1.0 Important Issues in The Ministry’s Environment
1.1 Early Years (1990s)
In the early years, the Ministry’s environment is mainly focus on the new dance club. Their chief executive was James Palumbo. However, they face the problem of drug-dealing by their security team. As a result, Palumbo persisted in making his club a safer and cleaner environment. He changed his security team and hired a psychoanalyst to solve the gangland threat. Their club culture has changed from an underground movement with drug-dealing into a mainstream youth market activity. In mid 1990s, the business developed in many directions. They start to encounter in magazine, radio show, recording business and merchandising logo business. They have also created their own distinctive logo and brand.
1.2 Latest Period (2000s)
In the early year of 2000, 3i acquired Ministry’s equity and this has made the spread of the dance music gospel worldwide. In 2002, Ministry dance club started to become outdated as life performances are more preferred. As a consequence Ministry’s business was at crisis. When Mark Rodol replaced James Palumbo as the chief executive, he launched a strategic review of the whole business and saw high potential in continued merchandising. In addition, Rodol also reorganised the Ministry, leading to several management departures.
2.0 Opportunities For The Ministry in 2004
As more and more home is equipped by the broadband services, the company may have an opportunity to expand their business by online broadcasting their music channel. The growing rates of broadband users can be evidenced by the increase number of users from 82 million in 2003 to 319.9 million in 2008.
PlayStation has shown a triple-digit growth, the site visits rate increased from 646,000 to 1.5 million in March 2004 and it ranked seventh in the top 10 based on site visits. This indicates that the company has an opportunity to increase their sales of PlayStation games in 2004.
The demand for branded clothing will be increased. Additionally, as the margin for the wholesale costs adds between 80% and 100%, this would be a prospect for the company to earn more profit in merchandising branded clothing.
3.0 Threats Facing The Ministry in 2004
The threat is the dance culture has become outdated as preferences of audiences have switched to live music performance. Live music is usually performed by more well-known music artists, disc jockeys, jazz musician and orchestras. Young people are more attracted to this kind of live performance. The outdated dance culture can also be evidenced by the drop in sales of dance music album to a ten year low and superclubs such as Liverpool’s cream had ceased their business.
Moreover, venture capital investment in third quarter of year 2004 has reduced. This would affect the Ministry’s venture capitalist, 3i, to reduce their capital invested in the company.
Also, as the investment in entertainment and media industry has also decreased, this may affect the company not being able to reach their targeted turnover of $ 5 million by 2006.
4.0 Identification Of Capabilities
One of the capabilities is changing the security team to make the club safer and cleaner from drug. This is one of the strategies for the Ministry to attain the objectives of increase the value of the club. This means that Palumbo as the CEO of the company would like to make the club to become a cleaner and safer club, instead of letting the drug dealer to commit their drug trading in the club.
Besides, Ministry of Sound has built a global entertainment business based on the creativity and quality of a brand. On the other hand, a distinctive logo and brand for the Ministry has been established and being used widely in clothing. ‘Super-clubs’ was first developed by the Ministry. They also engage in large merchandising clothing business.
The Ministry has launched a magazine that aimed at clubbers and a radio show that broadcasts in London and central Scotland. Moreover, it has the experience in having joint venture with Relentless and became the largest independent record-label. The company is also distributing their own albums. This shows that the company is capable of recording an album themselves. In addition, the Ministry’s has the capability in hosting tour with 300 events worldwide.
5.0 Relevance Of Capabilities
In 2004, the good value which is clean and safe environment of the club is being maintained. This is shown by the potential of senior citizens to visit and spend their time in the club would increased. This means that the club activities are still going on.
Moreover, they are still continuing in the recording and merchandising business. This is shown by Mark Rodol still continue to merchandise in branded clothing, specialist holidays and consumer hi-fi products.
The radio shows and touring division of the ministry are still in progress. They are expanding them globally.
However, the Ministry’s magazines have stopped published in 2004. They are incapable of attracting the readers to buy their magazines in the market. Their capability in targeting the market for the magazine has failed.
Their joint venture with Relentless has also failed. This indicates that the joint venture in producing recording product is irrelevant for the company.
