An Australian Giant Pay TV Operator - Decision Making, Managing Information, and People - Case Study Example

Name: XXXXXX Course: XXXXXX Institution: XXXXXX Date: XXXXXX Introduction Foxtel, an Australian giant Pay TV operator, has been facing stiff competition from internet TV providers which are offering more affordable subscription services to consumers and continue to threaten Foxtel’s subscription rates. In response, company CEO Mr. Richard Freudenstein has undertaken several initiatives such as a merger with Austra in an effort to re-position Foxtel within the emerging ultra-competitive internet TV market which includes airing the 2012 London Olympics. This essay examines the important role played by three functions of management: decision making, managing information and managing people with regard to Foxtel in articles by Holgate (2012) and Knott (2012) on recent strategic developments by Foxtel. The importance, implications and applications of these three functions is carefully examined and analyzed. In addition, the essay also captures the effects of the application of these functions of management to the Staff, CEO and its competitors. Decision Making Decision making plays an important role in the management of an organization. First and foremost, it ensures efficient use of company resources in order to achieve the desired goals and objectives. It guides the management on ways in which company resources such as labour, money and other assets can be best deployed and utilized to produce the desired results a fact that is clearly evident in the article by Holgate (2012). In addition, decision making as a function of management has also been highlighted as a problem solver. It provides an avenue of tackling new challenges and problems facing an organization. It also contributes to business growth and establishes the mechanisms of creating a competitive advantage against other rivals in the market. It is the fuel that drives the organs and processes of an organization (Singla 2009 p. 95). The role of management as a decision making organ is fully highlighted in the article by Holgate (2012) as seen from the strategic plans unveiled by Foxtel’s CEO, Mr. Richard Freudenstein aimed at simplifying its channel mix and therefore boosting its pay TV subscriptions and secondly, laying a firm hold on the emerging Internet Protocol Television (IPTV). As the CEO, Mr. Richard Freudenstein is seen to play the role of the chief decision maker in the organization by highlighting the new strategic approach of the company in meeting its key objectives. Decision making is the process of identifying, short listing and analyzing possible solutions to a problem and then choosing the most suitable of the options available (Swansburg 1996 p. 273, Waddell et al 2007, pp 90-94). The problem in Foxtel’s case scenario is the failure by the company to achieve the projected pay TV subscription and also the need to take advantage of emerging technologies to lay a firm hold on the Australian entertainment market. Foxtel’s initial plan to gain a 75% market penetration in the pay TV segment seems to have failed a decade after its launch. This failure highlights the key problem to be tackled in the decision making process. The identification of the problem is the first stage of the decision making process and is characterized by identifying the root causes of the problem, limiting assumptions, stakeholder concerns, organizational boundaries, systems and interfaces. The main focus of this stage is to clearly state the issue in a single sentence problem statement highlighting the initial conditions and the desired final condition. The statement must be concise and without ambiguity (Daft & Lane 2010 p. 222, Vermeulen & Curșeu, 2008 p.34). In Foxtel’s case scenario, the key issue to be identified at this stage is what the reasons are for the company not achieving the projected market penetration a decade after laying down the initial plan, what factors had contributed to this, and what the desired final position was (Holgate 2012). Mr. Freudenstein and his team of decision makers must also have had to look at the assumptions made and whether these assumptions were still true in the current situation. One of the factors highlighted as a contributing factor to the problem was pricing and failure by the company to integrate other services such as mobile telephony and broadband services to its current pay TV Portfolio. The plans announced by Mr. Richard Freudenstein are strategic decisions- decisions which key elements and factors that determine the successful achievement of the organizational goals and objectives and the positioning of organizational resources as well as setting the firms position in relation to its environment (Mukherjee 2005, p.51). This is highlighted by the company’s move to reduce the number of channel packages, forge ahead with cancellation of contracts with movie suppliers such as Movie Network and Premium Movie Partnership, and establish a major supply link with big Hollywood studios and finally its merger with Austar. In addition, Foxtel buys the broadcasting rights for the London Olympics and the 2010 Winter Olympics in a move to stimulate pay TV subscriptions (Holgate 2012). This move is part of the repositioning of company resources to contribute positively to company goals and objectives. The London Olympics were expected to have a boost on pay TV subscriptions because many Australians wanted to watch live coverage of the events especially those which Australian athletes were competing. In addition, the event took place over a month and therefore many would see the need for subscription. The next step in decision making involves listing down all possible solutions to the problem. Here Mr. Freudenstein would consider all the possible marketing strategies that can be implemented in order to enhance consumer penetration, price cuts among others (Waddell et al 2007, p 167). Each of these alternatives gives a different approach of achieving the desired goal. It is important to note that they must meet all the requirements (Vermeulen & Curșeu 2008 p.35, Daft & Lane 2010, p.223). Each of these alternatives is then carefully evaluated to determine how best it tries to solve the problem. The best alternative is the one that best solves the problem. In Foxtel’s case scenario, the best alternative may have features such as ease of implementation, cost savings among others. Cost savings has already been highlighted in the article as a product of the merger between Foxtel and Austar and the streamlining of its channel packages (Holgate 2012). Managing Information Information technology as a tool for improving human communication and relaying information plays a central role in Foxtel’s core business activities. The company’s business centers on the transfer of entertainment related information. The traditional method of relaying this information is now under threat due to the emergency of the Internet Protocol Television (IPTV) which facilitates a cheaper and more efficient mode of transmitting new movie releases from the production studios in Hollywood direct to online subscribed users (Knott 2012). This new technology makes use of the latest Information technology tools and is a typical example of the advantages accrued from IT. First and foremost, IPTV will usher in a new era in TV