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8/2/2019 Roaring Silence Case
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ROARING SILENCE
CONSULTANCY GROUP
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Submitted to;
VYP
Submitted by;
Roaring Silence
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31 March, 2012
Board of directorsV and Y Productions LtdUnited Kingdom
Sir,With due respect, we, a consultant group of four members, submit the report entitledBusiness Analysis: V and Y production Ltd. that you have assigned us. We haveanalyzed the current issues, prioritized them and discussed them. Based on thediscussion and analysis, we have provided some recommendations
We thank you, sir, for assigning us for the analysis of your production company.
Sincerely,Members of Roaring Silence
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Table of contents
1. Executive summary.3
2. What- so what analysis...4
3. SWOT analysis54. Strategic analysis.
i) PEST analysis...6
ii) Porters 5 forces analysis...7
iii) Porters generic Strategy analysis...9
iv) Ansoffs growth vector matrix10
v) Mendelows stakeholder analysis....11
vi) Critical success factors.12
5. Financial analysis13
6. Industry research14
7. Prioritisation of main issues...15
8. Issue types and approach19
i) Problems..14
ii) Proposal15
iii) Ethical issue....16
9. Recommendations..17
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Executive summary
This report has been prepared on the basis of our analysis on the case study andour knowledge about independent TV production companies and other issues of thecase. The independent TV production sector in UK is much talked-about nowadays.This sector can be said to be hugely demand driven, which ultimately makes thissector so lucrative. Therefore, the companies in this sector are expected to havestrong financial standing.The report starts with the company overview, and continues through the descriptionthe framework of overall business analysis. The business analysis includes fivemajor steps.
what- so what analysisSWOT analysisStrategic analysisFinancial analysis
Industry research
Business strategy analysis section also includes the PEST analysis, Porters fiveforce analysis, Porters generic strategy analysis, Ansoffs growth vector matrix,Mendelows stakeholders analysis matrix, and critical success factors. Inaccordance with the given information, financial analysis is done in this report. Incase of industry research we visited some TV production companies and interviewedsome directors, producers and TV production owners. We have prioritized the mainissues that the company is facing. This report includes the explanation of problemsand the potential solution of the problems. We tried to give some proposals, discussthe ethical issues. We also give some recommendation based on the problems and
proposals regarding this case study.
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What-so what analysis
What So what
BBC is exceeding the level ofcommissioning programmers by 2.5%
VYPs market for commissioning isincreasing
The market of independent TVproduction is very large-about 100
So the competition is very tough for VYP
Debt financing is increasing in thearea of TV Production Company.
As a result independent TV ProductionCompany is facing fund constrainproblem.
VYP has got so many talented andartistic employees.
This can be a very good side for VYP formaking unique programmes that can
help to gain competitive advantage.
only a small number of it is wellestablished
VYP taking this advantage can excelitself more conveniently and increase itsmarket share
Computer graphics interface hasattracted people and is influencing theprogramme quality and its cost
VYP must cope the new technologyusing computer graphics interface aswell as ensure its cost effectiveness
Higher initial cost lead to lower
margin in drama series
VYP need to be more careful in cost
controlling and forecasting accurately
Margin is getting lower in re-commissioned programmes.
There raise a need to be efficient in re-commissioning programmes and make acost effective budget
VYP cannot equip itself fully VYP needs to be more efficient inoutsourcing
The graphics technician of VYP iskeen to have a new software package
VYP should provide the employee with anew software package
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SWOT ANALYSIS
Strengths Weaknesses
Highly skilled, experience and
artistic employees One of top 20 companies in the
market Increasing market share Having regular freelance and
small companies workingexclusively for VYP
Management is committed andconfident
Having good customer in line Increasing sales both nationally
and internationally
Poor controlling
Inaccurate forecasting Fund constrains Difficulties in debt financing Technological scarcity
Opportunities Threats
Expansion of market Expanding with new
programmes Increasing international market
demand BBC is increasing its
commissioning programmes
So many competitors Reduction in programme
commissioning Distract from core business Unavailability of actors Unavailability of prepared script Reduction in operating profit
Vulnerable to reactive attack bymajor competitors
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Strategic analysis
Pest analysis
Political Economic
Intellectual property rights clause Govt. and legal authority Contract and labour act of UK
Fund constrain Increasing international demand Reduction in commissioning
revenueSocial Technological
Charity work Outsourcing ability Viewers attraction to computer
graphics interface Trends to re-commission drama
series
Creating potential through training Use of computer graphics
interface Not fully equipped IT based accounting process Video editing suits
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Porters five forces model
1. Threats of new entry:
Like VYPs emerging in these industries many more companies are coming in
this industry with a lot of talent, creativity and experiences. Reasons-
Better field to show creativity
Ever-growing market of TV media
2. Threats of substitutes:
Same programme just with a little innovation can succeed over another
programme of same kind.