6.0 Strengths Of The Ministry in 2004
Palumbo as the chairman of the Ministry in 2004 adopted the analytical, business-focused approach in managing the company. This is a strength as most of the recording companies are not using such approach and this made them has to end their business.
The replacement of chief executive to Mark Rodol in February 2003 has given the Ministry a chance to review and change its old strategies to improve its efficiency and effectiveness in performing their business.
The Annual 2004, which is released annually by Ministry of Sound, has won awards consecutively for Best Mix CD Compilations from numerous Dance Music Awards Shows. This compilation combines the best of the past, present and future.
The company is still a clean and safe club free from drug dealing activities. There is still a place suitable for people who just enjoy to dance and listening to music. They would not be distracted by the “dirty” activities.
Moreover, a venture capitalist investor, 3i, is still there with the Ministry of Sound to support them. This still provide and opportunity for the Ministry to expand their dance music globally although the funds are limited due to overall decreasing of venture capital investment in 2004. In addition, the brand name of the Ministry of Sound can still be used as a strategy to maintain their business activities in long-term. This can be evidenced by Stan Roche stated that “Ministry of Sound is one of the most important and successful dance brands in the world”.
A partnership was formed with Universal Music in 2004 to enable the sales of Ministry-branded compilations across Europe, Asia and Latin America. This indicated that the company can expand their sales not only in UK but also internationally.
A new superclub was also opened in Taipei, Taiwan which was the biggest in Asia. This is strength as it shows that the company has the ability to increase their profit among Asian. They have been able to step into the Asian market.
7.0 Weaknesses Of The Ministry in 2004
The entrance fee into the dance club of £25 is relatively expensive compare with more updated dance club. This is a significant weakness of the club. It would miss out a lot of customers.
This dance club has more old people rather than young people. A place full with old people would make the young people thinks that that place no longer suitable for them to enjoy.
The customer information received by the company was usually unreliable and mostly is duplicated information. As a result, the company’s marketing group was unable to rely on the data when developing the marketing programmes. This had major impact on the opportunity of generating revenue from potential customer.
8.0 Stakeholders OF The Ministry
Stakeholders include shareholders, customers, employees, suppliers and communities. In the case, the stakeholders are 3i, James Palumbo and Mark Rodol.
3i, which owned 20% of the Ministry’s equity for £24m in 2001, is the venture capitalist. It is a world leader in both venture capital and private equity. It joined the Ministry was because they were impressed by the successfulness of the brand and the rapid growth of the company.
James Palumbo, who is the major shareholder of Ministry of Sound, invested £225,000 in 1991. He held the position of chief executive of the company since 1991 and in 2003, he quit and become the chairman of company.
Then, Mark Rodol replaced James Palumbo as the chief executive of the company. Before becoming the CEO of the company, he was the marketing director of the company. He started to work in 1991 in this company in an old South London bus shelter.
9.0 Direction Of Stakeholders
3i would like to push Ministry into international market. This can be shown by they helped the company to spread the dance music gospel worldwide.
On the other hand, James Palumbo aimed for diversification of business activities. He was not only pushing the club into a mainstream youth market activities, but also involved in launching the company’s magazine, radio show, recording Ministry own album, merchandised its distinctive logo mostly for clothing and hosting touring event worldwide. This can help the company to diversify their risk and expand their business into other countries such as London, New York, Sydney and Berlin. He has also persisted in making his club a safer and cleaner environment by having a campaign nationally against the youth of drugs in youth venue. This shows that Palumbo not only want to maximise profit, but also concern about the environmental issues.
Mark Rodol also aimed at diversify the Ministry of Sound’s business activities but using a different way. He has re-examined the company core competencies and discovered the new core competencies was finding music that people want to dance to and providing them as attractive environment to dance. He pushed the company into continued merchandising. In addition, he started to sell branded DJ equipment and offering branded mobile phone games and a Ministry PlayStation game. Moreover, he has planned to expand the superclub globally. He has reorganised the Ministry, leading to several management departures, for moving the brand forward towards long-term goals.
10.0 Identification Of Strategies Choices & Examples Of Strategic Choices
There are two types of strategies for the Ministry, which are business strategy and corporate strategy.
