Mission, Objectives and Stakeholders - British Broadcasting Corporation - Case Study Example

Introduction In the age of globalisation, media has essentially come to be linked with the capitalist economic system in which the market is the ultimate arbitrator. Modern western democracies vouch for the free market in all sectors in which players have competitive freedom. British Broadcasting Corporation (BBC) is a state-owned media company that began as a public service but now has commercial operations also albeit in separate channels to meet the challenges of globalization. Over the years, BBC has grown to be a mammoth media house that incorporates radio, television and the internet. The organization has increased its strength through cross-fertilization of staff and ideas between the various outlets. In the UK, it has little competition even though some private commercial media houses, typically in television, have come into existence recently. Mission, Objectives and Stakeholders BBC’s main mission is to create innovative and high quality programming. The four defining objectives as laid out by BBC is 1) to inform the national debate by providing in-depth, informative and impartial news across various news outlets, 2) to express British culture and entertainment, 3) to create opportunities for education, and 4) to communicate between the UK and abroad (King-Shakleman, 2000). The commercial media market can be classified as the content market, the advertisement market and the consumer market. Hence, the stakeholders for BBC are the consumers, the advertisers, the government, the national and the international community. The classification runs across the value chain of the media industry, through investment, production, distribution to end users and consumers. The end-use consumer looks for interesting content that the program houses provide the distributor. The advertiser also looks for the same interesting content on which it can advertise its products and impress the consumers (McChesney, 1999, p 107-9). The core problems of media reforms in western democracies, according to McChensey (1999), are the result of “a profit-driven, advertising-supported media system: hypercommercialism and denigration of journalism and public service” (p 109). Hence, content provides the key competitive advantage to the market dynamics of the media market. The commercial broadcast industry – comprising of television and radio - is driven by the advertisement-oriented culture that results in cloning of programs across countries, predominantly in the sphere of entertainment, rather than news or public service oriented programs. This is driven by the trans-national media companies’ urge to follow profits through advertisements. However, BBC is to some extent insulated from the commercial pressures because it has a regular flow of income being a state-run organization and public service dominated. However, as competition from the private sector is picking up, both from national information and commercial media houses as well as the international media houses, BBC can no longer maintain a status quo and has to develop commercial strategy choices. Internal and External Competition The external competitive environment for BBC may be analysed on the basis of the PESTLE model, that is, considering the political, economic, social, technological, legal and ethical scenario. The political environment for BBC is favourable since the government-owned media organization is a highly respected one globally. BBC attracted a large viewer and audience base particularly in times of global crisis, like for example during the Iraq and Afghan wars, and after terror incidents like 9/11 in 2001 and the London train bombing in 2003. The most significant element of global media scenario is perhaps the emergence of trans-national media organizations. Through the 1980s, there was a wave of deregulation and liberalization in the media environment in almost all countries, including the United States and Europe. By the end of the 20th century, not only did the regulatory environment of media change, the society changed towards greater individualism. As a corollary, all business organizations are now expected to develop a customer orientation, which resulted in BBC shifting focus from a pure public service organization to a mix of public service and commercial operations. The economic environment at present is now not very favourable because of the global financial meltdown which has reduced advertisement revenues. The television industry in the UK is gradually making a transformation, with digital platforms replacing the analog. In 2001, 23.7 percent of UK households had digital satellite connection, 6.7 percent had analog cable, 8.2 percent had digital cable and 5.2 percent had digital terrestrial (ofcom). News is provided by BBC1 and ITV, soaps by ITV1, ITV2, C4, C5, UK Gold and BBC1, comedy by all the private stations as well as BBC1 and BBC2, factual programs by BBC2, ITV and Sky, light entertainment by BBC Choice and ITV. ITV has a greater audience share, having overtaken BBC over these years. Although BBC 2 has been increasing its market share, other private stations have increased commercial operations even more. Since ITV is a conglomeration of a number of regional companies, documentary-making has become more wide-based, incorporating regional and global issues. Also, financial crunch in the 1980s forced the British television industry to be more market-oriented and less regulated by government authorities. This, of course, has also meant that the market for