broadcasting since internet users can now easily access televised programming through their computers and at a significantly lower cost than that of the traditional pay TV. For example, a Foxtel monthly subscription for pay TV will cost between $ 120 to 130 dollars while an IPTV monthly subscription will cost as low $ 30 dollars (Holgate 2012). This cost saving on the part of the consumer highlights the advantages that information technology has now unveiled in the wake of IPTV technology. Foxtel is now moving with speed to consolidate its presence in the IPTV sector through Microsoft’s X Box, Telstra’s T Box and Samsung’s smart TV. The company has made an offer of $ 20 against its Fetch TV competitor’s 30 dollars for a monthly subscription charge (Knott 2012, Holgate 2012). Information management is the process of collecting, processing, managing and distributing information. Pay TV is basically a business that is involved with the collection and transfer of information. The company obtains entertainment information inform of movies, sporting events, documentaries and current affairs from its contracted sources (that is Hollywood studios, Movie Network, Premium Movie Partnership, Microsoft’s Xbox, Telstra’s T box and Samsung’s smart TV) and distributes it to a large audience (that is its subscribers) through its pay TV channels (Holgate 2012). To achieve this, the company must have invested in effective, reliable and efficient information management tools, resources and processes to secure the information and deliver it to clients in the best form and quality possible. The next battle for competitive advantage is now being fought at IT level where competitors will try to out do each other as they try to penetrate the market by offering cost effective, reliable and efficient means of delivery of services. The improvement of information management systems in an organization is therefore a vital role of the management since it increases efficiency in business processes as witnessed in Foxtel’s case scenario where embracing IPTV technology the company will significantly bring down the costs of its monthly subscriptions (by more than half)(Knott 2012, Holgate 2012). Secondly, it will reduce the number of processes involved in different transaction with Hollywood studios. This will further cut down on the costs of business by eliminating those costs which were rendered redundant by the emergence of IPTV technology. Analysts now appear positive that what Foxtel was unable to achieve in a decade will now be possible through the Internet Protocol Television (Knott 2012, Holgate 2012). Information management does not only encompass information technology only but also entails those business processes and activities that rely on creation and utilization of information. If properly used, information management tools, processes and resources can become effective in establishing superior service delivery, product quality and a pleasant customer experience which will give a competitive edge against other players in the market. In addition, it can become a springboard for launching new products and services in the market as witnessed by the entry of IPTV technology. Information technology as a component of information management has also played a key role in bringing cost effectiveness in how businesses operate (Doom, 2009, p.19). For example, it has simplified the mode of information transfer and consolidated the processes involved therein and thereby bringing down the cost of doing business. By use of computers, the process of collecting, processing and disseminating information has greatly been enhanced and costs associated significantly been reduced. The work that would have been done by 10 people is now easily executed by one individual through computer technology, the core backbone of information technology. It has also greatly improved and simplified the decision making process by the top management since all necessary information for decision making can be easily made available to them by a click of a mouse (Waddell et al 2007). Models for decision making can be easily simulated by use of computer software and results analyzed to determine the effects of certain decisions. Managing People The human resource management as a function of management is also highlighted in the article by Holgate (2012). The merger between Foxtel and Austar highlights the need for a thorough human resource audit and evaluation in order to effectively streamline the operations of the new entity and realize cost saving by eliminating redundancy. The key highlight for this function is seen when Foxtel reorganizes its operations and in the process reduces costs by downsizing as some employees become redundant. The human resource factor is very vital for the operations of any organization since it is the one that puts in motion the other factors of production such as capital, machinery and materials in order to achieve the set organizational goals (Waddell et al 2007, pp.98-100). It is the duty of the management to ensure that the organization has the right number of staff, equipped with the right skills and adequately motivated in order to stimulate their performance. The human resource manager is therefore mandated with the responsibility of planning, recruiting, selecting, training and conducting regular performance appraisals for all employees within the company (Saiyadain 2009, p.5 Randhawa 2007, p.8). Implications for Decision Making, Managing information and Managing People As highlighted in the article by Holgate (2012), the management of Foxtel faces important strategic decisions which are necessary for the company to remain competitive in the ultra-competitive internet TV market. To improve the quality of decision making and ultimately the effectiveness of the strategic decisions, Mr. Freudenstein and the top management of Foxtel must incorporate as much information as is possible concerning Pay TV consumer trends and preferences into the strategic decision making process. In terms of information management, Foxtel management must ensure that the company takes advantage of new technologies such as internet TV by restructuring the delivery of its services to consumers to be more efficient and at a lower cost. As indicated by Knott (2012), IPTV will enable Foxtel to meet targets which it could not in ten years with their previous business model. In terms of managing people, Foxtel must also restructure its labor force in line with its new strategic direction. This may imply downsizing redundant employees to cut labour costs under the new business model. Conclusion In the wake of technological advancement, Foxtel needs to take full advantage of the new era of IPTV in order to strengthen its strategies for pay TV market penetration. The efficient utilization of this new information technology tool carries the answers the company has been looking for. It cannot be over emphasized the role that information management plays in pay TV business and therefore it is a critical aspect of business management. When well combined with other functions of management such as decision making and management of the human resources, it creates a recipe for successful and efficient business operations and therefore facilitating the achievement of set goals and objectives. 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