10.1 Business Strategy
To develop the business strategy, the mission and the company’s competitive advantage are taken into account. Their core competency is finding music that people want to dance to and providing them as attractive environment to dance. Two criteria are taken into consideration when determine the business strategy which comprise of internal scrutiny and environmental scan at business level. For the Ministry of Sound, its competitive advantages are the brand name, the on-line broadcasting, clean safe club, merchandising of branded clothing, mobile phone games and DJ equipment and their own PlayStation game for gamers to mix their own dance music. As so, the company responded to these advantages by developing differentiation of services of the business unit to create something that are unique to attract more customers. The basis, which the Ministry is going to develop, is on entertainment. The on-line broadcasting of music video allows young music lovers to view the music video they like and listen to latest song they like. The PlayStation game helps to improve the creativity of the music lover in producing their own music. As live performance is getting popular, it is recommended that the Ministry to include live performance in their clean and safe clubs so more customers can be attracted to their club.
Alternatively, the Ministry has strategy to plan the allocation of their available resources, such as human resources, in each business unit. As the environment is changing, the main objective of the company has changed to focus on long term brand strategies. So James Palumbo is replaced by Mark Rodol to develop the business by examining the company’s core competencies. He is engaging in “hold” strategic to protect the business unit’s market share and competitive position. As so, he reorganised the business into three divisions, which are international arm, brand division and marketing division. The resources of the company are allocated to each division of the business accordingly.
However, it is recommended that the Ministry should also engage in “build” strategic to increase market share, even at the expense of the short-term earnings and cash flow. This is because the Ministry has quite high attractiveness in music industry and strong business strength by having the competitive advantages as mentioned earlier. It should have a mission in building their business from these competitive advantages instead of just holding their position in the market.
10.2 Corporate Strategy
Corporate strategy is being in the right mix of businesses and focus on where to compete rather than with how to compete in a particular industry. The company’s corporate strategies include their diversification and internationalism of business activities. They established their own brand to draw the customers’ attention towards their brand name. Besides, they have diversified their business activities by not only pushing the club into a mainstream youth market activities but also involved in launching the company’s magazine, radio show, recording Ministry own album, merchandised its distinctive logo mostly for clothing and hosting touring event worldwide. Moreover, the internationalism include the partnership was formed with Universal Music in 2004 to enable the sales of Ministry-branded compilations across Europe, Asia and Latin America.
Here, the company has diversified their business activities in related industry as they are having the core competencies among businesses. They operate both in the entertainment and merchandising industry. The company is suggested to have the conglomerate diversification by adding new, unrelated products of service. Here, each operating division or strategic business unit was treated as a semi-independent profit center with its own revenues, costs, objectives, and strategies. Acquisition of other company in other industry can be taken by the company. They as the parent company, which can hold the subsidiary company, can gain the advantage of the subsidiary’s in the form of dividend. They also do not have to control the activities of the subsidiary and this will reduce their burden in managing another company and additional costs incurred.
In addition, they can also engage in other business activies which are differ from the entertainment industry. For instance, they can engage in the shopping industry by establishing their own shopping mall. This can benefit them by selling their mechandising branded clothes, hi-fi products and other entertainment products in their own mall. As a result, the company can save their cost of hiring the company. Promotion can be make to attract more customers. By doing this, the company can increase their reputation and can expand their business if they run well in shopping industry. Direct relationship can also be built up and this can increase the satisfaction level of customers and increase their relationships with customers.
Intensive strategy can also be introduced to the company. It consists of market penetration, market development and product development. The company can adopt the product development which use to increase sales by improving or modifying present products. For example, they can improve the quality and add functions of the hi-fi prodcuts so that they can compete with their competitors. Reasearch and development and survey can be done intensively and adopt the latest information technology (IT) when designing the hi-fi. Consequently, this can increase the sales of both hi-fi products.
Integration strategy can also be used which include forward integration, backward integration and horizontal integration. Horizontal integration which is seeking ownership or increased control over competitors can be adopted. Here, the research and development (R&D) can be conducted intensively so that they may find the valuable information which can dominate their strength over their competitors. Survey can also be done to improve the performance and meet customers’ requirements towards their product. As a result, these can give them an opportunity in the market status and win ahead their competitors.
