Film industry is the largest entertainment business in the world. United States and India being the largest centers for movie making business known as Hollywood and Bollywood respectively. Though billions in stake with huge profits made by a good movie there are lot of problems faced by the film industry. In this case study we will analyse threats faced by the film industry as a whole.
Task 1 Answer 1
* Piracy is a major problem faced by the film Industry all over the world. Movie and Music Piracy is one of the worst types of Intellectual Property (IP) Crimes that affect our economy is facing now. Theft of movies by creating illegal copies of original movie which can be done by various ways like creating a master print of the copy and then making multiple copies of it, recording the movie in the theatre by camera phones and other devices has resulted in big loss for all the people who have really worked hard in creating the product. Downloading a movie from the internet is no different from buying a pirated CD from a street vendor and any time a person buying a pirated CD or DVD is hurting legitimate businesses, artists, and are also helping fund criminal organizations. Music and Movie piracy has been linked to organized crime, narcotics trafficking, child labor and other very serious crimes.
Avatar by James Cameron the 2010 blockbuster is the most pirated movie of the decade with more than 1 million downloads within its few weeks of its release though the 3D version had cut down the amount of piracy but still the 2D version was the most pirated movie in recent times. It may only be when Tim Burton's 3-D Alice in Wonderland arrives in March that Avatar will have to cede ground (http://entertainment.timesonline.co.uk/tol/arts_and_entertainment/film/article7004686.ece).
The film industry is trying to stop piracy; a coalition has been formed by Indian Studios and the MPAA, which hopes to stamp out DVD piracy in India. According to Pricewaterhouse Coopers, piracy cost the movie industry in India $959 million in 2008 - making it one of the worst countries in the world for creating DVD knock-offs (http://timesofindia.indiatimes.com/india/Piracy-cost-Bollywood-959m-Report/articleshow/5703165.cms). MPAA chairman Dan Glickman said: "Free is great and everybody likes things for free. [But] in a civilized society, we need to pay for products and services."I believe that as an industry, if we offer people products at reasonable prices in a hassle free manner, people will not steal." (http://www.techradar.com/news/video/bollywood-and-hollywood-vow-to-stop-piracy-menace--678505).
* Increasing cinema ticket prices is also a major concern for the movie industry. Rising business cost has made business to increase the cost of ticket and other refreshment prices in theatres have made audience to cut back their theatre visits. Families in the UK find it hard in recent recession times to spend £50 on movie tickets and refreshments when they can just sit home and enjoy a movie on DVD for just couple of bucks.
* Consumers today have more option for leisure time example computer games,Xbox,PS3 and other games which is a cheaper option of entertainment for the consumers rather than going to cinema and spending on tickets.
Though the most lucrative business the Movie industry has some major problems like piracy which eats half of its ticket sales business, some measures have been taken to control this like imprisonment, heavy penalty but still much needs to be done as some movies released in the US are available on internet even before released in the UK such as Shutter Island, Hurt Locker.
IKEA was founded in 1943 by Ingvar Kamprad known for dealing in international home furnishing products .It is the world's largest retailer in furnishing products known for making Scandinavian style of furnishing products. The majority of its business is DIY (Do it yourself products) furniture which the consumer can assemble by himself which reduces the time for the company and saves space and cost for the company. It sells its products through its 230 stores in 33 countries which is visited by more than 410 million shoppers worldwide. It designs its own furniture which is made by more than 1500 suppliers in 50 countries worldwide (http://fp05-527.web.dircon.net/ikea_company_profile.html). It employs about 128000 people in it stores. It made profits of about $ 7 billion despite of financial crisis IKAS'svision is 'to create a better everyday life for many people (http://www.swedishwire.com/business/3008-ikea-made-7-billion-profit-despite-the-crisis). In the UK, it has 18 stores and also sells online. The company is responding to the growing public's concern for sustainability. It believes going green is the best business practice. IKEA's concern for people and the environment helps it to make good use of bothenergy and raw materials it uses to make it products. There are 18 stores in the UK till date; the first was opened in Warrington in 1987. In July 2009 IKEA opened it opened its first store in Dublin, Ireland. IKEA store includes restaurants and cafés and also have small food shops selling Swedish groceries. It has currently 28 stores in US and plans to open 50 more store by 2010 (http://www.judithletcher.com/usability/JudithLetcher_InteractionDesign_Proposal.pdf).