serious, educative documentaries have been diminishing while that for sensational “stories” is growing. In the 1990s, BBC adopted an aggressive expansion policy of expanding into international markets, thus expanding the program content base from the regional to the global. This has opened up more opportunities for documentaries on travel, cultures, global politics and so on (ofcom). The Social environment, again, is favourable since the long heritage of BBC has meant that the organization is highly credible in all parts of the world. The technological environment is favourable as the broadcast technology is undergoing radical changes with various media and entertainment choices coming into the market. Technologies like digital radio camera are transforming media activities like news, sports, outdoor broadcasting and electronic news collection. Digital platforms are not only more cost effective but also provide improved broadcasts and the possibility of immense speed and flexibility than analog radio and camera that had been the norm for many decades (Shephard, n.d, p2). The legal environment is also favourable because it is a government organization. The ethical environment of the television market worldwide, and in the UK in particular, has deteriorated. However, the commercialisation of media has led to trivialization of news to the extent that BBC has often had to alter bulletins to increase the proportion of crime, showbiz and gossip (Mullan, p 99). In the age of globalisation and consumerism, media has essentially come to be linked with the capitalist economic system in which the market is the ultimate arbitrator. In this set-up, global media has shifted focus from hard news and analysis to ‘infotainment’, which is defined as the “blurring of the division between ‘news’ and ‘entertainment’” (Pearson & Philip, 2001). The docusoaps, which are typically the infotainment products, are a bastardization of the Direct Cinema of the 1950s and 1960s, following people with 16mm hand-held camera and battery-driven portable tape-recorders and the cinema verite or the “fly-on-the-wall” genre of shooting in available light and natural sound. The topics of such documentaries are typically the trivial, like Helen Fitzwilliam's and Paul Buller's 1996 seven-parter, Hollywood pets on ITV. Such documentaries are mostly aired on ITV channels and the cable television, attracting over 50 percent viewers (Witson, 1999, p 101). However, many of these docusoaps have encountered ethical issues. The 1997 docusoap aired on BBC1, Driving School, was first accused of having invented scenes. The character, Maureen, who failed the driving test a number of tests, apparently set her alarm clock at 4a.m but the shot was taken later. Hence, the documentary was accused of ‘faking’ the shot and camouflaging it as true. The media, which hounded the documentary, did not distinguish between reconstruction of the event and distortion of truth. It is accused of “abusing public trust” (Witson, 1999). Regulations were even imposed and fines imposed on such “faking” in documentaries in the British television. According to Porter’s (1980) theory, a company has to decide on its winning strategies on the basis of competition in the industry as defined by the five forces: 1) the threat of entry of new competitors (new entrants), 2) the threat of substitutes, 3) the bargaining power of buyers, 4) the bargaining power of suppliers and 5) the degree of rivalry between existing competitors. The business environment depends on the level of industry competition and the intensity of rivalry, which in turn depend on the threat of new entrants into the business and that of substitutes as well as how well the company can manage its buyers and suppliers. The intensity of rivalry between players also depends on the number and size of players, cost structure of the industry, level of product differentiation, customer-switching costs, level of aggression exhibited by players and exit barriers. The threat of new entrants raises the level of competition in the industry. The intensity of competition to a large extent depends on the threat of substitutes. The number of buyers for the product increases the opportunities for the company while its competitiveness vis-à-vis the suppliers of products determine the margins. For BBC, there is little threat of entry of new entrants in news but competition is intense in commercial operations, with the entry of ITV. There is little threat of substitutes for media but different segments within the media industry may be substituted. For example, television has substituted radio for news and the new media, that is the Internet, has posed a major threat to traditional media platforms like radio and television. BBC has entered the Internet market by launching the iPlayer (T3). Buyers have high bargaining power since in the days of satellite television and FM radio, audiences frequently switch between channels and so providing a severe competitive environment. Suppliers of content providers also provide serious threat to BBC as they can supply to alternate global media organizations. The major strength for BBC is in the production of television documentaries. Since the 1960s, documentaries have formed 20-25 percent of BBC’s and Channel 4’s programs and 10 percent of advertisement-sponsored ITV (Winston, 1999, p 67). However, the place of documentaries in television time scheduling since the 1960s till recently was driven by public broadcasting policies rather than popularity, although some documentaries did figure in the top slots in the viewer surveys (Kilborn, 