The Organization of the Royal Opera House - Report Example

The Organization of the Royal Opera House Report Submitted Part III (Industrial Analysis) This section details the Industry analysis in terms of its scope and size, popularity, trends barriers to entry competition and SWOT analysis. Size and scope There are a number of establishments in the US. The organization resides in Bow Street, Covent Garden, and London. Receipts, expenses and annual payroll for entering, staying and working at royal opera house takes around one thousand shillings each since in 2009 royal opera house sold seven hundred thousand tickets. Estimated revenues per year generated from this house are one million pounds per annum. Industry popularity The live performance industry is a highly popular industry. An example is the royal opera house alone can manage to sell 700,000 tickets preshow. The opera house pays a tax of 0.6 million annually, gives out aid amounting to 170 thousand pounds annually and has a national insurance 0.5 million per year. This makes the industry very popular. Industry trends The live performance industry works from macro to micro sectors in that the performances are classified as entertainment. This entertainment is narrowed down to music which eventually turns up to live music. This is what typically happens in the royal opera house. The industry has come a long way from street performances where actors were beggars to a professional job. The royal opera house was once called the house of beggars in that people who did not have anything to do would entertain people for money and other favors. Barriers to entry There are a lot of problems with entering this industry the first being monopoly. Many operas date many years ago and have formed a niche for its clients which make it very difficult for a new opera in town. Another is the high cost of startup since performers nowadays are professionals who are paid like any other well-paying job. In fact the industry is so competitive that there is a high competition for performers. In addition, cost of opening an opera is very high in terms of infrastructures and facilities. Competition from Three Music industries There a lot of competitors in the live industry and the royal opera house being at the top face rivalry from three main opera houses. These include Palais Ganier in Paris France, English National Opera (ENO). It was established in 1875 and its strength lies with ballet as it is majorly known for ballet and music and is a tourist destination. Its weakness is that it relies more on ballet and not all opera services. Its ticket price is about 1000 dollars per person. Teatro di San Carlos which is located in Naples is another reputable opera globally. It is commonly referred to as the red and gold theatre and is the oldest opera globally. Its strength is in its old historical background. Its weakness is that it lacks its once prestigious brand. Tickets range from 500 dollars per person. Another opera is La Scala opera locate in Milan Italy. La Scala was established in 1778 and is magnificently constructed. It is known for the best acoustics among all best operas worldwide. It very expensive as tickets goes for up to 5000 dollars per person. Its strength is from its building structure in floors that give acoustics the best sounds ever. It is perfect. A third competitor is English National Opera (ENO). ENO is a musical industry located in London, within the London Coliseum. It is one of the two principal opera companies in London. Its major competitors are ROH and Covent Garden. The unique feature with ENO is its specialization in English productions of the films. ENO was birthed in late 19th century, spearheaded by Emma Consa in collaboration with Lilian Baylis. The two participated in music performances that were aimed at capturing the attention of local people at the Old Vic. It was from here that they later began to build up both the opera and the theatre companies, and later added a ballet company which later graduated into the ENO. By the year 1930; the opera company became a permanent band. However, before the company could stabilize, it was closed due to Second World War. The reopening of the company after World War II saw it make tremendous progress and experienced continued expansion and improvement. Due to its tremendous growth, ROH directors wanted it be merged to form one opera company, a proposal that was rejected. The directors and mangers that have worked in company include Colin Davis, Reginald Goodall, Charles Mackerras, Mark Elder and Edward Gardner. The ENO musical industry derives its popularity due to its emphasis on the dramatic aspect of opera (Susie, 2011). The industry has also been known for its rich presentation of historical cultural aspects of the local people. Although ENO is situated in London, the top management consists of leaders from almost all races. This is a strength to the company unlike ROH where the management consists is not multi-ethnic. There has been a financial challenge with ENO but the directors are on top gear to address this issue. ENO is putting strategy to lure people from the English speaking nations. The industry is greatly successful in its artistically musical aspects which boosts it and makes it better musical industry than ROH. The management positions have risen from 69 to 79%, just 11% less to be at par with its rival ROH. Part of its plan for marketing is hiring competent artists and musical performances like impresarios Lord Grade and Michael Linnit to produce musicals for a mass audience that is marketable to English speaking nation. This is aimed at generating its incoming and to be visible at the national level. The directors are also seen as wooing new investors especially from the west. Some of its directors like Mr Grade and Mr Linnit have voluntarily taken the budget of paying the production costs, and any other related costs; this will see ENO rise in its profits margin and woo new audiences. The directors are also assuring audience of quality production of