Imitation by the competitors
Change of taste of the viewers
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3. Bargaining power of the buyer:
Broadcast company have employee whose duty is just to make decision
which programme to be commissioned at what price.
Their commissioning sensitivity is high
Their easy access to available information
4. Bargaining power of supplier:
The bargaining power of supplier that is the freelance people, small
companies affects the budget of the production house.
Availability of freelance and outsourcing company
5. Current rivalry:
Every independent TV Production Company tries to roll out its programme for
broadcasting.
Use of modern technology
Innovative programme making
Five Forces Analysis Outcome
Threat of the entry of new competitors Low
Intensity of competitive rivalry High
Threat of substitute products High
Bargaining power of buyers HighBargaining power of suppliers Low
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Porters generic strategy
Porters generic strategies
1. Cost leadership:
VYP mainly focuses on quality not the cost of programmes. It incurs initial cost inmaking drama series
Risks:
Other TV production company may be able to reduce their cost as technology
improves.
2. Differentiation:
VYP has established itself in the market and achieved goodwill by making
unique programme such as- documentary.
Low Cost Differentiation
Broad
Strategicscope
Narrow
Cost Leadership Differentiation
Cost Focus DifferentiationFocus
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Focusing on the quality
Making documentary from a different angle
Risks:
Imitation by the competitors and changes in the taste of viewers can hamper
achieving uniqueness in the programmes.
3. Focus strategy:
There are two scopes in focus strategy-narrow scope and broad scope. VYP is
making a number of programmes for the broadcasting company adopting broad
market scope strategy.
Focusing on new programmes
Focusing on new market
Risks:
Imitation by the competitors and changes in the segments of market can affect focus
strategy.
Ansoffs growth vector matrix
Product
Existingnew
Market
Existing
DocumentaryDrama series
Market penetration
Childrensprogramme
Productdevelopment
Ne
w
Sale of programmes in international market
Market development
Corporateadvertisingvideo
Differentiation
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Mendelows stakeholders analysis matrix:
Level of Interest
Power
Low High
Low Critics-evaluate VYPs
programmes
Competitors- interested in
winning contracts
Treatment- minimal effort
Outsourcing companies and free
lance people-perform VYPs most
of the tasks
Staffs- they actually make the
programme with the help of key
employees
Actors and presenters- they
present the programme in front of
viewers
Treatment- Keep informed
High Govt. and legal authority-
protect viewers and workers
right.
Viewers- make any programme
successful
Treatment- Keep satisfied
Broadcast companies-source of
VYPs revenue.
Shareholders and key employees-
greatly influence VYPs performance
and interested in earning profit.
Treatment- Key players
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Critical success factors:
1. One of the top 20 companies
2. 1.4% market share
3. Experienced, skilled and artistic employees
4. Good communication with broadcast companies5. Good programmes quality
Financial analysis:
Financial analysis (also referred to as financial statement analysis or accounting
analysis) refers to an assessment of the viability, stability and profitability of a
business, sub-business or project.
Profitability ratio: The sales profitability of VYP as follows:
2010- Profitability =
net profit after taxes
Net sales
1,483
20,620
=7.2%
2011- Profitability=
net profit after taxes
Net sales
2,085
28610
http://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Projecthttp://en.wikipedia.org/wiki/Projecthttp://en.wikipedia.org/wiki/Business8/2/2019 Roaring Silence Case
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=7.3%
Liquidity:
VYP works based on the cash inflow from broadcast companies. As VYP receives
commission revenue soon after the contract is signed, liquidity remains in VYP. VYP
meets its operating expense from commissioning revenue. Liquidity falls when
expense exceeds commissioning revenue. As no balance sheet information is
provided in the case we cannot estimate VYP in numerical terms.