1996, p 178). Since the 1990s, and particularly in the new millennium, television documentaries have gained in popularity. Much of this is related to global politics grabbing the headlines and facts becoming stranger and as intriguing as fiction. Besides, politics and current affairs are no longer the domain of politicians, strategists and academicians but involve the destiny of the common man, particularly in the post-9/11 world. Apart from the current affairs documentaries, another genre of documentaries that have gained in the popularity charts are the docusoaps. These multi-part documentaries, typically following celebrities in their everyday lives or ordinary people in extraordinary situations, have become immensely popular since the 1990s. BBC’s Vet’s School and Driving School have grabbed 41 percent and 53 percent audience in 1996 and 1997 (Witson, 1999, p 72). BBC’s main opportunities are in news and information through documentaries. British television is taken much more seriously than in other countries. Based on public service, the television industry is closely linked with other establishments like the government, the monarchy, education and the print media. Television journalism finds an important forum in the making of documentaries which are inherently educative, analytical and often controversial. Current affairs, historical analyses and informative issues that cannot be handled with regular news programs are dealt with through documentaries, which has been the major reason for the boom in documentaries aired on serious channels like BBC and Channel 4, the public service broadcast companies, British television is regulated on the basis of public service requirements that, although not explicitly specified, are involved with program range and quality, viewing audience, reception, reflection of national and minority identity. It is expected to be impartial to controversial issues and to provide a civic forum. The maintenance of public service image of television has drawn large investments for documentaries on social issues, history, science, technology and environment, particularly those aired in BBC2 and Channel 4. This has thrown in opportunities for independent documentary film- makers to produce documentaries of importance in a wide range of formats involving intensive research (Rowan, 2005, p88). BBC, the leading television broadcast company in the UK shows documentaries in BBC1 and BBC2 (the latter does not air regular news programs), which has commissioned heavyweight film makers like David Attenborough to make informative documentaries like Civilization, Ascent of Man, Life on Earth, Blue Planet and the Private Life of Plants. BBC Northern Ireland and BBC Scotland air documentaries based on these parts of the UK, many of which are often on politically sensitive issues. Other BBC services, like Channel 4, are also raking in to commission serious documentaries following its rating success in airing foreign documentaries like US-made Fahrenheit 9/11 made by Michael Moore which it bought it. Even though Channel 4, which can commission and buy documentaries but not make its own, has an annual budget of 30 million pounds, only 6 percent of its total budget, it plans to make a difference in documenting events and trends that could build up public opinion (Rowan, 2005, p 88-92). The threats to BBC are the shift away from the focus on public service with the advent of ITV, which cater to the mass market. BBC’s weakness is also in this aspect as commercial operations have for long been neglected by the company, which led BBC’s viewer drop by as much as 28 percent (Blumler, n.d). BBC has also responded to changes in the viewer pattern and has been aggressively producing or buying documentaries made by independent producers, reflecting many ideas and formats. Changes in consumer tastes have further modified the quality, content and format of television documentaries. Strategic Options Fern (2004, cited in Archibald, 2006) has used the Boston Consulting Group (BCG) Matrix developed in the 1960s and Hammel and Prahlad’s (1989) theories to categorize product launches in terms of market share and strategic intent of the player. The BCG Matrix correlates market share with market growth and categorizes the product as successively the Problem Child, Star, Cash Cow and Dog. BBC is a cash cow with its global operations providing it huge resources. Hammel and Prahlad (1989) categorize the strategic intent as technological excellence (TE), operational excellence (OE) and customer intimacy (CI). Products are launched with high technological costs when it is done with TE. The margin requirements at this stage are extremely high to cover development costs. BBC was at this stage in its early years of operation. At the OE stage, reverse engineering is often taken resort to. In the 1980s, BBC entered this stage with deregulation and liberalization and the organization airing documentaries that are value added and innovative. Additional features may be provided at much lower costs at this stage. At the CI stage, customer requirements are incorporated into the technology. Since the 1990s, following the entry of commercial media organizations, BBC has increased commercial content in its programming Combining both the BCG and Hammel and Prahalad theories, BBC is in the CC-CI stage as it has enough resources to enter into newer markets with more innovative content so that it can increase market share as well as market growth. Market based Strategies Product launch in different markets can be analyzed with the Ansoff (1965) Matrix. Risks