HBOs Organizational Strategy and Culture - Essay Example

HBO’s Organizational Strategy and Culture Over the period of time HBO has been one of the most successful T.V. Channels relying largely on its strengths in producing original and different contents which won many accolades for the channel for producing original work of excellent literary quality. It is one of the premium television programming wings of the Time Warner Inc. Providing round the clock telecast, this channel reach millions of viewers not only in America but also in other parts of the world. A closer look at the historical overview of the organizational strategy and culture at the channel would suggest that it has transformed itself from a Channel having a very rigid and bureaucratic organizational set up to one where it is more of a delegated environment within which employees and the creative staff are being given large amount of consideration while deciding upon producing the contents. HBO has adapted the organizational strategy of producing only those contents which other channels avoided to land their feet. In this sense, we can easily assume that HBO is largely focusing on practicing Differentiation as a strategy for its products which are offered to the vast majority of its audience. Thus its organizational strategy is based on differentiation. This is also evident from the fact that HBO over the period of time has been spending heavily in creating its brand identity which seems to be an excellent strategy especially in an industry environment which has very different and unique dynamics and lot of competition to face. Further, economic model which HBO is following is sort of unique in the sense that it provides it very readily available revenue as the viewers are charged only $12 over their basic cable bills allowing the company to have enough access to the funds to originate programs of unique and original quality. However, the contents produced are somewhat specific to one cultural strata of the society and hardly serve the viewers which live in America but have different cultural values such as Hispanic, Spanish etc communities in US. The cultural aspect of the organization suggest that it is an organizational which is largely driven by the creative ideas and an environment which allow to unleash creativity and innovation which is also evident from the contents produced on the channel. This approach towards developing organizational culture of creativity, innovation and open communication can especially serve the interest of the channel in long term because it would provide the necessary impetus to the organization to continuously look for people and ideas which can help the channel in bringing in unique and original contents – well directed at the selected target market of the channel. The basic components of the model of strategy being followed by HBO therefore are creativity and innovation with developing strong sense of brand equity. By following and managing talent, the channel has been able to follow an approach which though may seem little unstructured with lot of predictability as they are often been categorized as boutique network however, what is most important in the strategy that is being followed at HBO is its ability to create a culture within the organization which allow it to bring best out of people. HBO’s current competitive strategy Understanding strategy is a complicated art as the strategy is considered as the multitude of variable inputs, resources and capabilities. Viewing strategy as a stand- alone effort would be injustice to the word strategy as it is something which help organizations to achieve their goals and objectives and fulfill the vision and mission statements of the organization.[Dav00]. Thus it is very important that we must analyze the current competitive strategy of HBO within the context of both its internal and external elements which affects its business. Our analysis of the HBO’s current competitive strategy therefore would be based on the different models of strategic management which take into account various internal and external factors into account to describe an organizational culture and strategy. The learning model of the organizational strategy is based on the premise that organizations should evolve over the period of time by learning from its internal as well as external environment. However, the learning environment within the organization is achieved through knowledge management. Knowledge management is considered as at the center of economic transformation as organizational success is now largely dependent on the knowledge management of the organization. Competitive advantage is located in “learning organizations” “brain-based organizations” “intellectual capital” and the “economics of ideas”. The changing patterns of globalization and the use of knowledge based resources has allowed firms to shift the value creation process from the traditional tangible assets to the more intangible resources like human resources as well as the social capital. [RGB00]. Knowledge has assumed this centrality in conjunction with sweeping changes in organizational forms and the dawning post-industrial and information revolutions. Any economy with declining industrial base relies largely on its knowledge base since the rapid changes in the technological as well as professional skills demands that the human resource base must acquire a certain degree of knowledge which keep them in-line with the industry trends. Due to lack of this knowledge base, organizations within the economy also suffer since it is largely reflected in the performance of that organization having low or insufficient knowledge base. Thus the success of economy as well as organizations is shifting in the favor of having solid knowledge base on keep them sustainable and competitive. HBO being a channel which offers products which are not considered as critically acclaimed but also are of high literary value can clearly suggest that how much organization value knowledge management within the organization. In organizational terms, the learning model of strategic management would entail that HBO is an organization which largely require being more adaptive in its offerings and it because of this reason that HBO continue to look on for more innovative writers and producers. Further, as the learning model outlines that the new and emerging phenomenon of how firms work also leads us to a non-traditional view of the firm behavior which is based on the resources base of the firm. The new concept of resource based firms suggest that the firm is a collection of some idiosyncratic capabilities and resources which help management to increase the value of the firm and increasing the resource base of the firm for future use also.[Gra96]. This same resource based view therefore, outlines the use of knowledge as a resource not only helps organizations to gain the competitive advantages but also provide the firms the opportunity to recognize the knowledge as the most strategically important asset. In its essence, the rational model of strategic management does not seem to be the one used by HBO as its strategic management model. Though in some sense we can suggest that organization is following this model too but it would be hard to draw a line between what is being actually followed by the company. Due to this subtly, we assume that rational model is being adapted by HBO. However, information provided into the case study suggest that the HBO do not necessarily involve into a formal process of first planning and then executing the goals to achieve them. However, rather an unstructured effort is being placed in order to produce contents. This can be a suitable effort for a TV channel because due to changing consumer preferences, one can hardly stick to set rules and procedures. However, there is uniformity in the strategy of the channel as they tend to produce what others don’t want to thus creating for themselves a niche market. Culture is considered as the manifestation into the organization based on the organization’s place into the society within which it is working.