Strategy in Action - Assignment Example

?Organizational Culture at Lionsgate Lionsgate is a $2 billion global media corporation that is involved in entertainment through motion pictures, television programming, home and family entertainment, and digital distributions. Lionsgate has developed a diversified portfolio through growth and acquisitions. In the last ten years, it has acquired Artisan Entertainment, Trimark Holdings and in 2010, it bid for MGM studios. It is one of the largest independent film studios with up to 15 movie releases in a year. Lionsgate has made its presence felt in UK as well as investing in Break.com, a popular online site. (Lionsgate.com, 2011) Organizational culture is the collection of values and norms that are shared by individuals in an organization that affect interaction within and outside the organization. It is an important tool as it brings employees towards a common goal by developing affinity and provides impetus for growth. A healthy culture promotes self actualization and achievement in employees. Open communication and flexibility within the organization provide grounds for innovation and experimentation. Constructive cultures are empowering and lead to highly motivated employees, team work and growth. (Expertplagas.com, 2009) The organizational culture of Lionsgate is influenced by its start as an independent film studio which has developed into a major studio with global presence. Thus the culture reflects the entrepreneurial initiative that independent studios boast of. Lionsgate combines flexibility with the strategic management of a major studio with the customer focus of a digital company. A speech by Lionsgate’s co-COO, Jo Drake reflects the organizational culture of taking risks in media and movies, of looking at changes in the market place as challenges, and the focus on entrepreneurship and innovation. (indiewire.com, 2010) Curt Marvis, of Lionsgate, explains Lionsgate corporate culture of getting employees involved. According to him, if one person can do the job instead of ten, then Lionsgate will focus on doing so, and employees will be involved in different things that they can handle. This shows that the culture focuses on employee involvement and ownership; however the fact the Lionsgate has acquired various media companies over the world results in the impression that the organizational culture may vary along the acquired companies and may be not as ingrained as preferred. In the event of mergers and acquisitions, it takes times and effort, many a times unsuccessful to develop the company culture of the parent company in the acquired companies. (Variety.com, 2009) Challenges facing the Media and Broadcasting industry The Media and broadcasting company is facing major challenges in the future. The biggest challenge is the changing marketplace which has changed the way content is delivered to customers. The popularity of digital delivery poses threats for media and broadcasting companies as customers can access media easily and cheaply on the internet. The industry needs to develop and master digital delivery of television shows, news, movies and music in order to grab the market online and still retain profits (Vodafone.com, 2011). Another challenge is the increase in competition due to the abundance of independent film making and the cropping up of new competitors, customers have greater choice due to the internet and companies have to be on their toes to maintain performance. The media industry has seen an increasing trend in takeovers, acquisitions and mergers and thus performance and shareholder value needs to be maintained to protect the company from acquisitions. The media industry faces market saturation not only because of the increasing number of competitors but the increasing number of competitors worldwide and in different formats. News companies, movies and television all face threats from online competitors as well and need to maintain a major online presence. This has resulted in cost and margin difficulties, changing patterns of consumer behavior and the need to provide not only up to date but up to the second content. The shift from analog to digital content and to various media platforms is a change that is impacting the broadcasting industry greatly. Specific Challenges for Lionsgate Lionsgate is one of the few independent studios that have increasing revenues. However, in February 2011, it reported a financial loss of $6 million due to the legal costs of fighting a battle with Carl Icahn over his takeover bid. The biggest immediate challenge for Lionsgate is to reject the Icahn’s repeated bids for takeover (Stableford, 2011). Other major challenges faced by lionsgate include coping with changing market conditions, cost restrictions, increasing competition and the change in technology. Lionsgate has also been facing problems in the film making side, with many of its recent releases flopping at the box office. Tom Ortenberg, president of theatrical in Lionsgate also left the company with rumors about his differences with Joe Drake of the motion picture group. Corporate level strategy: Since 2008, Lionsgate has been undertaking intensive expansion and has merged with or acquired companies in Canada and UK. It has acquired many independent film studios, TV guide network and MGM. Talks are underway to acquire Summit as well. Lionsgate has an international presence and is one of the most well diversified broadcasting companies with stable cash flow streams due to its impressive library (livetradingnews.com, 2010). However, since the film production is suffering, the corporate strategy should shift its focus from high growth to more retention and innovation. The strategy should be to focus on the development of competitive advantages and improving the performance of current holdings rather than acquisitions and mergers. Due to the changing market conditions and increasing competition, the company should focus on developing digital delivery and up to the minute content