The Growth and Creation of Frieze in London - Case Study Example

?Entrepreneurship and social enterprise Introduction Entrepreneurship has been proven to be a key driver of economic growth. Employment and wealth created by the small businesses driven by entrepreneurs are contributing towards the economy of the nation. Many of the small businesses have turned to big businesses with time. Entrepreneurship is the propensity of a person to organize the business and run it in a profitable manner using leadership qualities, decision making and managerial skills (Okoroike, 2009; Shane, 2003). This paper focuses on a case study that deals with the growth and creation of Frieze in London, who aimed to become a global leader in the contemporary art industry. This organization was founded by two young college graduates named Matthew Slotover, a psychology graduate and Amanda Sharp, a PPE Graduate. They were assisted by Tom Gidley, an art college student. Mathew Slotover after completing his graduation from Oxford University has decided to work for him. He started to visit art gallery with his friend, which sparked the passion for contemporary art. This made him to combine his passion for arts combine with his dream to become boss. A promotion in the Guardian newspaper worked as catalyst where the works of few unknown artists with prices as well as contact details were shown. This made Matthew to think of creating a hybrid catalogue or magazine in which the artists can produce their works along with prices. This will make them reach to a wide range of consumers at a time and was expected to revolutionize the ways in which contemporary art world worked. In June 1991, the first edition of Frieze magazine was published. Frieze has grown as a significant company that had 44 employees and a turnover of 5 million, by focusing on art galleries as their major customers and applying their skills and expertise in desk-top publishing. Today, Frieze is operating as the most popular art magazine of Europe and is also gaining a strong position in United States. The Frieze Art Fair that was launched in London in 2003 was one of the top-tier art fairs that gained global recognition. The present case study has given the opportunity to analyze the situation in which the organization is going through and suggest the best possible option in which they can gain higher profitability. In this regards the paper will be focusing on the reasons that brought huge success for Frieze, their current stage according to the organizational life cycle and the best suitable strategy that they need to follow. Reasons for success At the launch of the magazine in 1991 Mathew started to work on the magazine so that it can be a grand success. Carl was a gallery owner and a major player in the booming contemporary art world of London. He turned down the idea saying that the artists will not like to use magazines for displaying their work and they are used to with the galleries for displaying their works. Stuart Morgan was an eminent critic in the leading magazines of UK, emphasized on the fact that credibility of the magazine will be lost if they even one thing to sale. This feedback given by these eminent people was taken seriously by Mathew and was one of the major reasons for the success of their first magazine. Matthew decided to change the vision of the magazine by removing the sale side from the magazine and keeping the editorial content and keep the talk about arts. Matthew was joined by other two members and the total team of three started on work on the new issue. They decided on the name and rented a space from where they can operate. Recession started impacting the economy of UK, which acted as a blessing in disguise for ‘Frieze’. The art world became less busy and the Frieze team was able to contact many of the eminent persons who were willing to offer their advice and time, which were very important for Frieze. Stuart Morgan’s help was also a big contribution towards the success of the business. Apart from this, contribution of all the team members who has devoted all their efforts and ideas towards the success of the magazine, the biggest competitive advantage that the magazine got was the use of desktop publishing. It was a new technology that was in the market and with the use of that Frieze not only got a different look but also could save some of the costs that the company would have incurred in case of traditional publishing. Therefore, the magazine got a huge response at the launch. When the fair was established in 2003 After the success of the first launch the team got rejuvenated and started to prepare from the second edition, which was again a huge success. The team was a perfect amalgamation of skills required to make the business a huge success. Mathew looked after the editorial content, Amanda looked at sales and promotion and Tom was looking after the designing aspect of the magazine. Frieze gained huge recognition and reputation in the field of contemporary arts in UK. They also got grant from the Art Council, which was almost 50 percent of their total revenue. The team then planned to move to the international market. Their next destination was US and eventually the organization evolved as the market leader in Europe and was a well established one in US. After this the organization faced situation of tension and changes. Tom left the team and finally Amanda and Mathew decided to go for some more risk venture and expand the success story of Frieze. They were successful in realizing the opportunity and the market that was unexplored. The success of every business depends on how the opportunities are identified and exploited. London by that time became a major hub of contemporary arts and had only limited number of events or fairs related to arts. The team took the advantage of the opportunity and utilized their revenue in launching the fair. The relationship with some eminent players in art proved to be added advantage. At the point of growth decision direction in 2008 The success of the art fair that was for the first time launched in 2003 paved the pathway for further growth of the organization in the future. The competition was increasing for