DreamWorks Animation SKG and Business Structure - Assignment Example

DreamWorks Animation SKG - Management Analysis Table of Contents Introduction 2 Analysis of Managerial Decision Making Process of DreamWorks Animation SKG 2 Business Structure 3 Management Strategy Analysis Based on Mintzberg’s Internal Systems 5 Critical Evaluation of the Management Position with Respect to Mintzberg’s Model 7 Management Strategy Analysis Based on Porter’s Generic Strategy Model 8 Critical Evaluation of the Management Position with Respect to Porter’s Generic Strategy Model 9 Conclusion and Recommendation for Adjustment to DreamWorks Animation SKG 11 References 13 Introduction The aim of this report is to conduct a well-organized management analysis of a chosen company. The company selected for the analysis of the management process is that of DreamWorks Animation SKG, an animation studio of America which is basically indulged in business of producing and promoting various animated films around the world. The American studio was formulated as a result of merger between this studio’s division of animation and the Pacific Data Images (PDI). DreamWorks Animation SKG was created under the signature of DreamWorks SKG but during the year 2004, it got itself separated and evolved as a different public company. The decision of conducting management analysis of this specific incorporation was undertaken after reviewing its market performance during the past few years (generated revenue of $650 million in 2008). The objective of this paper is to evaluate the managerial decision making traits of the company and find the loopholes, if any, so that recommendations can be provided for betterment of its performance (Shreshtha, 2010). Analysis of Managerial Decision Making Process of DreamWorks Animation SKG The process of analyzing the management decision process of the company will be inclusive of clear and concise evaluation of the structure of the company which will be evaluated with the help of certain relevant theoretical models such as Mintzberg’s model of internal system and Porter’s generic model. Business Structure The business structure of the company is widespread and concrete operable in two dimensions namely films and non-feature films business. The company produces and develops featured films all over the world market with huge prospect of growth both in the short term as well as long term. The company follows well managed and structured business prospect for the future in this segment and expects to remain popular in the future too as it is now. The structure of its business is also organized in the segment of non-feature films as well. This segment is specialized in producing objects for family entertainment and is inclusive of series of television (generally half an hour), live performances and online virtual segment. Apart from widespread business scope of the company, it also concentrates heavily upon the process of producing top quality films and distributing the productions. The following structure depicts the entire process stages of the company for producing a comprehensive featured film which is the most essential trait of its decision making. This is because on the basis of evaluation results of each of the following stages, management decisions are undertaken. The stages are composed of four basic elements: development, pre-production, production and post-production. The activities incorporated under each of these stages have been mentioned in the diagram below: Source: (DreamWorks Animation SKG Annual Report 2010, 2010). The above executive tasks of management are managed fundamentally by ten directors in the executive level of the organization, the configuration of which has been presented below: Source: (DreamWorks Animation SKG Annual Report 2010, 2010). Source: (DreamWorks Animation SKG Annual Report 2010, 2010). Management Strategy Analysis Based on Mintzberg’s Internal Systems According to the theoretical perspective provided by Henry Mintzberg, every organization is composite of several actors or influencers within both internal and external environment that hold various stakes and goals quite different from each other (Obaid, 2006). In the case of DreamWorks Animation SKG, influence of the internal aspects are more important than that of the external because the company focuses excessively on creating internal strengths for fighting up the external pressures. The external actors that influence the company can be the legalities associated with it and also the cultural factors associated with the animated characters. The decision making process allotted to each of the people within the company are carried out efficiently by each of the departments’ people assigned with the specific tasks. The company is heavily concerned with the maintenance of its operational employees along with the managerial staffs who undertakes the process of decision making (DreamWorks Animation SKG, 2011). Till the month of December, 2010, the company had 2100 employees appointed under its operational department. Among the 2100 employees, 1400 were directly appointed into the production department of the company in various roles such as animators, editors, lighters and modelers and several others. Among the remaining 710 employees, around 300 were appointed in performance of activities related to brushing up of animation technology and around 410 employees