1.1 Early Years (1990s)
In the early years, the Ministry’s environment is mainly focus on the new dance club. Their chief executive was James Palumbo. However, they face the problem of drug-dealing by their security team. As a result, Palumbo persisted in making his club a safer and cleaner environment. He changed his security team and hired a psychoanalyst to solve the gangland threat. Their club culture has changed from an underground movement with drug-dealing into a mainstream youth market activity. In mid 1990s, the business developed in many directions. They start to encounter in magazine, radio show, recording business and merchandising logo business. They have also created their own distinctive logo and brand.
1.2 Latest Period (2000s)
In the early year of 2000, 3i acquired Ministry’s equity and this has made the spread of the dance music gospel worldwide. In 2002, Ministry dance club started to become outdated as life performances are more preferred. As a consequence Ministry’s business was at crisis. When Mark Rodol replaced James Palumbo as the chief executive, he launched a strategic review of the whole business and saw high potential in continued merchandising. In addition, Rodol also reorganised the Ministry, leading to several management departures.
2.0 Opportunities For The Ministry in 2004
As more and more home is equipped by the broadband services, the company may have an opportunity to expand their business by online broadcasting their music channel. The growing rates of broadband users can be evidenced by the increase number of users from 82 million in 2003 to 319.9 million in 2008.
PlayStation has shown a triple-digit growth, the site visits rate increased from 646,000 to 1.5 million in March 2004 and it ranked seventh in the top 10 based on site visits. This indicates that the company has an opportunity to increase their sales of PlayStation games in 2004.
The demand for branded clothing will be increased. Additionally, as the margin for the wholesale costs adds between 80% and 100%, this would be a prospect for the company to earn more profit in merchandising branded clothing.
3.0 Threats Facing The Ministry in 2004
The threat is the dance culture has become outdated as preferences of audiences have switched to live music performance. Live music is usually performed by more well-known music artists, disc jockeys, jazz musician and orchestras. Young people are more attracted to this kind of live performance. The outdated dance culture can also be evidenced by the drop in sales of dance music album to a ten year low and superclubs such as Liverpool’s cream had ceased their business.
Moreover, venture capital investment in third quarter of year 2004 has reduced. This would affect the Ministry’s venture capitalist, 3i, to reduce their capital invested in the company.
Also, as the investment in entertainment and media industry has also decreased, this may affect the company not being able to reach their targeted turnover of $ 5 million by 2006.
4.0 Identification Of Capabilities
One of the capabilities is changing the security team to make the club safer and cleaner from drug. This is one of the strategies for the Ministry to attain the objectives of increase the value of the club. This means that Palumbo as the CEO of the company would like to make the club to become a cleaner and safer club, instead of letting the drug dealer to commit their drug trading in the club.
Besides, Ministry of Sound has built a global entertainment business based on the creativity and quality of a brand. On the other hand, a distinctive logo and brand for the Ministry has been established and being used widely in clothing. ‘Super-clubs’ was first developed by the Ministry. They also engage in large merchandising clothing business.
The Ministry has launched a magazine that aimed at clubbers and a radio show that broadcasts in London and central Scotland. Moreover, it has the experience in having joint venture with Relentless and became the largest independent record-label. The company is also distributing their own albums. This shows that the company is capable of recording an album themselves. In addition, the Ministry’s has the capability in hosting tour with 300 events worldwide.
5.0 Relevance Of Capabilities
In 2004, the good value which is clean and safe environment of the club is being maintained. This is shown by the potential of senior citizens to visit and spend their time in the club would increased. This means that the club activities are still going on.
Moreover, they are still continuing in the recording and merchandising business. This is shown by Mark Rodol still continue to merchandise in branded clothing, specialist holidays and consumer hi-fi products.
The radio shows and touring division of the ministry are still in progress. They are expanding them globally.
However, the Ministry’s magazines have stopped published in 2004. They are incapable of attracting the readers to buy their magazines in the market. Their capability in targeting the market for the magazine has failed.
Their joint venture with Relentless has also failed. This indicates that the joint venture in producing recording product is irrelevant for the company.