them and they incorporate new changes every year to be in the market. Critically evaluate the strategic growth opportunities The case suggests that the Frieze has been established as a successful organization and has expanded their business into other countries. By 2008, it has become successful organization and is presently operating in the stage IV (Shown in the figure below). They are in the take-off zone. In this area the major concern of the organization is to how rapidly they can grow and how they can finance this growth. Therefore, delegation and cash are the main issues which the organization should focus (Cunliffe and Luhman, 2012; Enz, 2010; Smith and Graetz, 2011; Farhoomand, 2005, Churchill and Lewis, 1983). Moreover, the SWOT analysis reveals that the organization has significant amount of strengths like high priority was given to quality, content and integrity right from the start of the business (Pahl and Richter, 2009; Bohm, 2009; Ebers and Wied, 2007). . . Figure 1 (Source: Churchill and Lewis, 1983) In case of Frieze management has been successful till now in showing their effectiveness. Presently, they are thinking of certain options and trying to work on them. The first option was to publish the magazines in more than one language. They are operating in the international market but publishing in only English. In this context they are especially targeting the Chinese market. However, the PESTLE analysis is essential before entering into a new market (Allen, 2001; Murray-Webster, 2010). The analysis reveals that there are potential legal hurdles and issues on censorship. Therefore, this suggests that though publishing in multiple languages is a good option for Frieze but entering into China may not be a profitable venture. The organization may incur additional cost in removing the hurdles (Dobbs and Hamilton, 2007). The second option was to organize more number of fairs. Frieze has already been approached by many of the cities for organizing a fair and the duos already have mastered the concept of organizing fair. Moreover, in terms of cash they will be highly beneficial since they have received three times more application from the galleries as compared to the previous times. Therefore, Frieze has a possibility of profit in this venture. The third option was of art school. The current situation of London in terms of art school was not in a very good condition. The teachers were having less freedom and huge paperwork was there. This type of school can be highly profitable venture for Frieze. However, this alone will not suffice the purpose. Art schools are generally treated as non-profit organization, so Frieze requires an alternative method through which they can maintain their profitable position and funding for the business. The fourth option was to launching an art building concept. The forth option can act as a diversification strategy form the current business. Keeping their core business aside Frieze can use this to enter into a different market related to arts (Allison and Kaye, 2011; May, 2010). Moreover, this business does not require any additional capital investment. The only thing which they need to take care of is the people they are recruiting for this business. These people need to be highly skilled so that they can derive profit. The fifth option is an amalgamation of many ideas, which can be potential ways to diversify their business. However, in this case the company needs to be careful that they do not get into business, which adversely affects their brand image like Frieze hotel is very different from their core business and requires huge investment. Financial aspect should be considered very seriously by the organization. The expansion plan that they are going to follow requires financial resource, which they can get through bank loans. The organization does not have any non-current liability so they can easily go for this option. Moreover, in case of organizing events also Frieze can go for loans. Since the current ratio reveals that they are financially sound so they will readily get loans (Siddiqui, 2006). Current ratio of Frieze Events Ltd = Current assets/current liability = 1784074 / 1776863 = 1.004 Conclusion When they launched their first magazine they worked on the feedback given by the experts and always aimed to bring some competitive advantage in their work and their projects. Whatever they did in the past the main reason for their success was proper strategic plan, analysis of the factors that may impact the business, optimum utilization of resources whether it is human or financial and taking the best possible advantage of the situation. This has made the company to reach till this height. The present issue of the organization which is operating in a matured stage is what more they can do to expand the business further. The above analysis shows that financial the organization is sound. They do not have any major long term borrowing so they can diversify their business by launching art building concept, which does not require any major monetary investment. Opening art school and organizing more number of fairs can go hand in hand. All these three option can work for Frieze but alone art school may not be beneficial for the business. Reference List Allison, M. and Kaye, J., 2011. Strategic planning for nonprofit organizations: A practical guide and workbook. New Jersey: John Wiley & Sons. Churchill, N.C. and Lewis, V.L., 1983. The five stages of small business growth. Harvard Business Review, May-June, pp. 1-11. Cunliffe, A.L. and Luhman, J.T., 2012. Key concepts in organization theory. London: SAGE. Dobbs, M. and Hamilton, R.T., 2007. Small business growth: recent evidence and new directions. International Journal of Entrepreneurial Behaviour & Research, 13(5), pp. 296-322. Enz, C.A., 2010. The cornell school of hotel administration handbook of applied hospitality strategy. London: SAGE. Farhoomand, A.F., 2005. Small business management and entrepreneurship in Hong Kong: A casebook. Hong Kong: Hong Kong University Press. May, G., 2010. 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Managerial economics and financial analysis. New Delhi: New Age International. Read More