The group being examined is IMAX (Image MAXimum) Firm, a Canadian company that is experienced in motion picture solutions. Its activities include design, maintenance and operation of IMAX film systems as well as the syndication to IMAX theatres located worldwide. The fundamental goal of this record is to go over the business and economical environment of IMAX as well as its business strategies. The survey is divided into three parts. The first part has an examination of the impact of the exterior business environment on the performance of IMAX. The next part focuses on the review of IMAX's current business strategy and recommendations on how to improve this strategy. The third part is a representation on the various tools that were found in the discussion of parts one and two. This involves reflecting on the knowledge in carrying out the responsibilities and proclaiming the challenges involved with using the analytical tools and techniques.
TASK 1 - POLITICAL, ECONOMIC Community AND TECHNICAL (PEST) Research AND STRUCTURE CONDUCT PERFORMANCE (SCP) MODEL
In analysing the external business and economical environment of a business, the factors impacting on the organisation must be identified. The usage of PEST research is a means of carrying out the research of business surroundings. The influencing factors of PEST are categorized into political, economical, social and technological forces. PEST research examines how these factors inter-relate and straight or indirectly impact upon businesses and organizations. Cooper (2000) state that the use of PEST analysis is proper as it helps a business to recognize its business position and market development. PEST also ensures that the performance of the company aligns with the causes of change which impacts the business enterprise environment (Porter, 1986).
Some of the PEST factors affecting IMAX are its variety of theater locations, customers, suppliers, cost of film seat tickets, competitors, culture of the surroundings in which the motion pictures are released, technical progress of home theater systems, new entrants in to the market, use of large-screen technology, branded digital re-mastering technology and unauthorised copying or piracy of films.
The progress of technology is identified as a significant risk to IMAX. There can be found and potential IMAX viewers who have found different and cheaper means of watching movies, even if the product quality does not match that of IMAX. A few of these alternative sources are the internet, pay per view Television and cable. The development of large screen home theatre systems is another form of technology that poses a kind of threat to IMAX. A 2005 study demonstrated that about 85% of film earnings came from viewers who watched from the comfort with their homes (Danaher et al, 2009). This progress in technology has also resulted in an increase of web sites that show unauthorized films and the creation of pirated CDs and DVDs which has resulted in massive losses for the film industry.
Customers are also a significant factor impacting IMAX because real human preferences are bound to change as time passes. IMAX creates more of educational films but there has been an increase in the demand for comedies as people are becoming more interested in movies that lighten up their moods. "While comedy's primary goal is to make people have a good laugh, humour can be a window into understanding different societies" (Snyder, 2010). IMAX diversifying to the area would meet up with the requirements of customer. Enough time of the entire year would likewise have an impact on attendance at cinemas. The use of e-commerce in marketing activities i. e. the power of customers to get seat tickets online has positively impacted on ticket sales as customers know about the options they have before giving their homes and can adjust their schedules somewhat than going to the movie theater with uncertainty of what videos are showing.
Although IMAX has tried out to differentiate itself in the film market, there are several opponents like Regal Entertainment Group (RGC) and AMC Entertainment who produce regular videos and operate multi screen theatres. These other theatres produce their movies at much cheaper prices and also produce different styles of movies unlike IMAX. These broader selections make customers more willing to patronise these other challengers. IMAX also produces typically documentary films and should make it very important that the movies produced in a specific area match the culture of the individuals for the reason that area as incorrect thought of the needs of a particular environment would influence IMAX's procedures. Furthermore, as most films can only be shown in about 24 locations at a time, the refusal of some locations to show confirmed film would significantly reduce earnings.
In addition, although IMAX obtains a few of the tools needed from suppliers, the majority of the assembling of the theater equipment is done in-house. IMAX has skilled staffs that possess the ability and experience to put together the components. Digital re-mastering technology is a technology developed by IMAX Corporation which includes been used in the conversion of films such as Harry Porter and Spiderman in to the giant display format. This brings a new viewing experience into the cinemas. Some other selected motion pictures have been enlarged and also changed into 3D taking the re-mastering process to some other level.
The software of the structure-conduct-performance (SCP) is an strategy in analysing the performance and industry composition of organisations predicated on the structure of the industry, firm carry out and market performance. The Composition, Do Performance theory state governments that "the framework of an industry (of the degree of attention) establishes conduct (collusion and monopolistic prices) which decides performance (abnormal success or the rate of come back)" (Theron, 2001).