Task 1 Answer 2
In the above case study we will analyse IKEA Company by using SWOT method and things it needs to adopt to develop a sustainable business. IKAS'ssustainability goalsand environmental designs are main tasks of its business strategy. It has launched a new sustainability plan which will take the company through to 2015 which includes environmental, social and economic issues.
Strengths and weakness which are internal factors like financial, marketing and opportunities and threats which are external factors and are out of business control like technological changes, economical situation ,political to name a few.
IKEA can create opportunities and tackle its threats by using its threats and looking into its weaknesses and one of the main strengths of IKEA is that it uses no extra raw material than needed for producing its products and plans to recycle the waste material.
* Great Brand image internationally.
* Their unique business model has very little direct competition from a similar style of business
* IKEA has its own design group which can make sure that their products can match the latest trend in the industry.
* Best use of raw materials making sure nothing is used more than needed and is used as much required.
* Suppliers working with IKEA have good relationships with the company.
* Maximum recycling of waste products.
* Economies of scale.
* Strong Financial Backup.
* One of the best Marketing strategies in the industry.
* Low cost wide range of products with best quality in the industry. Its aim to sell products at low price but not any price.
* Its vision 'to create a better everyday life for many people'.
IKEA though a successful business needs to acknowledge its weaknesses and try its best to improve them to sustain its business. The following are some of the main weakness of IKEA.
* Its size of global business sometimes makes impossible for the company to check the standard and quality of the products made in other countries. Some countries where it sources its products from do not implement the right working conditions and also to make sure no child labor is been used, this could also affect the consumers way of looking towards IKEA products.
* It is not possible for them to check the places where they source their products personally so they have to depend on third party companies to do that who cannot be trusted always.
* During recent times of recession it's been a difficult task for IKEA to source good quality products from other countries at low prices in order to compete in the market and increase or at least maintain its revenue.
* They need to inform all its stakeholders about its environmental activities and looking at the size for their business it sometimes becomes impossible for them to do it.
* Majority of its products are DIY(Do it yourself) which sometimes is not suitable for elderly people who may find it difficult to do it by themselves.
* They don't have much direct competition which can sometimes be a negative thing for the growth of the company.
* Need of large space for showrooms and warehouse which increases the capital cost.
* Not enough distribution channels have only 3 stores in London which can cause inconvenience to some customers who can switch to other retailers.
* Sometimes due to recalling of faulty products creates a bad impression on customers.
* Growing demand for greener products can help IKEA to look forward for a better market for these products.
* Expansion in Asian markets like India and other South Asian countries can help IKEA to generate more revenues.
* “Low prices with best quality” can help IKEA to look for more places to source its products.
* IKEA can work more towards recycling and better use of raw materials.
* Cutting Carbon Footprint.
* Increasing its online sales which can generate more revenue for the company, IKEA's website is one of the most visited website for home furnishing products.
IKEA can minimize the effects of threats if right actions are taken in appropriate time and some of the threats can be converted into opportunities by right solutions.
* In recent times of recession consumer slowdown on spending has caused in decline of revenues, it needs to come up with new ideas for attracting customers.
* More competitors entering the market has also caused slowdown in it business.
* Slowdown of first time customers buying house has also caused slowdown in IKEA's business which is also a major threat in reduction of its sales.
Based on the SWOT analysis IKEA needs to do the following things to develop a sustainable business.
* Increase use of Renewable materials and smarter use of raw materials will help IKEA to develop a sustainable business in the long run.
* Long term commitments with its suppliers will help IKEA to reduce its purchasing cost by committing of large quantities.