Risk position:
Revenue for commissioning of programme decreases. As a result VYP can be in a
risk position.
Industry research:
For finding out the real scenario of this industry we went to different production
houses of Bangladesh such as creative media ltd., Circle media, Black & white, CG
world and . We met with directors, producers and actors to find out some real life
examples. Specially we met with ZahidHasan who is a producer, director and actor.
Our findings from the research is that in this industry people focus more on
differentiation, relationship with others and reputation rather than profit but they also
make profit.
Prioritization of main issues
Fee negotiation for new childrens programmeme is evidently the mostimportant issue in current scenario. VYP being a beginner in children programme,this first performance will be largely determinant of its future prospect. Moreover, theprojects crucial strategic importance is enhanced by the challenge whether VYP willbe able to establish its brand image by diversifying its expertise or confine itself into
the niche of selected genres. Whether to remain contented with the huge 6,300,000sacrificing merchandise rights or venture taking the merchandise rights at the cost of
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35% of certain revenue is another million dollar question to be addressed.Furthermore, the huge 6,300,000 is a large enough amount to have surpassednumerically all other issues. Thus, this fee negotiation of children programmeme isundoubtedly the most prioritized issue and so management must select the rightpath from the merchandise right dilemma.
Re-commissioned drama series, the seemingly easy-to-milk cash cow isprioritized over all the remaining ones for its underlying challenge of retaining VYPsreputation, strengthening market position and obtaining huge 5 m revenue. Fulfillingthe expectation raised due to the unusually well received previous programme andthus obtaining more than 5% operating margin are crucial for VYP. The only obstaclein this way is concern over availability of John Strong whose absence can severelyhamper the programmes appeal. Considering this strategic importance, colossalsum of revenue and urgency of this issue, management should take necessaryactions in this regard.
Banks friends or foe is the issue prioritized third for its large financial impactand more importantly for critical strategic issues regarding quality-budget dilemma.Firstly the 62000 impact on income statement numerically surpasses rest of theissues. Secondly and most importantly, the decision on this quality-budget dilemmais immensely significant since it will determine whether VYP will lean towards profitat the cost of quality, credibility and ethics or show allegiance to those invaluablestandards even incurring loss. For all these reasons, it must be ranked higher thanthe following issues. In this circumstance, management must prudently take theappropriate course of action in this crucial issue.
Proposal to expand into corporate advertising videos comes next to bankingin prioritization schedule. Despite the lucrative advertisement market, whether totake or not to take is really a grave concern for VYP considering some key issues.Firstly, VYP is quite a novice in the advertisement arena lacking any previousevidence of its expertise. Moreover, the medium-sized organizations capability todeal with so many sectors simultaneously is also a vital question to be addressed.However, the advertisement margin being low, there arises another strategic issue oftaking a test work with Zubinos Coffee shop. In the midst of such surroundingquandaries, the management should take appropriate course of action in this issue.
Accident at studio, although ranked last, is never a negligible issue. Notdischarging duty to the employees can be an abominable act severely hampering theorganizations reputation of years. In the mentioned case, poor planning that led theset builders to work in a hurry. More importantly, the comment made by a leadingVYP producer is utterly irresponsible and inhumane. Management must step aheadto stop such issues derogatory to VYPs fame and professionalism.
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Problems
Releasing Mr. Strong from his pre-existing contract
The drama series is about the ups and downs of rowers life. Last year the program
revolved group of four rowers. Mr. John Strong, an original rower, is one of them. But
Mr. Strong is already contracted with GGG for ten months. VYP shooting will start
within four months. A programme without a major character will lose acceptability of
the viewers. For example if Mr. Bean is shot without Rowan Atkinson it will never
be well accepted.So releasing Mr. Strong from his pre-existing contract is a problem
for VYP because without him the programmed will not succeed.
Solutions:
1. Releasing Mr. Strong by motivating Mr. Strong about VYP reputation and
offering him a more lucrative amount than GGG; this is legal in terms of
personal service contract. Secondly giving some extra amount will not affect
our margin in true sense. Finally this will let the shooting go smoothly.
