Report Critique - Assignment Example

The Turnaround group of analysts considered the six best performing companies in the industry, which is indeed a reasonable number to regard in compiling the report. This piece of writing analyses the way out given by the explanation compiled by the team. The Turnaround research team’s idea of rating Lions Gate Entertainment’s company as the low performing firm is dreadfully precise considering the corporation’s portfolio diversification, leverage level, profitability and market allocation.

Nevertheless, the firm performs highly in video production compared to other competitors. The Turnaround team therefore considered the overall industry performance, which is exceptionally plausible. The first six companies in the Motion Picture and Video production industry occupy the market focus. The top six companies comprises of 91.2% market absorption and experiences a fierce competition amongst themselves abandoning Lion’s Gate Entertainment Company with only 4.3% of the market allocation (Davidson et al 1) .

High profitability in this established companies are caused by various factors ranging from the barriers imposed by the existing firms, buyers bargaining power, medium supplier power and the economies of scale enjoyed by the firms. The financial capabilities of the top six Motion Picture and Videos production companies have enabled them to acquire highly developed technologies and burly promotional networks thus covering a wider market. The monetary competence boosts the medium supplier power by using celebrities and creative artists in their Video production thus attracting larger crowd.

Investors’ self-belief is also elevated on these companies due to a first-rate standing enjoyed by the enormous companies thus encouraging investments. The need to focus on the taste and fulfillment of the population is additionally important in attracting a huge customer base as explained by the team (Davidson et al 2-3). Lions Gate Entertainment Corporation should embark on having a large risk tolerance portfolio, which eventually increases investors’ confidence, and widening customer base.

However, the increase of portfolio does not directly raise customer base as claimed by the report. The Lions Gate Entertainment Corporation should increase its investment in production in order to increase their profit margin as explained by the team. The larger firms seem to be investing much in video production thus increasing their income. This can also apply in the Lions Gate Entertainment Corporation for higher profitability. The fact that Lions Gate Entertainment Company has lower cost of production is not adequate since the team further explains the higher debt to equity ratio, which directly affects the net profit of the firm.

The shareholders do not enjoy the dividends because a larger amount of profit is used to pay the debtors. The Lions Gate Entertainment firm cannot therefore use diversification strategy properly due to its fiscal incapacity. Furthermore, the financial inability makes the corporation have a low cost budget, which cannot be interpreted as efficiency due to diseconomies of scale. Although, Lions Gate has expanded its portfolios, it experiences an overall net loss due to its unprofitable subsidiaries thus reducing its dividends.

The team suggestion that the