Instructor’s Manual

CASE TEACHING NOTES

Brown Bag
John Cullen

1. Introduction
This case study charts the development of an Irish animation company from small, unambitious beginnings to becoming an award-winning, globally recognised company with a growing list of international clients nearly ten years later. It describes how the enterprise emerged at a time of demographic and cultural change in Ireland, and how the withdrawal of significant investment in the animation sector created entrepreneurial opportunities. Having charted the issues that underpinned Brown Bag’s early success and acclaim, the case ends by highlighting a set of strategic decisions which the directors faced eight years after an ‘accidental’ beginning in 1994.

2. The position of the case
This case provides an opportunity to examine the evolution of a small enterprise which was very much a ‘labour of love’ in it’s start-up phase rather than a profit-oriented business. It tells the story of how a small start-up begins by explaining the socio-cultural background which predated the establishment of Brown Bag. The genesis of the firm is described in terms which unearths the unique cultural, demographic and market conditions which influenced the directors, and the forces within the animation market, and the global and Irish national economies which shaped these. The case explores some of the detail behind the firm’s initial projects and the rationales which presented to the directors and encouraged them to change their strategic direction.

3. Learning objectives
The Brown Bag case study is intended to provide a business case that is in many respects typical of entrepreneurial start-up companies who reach their goals and need to re-think strategy to survive and compete. It is written in a straightforward fashion which attempts to unpack the social, cultural and economic factors which led to the growth of the Irish animation sector and takes the reader through Brown Bag’s gradual accumulation of a structure and a strategy. The case provides an opportunity to conduct strategic analyses, e.g. employing competence analysis, PESTEL and SWOT analyses.
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If Brown Bag could hire one extra person as a member of its core staff. How typical is this case of the experience of directors of SMEs? 8. Questions for discussion Some of the tasks and questions that might be asked include: 1. How can the directors increase their understanding of business management issues? 6. A suggested learning sequence might be as follows: • • Students individually read and consider the case prior to the case session Students may then be provided with the case questions and form groups to consider all of the questions while specialising in one of the questions in order to develop a brief class presentation Each class presentation is followed by a wider class discussion.Instructor’s Manual The case can be used as follows: • • To conduct a strategic analysis and review the options available to the firm at a particular strategic juncture To provide an example of a post-startup scenario often faced by entrepreneurs. Teaching process The case is suitable for undergraduate and MBA students as an introduction to some of the basic concepts and techniques associated with strategy. • This structure provides a logical development for a case session. Conduct competence. What should the key elements of Brown Bag’s strategy for enlargement be? 4. 5. Should the company be restructured? If so. why not? 7. what role should that person hold? 435 © Pearson Education Limited 2005 . How should the directors capitalise on their Oscar nomination? 3. 2. how? If not. 4. PESTEL and SWOT analyses on Brown Bag Films. How can Brown Bag overcome its lack of investment capital? 5.

Commercially oriented management team. Brown Bag has also been commissioned to replicate the format in advertising campaigns. PESTEL and SWOT analyses on Brown Bag Films Competence Analysis • • • • Proven ability to deliver quality product to a growing base of commercial clients. Ireland is a small.Instructor’s Manual 6. 436 © Pearson Education Limited 2005 . Access to experienced talent pool and appropriate technology. Ireland.1 Conduct competence. However. The Oscar nomination has proven to be a ‘door-opener’ for the firm. The rapid modernisation of Irish society has impacted in various ways. and emigration from populations of which the country had no previous experience. • PESTEL Analysis Some points which might arise in a PESTEL analysis are as follows. Political • • • Irish government has been very stable for a number of years. has undergone significant social and cultural change since the economic boom/Celtic Tiger days of the mid-1990s which saw massive return emigration. Sociocultural factors • • Ireland has one of the youngest populations and highest birthrates in Europe. and was nominated for one of the most prestigious awards in their field. Case analysis 6. the product was expanded into an 8-part mini-series that was shown through Christmas on Irish national television. particularly the greater Dublin area. recent figures indicate that there is evidence that this may be declining. open economy dependent on international trade. such as an upsurge in the suicide rate amongst young males. Ireland has one of the lowest corporate taxation regimes in the world. Growing understanding of the markets (national and international) in which it operates. This indicates solid brand recognition for the firm and its outputs. Brown Bag has achieved international recognition for its work. A series of scandals related to political and church figures has damaged trust in the institutions and largely removed the control which they had on Irish life.

5 times that of the UK. Brown Bag offices and studios are located at the heart of Dublin City Centre. Points which could be possibly be used in a SWOT analysis of Brown Bag’s position as described in the case are outlined below. Technological factors • Animation is a technologically reliant industry and investment is continually required in this area. have accelerated strongly. but Dublin has been identified as one of the most expensive cities in Europe to visit and live in. The cost of doing business is very high in the capital city. the rate of inflation increased at double the rate of the EU average and the rate of price increase was 3.Instructor’s Manual Environmental factors • • Dublin has become a highly congested. SWOT Analysis Strengths • • • • • • Well-recognised brand in a national context International industry recognition for the firm’s work Ten years spent on a learning curve Development of a library of intellectual capital Beginning to work in foreign markets in a significant way Strong understanding of the animation sector. in January 2003. Legal issues • The protection of intellectual property is key to developing animation projects which can be made available on the international stage. particularly in Dublin. This rate has abated since then. grid-locked city with an inadequate public transportation system. Economic factors • Ireland has recently come out of a high inflation spiral where. Weaknesses • Animation production is expensive 437 © Pearson Education Limited 2005 . Property prices.