are appointed for the handling of matters related to the administration and corporations. Apart from these employees, the company also hires additional employees based on requirements and demands of each of the movies. The remuneration for these employees are decided on the basis of capital cost associated to the movies or animated films (DreamWorks Animation SKG Annual Report 2010, 2010). The most important external actors for the company are the legal authorities which from time to time bestow several legal requirements from the company. In due course of complying with those requirements, the company has been faced with several discrepancies, for example, during the month of February, 2011, complaint was launched against the company related to copyright issues by Jayme Gordon on the ground that many of the features of “Kung Fu Panda” have been copied from the work of Gordon named “King Fu Panda Power” whose copyright authority is held by Gordon (United States District Court District Of Massachusetts, 2011). Critical Evaluation of the Management Position with Respect to Mintzberg’s Model In relation to the influence of the external actors to the company, it is worthy to mention that legal compliance issue of the management is in rather a troubling position because apart from compliant related to copyright, the company has also faced certain occasions when it has been challenged on other grounds as well like that of the technology been utilized for producing the films. However, the strategies related to effective management of the company has so far been able to cause strong commitment in related to compliance with the rules and policies of the legal authorities governing its performance. Thus evidence of influence of the external factors upon financial performance of the company has not been found. As far as the interest conflicts among the internal actors are concerned, according the structure that the company follows which is partly structured and partly unstructured, the company can at any time be faced with challenges related to employees’ conflicts. The part time employees whom the company recruits as per the requirements of the films can act with norms and objectives which are not in line with the organizational common objectives. This can happen because these employees are not actually part of the company and would strive for deriving maximum benefits during the short period of time for which they are appointed. This type of actions from these employees will inculcate internal coalition within the organization. However, the company, over the years has maintained a separate legal department for handling these employee related issues where any person getting an indication of such conflict can approach and grasp attention of the supervisor over the issues (DreamWorks Animation SKG, Inc., 2011). Management Strategy Analysis Based on Porter’s Generic Strategy Model Porter’s generic strategy is based on the fact that although the fundamental indicator of prosperity of a firm is industry attractiveness in which the firm operates, another essential determinant of the same is the place which the firm holds within that industry. This fact generated by Michael Porter states that if the industry where a firm operates depicts a less that average profitability, the firm can still prosper through holding optimal position within the market and in that case the firm is expected to earn superior revenue to its competitors. According to the arguments of Michael Porter, a firm’s strength is dependent upon two aspects, differentiation and cost leadership (Athens University of Economics and Business, 2011). DreamWorks Animation SKG is able to achieve cost leadership within the industry of animated movies and television series in the world market due to its efficiency in the arrangements of service and distribution. The company can successfully gain competitive advantage over its competitors with respect to prices of its products because of the reason that its business follows distribution of its products through promotion in the international theatres along with television and home entertainment means. The subsidiary of Viacom Incorporation, Paramount Pictures Corporation is the fundamental distributor for DreamWorks Animation SKG. The company efficiently manages its relationship with the distribution partner with the maintenance of an agreement of distribution which the distributors owe to the company. The company is extremely conscious of managing the related rights to the distribution aspect of its products and carefully looks after the legal matters of rights related to merchandising, publication of music, interaction and many more. Efficient management of distribution channels of its products all over the world not only provides the scope of achieving cost leadership for the company but also it leads to develop a differentiation strategy for the company within the market of animated movies. This happens because the company continuously seeks to build on more competitive strategy by grasping opportunities from the world animation market. The successful management of international supply chain of the company is evident from the fact that during the recent few years, 49 percent of the company’s revenue has been derived from sales of animated feature films in the foreign countries (DreamWorks Animation SKG Annual Report 2010, 2010). Critical Evaluation