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T4 Case Study - TOPCIMA: Strategic Analysis V&Y Productions
T4 Case Study - TOPCIMA: Strategic Analysis V&Y Productions
Strategic Analysis
V&Y Productions
Nick Best
Welcome
For those of you who don’t know me, I’m one of the
TOPCIMA tutors at Reed Business School, and the
author of the official CIMA learning system, on which I
work together with one of the TOPCIMA examiners.
Governance
& Ethics
The first stage of analysis
is to ensure we fully FUTURE
understand where the
Mission &
organisation is heading,
along with its approach Objectives
to meeting stakeholder
needs.
Stakeholder
Mapping
Mission
The mission statement sets the direction and tone of the organisation, and
guides strategic decision making. Unfortunately there is no mission
statement given in the pre-seen material. However there are a number of
quotes from the pre-seen which sum up its key purpose and principles:
The case tells us that a KPI in this industry is revenue per hour, but does not
state specific targets. Critical success factors are mentioned throughout the case,
and these could be used to create a set of further KPI’s. Those mentioned include:
Good ideas
Good production skills
Selling programme ideas to TV
People
Reputation
Track record
Accurate budgeting
Cost control
Computer graphics
They may well have more specific targets we are not told about, but if not, this is a
weakness in the company’s planning approach.
Governance
• My only concern with VYP is that the two founders own 60% of shares and
so minor shareholders have little control if the two founders work together.
• Of course – all this will need to change should VYP list on the stockmarket!
Ethics and CSR
• There is little evidence of good or bad ethics either way, so I would assume
their ethics are good
• There is certainly a case for a more formal ethical code or formal statement
of their views on CSR.
– A quick tip for you then for the ethics section - on a specific ethical
issue (10 marks in the exam) state and explain the issue, make your
recommendation to deal with that issue and then add a follow on
recommendation “to avoid that similar situations in the future a formal
ethical code should be written and communicated to all staff…..”
Stakeholder mapping
• You must update the map for changes in the unseen, and add all new
stakeholders which are in your top 4 issues
• Refer to your map in the main body of your text, adding a comment to say
what the position of that stakeholder on the map means in relation to this
specific issue (e.g. a key player should be involved fully through regular
meetings, and incorporating their views into the final decision)
Stakeholder Analysis
Mendelow’s Matrix
Uncertain
Bank
Keep satisfied Key Players (Involve)
•Studio owners •Essential outsourcers
•Government •Major TV broadcasters
High
Power •2 founders (want freedom)
(Directors + Shareholders)
•Programme directors
•Major TV personalities
Strategic analysis – the rational model
• You will score 1 mark in the technical section for this, and up to 3 further
marks in the application section - if done well.
• You must update this SWOT for unseen issues (underline or bold these in
your exam script), and should aim to include ALL your top 5 issues in your
SWOT.
• A recent CIMA student script review I read, also made it clear that 2-3 word
points in the SWOT are NOT sufficient. Aim to write at least 7-8 words for
each point in your SWOT AND roughly 5 points per heading.
• I’ve shown my points in priority order as I see it. You don’t need to do this
in the exam, but it can help at this stage as you can replace the less
important points with those from the unseen.
SWOT
Strengths Weaknesses
1) Experienced directors and staff with good team 1) Just 4 key customers with significant power – caused
spirit and good incentives falling profit margins
2) Skilled in most CSF areas – innovative, quality, 2) Margins lower on re-commissioned works
people 3) Artistic staff are not cost conscious – some producers
3) Good reputation in industry, and meeting are poor at forecasting – some cost overruns +
customer needs - Large growth in revenues frustration about cost cuts
4) Flexible cost base 4) Little equity finance available + few assets to secure
5) Some elements of good cost control – budgets, debt finance
finance team at meetings, strong FD 5) Some falling margins – documentaries +scripted
6) Good cashflow and low debt comedies + low on drama
Opportunities Threats
1) Increase overseas sales 1) Downward pressure on revenues from customers due
2) Further cost reduction – use supplier power, to economic pressures
finance training for directors, control 2) Continued recession in UK and overseas
3) Off peak programming 3) Not using latest technology – expensive to update e.g.
4) More in-house operations to gain control and HD/3D TV
reduce costs 4) Web TV/You tube
5) Use Activity Based Costing to improve product 5) Offensive programming
profitability analysis
PEST analysis
• There are lots of PEST issues in this pre-seen but they are
very broad and general, so look for more specific ones in
the unseen to improve this one.
PEST analysis
Threat of cuts to BBC license fees – which could impact available funds
Political
Difficult economic circumstances may make it hard to raise finance (although they do have a high
interest cover)
Economic The industry has Increasingly delayed payments which could affect cashflow in future
Falling ad revenues and funds for customers putting pressure on fees – average revenue per
hour has dropped
Rise in popularity of documentaries
Offensive programming could affect reputation – quality control is critical
Social
• Each force can be given a strength (e.g. High, Medium, Low). Where
all the forces are high, the profitability of the industry is low, and
divestment may be a good strategy.
• The lower the forces the more attractive the industry is.
• Companies may look at the areas where forces are high and develop
strategies which may lower these.
New Renting facilities, and availability of Already lots of competition in a market where
outsourcers enable start up at relatively low revenues are under pressure
Entrants cost and limited expertise
Medium
In-house production – Close substitute Customers want original, innovative
Substitu-
Acquired programmes - Close substitute programming – so always likely to be a market
tes if produced for fair price
Other forms of entertainment – internet, sport –
Medium more distant substitute
Strategic analysis – the rational model
S W FUTURE
Business Strategy
NOW Mission &
O T Generic strategies Objectives
Ansoff’s matrix
Method of growth
Most programmes in maturity phase Not their focus, although costs are
– but constant innovation needed to increasingly important
BCG/ keep up with trends
Cost
Product Life
leadership
Cycle
Margins on drama weak (but new) They have a broad focus across a
range of different types of
Hard to maintain margins on re- programme
Weaknesses commissioned works Focus
Ansoff’s Matrix
• Those you’ll find in my analysis over the page are just that ‘options’ not my
recommendations.
•Continued expansion
• “Off-peak” – This morning, chat shows, cookery • Commission programmes for
businesses/individuals – training video,
• Game shows, Talent shows promotional video, wedding videos, advertising
• Hire out individuals to rivals
New • Children’s programmes • Straight to internet
Product •Feature films
• Educational programming •Broadcast company
• Sport
Methods of Growth
Buy studio
New genre with expertise
Acquisition Overseas production company
Another production company to expand
Seems unlikely
Divest
Defining a business strategy
• On the following page you will find my recommended strategy for taking VYP
forward.
• Also remember that in the exam, you are NOT expected to define a way
forward like this – you MUST deal with the unseen issues and only those
issues
So that’s what I would do. I’m sure you’ll have your own views.
Just remember not to hold onto these too tightly in the exam
– you must primarily deal with the unseen issues!