The program of the SCP model helps in the determination of competition within the marketplace. The composition of the market could be a amount of consumer recognition about the products proposed by the company as well as the amount of competition. A number of the factors impacting after IMAX are research and development, advertising and product differentiation.
Initially, IMAX was centered on producing and distributing large format motion pictures that were educational, yet enjoyable and the majority of its theatres were situated in aquariums, institutions, nationwide parks and museums. Presently, IMAX has embarked on an extension strategy because they build cinemas in multiplexes and switching selected Hollywood films into IMAX format. Compared to its opponents in the large film format industry, IMAX is the sole company that changes commercial movies into large format, making IMAX a monopolist for the reason that aspect. This enables IMAX to modify the market for large format commercial movies which is constantly on the increase. IMAX also distributes its videos to be shown in other theatres to help promote the films. IMAX's differentiation has resulted in its massive growth in the film industry in terms of its earnings.
IMAX's competition in the large format film industry also cause as hazard as customers choosing substitutes is on the increase because there are many substitutes available and customers may easily find competition offering similar products to IMAX at cheaper prices. This major distinguishing factor is the fact that IMAX films are more highly priced though the product differentiation strategy of IMAX still allows customers to buy the tickets and watch the films irrespective of the high cost. IMAX's major source of income is from long-term theater system lease and maintenance contracts, production and circulation of movies as well as the operation of theatres. The in-house assembling of technology used to job movies on giant screens by IMAX also really helps to save costs although the majority of the major costs are general theatre operations, costs of theatre operations, development of motion pictures and royalties.
As IMAX's major market is the educational and entertainment market, institution students account for about 20% of the populace that go to the theatres and most the trips are for excursion purposes (GPCET, 2010). This occurs mainly because an array of films are suited to university curriculums and educator resources and the educational market is a substantial source of revenue through the week and institution time.
TASK 2 - Evaluation OF THE BUSINESS ENTERPRISE STRATEGY
The constant developments in Information Technology and changing consumer wishes have led organisations to go global by an internationally integration of the business activities. Successfully circulating their activities internationally provides the good thing about standardisation of consumers needs. Globalisation has been grouped as "worldwide range, worldwide similarity and worldwide integration" (De Wit and Meyer, 2004).
The strategy of the company is concerned mostly with aligning its functional and development activities with business needs and with seeking tactical advantage for future competitiveness. IMAX works multinationally with a worldwide business strategy. A firm is said to be global if its headquarters is in one country and its functional activities are carried out in a single or other countries. In IMAX's case, its headquarters is within Canada and has over 470 movie theater locations working in about 45 countries on earth. Porter (1986:13) also identifies a global organization as "one when a firm's competitive position in one country is significantly affected by its position in other countries".
Having a central headquarters location allows resources like knowledge to be distributed globally. In addition, it allows global coordination of center businesses and centralised planning. This in turn empowers the organisation to efficiently support its different functions. This is of great gain to IMAX as a localised strategy would need to be designed to a variety of political, economical, social, cultural and technological makes.
The centralisation of IMAX's activities requires that strategies are included worldwide for competitive advantage and reaching its goal of delivering the world's most immersive movie experience. Therefore that the level of risk is increased because of this of the integration of activities. A number of the difficulties they face include religious and cultural barriers. Bartlett and Ghoshal (1998) suggest that global firms have to have both a multi-domestic strategy and a worldwide strategy to help reduce these problems and merge global coordination with local responsiveness. Some of the changes that could be made are structuring the business to fit the needs of specific environments as you product may not meet the needs of all its customers.
IMAX motion pictures are unique in the sense which it features large format videos which differentiates it from other film producers. This format is specially appealing to viewers who like to watch movies on big screens as the movies are produce in 3D images. IMAX tries to create its specific niche market by making a difference in the quality of the motion pictures it produces and finding its theatres in prestigious locations. Matching to Galliers and Leidner (2003), vertical integration is when an organisation controls the creation and syndication of its product and services in order to supercharge that organisations market control. The integration strategy that is implemented by IMAX is that of vertical integration and this is evidenced by the actual fact that it is into distribution, digesting and exhibition of its movies. Although IMAX is smaller than some of its competition, it also distributes the motion pictures it produces. IMAX has gained possession of several companies supplying the camcorders, projectors, audio development and displays and also has several subsidiary companies that work on post creation of films. This strategy helps IMAX to increase control over its suppliers also to reduce the fluctuation of the prices of equipment it requires for its operations.
