Arts Organization Analysis - Literature review Example

Arts Organization Analysis Name Institution Arts organization analysis Introduction and overview of the company Hospitality industry plays an important part in contribution towards a country’s GDP (Florida, 2002, p.15). Savage and Hanquinet (2012) claimed that some of competitive economies like the US, Australia, China, United Kingdom and France realized about hospitality sector and invested heavily which in return have provided employment and generated revenue for the country. To try to balance and find transition of history of art, centers and museums have tried to posses old and recent artifacts so as to have a wide audience (Savage & Hanquinet, 2012). One of such art entity is The Metropolitan Museum of Art situated in New York, US. As the name suggests, the Metropolitan Museum of Art is an iconic organization and center for art which was established in 1870 (Metropolitan Museum of Art, 2015). Today, the center has grown to become the biggest art Museum and one of the most toured globally. The organization has been expanded to 17 curatorial departments which host over two million collections of artworks. Its main building situated on the Central Park is the biggest art gallery in the world. Metropolitan Museum of Art (2015) stated that the art center host numerous collection or art galleries from the classical, ancient and modern Egyptian, African, European and American sculptures, paintings, and arts. The founders of this initiative consisted of businessmen, financiers, thinkers and artists who had the dream of bringing art education and programs to American citizens. Stylianou-Lambert (2009, p.141) claimed that over the years, the museum has been hosting regularly and notable exhibitions, focusing on the artist and their good work. Such exhibitions are considered as one of the attractions which attracts locals and international tourists to explore the Metropolitan Museum of Art. These exhibitions comprise of display particularly developed for Costume Institute, collection of ancient artifacts and paintings. The company positions itself as a public art gallery and enjoys massive visits from locals and tourists from other destinations. In broad, The Metropolitan Museum of Art’s mission is to gather, study, preserve, exhibit and inspire positive reception for and increase knowledge of the artwork which collectively signifies the widest spectrum of people’s achievement and success at the highest degree of quality (Metropolitan Museum of Art, 2015). Therefore, this essay will and use available literature and documentation to determine how it funds its operations, and to identify factors that pose challenges and/or offer opportunities for future economic sustainability in the context of the arts sector as a whole. Financial Status According to Kelly (2010), Metropolitan Museum of Art is today one of the major international art centers in the world. A lot of funds have been invested to make the organization what it is today with the aim that it will attract more people. Kelly (2010) went ahead to claim that the Metropolitan Museum of Art is a global accredited institution which is thought to be performing highly in terms of financial status and as one of the most visited museum in the US and globally. However, its financial status is not convincing as perceived. Stylianou-Lambert (2009, p.42) posited that the institution has faced tough times in the recent past starting with the global financial crisis of 2008 which reduced the demands for tourism especially visitation of museums which is considered to be a luxury. The hospitality industry is one of the inconsistent sectors which are highly affected by volatile economic conditions. The weak dollar and slower economic growth restrains people from visiting museums and having pleasure outside their homes (Kelly, 2010). During these times, the management of the Metropolitan Museum of Art has been forced to reduce charges which do not put the institution in a good financial position. Evaluation into the financial statements of Metropolitan Museum of Art from the annual reports of 2008 to 2014 shows inconsistency of increase and deficits over the years. Savage and Hanquinet (2012) contended that 2008 to around 2011 was not a good period for the organization as its performance was marred with instability and accumulated losses resulted from insufficiency and uncertainty of self-generated revenue, sponsorship and government grants particularly. However, there was an increase of the revenue from 2012 resulted by growth in the number of people who visited the center (Metropolitan Museum of Art, 2015). The growth trend has improved and is predicted to continue through to 2020. The figure1 below shows the financial performance of the Metropolitan Museum of Art from 2008 to 2014. Year 2008 2009 2010 2011 2012 2013 2014 Total income $million 79.07 77.47 81.01 82.03 92.3 94.29 98.70 Total expenses $million (95.15) (86.78) (92.94) (57.88) (48. 