are lowest when market penetration for a particular model of the product is attempted by present or existing players. Market development by a new player and product development by the existing player lies at the next levels of risks while diversification from a different product has the highest risks involved. Typically existing media houses launch new channels or content as product development strategies. New players that attempt to enter the market by either tying up with an existing player or capitalizing on synergic products find it a moderately risky business. BBC has been trying to enter synergic products across various markets hence it has moderate risks in market penetration. For a consumer product like media products, consumer psychology plays an important part in demand creation. Abraham Maslow developed the hierarchy of needs as follows: 1) physiological needs, 2) safety needs, 3) needs for love, affection and belonging, 4) need for esteem and 5) need for self-actualization. Based on this, customer hierarchy of needs for an electronic product may be laid out as 1) products that work, 2) rapid resolution of technical issues, 3) understanding and ability to increase profit, 4) recognition and expansion of horizons and 5) mutually beneficial partnerships. The media consumer are now used to a slew of media services from global providers and now demand for new innovative programs. Hence, most media houses like the BBC compete between each other to develop new programs like reality shows. Innovation typically gets diffused across the industry and the advantage is soon imitated by other. In the diffusion of innovation theory, Rogers (1962) defined innovation as a product, service or idea perceived as new by the customer. The innovation is adopted on the basis of relative advantage, compatibility, observability, trialability and complexity. While adoption is positively relative to the first four factors, the last factor has a negative impact. The innovation is adopted by consumers in five specific phases – by the early innovators who are a small group of people who initiate the innovation, the early adoptors, who are the initial purchasers, early majority and late majority when more customers take to the innovation and laggards who enter into the market at a late stage. Rogers (1995) found that customer behaviour in general formed a bell-shaped curve in adoption and diffusion of innovation. Thus, while the innovator benefits from the upward sloping curve, it reaches a pinnacle and the returns then tend to fall or face lower rate of growth. The innovation process involves the front-end study of customer requirements, product development and commercialization of the innovation. The success of the commercialization process depends on the level of integration of marketing and product development. BBC’s innovative content programming that incorporated information and entertainment has been meeting the standards of commercialisation and customer requirements. Conclusion Thus, BBC, one of the oldest and most credible media organizations in the world, is a strong institution that has not rested on its laurels. Even though it is a state-run organization and does not lack in cash flows, it has met the challenges of globalization and liberalization in global media that has made the business environment an extremely competitive one. From being a predominantly public service media organization, BBC now is a combination of public service and commercial operations. However, the main strength of BBC is in its impartial and credible news. Since the global audience for plain news is on the decline, BBC has focused on television documentaries and docusoaps that are in the nature of infotainment, combining qualities of information and entertainment. The main opportunities that BBC has in this aspect of making innovative documentaries that question conventional way of thinking. Such innovation has become very critical in the competitive scenario of global media. The only weakness of BBC is the numerous platforms that the organization has. Although the staff share content across the platforms, the organization has grown to be too large worldwide making it difficult to manage. As a result, controversial programs like those faking reality have been aired on BBC. Works Cited Winston, Brian, Lies, Damn Lies and Documentaries, University of California Press, 2000 McChesney, Robert W (1999). Rich Media Poor Democracy; Communication Politics in Dubious Times, University of Illinois Press Porter, M.F., Competitive Strategy, The Free Press, New York, 1980 Rogers E M, Diffusion of Innovations, 3rd Ed. New York: The Free Press, 1983 Fern, Edward, “Strategic Categorization of Projects,” http://www.time-to-profit.com/TTPcategories.asp Hamel, Gary & C. K. Prahalad. Strategic Intent, Harvard Business Review, May-June, 1989 Ansoff, H I., Corporate Strategy: An analytic approach to business policy for growth and expansion, McGraw Hill, New York, 1965 King-Shakleman, Lucy, Inside the BBC and CNN: Managing Media Organizations, Routledge, 2000 Shephard, R (n.d). Getting Closer to the Action with Digital Radio Cameras, http://www.gdspublishing.com/ic_pdf/icta/bbcw.pdf Mullan, Bob, Consuming television: television and the audience, Wiley, 1997 Ofcom, Developments in the UK Television Market, 2002, http://www.ofcom.org.uk/static/archive/itc/research/industry_info_march02.pdf T3, BBC iPlayer Comes to Sony PS3, http://www.t3.com/news/bbc-iplayer-comes-to-sony-ps3?=40317 Pearson, R E and Simpson, PCritical Dictionary of Film and Television, Taylor & Francis, 2001 Read More