Law Essays on Marvel Enterprise
Marvel was a multi-billion dollar cinematic empire prior to its collapse. The legendary corporation grossly transformed the entertainment sphere. They invented the Avengers, Spider-man, and X-men among other comic characters. Perelman had in sights Marvel to become more highly profitable than it previously was, trying to eliminate the unlucrative aspects of the enterprise. For this purpose he modernized the business operations of the company. According to Bell et al., Marvel comic published more than 40,000 individual comic book issues over an array of more than 5,000 titles (7). However, upon realization of the anticipated profits, Perelman adopted strategic shifts leading to the eventual collapse of the whole business.
Generally speaking, Marvel’s troubles were caused by a poor strategy in spite of its comic purchasers were loyal and fanatic. The firm altered the aspects around the customer preferences which resulted in a quick loss of the clientele’s patronage. Thus, Marvel’s comic literature was gradually losing the favor of the readers. The alterations in prices, titles, and styles had disastrous impacts on Marvel. They failed to consider the cyclical nature of the popularity: while flush times a firm should not be tempted to overspend but to invest wisely because the thing may take unexpected turns.
In other words, the strategies that led to the failure of Marvel include aiming the top line growth by escalating the prices of comic literature, pushing for the proliferation of titles and comics. The need to lower the marginal costs distracted the company from making quality products.
Also, the trading car market affected Marvel operations. According to Platt, Marvel entertainment stock traded at nearly $15 in late 1995 while its holding’s trade near par (262). As the organization’s troubles soared, Perelman began blaming the decaying sales on distributors of their comics, which damaged the distributors and the retailers. The corporation’s management proved to be incredibly poor in its judgment skills. Consequently, this led to ill-timed acquisitions that targeted establishing marvel to an entertainment empire. The company was distracted and its balance sheet eroded.
The company was further weakened by Perelman’s buying plan. No wonder, this gesture pretty much aggravated the existing crisis, and the liability tension became enormously high. Failure of restricting their debt worsened the situation. In 1996, the company violated the agreement of bank loans. The holders of the bond did not accept the proposed restricting strategies. This pushed the company to file for bankruptcy. The firm’s financial situation presented two options to the debtors: the debtor would continue holding its asset or liquidate its assets. The first option would benefit the debtor who wanted to take a risk and who held Marvel’s opportunity to turn around.
On the contrary, liquidation would benefit the debtors apprehending to incur further losses. The debtor would lose the opportunity of recouping the entire investment in case Marvel becomes successful. During bankruptcy years, the corporation’s major obligation was fixing the broken parts of the enterprise. This included shedding the non-core businesses renegotiating the premium contract for the maximization of cash-favorable terms as well as the articulation of the precise and coherent vision that would catapult the organization’s unfavorable future investments.
The situation of the company today proves its appropriate turnaround strategy. Marvel managed the attaining 250% operational benefit above its losses progressively approving the altering consumer needs. For now, the competitors are unable to predict the firm’s fashion products that depend on the popular characters and its success in the movie industry. The new stratagem facilitated the reduction of risks and capital expenditures, involving creative content and talents. After all, this proves to be effective in pursuing a wider array of projects with minimal financial risks.
Works Cited
Bell, Blake and Michael J. Vassallo. The Secret History of Marvel Comics: Jack Kirby and the Moonlighting Artists at Martin Goodman’s Empire. Seattle, WA: Fantagraphics Books Inc, 2013. Print
Platt, Harlan D. Principles of Corporate Renewal. Ann Arbor, MI: University of Michigan Press, 2004. Print