and stay ahead of competition through innovation and creativity. Lionsgate needs to harness its strengths and integrate the acquired companies into the corporation to develop synergy and thus attain greater strengths. Business level strategy The business level strategy should focus on the failing movie production side. The company should diversify its movie portfolio to include movies from various genres rather than simply focusing on horror, which is becoming stale. The strategy of focusing on racism based movies is successful and should be developed. As Co-Chairman and Chief Executive Officer Jon Feltheimer mentioned at Cannes, there is high demand for premium content. Customers are driving content and deciding how, when and where they want it and Lionsgate needs to provide it (Finke N. , 2009). Ansoff Matrix Existing products New products Existing markets New markets The current strategies that Lionsgate is pursuing are of market penetration through merging with media companies, independent film studios and television programming; and of diversification as it has diversified into different media platforms and content. Lionsgate is also developing markets by entering new markjets such as Asia through Tigergate (Lionsgate.com, 2011). However, the company is ignoring product development as can be seen by its failing movie score in 2009 (Miller, 2009). Thus greater focus should be on improving current media content. Functional Level strategy The functional level strategy should focus more on retaining employees and streamlining operations. Lionsgate must consider whether separate operations within subsidiaries need to come under Lionsgate, and how mergers and acquisitions are affecting human resources. They should focus on motivation and the development of Lionsgate’s organizational culture in the subsidiaries. The functional level strategy should focus on finance and how legal costs are affecting company profits as well as the development of resources available to help achieve corporate and business level strategies. Network Level Strategy The network level strategy should focus on the internet and developing a greater presence online. The current network strategy has focused on acquisitions and mergers that have established a network of successful media subsidiaries greatly beneficial to Lionsgate. However, the company needs to focus on greter development online as that is the main media platform to reach out to new customers. Lionsgate has already developed and released a New Saw 3D facebook game in alliance with row27 that received 27000 hits in the first 72 hours (Tradingmarkets.com, 2010). Lionsgate has also gone viral. Future joint ventures, mergers or acquisitions should focus on the internet media and enhancing digital delivery. Conclusion Lionsgate is one of the largest international media corporations and has been posting increasing revenues for a decade due to its winning strategy of acquisitions, low cost films and diversification. Lionsgate has also made great use of technology to cut costs and innovate. However, recently the company has faced rising legal costs due to takeover bids and falling movie revenues due to bad performance n the box office. In addition, Lionsgate faces the industry challenges of changing markets, rising costs, falling margins and changing consumer behavior. The media company needs to focus on current content and improve quality and creativity rather than focusing on rampant expansion which might result in losing their competitive advantage of being an independent studio with the strength of a major studio. References Finke, N. (2009, 2 13). Lionsgate's Feltheimer: People Want Their Content When, Where They Want It. Retrieved 3 16, 2011, from http://www.deadline.com/2009/02/carl-icahn-may-be-amassing-a-bigger-lionsgate-stake-than-anyone-realizes/ Finke, N. (2008, 7 18). SOURCES: Major Expansion At Lionsgate. Retrieved from http://www.deadline.com/2008/07/source-major-shake-up-at-lionsgate/ indieWIRE. (2010, 10 30). Toolkit | Lionsgate’s Joe Drake: “You can’t just have a dream, you have to have a plan”. Retrieved 3 16, 2011, from http://www.indiewire.com/article/test1/P1/ Industry expertise. (2011). Retrieved 3 16, 2011, from http://www.vodafone.co.uk/corporate/industry-expertise/media-and-broadcast/index.htm Investor relations. (2011). Retrieved 3 16, 2011, from Lions Gate: http://investors.lionsgate.com/phoenix.zhtml?c=62796&p=irol-irhome Kaufman, A. (2009, 1 26). Culture Clash: Ortenberg Leaves Lionsgate for Weinsteins. Retrieved 3 16, 2011, from http://www.thewrap.com/deal-central/article/958 Lionsgate. (2011). Corporate Overview. Retrieved 3 16, 2011, from Lionsgate: http://corporate.lionsgate.com/Division.asp Lionsgate's Curt Marvis. (2009). Retrieved 3 16, 2011, from Technotainment: http://weblogs.variety.com/technotainment/2009/03/lionsgates-curt-marvis-interview-part-1.html Miller, N. (2009, 2 2). Lionsgate may buy Summit, Bloody up Twilight. Retrieved 3 16, 2011, from http://www.filmschoolrejects.com/news/lionsgate-may-buy-summit-bloody-up-twilight.php News, L. t. (2010, 10 29). Lionsgate challenges Carl Icahn. Retrieved 3 16, 2011, from http://www.livetradingnews.com/lionsgate-challenges-carl-icahn-26339.htm Organizational Culture. (2009, 7 11). Retrieved 3 16, 2011, from http://www.expertplagas.com/organizational-culture-and-its-importance.cfm Spiers, K. (2010, 10 5). Lionsgate's Feltheimer: People Want Their Content When, Where They Want It. Retrieved 3 16, 2011, from http://www.thewrap.com/media/article/lionsgates-jon-feltheimer-need-new-business-models-21455 Stableford, D. (2011, 2 9). Lionsgate Reports $6M Loss Due to Legal Costs of Fighting Carl Icahn. Retrieved 3 16, 2011, from http://www.thewrap.com/movies/column-post/lionsgate-earnings-24588 Tradingmarkets.com. (2010, 10 19). row27 and LIONSGATE Release New Saw 3D Facebook Game. Retrieved 3 16, 2011, from http://www.tradingmarkets.com/news/stock-alert/zziac_row27-and-lionsgate-release-new-saw-3d-facebook-game-1239523.html Read More