knowing how to generate buzz about it in an increasingly crowded
market.” How does EA do it?It starts with the discipline of
understanding ideas. Game designers try to identify the creative center
of a game—what they call the “creative x”—so they understand what the
game is about. Then, it’s the discipline of understanding the customers
by using focus groups to pinpoint desires and likes and dislikes. And
it’s the discipline of sharing best practices and technologies through
the company’s intranet library. As one employee said, “If somebody
develops a better blade of grass in one game, that grass will be in
somebody else’s game the next day.” Then, there’s the discipline of
developing the next generation of creative leaders. The company’s
“emerging leaders” program gives participants firsthand experience in
departments outside their own. And there’s the discipline of studying
the competition. Employees are encouraged to know the features of
competitors’ products. Then, it’s disciplined project management.
Riccitello, known for his strict discipline, said, “If you’re working on
a game and you miss your deadlines, you won’t be working here very
long.” Although the discipline of creativity is important at EA, you
can’t overlook the passion of the company’s game designers. Nearly
everyone at EA grew up playing games. They love what they do and are
inspired to look for new and creative challenges not only for the
hard-core gamers, but for the casual gamers as well.Discussion QuestionsDescribe EA’s competitive advantage from each of the three perspectives on competitive advantage.Does EA exhibit the critical success factors for the new business context? Explain.Describe the types of resources EA appears to have. Do you think any of these resources might be unique? Explain.What
ethical and social responsibility issues might EA face as it develops
new games? What would be the best approach for dealing with those
issues?What stakeholders might EA have to be concerned
with, and how might those stakeholders affect EA’s strategic decisions
and actions?