Also, since the majority of the motion pictures are targeted towards children and more radiant people, IMAX needs to be aware of the difference in this and educational degree of its customers as this can have an impact on the demand for its products. So, its products have to be varied to meet the specific needs of its various customers round the world. Motion pictures should be produced for parents as this might broaden the market. Another modification that can be made is in the use of its technology which is the key way to obtain competitive advantage. Breakthroughs in technology could provide existing technology redundant and this would require capital to make changes to equipment used. IMAX can also differ its business. Advertising should also be increased because so many customers are unaware of the difference between an IMAX film and a normal film. These advertisements would inform prospects of the great things about the IMAX experience as well as the differentiating factors from other cinemas. Advertising would create recognition among customers and raise the demand for IMAX films. Furthermore, IMAX film seat tickets cost discourages customers and prevents them from going to the theatres. It is strongly recommended that the costing of tickets be reduced to encourage clients to patronize as well as for present customers to keep using IMAX services customers. This might lead to a rise in the demand for IMAX motion pictures as more people can easily spend the money for cost.
One of the issues confronted by global companies is that they make an effort to simultaneously serve both local and international market segments, thus making a standardised product for any markets. The films created by IMAX aren't modified to the needs of a few of its customers in other countries. Therefore, there are motion pictures which do not completely meet the requirements of most of its customers. Furthermore, variances can be found in the cultural beliefs of different market segments. Schoenberger (1997:116) advised that "corporate culture is normally seen as a set of social conventions embracing behavioural norms, requirements, customers, and the guidelines of the game underlying social connections within the company". IMAX needs to allow each location to make strategic decisions that will meet up with the socio-cultural needs of the consumers for the reason that specific region. In order to achieve this, a few of the decision-making operations have to be de-centralised.
IMAX's success can't be solely attributed to the use of technology. Its competitive strategy is not only in the utilization of the technology however in the emphasis of its capabilities on its differentiation of producing motion pictures only in large screen format. The usage of this technology is coupled with its business innovation and the capability to execute effective business technique to achieve its eye-sight. Making several changes to IMAX's strategy might present a difficulty because it might eliminate the organisation's way to obtain differentiation that is uniquely recognized to IMAX.
TASK 3 - REFELCTION
This section discusses a reflective view of the knowledge while making use of the PEST evaluation and SCP model in the analysis of IMAX's environment and a reflection on the analysis of IMAX's strategy. This section seeks to identify the challenges experienced during the coursework as well as alternate techniques that could be applied in future evaluation.
In using the Infestation evaluation, all the factors needed to be categorised as politics, social, economical or technological. The use of this technique sometimes is not exhaustive as there are some other factors that take place beyond this scope and an indicator is to utilize PESTEL which further includes economic, ecological and legal factors. This would allow more factors which impact the external and interior environment of the organisation to be recognized and taken care of immediately. Furthermore, the simultaneous use of Porter's five pushes would have helped identify major influencing factors that could easily be overlooked. Porter's five pushes also incorporate the industry examination with business strategy development for a more comprehensive overview of an company.
Furthermore, it is not enough to recognize all the influencing factors but to also identify the factors which are likely to improve and the impact these factors will have on IMAX. So, each one of these factors could be positioned with the best placed being the factors that happen to be most critical to the business. A further examination will be to determine the impact of changes of the various factors on the business. This would be utilized in planning and to enable adjustments to be produced to the prevailing strategy. As these factors would have an impact on various degrees of IMAX as it is a worldwide organisation, it would also be useful to evaluate which level the factors impact on i. e. locally, nationally or globally. Using the Infestation examination and SCP model all together assists in business and tactical planning and product development. Hence the consequence of both evaluation performed can be given into the strategy of the business enterprise to recognize areas for expansion and aligning those to existing strategy would help maintain competitive benefits.
Reflecting upon this coursework has made apparent how the evaluation of the factors influencing an company may help with understanding the marketplace composition as well as plans for development into new markets. This research helps bring better control over the decision making process in organisations. However the analysis will not provide clear-cut suggestions to success, it offers a plan which is often designed wholly or partially for a good final result, while highlighting the areas that may be improved after or done in different ways in future examination and design of IMAX Organization.