music at cheaper costs due to so many subsidies it has from the donors. The quality of ENO’s is the top priority for all key players and nothing is taken for chance about this. Although this has attracted criticism from the ROH and public, the directors are not worried. There are also plans to refurbish the image of ENOs building of the front of house. By doing this ENO hopes that all-day catering at the Coliseum will boost the image of the industry. An annual saving of at least £1m a year has been put in place. This has been made possible through a partnership with University College London to research the future of the performing arts. All these are marketing strategy to ensure that ENO remains visible at the national level in music industry making it a threat to some companies like ROH. The ENO industry is known for its creativity in presenting award-winning work that is new, exciting and surprising. The industry presents more new productions and current opera than any other music industry in UK. The music industry enjoys the world-class reputation for distinctive and highly theatrical productions, which has resulted to many high profile artistic partnerships, including the Metropolitan Opera, and New York amongst others. The industry is devoted to creating new audiences for opera through English language performances, which are affordable and accessible to everyone (Puccini, 1982). The strength of the company comes from the government through loans and grants in one-off its transitional funding under its strategic plans. Its products are distributed through installation of very powerful lighting systems that anyone can see during performances. Its products are more definite and quality through more widespread distribution of Videos/DVDs and CDs. The distribution of the products is also done through Touring and Open-air Opera and to some extent educational workshops and talks. The English National Opera (ENO) has improved accessibility socially, geographically and physically. On a social level, Opera can be taken to the people, giving it a new and more innovative image therefore creating interest throughout a more widespread number and class of people. Thus allowing Opera attendees to begin to be stereotyped in a different way, which in itself improves accessibility to those who believed they simply were not of a high enough class to attend Opera. The accessibility to attend the opera shows has been enhanced. People no longer need to travel to the only venue of the ENO. The new Coliseum where ENO is housed has full access and also has improved orchestra pit and stage doors from the workshop, allowing even more fantastic set designs to be constructed. The ENO have a full schedule of shows throughout the season. Communication links between interested parties are good. There are frequent updates from secretariat to its members in the mailing list. This regular contact makes people feel as if they are involved and play a role in the success of the Opera House. The price elasticity makes people preffer ENO. Seat prices vary greatly so that more people can afford to attend the Opera. The ENO have full-time employees for the principal roles. Part-time employees include the chorus and orchestra. Because these people have a high interest in Opera, they are loyal to their employer and changes in management are minimal. The management structure of the industry is strong since it is directed by a board. It works in a hierarchy of department managers and employees. Expertise among employees is high and many employees attend training courses in management. Most of the employees from nearer the top of the hierarchy are graduates or have years of experience. The marketing and distribution channels are broadening. This is due to recent up scaling in its production of CDs, Videos, and DVDs, Touring and Open-air Theatre and educational workshops (Policy Studies Institute English National Opera, 2001). Its weaknesses can be seen in geographical accessibility. The introduction of Touring Opera has only made accessibility impossible. This makes it very difficult for people from outside the area to attend the Opera House. Its promotion is limited to only existing friends in the mailing list. This type of marketing to interested parties only does not reach other potential customers. The ENO Opera is more expensive due to high production costs. Some of the threats the English National Opera has faced is cutting down of its annual funding by about 29% by Arts Council England, as part of a shake-up of how arts funding is distributed. It is therefore clear that ENO is a strong competitor of ROH in the music industry. SWOT Analysis for the Industry Under this section, my study describes the location where the Royal Opera house is situated in terms of the population, economic status etc. Table 1 shows the summary of data that was obtained from U.S. Census Bureau derived from Population Estimates, American Community Survey, Census of Population and Housing, State and County Housing Unit Estimates, County Business Patterns, Non-employer Statistics, Economic Census, Survey of Business Owners and Building Permits. After the collection of the data, SWOT analysis was performed. Table 2 is summary of SWOT analysis based on the data collected. Table 1: Data collected from US Bureau Economic Census Population 1997 2000 2001 2003 Pop 2003 42 million %Change Pop 2000 20 Pop 2000 50,400,000 Pop change 1990-2000 50% Female pop 2000 27 M White % 70 Black % 20 Hispanics % 10 Asians % 5 % 25yr with high school degree 50 % 25yrs with bachelor’s degree 20 Median income1999 2000 pounds Per capita money increase $5 % below poverty line 40 Private employees 2001 30 % Private nonfarm employees 50 % Manufactures shipment 20 million tonnes Retail sales 1997 60 % Minority firms 1997 80 % Women owned firms 1997 2 % Federal funds and grants 30 % This trend shows that this location and country is still struggling with its economy. It affects the organization in that not many people can afford to attend shows as frequently and in large