Star Tv Case Study Essay Example for Free

Star Tv Case Study Essay STAR TV was using asiasat-1 satellite to beam their channel to Asian country. The grand strategy that has been using during this time was growth. The fact is most of the 2. 7 billion people living in the 38 countries extending from Egypt through India to Japan and from the Russian Far east to Indonesia do not have television sets and satellite dishes. Yet STAR TV has debuted 24-hour all sports television program, beaming the U. S Open Tennis tournament via satellite to these potential audiences in Asia. The five channels being offered were Sports, News, Music TV, Entertainment and special channel to learn mandarin. The subcategories of the grand strategy during this time that had been using by STAR TV were intensive/concentration. As we know, the intensive strategy is divided into three things which are Market penetration, Market Development and Product Development. As for market penetration, previously STAR TV was initially targeted to a select 5 percent of the population in major markets in Hong Kong, Taiwan, South Korea, Indonesia and India. These are the countries that they chose to being penetrated and to increase the market share. This segment of the potential audience is made up of English-speaking, well-educated, well-travelled and wealthy Asian. All channels were in English without subtitle/translation that made most of the targeted countries’ residences were not interested to subscribe it. Plus the Television was very difficult to get due to the price was considered expensive. Japan was not in targeted country due to Japan already had its own well-developed satellite TV network. On the other hand, Japanese were not interested in English because they didn’t speak/understand English at that moment. With the $300 million initial capital, some observers predicted that STAR TV would lose massive amount of money in getting the audiences. As for the market development of the subcategories, STAR TV introduced the satellite dishes which were new to audience. Customers were scared to buy because that was new to them. They didn’t really understand of its functions. STAR TV had come out with many campaigns and advertisements to audiences to make they know the functions well. However, when STAR TV sports channel offered world cup cricket championship in 1992, sales of satellite dishes were skyrocketed, particularly in areas that had once been British colonies. Everybody was interested in watching those channels in Asia. The subscribers were increased from time to time and they enjoyed not only sports but they also were getting music television (MTV), News channel, Entertainment (movies, drama, etc) and Mandarin learning channel. Initially STAR TV was making its money solely from advertising. They found that the profit unable to bear all the cost in order to maintain the good service level and product enhancement. They were start thinking and they found an idea on how to increase the income. They implemented pay channel concept as for the product development. They courageous to implement this concept were because their audiences were reaching a total number of 3. 75 million households in eight countries just after a year it began operating. The porter five forces involved during this previous time were suppliers, customers, and substitute product. The suppliers were not so many which had given less choice to Star TV to choose from. The price fight was almost zero. Most of them were providing the service in equal price quotation. Star TV had to follow whatever price that had been setup by suppliers. The suppliers were including production house, raw material, labor or manpower, components and other supply. Most of the customers were not a native English speaker. As for the target market, no more than educated people subscribed this Star TV at first when it was launched. However, Star TV found that sports can be watched without understand the English when the customers subscribing rating were increasing during world cup Cricket being beamed by Star TV. Star TV provided 24-hour sports channel and it had been a strong point for customer to chose compared to other channels. The threat of substitute product was typically impacting the industry through price competition. The competitors were such as NBC, ABN (Jow Dones), CNN,Nine Network Australia and local station. The local station could provide the live sports game for free while Star TV needs to pay to watch. Definitely customers chose local station because it is free. For a reason, the rating had been decreased due to this threat. Nevertheless, Star TV had it own advantage where the channel is beamed clearly without dotted screen like an aerial TV. Compared to other satellite TV, Star TV needed to lower the price to get more customers. In other words, Star TV could not run from price competition. GENERIC GRAND STRATEGY AND ITS SUBCATEGORIES CURRENTLY PURSUING AND THE PORTER 5 FORCES INVOLVED In 1993, News Corp, headed by media mogul Rupert Murdoch, purchased 64 percent of STAR TV and later bought the remaining shares for total cost of $825 million. The acquisition was undertaken because of supply-side as well as demand side impetus for standardization. The generic grand strategy used once Rupert Murdoch bought START is also growth. Murdoch was looking to have very big shares in the Asian market. He is the owner of News Corp seeing that with the purchase of STAR TV, he can beam his channels all over the Asia with the very efficient cost. For the subcategories we can say that STAR TV was using intensive/concentration as well. It is the same with subcategories earlier but now the method is different. It still involved Market Penetration, Market Development and Product Development. However, other than