Background of TMnet:
Telekom Malaysia Berhad (TM) is a leading regional information and communications group, which offers a comprehensive range of communication services and solutions in fixed-line, mobile, data and broadband. The year 1995 was considered the beginning of the Internet age in Malaysia. The growth in the number of Internet hosts in Malaysia began around 1996. According to the first Malaysian Internet survey conducted from October to November 1995 by MIMOS and Beta Interactive Services, one out of every thousand Malaysians had access to the Internet (20,000 Internet users out of a population of 20 million).
TM tries to deliver value to its stakeholders in a highly competitive environment. The Group places emphasis on continuing customer service quality enhancements and innovations. To do so Streamyx which is a broadband internet service offered by TM Net Sdn. Bhd., a subsidiary of Telekom Malaysia Berhad is introduced. Most Malaysian broadband users subscribe to Streamyx due to the lack of alternative services from other Malaysian internet service providers, like Jaring, NasionCom and TIME dotNet. Broadband services rolled out by these companies have limited service coverage, because the last mile connections are monopolised by Telekom Malaysia
In a survey conducted by the Energy, Communications and Multimedia Ministry, it was reported that 7 % of the population was registered as Internet subscribers compared to only 2.6% in the previous year. The Internet penetration is still low at less than 10 percent of the population. According to International Data Corporation (IDC) Malaysia, the number is estimated to grow to 3.91 million in 2004. It is hard to determine an actual figure of online users in Malaysia, as some of the online users are not registered as Internet subscribers. They assess the Internet at their workplace or through Internet cafés.
Mission:
We will continue to provide and a ray of online and e-commerce applications to complement the access service to ensure the Internet becomes the major communication tool of the future. Our content aggregation effort via www.bluehyppo.com will provide one stop integrated Internet Solution to recall TMnet pledge to bring the Internet in the reach of Malaysia
Vision:
TMnet is committed to bringing the Internet to all Malaysians be it for home or business. TMnet aims to make the world accessible to all through the technologies we provide. TMnet will lead the way in become the country main Total Solutions Provider with a commitment focused on providing Quality Service that will transform the nation into a techno-centric population while promoting the development destination on the Global Information Superhighway
SWOT ANALYSIS:
Strength
• TMnet monopolize the Internet Provider Market in Malaysia
• TMnet supported by Malaysia Government
• Implement WIMAX ( Worldwide Interoperability for Microwave Access) 2008 in Malaysia)
Weakness
• Low customer satisfaction regarding their Customer Services
• Poor Internet connections
Opportunity
• 9th Malaysia Plan- Implement Smart School Threats
• Competitors such as Maxis and Digi Company
Issue Faces by TMNET
a) Low Customer Satisfaction
All this while, customers had been unsatisfied with the services provided by TMnet as it is claimed that it’s not money worth. Criticisms such as slow connections as well as frequent disconnections are often heard from the users. Help lines are mostly put up for the sake of showing and assistances are hardly useful as problems are mostly unidentified.
Other than the connection problem, it is claimed that customer services are not up to the standards and some services are faster than approaching the problems e.g. billing.
b) Response to Government Calling
Goals set for the future such as the Smart school is the project to get the country’s secondary schools equipped with computers. Currently, 46% of the country's secondary schools are equipped with computers. However, according to a survey conducted by the National Teachers Association, only 30% of the 250,000 teachers in Malaysia use computers. Private companies like Sun Microsystems have helped by donating RM2 million worth of its office productivity software to 700 schools in the state of Selangor to boost the IT literacy rate among students. These are good initiatives for Malaysia as educating the younger generation helps the country to build IT based communities.
c) Criticism on Blogging Sites
Due to the negative comments on Streamyx, it cause a much arouse in criticism not on the newspaper itself but including the Blogging sites. All the comments are free flow contribution from users or non users and this may seriously cause bad reputation towards the company. This might also cost future business opportunity for TMnet as most third parties rely on that information to understand the capability and potential to make plans or decisions.