40) (64.30) (54.14) Deficit/Surplus $million -16.08 -9.31 -11.93 24.15 43.9 29.99 44.56 Figure 1: Financial statement Source: Metropolitan Museum of Art financial annual reports 2008-2014 Funding Funding is a major factor in an organization and helps them forecast on their operation and success. First, worth noting is that this institution is a non-profit making organization hence does not have strategies to increase profits (McPherson, 2006). Therefore, Metropolitan Museum of art does not “impose” fees for admission, but rather determines what is recommended by the community. Even though the Metropolitan Museum of art has operated on deficit in the recent years (2008-2009), it has great fundamentals that it uses to raise funds that consist its high number of membership of more than 100,000, with roughly 5,000,000 tourists who visit annually, effective auxiliary operations and the sound management team which has shown its desire to evolve (Metropolitan Museum of Art, 2015). A review into literatures and the company annual report established that 37 percent of the Metropolitan Museum of art’s funding comes from its endowment while 11 percent funds comes from New York council (see figure 2). Other funds consist of grants, gifts, transfer, restrictions and admissions. Gifts and grants contribute 22 percent of its funds while admissions contribute 14%. In 2011, Metropolitan Museum of art’s income increased to $226.2 million while spending $224.9 million on the curatorial expenditures, and salaries and services (Metropolitan Museum of Art, 2015). In 2014, the institution had a surplus worth just $13000. Today, Metropolitan Museum of Art still operates as a non-profit organization and yet remains the most inexpensive art gallery in New York City and entertains and educates millions of people annually. Figure 2: revenue and funding from 2008-2014 Source: Metropolitan Museum of Art financial annual reports 2008-2014 The External Environment of the Art and Museum Sector An external environment means the business environment where a company or institution operates. Lin (2006, p.107) argued with the rapid change in economic, social, political, technological and demographic, art and museums organizations around the globe have also considered changing their strategies to match such external factors. Stylianou-Lambert (2009, p.143) asserted that despite the rush to change strategies, museums and in this case Metropolitan Museum of Art is still facing the challenges entailing economic, technological and attracting cultural tourism. Metropolitan Museum of Art is a non-profit making institution which depends on fund-raising to survive (McClellan, 2008). Technology which can promote its activities also changes rapidly, which could be an opportunity and a challenge on equal measures. Opportunities and Challenges Economic In the current settings, economic experts argue that the economy is still moving from the global financial crisis of 2008 which affected the US severely (Kelly, 2010). Art and Museum sector was heavily affected due to the fact that services in this sector are basically categorized as luxury. The slow growth presents hope and opportunity to the government to improve the sector and attract more visitors. Kelly (2010) maintained that more visitors mean the institutions such Metropolitan Museum of Art will not rely heaving in government funding and grants to operate. However, the current situation of slow growth makes it tough to run the Metropolitan Museum of Art because its management has to raise funds. Even though every public gallery in the US is needed to raise its funds, it’s been difficult for these institutions to survive just on government funds alone (Cameron, 2006). In addition, as the world economy fluctuates, demand to visit public gallery or museum reduces because basic needs are given the first priority. Grants and gifts often decrease as more people willing to contribute to the institution delay their contribution due to bad economic conditions (Prior, 2002, p.49). In a nutshell, art and museum sector depends on economic conditions, especially more disposable income. However, Savage and Hanquinet (2012) opined that there is an opportunity in the global tourist especially from Asia. Economic in Asian countries such as China, South Korea, Qatar, Bahrain, Singapore, Hong Kong, Taiwan and UAE have shown a great potential to continue growing in the future. The situation is expected to raise the number of middle class citizens with higher disposable income which can be used to tour the world, especially in New York to places like Metropolitan Museum of Art (Savage & Hanquinet, 2012). Technology McPherson (2006) argued that with intensification of busy-scheduled jobs, many people throng hospitality institutions to relax their minds and get off the pressure of work targets. Technology has reduced the need to walk to the physical site to know what it offers, as its products and services can now been show online living an option of making decision of either to attend or not. In the 21st century, product quality has become very important in providing competitive advantage and in this case, it is the artistic content and art value provided by Metropolitan Museum of Art that makes consumers visit the organization (Florida, 2002). Content and quality alone, does not make a business successful; hence communication strategy is equally critical as it helps create high perception and attraction of customers towards one’s business. Technology therefore facilitates easy communication and engagement of audiences in New York and beyond and informs them charges and packages offered by Metropolitan