6.0 Strengths Of The Ministry in 2004
Palumbo as the chairman of the Ministry in 2004 adopted the analytical, business-focused approach in managing the company. This is a strength as most of the recording companies are not using such approach and this made them has to end their business.
The replacement of chief executive to Mark Rodol in February 2003 has given the Ministry a chance to review and change its old strategies to improve its efficiency and effectiveness in performing their business.
The Annual 2004, which is released annually by Ministry of Sound, has won awards consecutively for Best Mix CD Compilations from numerous Dance Music Awards Shows. This compilation combines the best of the past, present and future.
The company is still a clean and safe club free from drug dealing activities. There is still a place suitable for people who just enjoy to dance and listening to music. They would not be distracted by the “dirty” activities.
Moreover, a venture capitalist investor, 3i, is still there with the Ministry of Sound to support them. This still provide and opportunity for the Ministry to expand their dance music globally although the funds are limited due to overall decreasing of venture capital investment in 2004. In addition, the brand name of the Ministry of Sound can still be used as a strategy to maintain their business activities in long-term. This can be evidenced by Stan Roche stated that “Ministry of Sound is one of the most important and successful dance brands in the world”.
A partnership was formed with Universal Music in 2004 to enable the sales of Ministry-branded compilations across Europe, Asia and Latin America. This indicated that the company can expand their sales not only in UK but also internationally.
A new superclub was also opened in Taipei, Taiwan which was the biggest in Asia. This is strength as it shows that the company has the ability to increase their profit among Asian. They have been able to step into the Asian market.
7.0 Weaknesses Of The Ministry in 2004
The entrance fee into the dance club of £25 is relatively expensive compare with more updated dance club. This is a significant weakness of the club. It would miss out a lot of customers.
This dance club has more old people rather than young people. A place full with old people would make the young people thinks that that place no longer suitable for them to enjoy.
The customer information received by the company was usually unreliable and mostly is duplicated information. As a result, the company’s marketing group was unable to rely on the data when developing the marketing programmes. This had major impact on the opportunity of generating revenue from potential customer.
8.0 Stakeholders OF The Ministry
Stakeholders include shareholders, customers, employees, suppliers and communities. In the case, the stakeholders are 3i, James Palumbo and Mark Rodol.
3i, which owned 20% of the Ministry’s equity for £24m in 2001, is the venture capitalist. It is a world leader in both venture capital and private equity. It joined the Ministry was because they were impressed by the successfulness of the brand and the rapid growth of the company.
James Palumbo, who is the major shareholder of Ministry of Sound, invested £225,000 in 1991. He held the position of chief executive of the company since 1991 and in 2003, he quit and become the chairman of company.
Then, Mark Rodol replaced James Palumbo as the chief executive of the company. Before becoming the CEO of the company, he was the marketing director of the company. He started to work in 1991 in this company in an old South London bus shelter.
9.0 Direction Of Stakeholders
3i would like to push Ministry into international market. This can be shown by they helped the company to spread the dance music gospel worldwide.
On the other hand, James Palumbo aimed for diversification of business activities. He was not only pushing the club into a mainstream youth market activities, but also involved in launching the company’s magazine, radio show, recording Ministry own album, merchandised its distinctive logo mostly for clothing and hosting touring event worldwide. This can help the company to diversify their risk and expand their business into other countries such as London, New York, Sydney and Berlin. He has also persisted in making his club a safer and cleaner environment by having a campaign nationally against the youth of drugs in youth venue. This shows that Palumbo not only want to maximise profit, but also concern about the environmental issues.
Mark Rodol also aimed at diversify the Ministry of Sound’s business activities but using a different way. He has re-examined the company core competencies and discovered the new core competencies was finding music that people want to dance to and providing them as attractive environment to dance. He pushed the company into continued merchandising. In addition, he started to sell branded DJ equipment and offering branded mobile phone games and a Ministry PlayStation game. Moreover, he has planned to expand the superclub globally. He has reorganised the Ministry, leading to several management departures, for moving the brand forward towards long-term goals.
10.0 Identification Of Strategies Choices & Examples Of Strategic Choices
There are two types of strategies for the Ministry, which are business strategy and corporate strategy.