numbers. Furthermore, a large part of the population are private owned which leaves no time for attending shows and women do not have owned companies. This means they are still inferior and do not have money to attend the shows nor can they afford permissions to attend shows. This as compared to the US makes US better and brighter. It means that the location is of average income individuals and the organizations middle class. Yes I would relocate to find higher end clients who would attend shows and come in large numbers. Table 2: SWOT Analysis for the Industry Strengths Sufficient profits Tourist attraction Skilled and educated cheap labor Economically viable Weaknesses Low income for population Insufficient infrastructures Lack of employment Gender disparity Opportunities Availability of cheap labor Availability of performers Business investments and e-trade Threats Stiff competition lack of funds and grants for development Racism Stagnation in illiteracy Poverty Strengths Sufficient Profits The live music industry is raking in good money even though not very much. Many people love to watch the performers. It is relaxing and kind of therapeutic. Economically, the London is doing well since there is a significant increase per capita. This is a show of growth and future progress of the economy. Most people opt for non formal employment or in other words they prefer to create their own employment both at county and at national levels contributing to the National GDP. The increase in population can also be seen as strength since the rising population offers cheap labour for the industrial development of the country. Tourist attraction Operas worldwide have acted as tourist attractions. This is due to their fame and reputations. These end up creating jobs and increasing revenues. Skilled and Educated Cheap labor In this industry cheap labor that does backstage work are plenty. Therefore, service is good as there is sufficient staff to complete the work efficiently. This is derived from high number of high school graduates and the University graduates above 25years of age. Business and Investments opportunity The manufacturer’s shipment stands at about 20Million tonnes. This offers the opportunity for more shipments and revenue generation for the states. This is also seen as a pointer towards creation of jobs for the young people. It is also seen as an opportunity to increase the bilateral trades and ties with the regional and counterparts countries Weaknesses Low income population The area where this organization is located has poor populations. The people do not have much education or stable jobs. Women do not have money from the companies they work for due to underpayment. This makes not able to attend live music performances. The median household income is too little. This reveals underpayment by the employers. Very few people opt to look for employment at farms owned by individuals. This could be due to poor remuneration package and mistreatment by the owners of the farms. Gender disparity Another weakness is seen in marginalization and gender disparity. Although the ratio between women to men is almost 1:1, women are restricted in owning farms and occupying leadership positions. The increase in population is a weakness to the government. This is because the government should put up measures to curb the ever rising rate of population. The more the population the more burdensome and budgetary constraints to the government. The priority for the government is to create more resources for development and infrastructural alignment. Comparatively, the population keeps rising from 2000 upto 2003 projection Insufficient infrastructures. Infrastructure is bad and the ones available are in dire conditions. This discourages people from attending especially in rainy and cold weather. Roads and communications are the major ones. Opportunities Availability of cheap labor In this industry cheap labor that does backstage work are plenty. Therefore, service is good as there is sufficient staff to complete the work efficiently. Availability of performers Performers for live music have increased with time due to the rising population. It is not very difficult to find, recruit and hire professional dancers. This has boosted this industry. Threats Stiff competition This live music industry faces stiff competition as there are other reputable operas in the world like ENO. These operas have the best of everything thus small upcoming operas and even reputable ones often compete fiercely. Lack of funds Lack of funds to pay staff and renovate the buildings is major threat to the industry. The opera is old and there is little money which cannot afford to renovate it and bring it to higher standard to attract high end clients. The threat to the London economic stability is seen from lack of the government to properly allocate money through grants and other funds. Many Projects and development are done through the grants and loans. Therefore lack of proper allocation of funds and grants is seen as threat to development and infrastructure Racism Another threat is the marginalization and racism in London which translates to racism in parts of US. This can be seen by a very small percentage of minority owning farms in London and other parts. The frustration and much government bureaucracy are used to deny the minority in owning farms. This is seen as a threat since only the natives enjoy the rights and freedoms unlike other nations. The level of illiteracy to the young people above 25years is seen as a threat to the future success and academic world and London, Ohio cities and its environment. This is evidenced by less than half of the youths with bachelor’s degree. Poverty The median household income for the residents in London is about 2000 pounds. The average incomes represented by these figures hardly can offer indication of measure of household’s poverty. Both median and mean can’t be used to accurately decipher poverty levels in the households. The use median household income to measure poverty level