intensive/concentration, during this time STAR also using integration for its subcategories. STAR was using rearward method. It was considered as rearward because STAR has been in the same company with one of its suppliers which is News Corp once bought by Rupert Murdoch. News Corp hoped to use STAR TV to arbitrage its existing program sources including the 20th century Fox movies and television program library. FOX broadcasting hits were such as â€Å"The Simpsons†, BSkyB sports and news programming in the Asian market and vice versa. If successful, this strategy would cut the cost of programming for STAR TV to bear minimum associated with copying tapes and broadcasting them. As for Market Development and Market penetration, Murdoch reversed the mainly English strategy aimed at a select audience in favor of supplying regionally oriented languages, including Chinese and Hindi in less than a year. Rupert Murdoch came out with good initiative such as English movie with India subtitle for India region. For some movies he did the direct translation which was accepted by most of the customers. This initiative was made the star TV became more popular and the sales was increasingly rapidly. Rupert Murdoch saw that the resistance of English in Asian region as an advantage to created this initiative successfully. Murdoch first began to customize the satellite network’s music programs. The company found that in Taiwan, the audience prefers saccharine, Chinese love ballads, while Indian viewers are more drawn to dynamic music videos. Murdoch did the segmentation and research to get best result before he did any decision making for particular region. Therefore the northern beam of star’s satellite, which broadcast to Taiwan, Hong Kong and an estimated 30 million viewer in mainland China, carries mainly Chinese pop music. The southern beam aimed at India and Southeast Asia, focuses on Hindi and English Music. The customization has carried over to other types of programming as well. For example, Star has split the signal on its sports channel to provide more Crickets to Indians and more soccer, gymnastic and tracks to the Chinese. Movies channel are being geared up to broadcast in seven languages which are Mandarin, Hindi, English, Bahasa Indonesia, Tagalog, Cantonese and Japanese. Murdoch says his plan is to dominate four key program categories in sports, music, movie and general entertainment. By mid 1990s Star TV was reaching an estimated 54 million households. Even with this coverage the satellite network was experiencing major losses. Murdoch has determined that Star TV cannot bring sufficient revenues from advertising alone to make a significant profit. Instead it will be necessary to have viewers pay to watch some programs on the network. News Corp is attempting to develop systems that will allow company to collect viewer payments at a reasonable cost. This is what they called pay per view (PPV). This was one of the brilliant idea of Murdoch since it could increase the company profit. Viewers were willing to pay at a reasonable price for their favorite channel. Star TV now has access to the sophisticated AsiaSat-2 satellite as for the product developement, which is positioned to cover two third of the world population. This shows that Star TV has the biggest asset to be a strong pint to penetrate world market. Star TV is considered to be a large organization as it employs approximately 700 workers in Hong Kong Headquarter alone and further 2000 workers in other Asian regions. Size is quite directly related to structure. Robbins (1990) summarizes that complexity and formalization are positively related to size. Even that STAR operates in various locations and as organization, it is expected to grow, both the opportunity and need for work division and coordination (Pugh and Hickson, 1976). STAR is in elaboration-of-structure stage. The organization has reach large size and its two (2) revenue streams of subscriber fees and advertising had to be more balanced in order for STAR’s business to attain maturity. Nearly half of the world’s population resides within STAR’s footprint in Asia. In order to connect with these billions of potential viewers to maintain the momentum of expansion, STAR has made several strategic investments in pay-TV platforms throughout the region. These pay-TV platforms have become invaluable assets to STAR, strengthening our ability to deliver our content to consumers. In addition, organization has established a close working relationship with thousands of other platforms operators in Asia and beyond. STAR has also been expanding its reach beyond television broadcasting, by setting up some departments to offer its content via wireless and online-based services. Whether in front of the TV, surfing the web, or on the go with a mobile phone, viewers connect with STAR. Considering the recent innovations on STAR and its service programming, technology plays a definite role in the whole operations and competitiveness. Since bureaucratic organizations like STAR have strict rules, standards, hierarchy and legitimate authority, where the markets are characterized by prices, competition and exchange relationship, affecting traditions, shared values and beliefs, and trust, technology functions as determinant of pace and timing of tasks, providing information to managers on performance, and dictates standards. Looking on Woodward’s ideas, technology and structure of STAR fall on the Group II, which is the large batch and mass production. Considering the various regions in which they operate, large batch and mass production is the most practical way to manage technology. The structural characteristics of Woodward are the following: number of management levels (4), supervisor span of control (48), direct/indirect labor ration (4:1), manager/total