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Rustia Jr., Teresito B.

Business Strategy (10AM-1PM(SAT.))

The Movie Industry in 2008 (Case A)


Time Context
The problem arise in the Middle of the year 2007 - 2008

Viewpoint
As a manager, I will begin with the past historical data standing of the company in order to assess
and identify the roots of the problem/ issue that have arises.

Statement of the Problem

Loss leadership
Attendance is declining
Average ticket price is increasing
Technology has been double edge sword
Numbers of screens are increasing
Factoring facility and labor expenses income is often negative

Objectives

To expand the vision of the company in all areas of movie industry


Establish a good leadership (Organizational Structure should be implemented)

Areas of Consideration/Analysis
Competition in the movie industry in the late 2008 is very high, so we need to identify and analyze
the level of competition within an industry. The Porter's 5 Forces can help us to know on what the
companys doing and to determine the competitive intensity and therefore attractiveness of an industry
(Attractiveness in this context refers to the overall industry profitability).

You can now see the problem of the movie industry in 2008. The buyer power is low because
they act independently. If a large number of customers will act with each other and ask to make prices low
the company will have no other choice because of large number of customers pressure. Because of the
existence of products outside like DVDs and etc., the company has no choice but to increase the prices.
Indeed, considering the size of theatre and the facility itself would cost a lot. Likewise, the price also
depending on the trend that the viewer are capable of. Another, the intensity of competitive rivalry,
competitive advantage is very low because of the technological advances, it greatly affects the profitability
of the company.
As a summary, the product or services offered is unattractive, in which the five forces acts to drive down
overall company profitability, we should need to strategize our product, new offerings like discounts and
etc. The company should targeted the middle class and lower in order the business to become
profitability.

Alternative Course of Action


Understanding the roots of the problem is very important for us to know the companys profitability, if the
said vision and mission is achieve. The SWOT Analysis can help us to assess and to evaluate the
strengths, weaknesses, opportunities and threats involved in a project or in a business venture.
SWOT Analysis
Strengths:
Digital projectors are valuable; very few theaters have installed digital projectors and the
ability to watch a movie in HD digital adds value for patrons. Patrons have total bargaining
power.
Weaknesses:
Movies are no longer rare with the sheer number of alternatives from Netflix and Red Box to
pirating. The Digital projectors are costly to initiate.
Opportunities:
Theaters have the opportunity to make the transition to all digital.
Threats:
The movie industry is tight competition. Increasing threat of substitute products such as
Netflix, Red Box, and pirating.
Opportunities & Threats:
Technology:
Digital screening and the number of screens
Ability to illegally download and stream movies further reduce revenue
Socio-cultural:
core audience is 12 to 24 and little growth expected in this age group.
Economic:
Movies are the cheap form of entertainment
Few major exhibition leaders have control over market
Rising operational costs lowering margins

Rising ticket prices to offset costs in time of high unemployment

Strengths & Weaknesses:

Control over concession and ticket prices


Decline in ticket sales is causing consolidation
Costs for creating films are relatively high for the studios.
Bargaining power is very high for the suppliers.
Digital projectors cost roughly 3 to 4 times the cost of standard projectors.

Recommendation

Elimination of substitutes source of entertainment such the Pirating and etc.

Conclusions
The common problem faced by the movie industry, is pirating in which until now was boom to
the middle and lower class people because of the affordability of the product or services.

Pirating should be restricted (the company should monitor, control and secure that nobodys copy
or pirate the movie). For example, they should put CCTV on every chair of the movie goers, thats
possible.

The government should ban those who are in Pirating industry. If not give them, a higher taxes.