They have become something of media spokespeople on commercial arts (particularly in their own sector). Opportunities • • • Capitalising on Oscar nomination Growing exposure in international markets Strategic alliances with major force in US market. 6. They have used this ‘free’ publicity to re-distribute new showreels to a number of advertising agencies and have entered into discussions with several ‘mainstream’ directors with a view to creating strategic alliances in order to gain a surer footing in television productions.2 How should the directors capitalise on their Oscar nomination? The directors made themselves available to the Irish media extensively following their Oscar nomination. There is a need to develop a new flagship project with which they can continue to be identified. Threats • • Cutting-edge.4).3 What should the key elements of Brown Bag’s strategy for enlargement be? It could be suggested that Brown Bag’s growth is dependent on focusing on two areas: the first is developing its commercials work which will provide finance in the short term. highly resourced competitors such as Pixar utilise advanced technologies which have altered consumers’ perceptions of what animation is International competitors have much stronger brand recognition in key markets such as the US. the second is developing its archive of intellectual property which. will serve to generate profits in the longer run. However. The question which the directors must address is: ‘Should Brown Bag be an Irish company working in a global market. as they would otherwise run the risk of being perceived as a ‘onetrick pony’. 6. or a global company based in Ireland?’ 438 © Pearson Education Limited 2005 . there is only a limited amount of mileage which the directors should use the Oscar nomination for. although costly.Instructor’s Manual • • Limited indigenous markets for their television productions Production is time-consuming. The internationalisation of the business is also an important option to be considered (see 6.

Globally successful television shows such as the X-files and the Simpsons have conducted significant amount of production work in less expensive locations. the firm can ill afford to turn down revenues in the digital media sector. Brown Bag could also move its own offices and production facilities outside Dublin City Centre to a less expensive and congested location. 6. The Irish market is quite small and crowded. Commercials are valuable. or joining a representative organisation for businesses. Opportunities are also available to the firm to reduce its operating costs. perhaps in the form of an MBA or a similar qualification.6 Should the company be restructured? If so.5 How can the directors increase their understanding of business management issues? Like many entrepreneurs who experience some early success. and in an industry where available capital is often very scarce. This unit should have a strong business development emphasis which should have a singularly commercial orientation. should they purse MBAs which emphasise leadership or innovation etc. The Oscar nomination has won the firm some work in the Middle East and it has strong relationships with a leading North American company working in this field. However. the directors of Brown Bag might possibly be of an opinion that additional business education. might not be of benefit.)? Other options for the directors to increase their understanding of business management might involve engaging with business development specialists or management consultants. very real opportunities exist for the company in markets outside Ireland. how? If not. include: • • The company is too small to reorganise The company is too ‘young’ to discuss changing its organisational ‘identity’ 439 © Pearson Education Limited 2005 . 6. Reasons for not re-structuring.Instructor’s Manual 6. what particular flavour of MBA should they pursue (for example. if the directors could be convinced of the benefits of participating in a management development or executive education programme. Is an introductory management course appropriate to their experience? If not. the question remains: what part of the business should be downsized? Television production is very close to the organisation’s core ideology and raison d’être.4 How can Brown Bag overcome its lack of investment capital? It could be suggested that Brown Bag might develop its commercials work as a separate business unit. why not? If the company restructured its existing business units and concentrated mainly on only one of its main activities. the question remains as to which would be the correct approach for them to take.

A marketing expert Possible impact might include more investment in longer-term projects. This would involve a fundamental re-think of Brown Bag’s raison d’être. 6. the firm and its directors are still quite young. possible closure of less profitable activities. 440 © Pearson Education Limited 2005 . Greater investment in learning and researching international animation and commercials markets would be needed.Instructor’s Manual • Restructuring might fragment the existing ‘tight’ team atmosphere and destabilise creative and operational relationships between staff. relocation of the company ‘headquarters’. The possible additions mentioned below are suggested with a view to presenting two very different staffing approaches which would fundamentally reshape the organisational culture. The introduction of a new member of core staff will very possibly change Brown Bag’s corporate identity. but know that it needs to change if it is to survive and grow.8 If Brown Bag could hire one extra person as a member of its core staff. and outsourcing. 6. Other possibilities might include retaining the services of sales agents in target international markets. A finance executive The possible impact would be a tightening up of costs. travel to international conferences and trade shows. and nonrevenue generating activities such as more press work.7 How typical is this case of the experience of directors of SMEs? This case is not entirely reflective of SMEs but might be more indicative of the case of entrepreneurs who remain ‘emotionally’ attached to their enterprise. what role should that person hold? As mentioned above.

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