2. Starting shooting without Mr. Strong and then making his part of shooting
when his contract with GGG is over. In this case VYP will not have to pay any
extra amount. Moreover will not hamper GGG trough this way.
3. Telling Mr. Strong to complete his contract within 4 months and then join VYP.
This will not hamper both VYP and GGG.
Conflict between programme producer and director
Banks- friend or foe? A new documentary by VYP is forecast to make a loss. The
programme producer suggested taking no mare interviews and cutting back the user
of expensive CGI to achieve breakeven. The director is angry at these suggestions.
So there is a problem regarding conflict between director and producer. This problem
is actually choosing between cost leadership and differentiation strategy.
Solutions
1. Completing the interview taking no more interviews and cutting back usage ofCGI. This will help VYP reach breakeven. In business money is the main thing
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so what if VYP cannot express the truth properly and sustain reputation but
VYP can save money through this way.
2. Taking as many interviews as necessary for finding out the truth but
minimizing the use of CGI as far as possible. Doing so VYP can express the
truth thus sustain reputation and minimize its loss in a large extent. Moreover
for a documentary gaining viewers acceptance, broadcasters satisfaction and
award does not depend on the use of expensive CGI that much.3. Taking more interviews as necessary and using expensive CGI. This will
make the documentary attractive in spite of incurring huge amount of loss.
Accident at studio
Recently VYP made set builders work from 11 pm to 10 am (anti social work hour)
as VYP had little time to set up the studio due to poor planning. In this hurry a set
builder fell off and broke his arm. This accident must have a reputational impact on
VYP and relationship with stakeholders may be hampered.
Solutions
1. Taking responsibility of accident and making compensation for it. Doing so
VYP will be marked as empathetic and responsible to workers and be able to
develop relationship with stakeholders.
2. Stopping to work at anti social work hours but not taking the responsibility of
accident. The accident happened due to lack of concentration and tirednessof that worker. VYP do not need to take responsibility for this.
Proposals
Strategic proposals
Expand into corporate advertising video
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Background to the proposal: Steve Voddils old friend at Zubinous Coffee Shops has
requested to help him promote his chain of coffee shops by producing a corporate
advertising video which will be local independent TV.
Discussion of the proposal: It is a new market for VYP and VYP does not have any
experience regarding this market. Moreover if VYP accepts the proposal it will have
to bear loss at first. It will earn profit later on if the first video goes well. VYP may loss
its focus on TV programmemaking.On the other hand corporate advertising video is
a huge and potential market from which large amount of profit may be earned.
Taking ownership of merchandising right:
Background to the proposal: VYP is being contracted for a new childrens
programme Sammy Squirrel. VYP is confident about the successes the pilot
programme has received rave reviews. The contract contention is the ownership of
merchandising right. The broadcast company offered VYP 350,000 where the
merchandising right will remain with broadcaster. If VYP receives 40%
merchandising right, the revenue will drop by 35%.
Discussion of the proposal: Though merchandising is a new task for VYP, it will
outsource all the merchandising activities. If VYP takes the right it will reach
breakeven in the first year of first instance at sales level of 22,050,000(Appendix- ).
Earning so much revenue at the first year first instance may not be possible for
aoutsourceing company.
Operational proposal:
Re-commissioning of drama series
Background : Following the success of a drama series last year a proposal of re-
commissioning of drama series from BBC.
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Discussion: The re-commissioning of the drama series will give 5 million revenue
and more than 5% margin after cost savings. Though one of the major actors is
unavailable, it is possible to make him available through some techniques.
Giving Sara Mills share in the profits of the company
Background: Sara Mills, head of programme commissioning, has recently
approached Voddil and Young to ask whether she can participate in the companys
success as she does not consider that her skills are being fully recognized and
rewarded.
Discussion: Sara Mill, a key employee of VYP having high power and interest, will
contribute more loyally in VYPs success. As a result positive atmosphere will prevail
in VYP. Otherwise VYP have to look for her alternative.
Ethical Issues
Objectivity
Portraying the truest possible picture of an incident is the responsibility of the maker
of a documentary. In the issue of Banks friends or foe, it has been recommended
that Sarah Runner, the program director be allowed to have as many interview as
she requires to bring out the truth. Regardless of business consequences, VYP
establishes its ethical stance of objectivity in this instance.