do not reveal all the details accurately especially in densely populated areas. The use of average income offers the potential to measure the relative wealth between different areas. Table3: SWOT Analysis for location Strengths proximity to town proximity to good neighborhoods Weaknesses poor location lack of infrastructure Opportunities prime land spacious land Threats expansions by government and private sectors age group living proximity Strengths Proximity to town The opera is located near a major town. This is good for business as many people get to know of the opera. Furthermore, the media always talk about it since it is near the town. Proximity to good neighborhoods Good neighborhoods mean middle class income earners and above. Since the location is near to the near elite class the opera can make money. They can easily access the opera and attend shows. Weaknessess Poor location The immediate location is made up of poverty stricken people. This is a major turn off for the near elite group who find the place unhygienic. The poor people cannot afford to attend shows and are not interested. Lack of infrastructures Some major infrastructures that make operas become renowned are lacking such as good roads leading to the opera. This is the major setback to the operas growth as less people come to shows. Opportunity Prime land The opera is an old one and is situated in an old piece of land which is rapidly being categorized as rime land. This location is highly underdeveloped thus can be very profitable. Spacious land This location is old and the opera was built on large piece of land. The land is spacious and can be used for various things that can increase profits for the opera. Expansions by government The government has been making expansions of late and this may pose a threat to the opera. This is because the government may decide to tear down the opera since it is old and dangerous to people. Age group living proximity The age group living around the opera is old people who have their homes there. These people do not have energy or interest to visit operas. The young vibrant people are the ones who can attend. This age group does not like loud music or noise which is proving to be a threat to the opera. Table 4: SWOT Analysis of music Strength availability of musical performers growing popularity of classical music Weakness lack of originality in music somber nature of classic music Opportunities Media frenzy in classic music Rapid upcoming classic music schools Threat Stiff competition of singers among rival companies High fees for classical music and dance schools Strengths Availability of classical performers Classical performers have been on the rise in recent times. This is a major boost for the opera for it will attract many people. Classical performers are now living decent lives and are recognized worldwide. Growing popularity of classical music Classical music has grown just as classical performers have. Classic music used to be left for certain class or group of people but now it is emerging as a trend among every class of people. This is a huge strength for the opera. Weaknesses Lack of originality in music Classic music is an old genre of music and was left for a certain class of people. This has led to lack of originality in the production of classic music as performers frequently repeat songs. Somber nature of classical music Some people find classic music to be too dull and boring. Furthermore, classic music reminds them of bad situations or sad memories thus huge turn off for visiting operas. Opportunity Media frenzy in classic music Since classic music had been left out for a long time and was not often heard of by other people, there is a new emerging craziness that the media has about classic music. This frenzy has caused a huge advertisement for operas and this has created an avenue where the opera can maximize profits. Rapid upcoming classic music schools Due to the media frenzy in classic music, classic music schools are rapidly emerging. The opera has an opportunity to earn more money by capitalizing on this area. The opera can open its own classic music school and add revenue to its financial department. Threats Stiff competition of singers among rival companies There is a high demand for classic singers among rival operas. This has encouraged classic singers to demand higher wages and salaries further decreasing profit levels of the company. The other reputable operas have stiffened the competition and have made singers have the lion’s share of the company’s revenue. High fees for classical music and dance schools Businesses have also started to rapidly establish classic music schools but they are charging high prices as fees. This means that only the best and wealthy can get admissions who after completion demand extremely high salaries. Therefore, the poor but talented singers cannot have better education and can only work for small operas leaving talented and educated singers for high end operas. Summary, Recommendations and Conclusions From the SWOT analysis, it is clear that some of the challenges facing Royal Opera House (ROH) emanates from within the city and its environments. The ROH is mostly dominated by people of aged 25years and above but children above age 5 are not included and yet talent nurturing begins as early as this age. This has been attributed to dominance of whites and lack of information and skills on offering programs those appeals to the children. Maintaining the same audiences every year seems to be a problem affecting the ROH and music industry as a whole. This is confirmed from the SWOT analysis where majority of the residence in London are white Americans. The Royal Opera House (ROH) faces both direct and indirect competition from public, individual organizations and even the governments. The major issue at stake is how the ROH should balance to satisfy both the poor and the rich segment of the population. The SWOT revealed that the median income of the household is very small and there is certain percentage of the