personnel ratio (medium), worker’s skill level (low), formalized procedures (high), centralization (high), amount of verbal communication (low), amount of written communication (high), and overall structure (mechanistic). However, it is also recognized that STAR may invest on the process of maneuvering into Group III or continuous process production due to the emerging trends of service television industry and its clients. In application, the most important thing to think about in production and technology is the basic value of making good TV shows and marketing them to the targeted consumers – viewers across Asia, advertisers, and cable distributors. This is the most important consideration as far as technology and structure is considered. STAR can talk on new kinds of services, new technologies, and cable versus DSL versus satellite, but everything is futile not unless integrated in producing quality programming for viewers and advertisers alike. STAR acknowledges the need to take steps to move the whole industry forward and start shaping it to be the kind of industry where they will continue to be a player if not the leader in the next five or ten years. STAR is a bureaucratic organization involving Weber’s main characteristics of bureaucracy such as Rules and procedures, Specialization and division of labor, Hierarchy of authority, technically qualified personnel, Separate position and incumbent and written communications and records. Rational-legal authority is practiced in STAR where authority legitimated by virtue of supremacy of law and formal rules is used in conducting the organization. Basing on French and Raven power types, STAR uses legitimate power where formal standards, rules and laws are exercised. With the leadership and managerial expertise of Richard Li, the execution of STAR strategies is bounded on formal and legitimate source of power. Li’s power supported by clear corporate governance initiatives possesses outstanding ability to cope with uncertainty, position in information network, and control over physical and financial resources. Furthermore, modern control theories are â€Å"the mechanisms through which an organization can be managed so that it moves toward its objectives† (Ouchi 1979, p. 833). STAR reflected News Corp. s culture of taking risks and swift decision-making with minimal formal structure. It is bureaucratic because it emphasizes on achieving consistency and stability by following procedures and practices, high level of conformity and collaboration among employees, and focused efficiency and consistency are the key objectives. Arguably, this type of control may also affect employee motivation, working relationships with the management and p roductivity as there are other aspects of the organization that are overlooked when a legitimate source of power and control is operating all alone. Consideration of other power and control types or perhaps the integration of some of their inherent attributes is recommended. Culturally speaking, STAR projects the organizational culture of News Corp. by serving as powerful source of control and achieves Behavioral Consistency through a system of Shared Values and Meaning both in internal and external perspectives including the needs of the environment and strategic focus. A dominant level of culture is exemplified by a significant number of members of the organization. Core values are similarly expressed y the dominant culture, which is providing quality service programming to viewers while maintaining market leadership and organizational productivity. It could also be assumed that subcultures occur in local or regional offices due to national, cultural, and individual diversity. Adaptability culture is seen on STAR. STAR has penetrated deeply into key markets with mass appeal general entertainment channels, produced locally in lo cal languages, by local talent. These channels help organization achieve a genuine resonance with audiences, and uniquely position STAR as the leading media company in Asia. For example, Murdoch could hardly have been happier with the successes of â€Å"Correlate† in India and Xing Kong in China, STAR’s two most important markets. Asian companies that were setting up satellite broadcast channels aroused fewer political and cultural concerns in their target markets and often had closer connections with local governments. Foreign broadcasters valued them as partners for this reason as well as because of the access that they often afforded to local programming. Further, STAR is also uses mission culture type as noted on its organization’s purpose and on the attainment of goals, managers share organization’s goals and future direction, rewards on high performance, and environmental relativity. As Asias largest television network watched by approximately 100 million viewers every day, STARs reach is unmatched. The breadth and scale of operations across Asia position STAR uniquely as a powerful communication vehicle that can be leveraged for the good of the communities it reaches. Inherently bureaucratic, there is a need for STAR’s management to consider creativity and individual initiative as well as behaviorally-based mechanisms in creating standardized corporate laws and policies. The satellite provides STAR TV with 30 or more new channels of digital television. Moreover the digitalization process allows STAR TV to simultaneously offer the same program in several different languages, thus supporting the network’s regional focus. With the increased technology, STAR has successfully entered the Japan Market and offering a 24-hours Japanese language channel. The company plans to offer six more channels in the near future. STAR TV faces growing competition from others attempting to launch various satellite networks in the area such as NBC, ABN (Dow Jones), CNN and Nine Network Australia. As STAR TV attempts to target its program more regionally it will be competing with regional broadcasters. Murdoch views the situations as an investment. So far STAR TV has the highest market penetration of any satellite network. To be successful it will need to gain additional share in various market. These are certain porter 5 forces that involved: Risk of New Competitors One of the primary advantages of the company is their strong relationship with their customers. As of January 1993, the company reached its 4. 