Museum of Art (Metropolitan Museum of Art, 2015). This implies that technology provides opportunities for Metropolitan Museum of Art to offer better and quick services to its customers. The management has allocated funds to purchase new technological equipment to replace the old ones to create a new gallery experience. Metropolitan Museum of Art has digital Digital Media Department, which is a small called MediaLab which specifically deal with technology development and innovation (Metropolitan Museum of Art, 2015). The turning point for the Metropolitan Museum of Art started in 2011 when the institution began putting more emphasis on technology. Metropolitan Museum of Art (2015) claimed that it started with revamping on the organization website and integrating with smartphones for mobile access. The organization has introduced an e-philanthropy platform, and intending to introduce the wireless access in every gallery. The digital experience has been adopted and is meant to improve storage of data and marketing at the institution. The trend is accelerating in museums across the globe. However, the fact that technology keeps on changing is a challenge to the Metropolitan Museum of Art. Lin (2006, p.310) argued that as a company which relies on fund-raising, government funding and grants, it faces financial challenges which it can continuously use to improve its technology. Despite getting $ 2 million from New York state government in 2014, the amount was not enough to help upgrade its technology the match best technological infrastructure in the market (Metropolitan Museum of Art, 2015). Partnership Opportunities In the current business environment, partnership has been one of the strategies which is critical for the success of companies (McClellan, 2008). Therefore, Metropolitan Museum of Art also has numerous opportunities in forming partnerships which can help generate extra incomes to run the institution. The partnership may not just take place between the Metropolitan Museum of Art and an institution in the same sector but also other related sectors like sports, gender and culture. For instance, in 2013, the institution partnered with Art21 to hold the 3rd annual “evening of trivia” which is an event stirred by the culture and art (Metropolitan Museum of Art, 2015). In the process, they get sponsors for their projects and others who provide cash to support their course. For instance, Orden (2010) stated that during one of such annual “evening of trivia”, billionaire David Koch granted the Metropolitan Museum of Art $10 million for renovation of its building. Conclusion An analysis of the Metropolitan Museum of Art has established several opportunities and challenges at the institution which has led to its success and stagnation as well. In the recent years, the organization has received visitors across the globe, hence slightly increasing its revenue. However, various issues have also affected its growth, such as financial and technological challenges. As a non-profit making institution, it majorly depends on government funding, grants, gifts and endowments. Such funding also depends on the economic climate and could delay when the economy has slowed down. The fact that the Metropolitan Museum of Art depends on fund raising also delays its upgrading of technological infrastructure. Despite the situation the art center has opportunities in targeting fast growing Asian market, which will increase its clients and revenue. In addition, partnership can help the management generate extra funds for carrying out projects like upgrading technological infrastructure. References Cameron, F. (2006). Beyond surface representations: Museums, edgy topics, civic responsibilities and modes of engagement. Open Museum Journal, Vol. 8, 12-45. Florida, R. (2002). The Rise of the Creative Class...and How it’s Transforming Work, Leisure, Community, & Everyday Life. New York: Basic Books. Kelly, L. (2010). Measuring the impact of museums on their communities: The role of the 21st century museum. University of Leicester. Retrieved 19th September 2015 from http://www.intercom.museum/documents/1-2Kelly.pdf Lin, Y.-N. (2006). Leisure. A function of museums? The Taiwan perspective. Museum Management and Curatorship, 21 (4) 302-316. McClellan, A. (2008). The Art Museum. From Boullée to Bilbao. Berkeley & Los Angeles: University of California Press. McPherson, G. (2006). Public memories and private tastes: the shifting definitions of museums and their visitors in the UK. Museum Management and Curatorship, 21 (1), 44-57. Metropolitan Museum of Art. (2015). Metropolitan Museum of Art Official Website. Retrieved 19th September 2015 from http://www.metmuseum.org/ Orden, E. (2010). Koch Pours Millions Into Met. The Wall Street Journal. Retrieved 19th September 2015 from http://www.wsj.com/articles/SB10001424052748704302304575214612871804010 Prior, N. (2002). Museums and Modernity: Art Galleries and the Making of Modern Culture. London: Berg. Savage, M., & Hanquinet, L. (2012). Educative leisure’ and the art museum. University of Leicester. Retrieved 19th September 2015 from https://www2.le.ac.uk/departments/museumstudies/museumsociety/documents/volumes/hanquinetsavage28.pdf Stylianou-Lambert, T. (2009). Perceiving the art museum. Museum Management and Curatorship 24(2), 139-158. Read More