[Wal99]. HBO’s culture as defined above is one which has less clutter in it. However, in order to understand the cultural dimension of the organization, it is very important that we must know the internal environment of the organization. However, HBO, being a network channel, is facing complete different dynamics. It has to rely on people who are external to the channel i.e. writers, actors, producers as well as directors and other technical staff. Therefore the power distance seems to be low within the organization as otherwise HBO may not have been able to produce contents which are so original in nature. The decision making process at the Channel seems to be a coordinated effort as subordinates and bosses tend to have open communication channels with each other. Further, it seems there is a lot of individualism in following a differentiation as the strategy as it seems most of the decisions regarding the production of the contents is being made by two individuals only though these decisions are most of the successful. Further, the decision making is mostly dominated by the degree of challenge being faced by the channel as contents are produced based on the varying degree of enthusiasm and after thorough analysis of the consumer preferences and competitive landscape within which channel works. The Porter’s Model It seems that the existing rivalry between the various channels is low as HBO tend to produce contents which are hardly being shown on other channels. In this way, HBO tend to follow a differentiation strategy with lot of focus on developing original programs. Further the well defined niche market of HBO helps it to keep the competitive rivalry at low. Barriers to entry in the overall entertainment industry are high as it requires substantial amount of capital expenditure to enter into the market therefore the possibility of smaller players in the market is very minimal and the competitive landscape is mostly shared by the giants. This capital expenditure can be in different forms i.e. technological equipment, purchasing and development of show etc. thus the barriers to entry are very high. HBO follow a pricing structure which allows it to charge $12 over the basic cable bill of the consumers. However, as defined in the case study, viewers of the channel show a tendency where they cancel their subscription after the series or the show they want to view ends. Thus in this regard, we can assume that the buyers have the indirect bargaining power in their hands however, as for as direct bargaining power is concerned, buyers usually do not have significant role to play. Since HBO present contents which are largely overlook by other channels and networks therefore HBO has been able to carve out a niche for itself. This factor of their strategy also allows them to minimize the threats of the substituted products as the contents offered by HBO are markedly different from the mainstream channels offering. On the whole, Porter’s model specifies some of the components of its overall strategy. SWOT Analysis In its essence, SWOT analysis is a very simple tool of assessing the strengths, weaknesses, Opportunities and threats of the organization. However, deep down its one of the strongest strategic tools which if applied correctly can provide many strategic insights into the company’s internal and external environment. One of the basic assumption behind the development of SWOT as a tool is that it assumes that managers can plan the alignment of firm’s resources with its environment.[Nov]. “SWOT Analysis is a simple but powerful framework for analyzing your company's Strengths and Weaknesses, and the Opportunities and Threats you face. This helps you to focus on your strengths, minimize threats, and take the greatest possible advantage of opportunities available to you.”[www081] A SWOT Analysis of the company is presented below: Strengths: 1) Large Audience. 2) High quality content production. 3) Flexible organizational environment. 4) Strong brand equity Weaknesses 1) Individualistic decision making 2) Reliance on external personnel to create contents for the channel. 3) Predictable organizational strategy Threats 1) External writers, producers and directors can sell of their best work to some other channels. 2) Low Switching Cost Opportunities 1) Un-served audience having different cultural values in US i.e. Hispanic, Spanish etc. 2) Market development into other markets especially Asia. Factors essential for Success and failure of HBO’s strategy Differentiation strategy as followed by HBO is its success story as it allows the channel to cater the audience with something which is not easily available to the audience at other channels. However, this differentiation can no longer succeed because of the fact that differentiation needs continuous improvements in the quality of the contents being offered. Being reliant mostly on the external sources for producing contents. This reliance on the external sources may not allow it to sustain in the longer run and HBO has to develop its internal capabilities to produce contents which corresponds to its strategies. Further, the notions of producing the contents which are unique in nature also need to be revisited as changing viewers’ preference demand that the contents be delivered according to the tastes of the customers. HBO add value to its contents by offering a unique combination of movies and the shows offered thus creating a niche for itself however, since most of the time on HBO is being utilized for the purpose of movies. Overall the success of HBO’s strategy is based on differentiation however, its reliance on the external sources is one very crucial factor which may not allow it to sustain its competitive advantage over a longer period as it is also evident from the case study that writers and producers of the most successful shows at HBO first offered them to some other networks for their airing. Strategies to pursue Differentiation as a strategy requires substantial costs and risks to run. Though differentiation can insulate a company from competition however, in an environment like HBO trade offs has to be made in terms of research, product design and high quality materials.[Bae00] Therefore what HBO requires is a slight modification in its differentiation strategy. Rather than relying more on product it need to differentiate on price and adapt focus as its alternative strategy. This would allow it to keep its existing customer base intact as it has the tendency to shift to other channels once their favorite TV series or show ends. This happens mostly because of the high cost of viewing the channel. Thus the future strategy of HBO would much be driven by the price differentiation rather than product differentiation. Further, as discussed above that the HBO’s main contents consists of movies therefore it needs to re-address its priorities to give more space and time to its originally produced contents. This can only be achieved through the use of FOCUS as alternative strategies. Improving upon the process of reaching to your customers would re-define the competitive landscape in the future entertainment industry. This is also evident from the fact HBO has already planned to offer SOPRONS to non-subscriber cable operators thus trying to reach upon the audience which can not afford to enjoy subscribed services of HBO. Bibliography Dav00: , (Davies, 2000), RGB00: , (RGB Global, 2000), Gra96: , (Grant, 1996), Wal99: , (Wallace, Hun, & Richards, 1999), Nov: , (Novicevic, Harvey, Autry, & Bond III, 2004), www081: , (www.mindtools.com, 2008), Bae00: , (Bae, 2000), Read More