* Economies of scale (Buying large quantities at cheaper unit cost) which will help IKEA to sell products at a lower cost and also increase profits.
* Reducing transportation cost this can be done by smarter packaging which can help it get more products at a particular time which can also help to lower carbon footprint. Their main motto should be going green is the best.
* IKEA should work more toward its social responsibility like more support for charities. It is already working with World Wildlife Fund, UNICEF and Save the Children.
* Should be more open to its stakeholders which can be done through proper communication with its employees, consumers by informing them about all the important decisions of the company.
* Should guide customers towards a more sustainable life.
These measures would definitely help IKEA to develop a sustainable business.
Task 1 Answer 3
IKEA though a successful business needs to do a lot to fulfill its social responsibility some of these are:
* IKEAS's main aim is “Low price but not at any price” but it should make sure that the suppliers from which it sources its products strictly follow these rules and the products manufactured should be in acceptable working conditions and minimum damage done to the environment.
* IKEA should use maximum recycled, reduce its waste and best use of raw materials.
* IKEA is known for its low prices and innovative design. Like most multinationals companies, IKEA has been charged with allegations of indirectly using child labor. It sells carpets sourced from India, where some suppliers employ children for weaving carpets. IKEA has undertaken several schemes to address these issue, but with limited success. It needs to really work hard to make sure no child labor is used for manufacturing its products.
* It should work more towards reducing carbon footprint and saving the environment by reducing waste and making the best use of raw materials.
IKEA is a well-known international brandwith hundreds of stores spread across the world. In order to improve performance, it must assess its weakness and external threats and work towards making its threats into opportunities through this, IKEA is able to grow over the years but it needs to retain its identity.
IKEA's believes in low prices, economical use ofraw materials, and its responsibility for people and the environment but needs to really work hard to fulfill its social and environmental responsibilities.
IKEA has discovered a business truth - being sustainable and responsible is not just good for customers and the planet, it is also good for business!
Toys "R" Us, Inc. is one of the world's leading retailers of toys, children's clothing, and baby products. Of the company's more than 1,000 U.S. locations, 681 were general toy stores under the flagship Toys "R" Us name, 183 specialized in infant and toddler products under the Babies "R" Us banner, 146 were children's clothing outlets under the Kids "R" Us brand, and 37 operated as educational specialty stores under the Imaginarium moniker. The company operated, licensed, or franchised an additional 544 toy stores in 29 foreign countries, headed by Japan, the UK, Canada, Germany, France, Spain, and Australia (http://www.fundinguniverse.com/company-histories/Toys-R-Us-Inc-Company-History.html). Toys "R" Us founder Charles Lazarus was born above a Washington, D.C., shop where his father repaired and sold used bicycles. In 1948, after a stint in the Army, Lazarus began selling baby furniture in his father's shop, using as seed capital $5,000 from a combination of savings and a bank loan (http://www.fundinguniverse.com/company-histories/Toys-R-Us-Inc-Company-History.html). It owns about 1000 stores worldwide in more than 29 countries approximately 600 in US, 300 in different countries,250 franchised and about 210 in US selling baby clothes under the name Kids ‘R' Us is the world largest toy retailer. It employs more than 50000 employees worldwide. The major competitors for Toys ‘R' Us are Walmart and K Mart in the US. Since the US market was coming to a saturation point and to increase its sales Toys ‘R' Us decided to expand globally by opening stores in different countries worldwide. In this case study we will analyse how Toys ‘R' Us faced many problems in entering Germany market in 1986 and what business strategy market and non market strategies it adopted to enter German Market, tackle the protests it faced by the local toy retailers and various Government and Union regulations in Germany and its approach towards German Government regulation regarding store opening hours in Germany..
Task 1 Answer 1
MARKET AND NON MARKET STRATEGIES ADOPTED BY TOYS R US TO ENTER GERMAN MARKET
* Compete against the local toy manufacturers and retailers in the German market.