5 million people out of 11. 3 million households in Asia (Ghemawat 2005). The company is using the specialized input by using different important and new technologies that will help them to improve their services. In Hong Kong, the government requires any companies that are interested in doing their broadcasting or news program in Asia, must be controlled locally (Ghemawat 2005). This is due to the fact that they are going to handle the different information about the current events of the country (Ghemawat 2005). In terms of the socio-cultural aspect, in China, Chinese people prefer to watch local films and TV programs because they are not that good in understanding as well as speaking English language. Rivalry among Established Firms The company had been able to catch the attention of their customers as well as gain their loyalty by implementing their strategies of thinking local and acting global. It enables the company to create different programs that are suitable for the taste of their local viewers. Bargaining Powers of Suppliers In general, the products of the company have few substitutes. In addition to that, those products are considered as significant to the buyers such as the process of purchasing exclusive TV programs and movies. Above all, the suppliers of the company have the ability to vertically incorporate forward for them to compete with the buyers of the company. On the other hand, the buyers don’t have ability to integrate backward for them to supply their own demand. Bargaining Power of Buyers The buyers, end-users or distributor and the buyers of the company can switch suppliers at low cost. The buyers can easily and vertically integrate for them to compete with the suppliers. Threat of Substitute Products In the industry of entertainment and media, the competitive threat of the substitute product increases as it comes closer to fulfill a similar function or feature towards the original product. The availability of a substitute product can create a price limits on the original product. But it doesn’t directly hit the company due to the fact that it has its own production of their TV programs that help them to control the features and functions of their media products, in order to meet the demands of the customers. FACTORS SHOULD MURDOCH CONSIDER IN MAKING AN ENVIRONMENTAL ASSESSEMENT AND TYPES OF STRATEGY FOR USE AT BEGINNING OF TWENTY FIRST CENTURY Identifying the environmental factors inherent to the operations of STAR regardless of geographic locations or specified regions is done through PESTLE analysis: Political Asia was not an easy neighborhood where anyone can do business. On the case of STAR, new government regulations restricting foreign ownership of news channels were passed in India, and more work was needed in order to make STAR’s China venture profitable. In all its markets, STAR maintained close relationships with government officials and understood local operating requirements, both explicit and unwritten. Media, particularly TV broadcasting, were salient politically because of their potential influence on public opinion and their importance to local artists. They therefore remained subject, around the world, to extensive state control – a reality that STAR managed carefully. Economic The risk of the occurrence global economic downturn brought about by dynamic competition among companies that lead to closing down and the loss of jobs may have a direct impact on STAR strategy of dominating the world’s television entertainment market. Also, there are huge differences in terms of the GDP per capita earnings among the countries. This situation should make STAR consider about its positioning strategies in certain countries (Barlett and Ghoshal, 1989). Social The varying demands of audiences in relation to culture is a primary determinant of organizational performance provided that environment is being considered. Not only must the cultural differences be recognized, but there is also skill in knowing how to organize the programming; for example, when to insert the commercial breaks. Television ventures can be killed by managers who do not know programming, especially if they believe ‘good programming’ is what they like personally. As case provided, India, with its British colonial legacy, was somewhat easier in programming perspective in contrast to Taiwan where STAR experienced resistance to English content. As it was still in an embryonic stage, India’s television market was largely unregulated, at least compared with other Asian markets. India had only two television channels in 1991, both operated by government broadcaster Doordashan. STAR later formed a joint venture with native Indian media conglomerate Zee Telefilms. Under the agreement STAR was precluded from developing Hindi programming, and instead was limited to broadcasting exclusively English-language content. For example, a quiz show would be successful because India is a nation of very intelligent quizzers. In general, the rising middle to upper-middle class households in certain countries requires a strategy formulation that will not mismatch to the potential for consumer market. Technological The innovations in terms of STAR’s technology are contributory