community that lives below the poverty index (about 10%). This chunk of the society cannot afford to attend the ROH completion. The question is how the music industry intends to reach this 10% population that live below poverty line. It is also argued that the ROH exploits the public and young children by paying much and having less impact on generation with the direct competition coming from the government. The racism is also seen in the management of the Opera industry since most of the top organizations is dominated by the whites. There are very few or no blacks, Asians and Hispanics in the management position of the royal opera house industry. In my SWOT analysis, I reported that there is unclear policy or measures by the government on federal funds and other funds for development, which is a key stimulus for any economic and social prosperity. This problem has also trickled down to the ROH management and its staff. The media and entertainment union wants clarification on why it has tripled the staff pension schemes member contributions. The Royal Opera House is arguing that the final salary scheme deficit has almost tripled in the six years since 2006 and that employer funding at the current level is not sustainable. The problem of tripling the pension plan is because the government has frozen the grant and federal funds for such schemes as was seen from the SWOT analysis.  The management of ROH is suggesting a plan or scheme to be operated by an independent body known as Friends Life as an alternative to the final salary pension, a scheme under opposition by the Broadcasting, Entertainment, Cinematograph and Theatre Union (BECTU). The challenges and limitations the music industry (Opera entertainment industry) faces in London are the same as those experienced in the USA. Although digital technologies have revolutionized the music industry by creating high-quality, low-cost recording technologies and digital distribution in USA, it has been experiencing low sales and revenues attributed partly to piracy and poor music production that don’t meet the demands of the younger generation. The Opera music industry has been experiencing low volume sales due to lack of productive, enthusiastic and energetic young sales agents. The music quality and brands being produced do not also meet the demand of the majority of the users (age 5-25years). The way forward for the Opera music industry is not to relocate but to consider revising its strategic and marketing plans if it is to stay relevant in the music industry. The SWOT analysis has revealed very serious issues affecting the music industry that when not looked into, can result to the downfall of the Royal Opera House music industry. As a way forward and on behalf of ROH, I have put very important actionable a ten (10) year plan to revamp the operation of the ROH industry. We have recommended a review of our budgetary expenses through an audit of operational accounts with the aim of reducing costs. This is meant to curb the shortfall occasioned by a decrease in funding by the government who has been the major financiers of music industry through grants and federal funds. The strategies for raising funds through ROH commercial enterprises have been proposed. The annual costs base has also been reduced which will results to the treasury saving significant amount of money. The cost of producing music has also been revised downwards by getting supplies that provide materials at reduced cost. It is important to note that the reduction of production cost will not affect the quality of the music. In fact in the contingency plan, we are hiring very competent and qualified staff with great knowledge, experience and creativity to spear head the vision of ROH in the next decade. The staff main objective is to ensure operas glory is restored back to where it belongs as a top notch music industry in London and US as a whole. We are putting in place special programmes that would attract the young children aged (above 5years). The strong partnership with Youth Dance England and East London Dance will help utilize the young generation (aged 14-19 years) talent and passion for dance as performers and choreographers. There will be series of specially commissioned films that are interactive for younger visitors and generation. The production department has been instructed to issue programmes that cut across the ethnical and multi-linguistic music. Our target is to increase the customer base of all races by issuing amazing productions as much as possible. A boost to this marketing strategy would be the use of digital technologies which enhances audience view and accessibility (ROH 2012). We are also targeting the people down at the county level. This is aimed at increasing the community participation, increasing revenue allocation and communities owning up the productions of the music. This will be achieved by opening new production workshops at county levels. The music and entertainment would be derived from local history and involved hundreds of local people in everything from costume design, to writing the words and the music, staging the opera and performances. To remain visible in the world-class music industry, the Royal Opera House will improve its world-class orchestra and chorus. The position of Orchestra of the Royal Opera would also be harmonized to conform to the heart of artistic life. 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Attending a performance.Retrieved November 22, 2014 from http://www.roh.org.uk/visit/attending-a-performance. The Royal Opera House. (2014). What’s on. Retrieved November 15, 2014 from http://www.roh.org.uk/events. The Royal Opera House.(2014). Who’s Who.Retrieved November 15, 2014 from http://www.roh.org.uk/about/whos-who. The Royal Opera House. (2014). Why support us? Retrieved November 12, 2014 from http://www.roh.org.uk/support/why-support-us. Top 10 Opera Houses - National Geographic. (n.d.). Retrieved November 23, 2014, from http://travel.nationalgeographic.com/travel/top-10/opera-houses. Read More