* To analyse German market structure and local consumer preference and to sell toys and other stuff accordingly.
* To maintain uniform policies of the parent company example work rules etc but follow German rules regarding labour laws, unions
* Having a supply chain and toy selection through a centralized information system
* Sending its Globalization expertise to Germany.
Toys “R” Us can use PESTEL analysis to help it to enter German market successfully.
* Political- Study the political environment in Germany to help it to enter the market successfully as any political instability could cause a problem.
* Economical- This includes taxation rules, interest charges in Germany.
* Social- Social trend changes could affect the company's profitability so it should study the local trends in Germany before entering into German market.
* Technological- Latest technology needs to be used to manufacture toys to compete in the market.
* Environmental- It should assure the Government that it will do its best to protect the environment by reducing waste and recycling.
* Legal- Proper Legal factors like minimum age to work, health and safety rules and other Government rules and regulations of the country.
A successful PESTEL analysis would help Toys “R” Us to successfully enter German Market.
NON MARKET STRATEGIES
* Toys “R” Us can invest in social and environmental causes to help the German Government by reducing greenhouse gases.
* Since its business is of selling Toys for children, it could donate money to NGO's who support less privilege children like children with disabilities, orphans etc
* Can help the local suppliers by sourcing its raw materials from them and thereby increasing the business of local German suppliers.
* Working together with the German government and local community to help them in every possible way.
TOYS “R” Us IN DEALING WITH PROTESTS FROM LOCAL TOY MANUFACTURERS AND RETAILERS
* It should convince the local toy manufacturers that it would keep the prices as per the German market standard which would not eat into their business.
* It should convince the local retailers that by opening a store not in the city centre would also benefit them, as most of the customers coming to the city centre would prefer to buy from them instead of them.
* It should also assure the local toy manufacturers that it will source its maximum raw materials locally which would benefit the local economy.
* Regarding toys which require assistance and are of danger to children example Fachmann assistance would be given to children and their parents.
* It should also assure that it would sell other products in less quantity like diapers, baby food products as its main aim is to establish itself as Toy retailer in Germany.
These measures should help Toys “R” Us to satisfy the local Toy Retailers and manufactures about their protests.
Toys “R” Us STRATEGIES TO DEAL WITH GOVERNMENT STORE OPENING HOURS
Germany has strict rules regarding store opening hours and other labor laws which are among the strictest in Europe. To establish itself in Germany it has to follow the rule of the land, this would help them to win the hearts of the local people and establish them successfully in Germany.
Toys “R” Us should follow the Government rules of 37.5 hrs a week; they should motivate its employees to work hard to achieve more productivity and contract people during busy season. Stores should close at 6.30 pm everyday except at 8.30 p.m. on Thursday when people get extra time to shop, Saturdays at 2p.m.and closed on Sundays, to increase its sales due to these reasons Toys “R” Us should focus more on online sales by offering online discounts and good advertisement should be done to let people know that they can buy toys at any time online.
Above strategies would help Toys “R” Us to successfully establish its business in Germany.
http://www.fundinguniverse.com/company-histories/Toys-R-Us-Inc-Company-History.html (Accessed on 13/04/2010, 21:09 p.m.)
http://timesofindia.indiatimes.com/india/Piracy-cost-Bollywood-959m-Report/articleshow/5703165.cms (Accessed on 27/03/2010, 14:30 p.m.)
http://entertainment.timesonline.co.uk/tol/arts_and_entertainment/film/article7004686.ece (Accessed on 27/03/2010, 14:05 p.m.)
http://www.techradar.com/news/video/bollywood-and-hollywood-vow-to-stop-piracy-menace--678505 (Accessed on 27/03/2010, 15:00 p.m.)
http://www.swedishwire.com/business/3008-ikea-made-7-billion-profit-despite-the-crisis (Accessed on 28/03/2010, 11:05 a.m.)
http://fp05-527.web.dircon.net/ikea_company_profile.html (Accessed on 28/03/2010, 11:55 a.m.)
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