of the Management Position with Respect to Porter’s Generic Strategy Model Since almost half of the revenue earnings of the company is dependent upon the performance of the company’s produced movies in the international market, therefore, the risk associated with the exchange rates always hinder in its operations. But the company, at present, is in a mood of enjoying profits earned from the foreign countries for a longer period of time. The economic cycles of the international market is completely unpredictable and every company should build such a position in terms of financial holdings that in terms of adverse economic conditions, they can sustain high level of performance. Although it has been observed that the company has been so far able to sustain its strong financial position with effective management of cost and revenue earnings with the help of its innovative operations, more cautious strategies are required to be developed by the company for achieving prosperity in the future too. It is noteworthy to state that the company has over the years complied with various legal proceedings related to the management of distribution channel all over the world. It is comprehensively aware of presence of various laws and regulations in the world and has substantially maintained the relationship with other countries’ governments along with the customers (DreamWorks Animation SKG, Inc., 2011). Conclusion and Recommendation for Adjustment to DreamWorks Animation SKG DreamWorks Animation SKG has been evaluated to be in a strong market position with respect to popularity, reputation, high revenue earning and attractiveness of the industry. The aim of this section is to identify loopholes of the company’s managerial decision making and recommend feasible improvement for its management strategies. For avoiding the legal lacuna of the company which it encounters from time to time such as copyright issues and similar others, the management should consider more comprehensive formulation of legal team. Along with the legal team, proper cooperation of the marketing management team is also essential for acquiring precise information about the market. This approach will help in avoiding any issues related to unknowingly copying other animators’ works as the market research will generate every possible market and competitor information for the company. For the purpose of avoiding employee conflicts within the organization, the management should concentrate on building up an effective team for reporting everyday information about every aspect of work activities to the proper authority of the company. It is fundamental for the company to tackle initial problems on time so that formulation of never ending troubles can be avoided. The employees should be made understand the fact that the responsibility of protecting the assets of the company rests upon their shoulders. Image and reputation are important assets for a company and the employees should be taught the reality that these assets should not be destroyed for their negligence towards informing the management of any unfavorable situation within the work environment. As far as the uncertainties of the world economy are concerned, the company should concentrate more on its channels of distribution within its national market or the US market. In this way, it will be able to get rid of the exchange rate risk prevailing in the international market. For enhancing its distribution power in the national market, the company should identify more effective promotional means of marketing its products. Marketing strategies for targeting other segments of the market apart from child market should be generated so that adverse economic conditions become ineffective in affecting the company’s revenue production. References Athens University of Economics and Business, 2011. Porter's Generic Strategies. Cases. [Online] Available at: http://e-learning.dmst.aueb.gr/mis/Cases/7-Eleven/Case/Porter%27s_Generic_Strategies.pdf [Accessed July 1, 2011]. DreamWorks Animation SKG Annual Report 2010, 2010. Form 10-K. Docs. [Online] Available at: http://www.dreamworksanimation.com/2010AR/docs/114527_008_DreamWorks_BMK.PDF [Accessed July 1, 2011]. DreamWorks Animation SKG, 2011. Our People. Company. [Online] Available at: http://www.dreamworksanimation.com/ [Accessed July 1, 2011]. DreamWorks Animation SKG, Inc., 2011. Code of Business Conduct and Ethics. SEC-Filings. [Online] Available at: http://www.faqs.org/sec-filings/100224/DreamWorks-Animation-SKG-Inc_10-K/dex14.htm [Accessed July 1, 2011]. Obaid, Z., 2006. Reforming Political Universities: An Organizational Analysis of University of Peshawar. Bitstream. [Online] Available at: https://bora.uib.no/bitstream/1956/2244/1/Masterthesis_Zia_Obaid.pdf [Accessed July 1, 2011]. Shreshtha, A., 2010. Marketing Mix of DreamWorks Animation. Vidyavardhinis College Of Engineering And Technology. [Online] Available at: http://www.managementparadise.com/forums/marketing-management/208974-marketing-mix-dreamworks-animation.html [Accessed July 1, 2011]. United States District Court District Of Massachusetts, 2011. Case 1:11-cv-10255-JLT Document 1 Filed 02/16/11. Civil Action No. 1:11-cv-10255. [Online] Available at: http://newsandinsight.thomsonreuters.com/uploadedFiles/National_Litigation/Legal_Materials/Court_Filings/2011/02_-_February/KungFuPandaComplaint.pdf [Accessed July 1, 2011]. Read More