Davidson and Holgate Articles on Foxtels Business Strategies - Coursework Example

Foxtel Introduction This essay examines several management theories and concepts with reference to Davidson (2012) and Holgate (2012) articles on Foxtel’s business strategies. This essay particularly examines how the business strategies employed by Foxtel have influenced the company’s structure and position in the market. Foremost, this essay will look at Foxtel’s overall business strategies and how they have influenced the company’s structure. Subsequently, it will analyse the effectiveness of Foxtel’s business strategies using Michael Porter’s “five forces analysis” model. Foxtel’s Business Strategies In the article, “Foxtel goes for leaner mix to counter threat of net TV”, Davidson (2012) notes that, in a bid to boosts its subscriptions, PAY-TV operator Foxtel intends to realign its business strategy by simplifying its channel mix and shaking up its Hollywood supply chain. Davidson observes that Foxtel is bound to minimise the number of channel packages that it provides in order to effectively target its market segments. The company is also planning to cancel some of its contracts with movie suppliers such as Premium Movie Partnership and Movie Network. Instead the company intends to pursue a direct relationship with big Hollywood studios. Davidson further notes that, the rationale behind Foxtel’s change in strategy is so as to take over new movie releases because the company’s extensive back catalogue may become redundant in market that is increasingly embracing an IPTV or television through the internet since they can access movies through a cheaper subscription services like Fetch TV or subscribe to individual films on emerging platforms like Apple TV and Google TV (Davidson 2012). In his article, “Foxtel to push cheap packages”, Holgate (2012), also highlights some of Foxtel’s current business strategies. Holgate observes that in a bid to enhance the company’s presence in Australian homes the company’s chief, Richard Freudenstein intends to double the rates of its subscription by lowering the prices of its packages. The company’s goal is to penetrate over 50% of Australia’s household. The company defines market penetration as households purchasing video contents from Foxtel rather than the number of subscribers. Furthermore, Holgate (2012) notes that, Foxtel has branched out by minimising content offerings for internet protocol television through platforms such as Samsung's smart TV, Microsoft's Xbox and Telstra's T-Box . The company also intends to sell broadband. Additionally, Holgate points out that in a bid to boost its profile, the company carried out a merger with Austar, a regional pay TV operator (Holgate 2012). By critically reviewing the information presented in the articles by Davidson (2012) and Holgate (2012), it is evident that Foxtel’s business strategies will significantly influence its organisational structure and position in the market. In light of changing trends in the pay TV market, it has become necessary for Foxtel to undertake operational modifications. With the introduction of new technologies, the pay TV market has taken a turn and as a result the company can no longer maintain status quo when it comes its operations. The recent move by Foxtel’s CEO Richard Freudenstein to reorganise the company’s business will evidently impact on the company’s organisational structure. According to Waddell et al (2007) some of the key factors that influence an organisational structure include; organisational environment, strategy, technology and human resources. In the case of Foxtel, it evident that the technological changes in the market and the newly introduced business strategies will influence the company’s organisational structure. For instance, technological advancements may render some departments or work roles obsolete. This may in turn cause a company to restructure its departments or work roles. Foxtel’s announcement to minimise the number of channel packages that it provides and its plan to cancel some of its contracts with movie suppliers such as Premium Movie Partnership and Movie Network will inevitably lead to the restructuring of some of the work roles in the company. Moreover, the company’s merger with Austar, a regional pay TV operator will indefinitely influence it organisational structure (Davidson 2012; Holgate 2012). Waddell et al (2007) argues that the framework in which duties and responsibilities are allocated or distributed among stakeholders within an organization constitute what is termed as organisational structure. Mintzberg (1980) reiterates that it’s a form of configuration with logical and consistent clustering elements that create harmony and consonance within the working environment. Strategy on the other hand is the main purpose for structuring the businesses the way it is to begin with, Waterman, Peters and Philips (1980) are of the view that structure of an organization comes into being after the strategy has been set out hence with a clear strategy an organizational structure that suits the attainment of the set goals is established. Porter’s five forces analysis Michael Porter’s “five forces analysis” model provides a suitable framework that can be used to evaluate the effectiveness of Foxtel’s current business strategies. This section will focus on two forces in Porter’s model that are relevant to Foxtel’s current business strategies. These two forces include; threat of new competition and threat of substitute products and services. In a bid to respond to the threat of new competition, Foxtel intends to realign its business strategy by simplifying its channel mix and shaking up its Hollywood supply chain. The company also aims at minimising the number of channel packages that it provides in order to effectively target its market segments. Furthermore, the company is planning to cancel some of its contracts with movie suppliers such as Premium Movie Partnership and Movie Network so as to pursue a direct relationship with big Hollywood studios. This will in turn enable the company to take over new movie releases (Davidson 2012). Moreover, the company’s CEO, Richard Freudstein has opted to reduce cost of entertainment packages offered to subscribers. This move may be seen to translate to losses, however in a competitive market the CEO is of the notion that it would serve to place the company to compete fairly. Furthermore, the CEO has made some changes in the programing contracts that would ensure that programing that is fast losing popularity are dropped in favour of lucrative ones. Although this would reduce the number of channels transmitted by Foxtel, it would greatly serve to merge stations that are similar in programing and ensure delivery of relevant content to viewers. Mintzberg (1980) describes this strategic move by Foxtel CEO as the coordination mechanism where in particular standardization of work processes and standardization of outputs is the major aim of the move that would steer the company into a state of productiveness. In order to respond to the threat of substitute products and services, Foxtel has embraced leaner mix to counter threat of net TV. The company intends to pursue a direct relationship with big Hollywood studios and dominate new movie releases since the company’s extensive back catalogue may become redundant in market that is increasingly embracing an IPTV or television through the internet. Holgate (2012) notes that, Foxtel has branched out by minimising content offerings for internet protocol television through platforms such as Samsung's smart TV, Microsoft's Xbox and Telstra's T-Box . The company also aims at selling broadband. Waddell et al (2007) observes that the four building blocks of competitive advantage include; flexibility, innovation, responsiveness to customers needs and superior efficiency in relation to quality. With reference to Porter’s “five forces analysis” and the sentiments of Waddell et al (2007) it is plausible to conclude that, Foxtel’s business strategies are viable and effective options for efficiently responding to increased competition in the market, technological advancements and the specific needs of customers. Conclusion This essay has examined Foxtel’s business strategies and how it has influenced the company’s structure and position in the market. Additionally, this essay has evaluated the effectiveness of Foxtel’s business strategies using Michael Porter’s “five forces analysis” model and several management concepts. The findings of this essay illustrate that Foxtel’s business strategies have significantly influence its organisational structure and position in the market. In a bid to maintain its competitive edge in the market the company intends to realign its business strategy by simplifying its channel mix. Moreover, it is established in this essay that Foxtel’s current business strategies are viable and effective options for efficiently responding to increased competition in the market, technological advancements and the specific needs of customers (Davidson 2012; Holgate 2012). . References Davidson, D. 2012, Foxtel goes for leaner mix to counter threat of net TV, viewed on September 8 2012 Holgate, B. 2012, Foxtel to push cheap packages, viewed on September 8 2012, Mintzberg, H., 1980, The nature of managerial work, Prentice Hall, California. Waddell, D., Devine, J., Jones,G.& George, J. 2007, Contemporary Management, 2nd Ed,. McGraw-Hill, North Ryde, NSW, Australia. Waterman, R., Peters, T. & Phillips, R. 1980, “Structure Is Not Organisation”, Business Horizons, vol 23, no, 3, pp.14-26 Read More