AOL Time Warner Strategic Alternatives and Turnaround Plan

Strategic Alternatives Overview

Revised strategies for Time Warner Inc. include ways to mitigate the problems stemming from the merger between Time Warner and AOL. One such strategy is the change in the company's name from AOL Time Warner to Time Warner. The mixed public reaction to this change indicates that more significant work is likely necessary to restore confidence in the company. It should be noted that the case study ends on a positive note, with the company's financial situation appearing to reflect a profitable strategic plan. As such, it may be possible for the company to turn its situation around toward a more favorable future, though the speed at which this occurs remains a concern.

Time Warner Inc. may benefit from refining its current strategies, but should also consider new strategies and possible alliances in order to maximize its market position. Alternative strategies should be considered in addition to what is currently being done, and these should be specifically targeted toward the company's most pressing problems, including its debt levels and ongoing investigations arising from the AOL merger.

On any organizational level, Time Warner is currently not in a stable position. The company is under investigation, its economic situation is far from optimal, and internal leadership struggles detract from organizational unity. Its growth is, however, showing early signs of reestablishment as a result of retrenching managers and workers who have not contributed positively to the company.

Evaluating Retrenchment and Cost Leadership

The disadvantage of retrenchment as a strategy is that it contributes to internal instability and conflict as employee stress levels rise. In the wake of existing retrenchments and resignations, further strategies of this kind can only deepen that instability. While retrenchment can serve the purpose of eliminating unprofitable roles and thereby increasing overall profitability, it must be weighed against its effect on remaining employees. Given the company's current situation, further retrenchment does not appear to be a favorable strategy for Time Warner. Instead, the company should focus on its existing employee base and consider how this, along with other strengths, can be leveraged to help the company prosper going forward.

Cost leadership refers to offering low-cost services in order to compete within an existing market. Again, in light of the company's current situation and the lessons of its recent history, this does not appear to be a strong strategic choice for Time Warner. Differentiation may be a more appropriate alternative, provided it is targeted toward current market demands and existing competition. The company could, for example, draw on the creativity of its current employee base to differentiate its products and services in meaningful ways.