Goals and Objectives of PR Consultant of TMNET
a) Improve the relationship between TMnet and their customers.
b) Help TMnet to work more efficient towards government current plans.
c) To gain better reputations among the community in Malaysia
ISSUE 1: Low Customer Satisfaction
OBJECTIVE
Improve the relationship between TMnet and their customers.
Strategy 1: Motivate employees working attitude through organizing functions.
It is important for a company to maintain employee goodwill. Variety of functions can let employees feel that their company strives to maintain their goodwill. Therefore, through these functions, staffs in TMnet’s will work more ambitious for TMnet in the future.
Public:
Our public here will focus on employees. It is an internal public relation of a company.
Tactics
In every six month, every company of TMnet need to select one of the most outstanding employees presented with a cash bonus of RM500 given as a motivation factor
- Incentives are likely to encourage employees to perform better and by having better performance, the companies will benefits.
Every year, each company will organized a vacation trip for the staffs that have working experience more than two years in TMnet.
- 20% of the trip expenses will be covered by the company; through this the employees will be content to work with TMnet for a longer period as such opportunities are rare.
During Christmas season, every company will be holding a grand ball where all of the employees are welcome.
- All the expenses of the grand ball will also covered by the company. It is a face-to-face communication during this grand ball and it maintain communication links with leaders and employees to have a closer relationship.
Strategy 2: Train the employees to improve their technical capabilities and service attitude.
Everybody should improve themselves trough learning continually. Today, knowledge is often a company’s biggest asset. Services and quality are more important than ever. Therefore, TMnet’s employees need to be train in order to gain more knowledge of technology and service.
Public:
Our public of this strategy will also focus on employees.
Tactics
For every three months, every company will organize employee’s training lasting for a week.
- This training will focuses on the employee’s mentality and service quality. The sales department managers will be the mentor in these training.
Every year, one or two technician from every company will be sent to Japan or America for Internet Technical training.
- The expenses of the training will be supported by the company. Japan and America are the well-known high-technology countries in the world. Hence, after technicians studied from Japan and America, they will bring more and more benefits to TMnet and improve the technical of TMnet year by year.
Strategy 3: Provide different ways of solving uncertainties face by customers.
We provide different ways for customers to solve their problem more conveniently. At the same time, customers can see how TMnet care about them through these ways. As a result, customers will more and more satisfied by TMnet in the future.
Public:
The public of strategy 3 will focus on customers.
Tactics
Every Employee will be given a name tag for the purpose of providing personal information for customer’s future references.
- Every staffs should put on the name tag. On the name tag, it will have the name of the staff, the position of the staff, and the staff number. For example, if a customer wants to praise or complain a particular employee, he/she can mark down the employee name and number for future references.
Every service department should provide opinion box and opinion slip for customer to voice out their opinions.
- Customers can fill in the opinion slip, after that put it into the opinion box. Opinion box should be check everyday and those opinions will consist of positive or negative issues.
Establish Complain Centers, equipped with specialized personal to solve complains from website, telephone and opinion box. Enquiry should be settled within 24hours, however, if it is a complex situation it will take up to 7 working days.
Complain center will held performance evaluation every month, employees who were complained or those who did not solve complains, will be punished appropriately.
- For example, if a staff who is complained by the customers or did not solve complains properly, appropriate measures will be taken such as deduction of salary and is ineligible to take part in the outstanding employee program.
Issue 2: Response to Government Calling
OBJECTIVE
Help TMnet to work more efficiently towards government current plans.
Strategy 1: Introduce “Smart School” for the rural areas.
Education is vital in today’s society, and with the help of computers it will increase the benefits. Therefore it will be a crucial step for schools in the rural sector to benefits from technology.
Public:
The public in this strategy will be focusing on Government and Rural community
Tactics:
• Provide Internet availability to rural schools in order to broaden their knowledge.
- According to TMnet’s vision where it stated ‘to bring Internet to all Malaysians be it for homes or business’, it is then essential for TMnet not to neglect the rural sectors by providing Internet services to those part of community as this is an opportunity for the people to gain knowledge and being able to contribute to the society in the near future.
• Partner with the Government to provide IT courses for the rural students in order to prepare them for a brighter future.