10.1 Business Strategy
To develop the business strategy, the mission and the company’s competitive advantage are taken into account. Their core competency is finding music that people want to dance to and providing them as attractive environment to dance. Two criteria are taken into consideration when determine the business strategy which comprise of internal scrutiny and environmental scan at business level. For the Ministry of Sound, its competitive advantages are the brand name, the on-line broadcasting, clean safe club, merchandising of branded clothing, mobile phone games and DJ equipment and their own PlayStation game for gamers to mix their own dance music. As so, the company responded to these advantages by developing differentiation of services of the business unit to create something that are unique to attract more customers. The basis, which the Ministry is going to develop, is on entertainment. The on-line broadcasting of music video allows young music lovers to view the music video they like and listen to latest song they like. The PlayStation game helps to improve the creativity of the music lover in producing their own music. As live performance is getting popular, it is recommended that the Ministry to include live performance in their clean and safe clubs so more customers can be attracted to their club.
Alternatively, the Ministry has strategy to plan the allocation of their available resources, such as human resources, in each business unit. As the environment is changing, the main objective of the company has changed to focus on long term brand strategies. So James Palumbo is replaced by Mark Rodol to develop the business by examining the company’s core competencies. He is engaging in “hold” strategic to protect the business unit’s market share and competitive position. As so, he reorganised the business into three divisions, which are international arm, brand division and marketing division. The resources of the company are allocated to each division of the business accordingly.
However, it is recommended that the Ministry should also engage in “build” strategic to increase market share, even at the expense of the short-term earnings and cash flow. This is because the Ministry has quite high attractiveness in music industry and strong business strength by having the competitive advantages as mentioned earlier. It should have a mission in building their business from these competitive advantages instead of just holding their position in the market.
10.2 Corporate Strategy
Corporate strategy is being in the right mix of businesses and focus on where to compete rather than with how to compete in a particular industry. The company’s corporate strategies include their diversification and internationalism of business activities. They established their own brand to draw the customers’ attention towards their brand name. Besides, they have diversified their business activities by not only pushing the club into a mainstream youth market activities but also involved in launching the company’s magazine, radio show, recording Ministry own album, merchandised its distinctive logo mostly for clothing and hosting touring event worldwide. Moreover, the internationalism include the partnership was formed with Universal Music in 2004 to enable the sales of Ministry-branded compilations across Europe, Asia and Latin America.
Here, the company has diversified their business activities in related industry as they are having the core competencies among businesses. They operate both in the entertainment and merchandising industry. The company is suggested to have the conglomerate diversification by adding new, unrelated products of service. Here, each operating division or strategic business unit was treated as a semi-independent profit center with its own revenues, costs, objectives, and strategies. Acquisition of other company in other industry can be taken by the company. They as the parent company, which can hold the subsidiary company, can gain the advantage of the subsidiary’s in the form of dividend. They also do not have to control the activities of the subsidiary and this will reduce their burden in managing another company and additional costs incurred.
In addition, they can also engage in other business activies which are differ from the entertainment industry. For instance, they can engage in the shopping industry by establishing their own shopping mall. This can benefit them by selling their mechandising branded clothes, hi-fi products and other entertainment products in their own mall. As a result, the company can save their cost of hiring the company. Promotion can be make to attract more customers. By doing this, the company can increase their reputation and can expand their business if they run well in shopping industry. Direct relationship can also be built up and this can increase the satisfaction level of customers and increase their relationships with customers.
Intensive strategy can also be introduced to the company. It consists of market penetration, market development and product development. The company can adopt the product development which use to increase sales by improving or modifying present products. For example, they can improve the quality and add functions of the hi-fi prodcuts so that they can compete with their competitors. Reasearch and development and survey can be done intensively and adopt the latest information technology (IT) when designing the hi-fi. Consequently, this can increase the sales of both hi-fi products.
Integration strategy can also be used which include forward integration, backward integration and horizontal integration. Horizontal integration which is seeking ownership or increased control over competitors can be adopted. Here, the research and development (R&D) can be conducted intensively so that they may find the valuable information which can dominate their strength over their competitors. Survey can also be done to improve the performance and meet customers’ requirements towards their product. As a result, these can give them an opportunity in the market status and win ahead their competitors.