Duty of Care
To ensure safety of its employees and to design a social work hour for them are
obligatory responsibilities of an ethical organization. Concerned by the accident at
studio, VYP has been recommended not to let a single more occurrence of this type
take place. Moreover, the producer making irresponsible comment should be
despised. In fine, the mentality towards employee should be changed holistically and
it should be ensured that all the employees are treated humanely, compassionately,
and above all, with care.
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1. Conflicts of interest
Recommendations
Problems
1. Releasing Mr. Strong from his pre-existing contract: in this problem VYP
should follow the first solution that is offering Strong lucrative amount. If it is
not possible VYP should start shooting without Strong and then taking his part
of shooting after his pre- existing agreement.
2. In case of the conflict between the producer and director VYP should use as
many interviews as possible but minimize the use of CGI.
3. VYP should take responsibility for the accident at the studio and makecompensation for the loss of the set builder.
Proposal:
1. Ownership of 40% merchandising right should not be received by VYP asindicates a total sale of 22050000 which is not feasible in the first at first
instance rather it should take the 3500000 revenue offer as it brings huge
amount of cash without any risk.
2. The proposal of re-commissioned drama series must be accepted by VYP as it
brings profit. In this case the releasing Mr. Strong is legally possible.
3. Proposal of making Sara Mills a shareholder should be accepted and VYP
should give him handsome amount of share after negotiation. It can be 5% of the
total share.
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Appendix
Breakeven point of merchandise sale:
Revenue from commissioning without merchandise right= (350,000*54/60)*20
= 6,300,000
Revenue from commissioning with 40% merchandising right= (227,500*54/60)*20
= 4,095,000
So we need more 2,205,000 revenue from merchandising sale which is actually the profit
received from outsourcing companies after providing 60% royalty to broadcaster. The sales
level must be 22,050,000
Here, total sales=2,205,000 by outsourcing
25% profit from outsourcing companies
5,512,500 60% royalty
2,205,000 3,307,500
Our profit 40%
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[The questionnaire is based on aninterview of a leading production house of
Bangladesh. Mr. ZahidHasan, the subjectof our interview, has provided us with
information on the management of his
production house under the following
format.]
1. How many production houses do you own?
1
2
More than 2
Answer: 2
2. What are the names of these houses?
Questionnaire
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Answer:
Pushpita Visuals
Black and White
3. Do you hire directors for your programs?
Yes
No
Answer: No
4. Do you play the roles of producer and director at the same
time?
Yes
No
Answer: Yes
5. What kinds of programs do you make?
Drama
Advertisements
Childrens program
Documentary
Answer: Drama
6. What is commissioning system of your production house?
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Answer: It is mainly based on the deed of agreement with the broadcast
company.
7. Do you think it is beneficial for a production house to grab 3\4
items
of programs at a time?
Yes
No
Answer: No
8. Suppose you want an actor to play an important role in your
next
program. Now he has already entered into a contract with some
other production house . Do you think you can validly convince him to
work for you instead of that production house?
Yes No
Answer: Yes
9. How would you do that?
Answer: I would convince him by ensuring that if he works for me hell
be benefited financially and will also become a popular character.
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Ordinarily, this works.
10. Have you ever faced any legal complications in doing so?
Answer: No. Ive never faced anything like that. Moreover, in
Bangladesh perspective, generally there is no legal bar in
doing so.
11. Have you ever made any late delivery to broadcast
companies?
Yes
No
Answer: Yes
12. What were the legal consequences of late delivery?
Answer: I did not have to face any legal consequences for such late
deliveries. Most of the broadcast companies are good friends of mine.
As such whenever there is a late delivery I let them know
earlier so that
they can make some alternative arrangements. However the number of
such late deliveries had been very few.
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13. Do you want to share any problem that you have undergone
in dealing
with any broadcast company?
Answer: Yes. I had a deal with a renowned broadcast company (do not
want to mention name) to submit a drama series consisting of 26
episodes. Lateron, seeing the progress and quality of the series, the
company asked me to prepare 52 episodes of the said series. So, I
started
to invest more on that series. But a few days later the broadcast
company
informed me that they want only 13 episodes of that drama series. I was
very disappointed. Therefore I decided to cancel my deal with them.