seeing that technological advancements are among the primary features of competitive advantage of STAR. Investing on new state-of-the-art programming facilities and equipment is essential in the business strategy to be aligned to any revolutionary technological changes affecting the television entertainment industry. Legal STAR’s awareness of any changes in terms of government policies and legislations within the operating countries is vital. Constant large-scale legal evaluation facilitates opportunity for expansion and minimizes legal difficulties. Environmental By Duncan theory, an unstable environment combined with low levels of complexity leads to moderate to high uncertainty. In this environment, there are only few elements, but each element changes in an unpredictable manner. As there is a heightened need to process information and respond to it, management is decentralized. Teamwork is emphasized in order to facilitate communication. There is extensive use of boundary spanners and intensive coordination devices to enable the organization to respond to environment pressures. However, production processes are more stable and tend towards being mechanistic. The PESTLE analysis conducted above identifies the environmental factors affecting STAR’s operations in all the regions in which they do business. The identified factors certainly create influences and at the same time relevant to its functions. STAR’s niche market is technologically motivated, thus, the role of technological factors in the environment (e. g. innovations) is important while considering the varying needs of their diversified clientele. Indeed, not all environments are the same as they vary in various degrees of uncertainty. On the case of STAR, it is a complex one. The following indicates the degree of environmental uncertainty. Decentralized with an emphasis on teamwork Constant environment monitoring by boundary spanners High levels of coordination and integration in order to promote imitation and innovation Production facilities often mechanistic Burns and Stalker (1961) distinguished organic and mechanistic organizations. They believed that the most effective structure is one that adjusts to the requirements of the environment, which means using a mechanistic design in a stable, certain environment and an organic form in a turbulent environment. Large firms may even have some parts which are organic and others which are mechanistic. For instance, Operations Engineering department may apply largely mechanistic practice in terms of job functions. The mechanical system design as evident on the structure of STAR is stable and efficiently performs as seen on its double-digit performance and growth in revenue and operating income for four (4) consecutive years. Furthermore, STAR’s departmental differentiation adopted by regional managers and staff explicitly addresses the needs of the diverse environment. There is a lesser degree of call for change not on its structural level but on the ability of the management to effectively manage and response on the growing needs of clients and international competition in the niche market. To do such, STAR should establish international linkages and control environmental domain as prime strategies for controlling external environments. STAR also needs to consider on SWOT analysis in future planning. The SWOT of STAR TV that can be concluded as per below: Strength Worldwide presence Strong in the prime time slot Association with big names Good contents Effective packaging Weaknesses Not much strong in non prime time slot, need concentrate on this Excessively dependant on K series soaps. This may harm in long term. Opportunities Lack of strong challengers Strong network channels for promotion. Threats Popular series on maturity phase and about to expire New emerging channels like NDTV imagine New technology HDTV, 3D TV The grand strategy that STAR TV needs to use in planning the best for the beginning of the 21st century is growth. STAR must concentrate on R D which is fall under product development (concentration). The offering channels should be updated based on the current technology. STAR should come out with interactive channel in the future. The Interactive Channel delivered shopping and games as well as regularly updated news, weather, and sports. Viewers were able to make airline reservations, sample music CDs, and even hear an update for their favorite soap opera. Through the Interactive Channels Teachers Assistance Program, viewers had access to information such as school lunches, homework assignments, and student projects. This channel has many benefits and makes life easier. As for now, people definitely will choose SPEED product where customer can do things in short period of time. On the other hand, STAR should come out with more channels in non prime time. So the subscribers are stick to the STAR channels without change to another channel which is impacting the rating. Plus, the box office movies should be from worldwide not focuses only from Europe countries. Other than concentration on channel enhancement, Since STAR owned the big satellite; STAR should come out with the great GPS system device like PAPAGO, GARMIN and etc. STAR also needs to come out with application for android and iphone so that people can watch STAR TV anytime and anywhere. People are now having phone with them 24-hour a day with internet. These are my two cents thought that might increase the profitability of the company. The conclusion, STAR and technology must move simultaneously as a strategy to growth. Last but not least, I was thinking recently that life revolves around making plans, whether we are conscious of it or not Good plans shape good decisions. That is why good planning helps to make elusive dreams come true.