- As TMnet provides the connections into those sectors with the support of the government, both TMnet and the government may help to provide IT courses. Through this it will help the government to achieve their goals and benefits the rural community. Let’s not be bias on the thinking that talented people are only available within urban sector. There might be talented people within the rural sector as well.
• Communicate with the local parents to share the positive impact of Internet for their children.
- By reaching out to the parents regarding those changes will be crucial as parents will be concern regarding moral issues and how it might pollute the young minds. Therefore TMnet should give talks among the rural community on how important Internet is towards the students as it is an information highway and is beneficial. Although the negative impact of the technology exists, however, parents are able to prevent it by filtering websites and make it safe for their children to access the Internet. When this matter is cleared, it will then encourage the parents thus motivates their children to accept the change. Grunig’s two-way symmetric model is practice here where there is mutual understanding and a balanced communication.
Strategy 2: Strive for more committed and ambitious employees to achieve goals more efficiently.
By having more committed and ambitious employees will be beneficial as it helps the company to be more innovative and diverse.
Public:
The public focus on this strategy will be on Community and Media.
Tactics:
• Advertise through media such as newspaper, television, radio and Internet to recruit promising talents among the community.
- By having this approach, it will help to create a more diverse TMnet company where more ideas are being contributed and higher competitions arise in order to be more innovative for the sake of the Malaysia community as a whole.
• Provide talk programs in universities in order to pursue student to join TMnet’s team after graduation.
- The talk programs help to provide options for the students after graduation. This will eventually triggers their mind in deciding for their future ahead. This also shows the sincerity of the TMnet in recruiting locals and foreign students as important assets to the company in order to provide better services to the community of Malaysia.
Issue 3: Criticism on Blogging Sites
OBJECTIVE
Gain better reputation among the community
Strategy 1: Building good media relationship between the community and the company.
By having good relationship will makes the business smoother and convenient. Media is a powerful tool where it brings positive and negative impacts.
Public:
The public being focus on this strategy will be Media and Community
Tactics:
• Have the CEO of TMnet to attend Radio talk shows to answer audience’s questions.
- The motive is to build a better relationship between the community and the company, by doing so it reduces the gap and conflicts. As the audiences are able to voice out directly to the CEO, this show the current issues facing by the company and measures will be taken to improve those areas. This action will demonstrate that TMnet cares for the community, not just blindly on profit maximization. It is a two step flow mass communication also known as agenda setting theory.
• Have Public Relation (PR) technician specifically log into the blogs within Malaysia; in order to clear the doubts face by the customers.
- Blog is referred as one of the online Consumer Generated Media (CGM); it has an impact on all facets of the corporation from reputation and sales to product marketing and market research. Bloggers represent an enormous cross section of consumers and business buyers who are listening to the recommendations, good or bad. PR technician are to help those customers to overcome the problem by paying attention to them and asking details through blogs. Eventually when things start to improve due to the assistance from the PR, Bloggers will comment on the good services provided and thus boosting the reputation of TMnet and also improve the relationship with the company.
• Have TMnet apologize through newspapers and blogs regarding unforeseen errors, which causes inconvenience to the community of Malaysia.
- Sometimes TMnet might take days to service certain errors and this might cause inconvenient which frustrates the customers. It will be wise to voice out their problem by apologizing through the Internet and newspapers as this will show their deepest regret. When customers are inform, they will be better off rather than not hearing anything from TMnet.
Evaluation
Basically from the report, after discussing on the issues and ways of strategy and tactics were used for achieving the goals and objective, it helps to clear several disputes between the company and the end users. By having implementing those being proposed, it will help to build up a better relationship among TMnet, its employees and the community. It helps employees to become more ambitious and committed and being more friendly and helpful towards customers. By building and maintaining a good reputation will eventually boost Malaysia in to a more diverse environment where more competitions are inputted which results in a more innovative company. It also helps to benefits the community by giving the best which is equally towards their payment (money worth). By gaining better reputation and employees who are happy to work with the company will impact future business opportunities thus secure TMnet.
Showing posts with label Business. Show all posts
Showing posts with label Business. Show all posts
Tuesday, May 13, 2008
Case Study: Ministry of Sound
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.
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