Blue Ocean Thinking Framework
Hollywood Film Industry is one of the leading world movie producers that has been in existence since the twentieth century. Over the recent past, the industry has experienced the challenges associated with technological advancements that have reduced its purchases and sales volume. Critical success factors refer to the ones that do not only provide organisations with cost effective advantages, but also display some level of value among the target customers.
Johnson, Whittington, and Scholes (2011) assert that effective employment of critical success factors helps organisations succeed in the marketing environment since they enable organisations to identify consumer needs. Remarkably, organisations that use critical success factors usually identify the needs and values of potential clients and turn them into tangible products or services using cost effective strategies. Fundamentally, the Blue Ocean thinking is a framework that focuses on utility of market gaps or spaces in the marketing environment, which has minimal competition (Johnson, Whittington, & Scholes 2011). As opposed to the Red Ocean Competition, where the rivalry is stiff and industries have clear definitions, the Blue Ocean thinking framework demonstrates minimal competition and utilises unexploited market spaces.
The Blue Ocean thinking framework encourages entrepreneurs to identify unexploited market spaces and utilise them effectively. As a result, innovative marketers create new opportunities based on spaces or gaps, which were initially unexploited (Orcullo 2008). In case of Hollywood, an effective Blue Ocean thinking framework is essential to salvage the industry from the challenges related to declining sales and decreasing profit margins.
The industry requires a system that facilitates effective identification of market gaps, so that it can address the changing customer needs and sustain the life cycle of the movie or film industry. Notably, unwise use of critical success factors can act as a disadvantage to an organisation, but wise use results in some benefits. Therefore, Hollywood needs to put in certain strategy in applying critical success factors so that it can result in some advantage.
Competition among television, gaming, and film industries is intense and challenging for all the businesses are providers of entertainment services and target at a similar consumer segment. According to Johnson, Whittington and Scholes (2011), the Red Ocean Competition is a type of framework that is associated with great losses and intense competition of industries.
Conversely, it is significant for the industries, such as Hollywood, to use the Blue Ocean thinking framework so that they can minimise competition and losses through the identification of market gaps and consumer needs. Recently, the levels of revenues earned by television and gaming industries have risen as opposed to the declining sales of Hollywood. The contrast demonstrated by the sales levels of Hollywood, gaming, and television industries calls for a strategic application of the Blue Ocean thinking framework and critical success factors in Hollywood.
The Blue Ocean thinking framework helps organisations to minimise losses and competition because it encourages identification of spaces and opportunities, which are not utilised by other organisations in the marketing environment. The ability of reducing competition using the Blue Ocean thinking framework is very important, and organisations cannot underscore the application of the framework in their move towards success.
Through the identification of opportunities, businesses increase their revenues and sales volume, identify the opportunities, and turn them into products that customers expect in the market (Orcullo 2008). For the effective success and development of Hollywood, it is important to combine the application of strategies, such as the Blue Ocean thinking framework and critical success factors. A combination of the two strategies is elementary in the identification of customer needs and conversion of these needs into products using a cost-effective budget, which does not strain the financial state of the industry.
The Industry Lifecycle
Hollywood has been in existence since the 20th century as one of the leading producers of films and movies in the United States and globally. However, the recent technological advancements and increasing competition, which has been compounded by the shifting consumer trends, have led to a serious decline in the profit margins of the industry. The emergence of new film industries in China, Russia, and Japan has challenged the monopoly and dominance in the film industry and entertainment market (Orcullo 2008).
In addition, the introduction of several channels by television service providers posed a great challenge in the film industry, as the majority of potential consumers become able to watch some of their favourite programs on televisions instead of purchasing movies. Various film companies preferred streaming their movies through online companies like Netflix. As a result, the sales volume of the industry reduced drastically as reflected by a corresponding decrease in the number of tickets sold in the United States.
The challenges transpired during the peak period of some giant producers like Warner Bros, 20th Century Fox, and New Line Cinema, which started amplifying the prices of their actors and directors in a manner that strained their working budgets. The decline has seen some film producing companies shift from the use of mainstream directors to hiring of first time directors, who would charge less in order to minimise expenses and reduce losses. Currently, China, Russia, Japan, and Canadian based companies like the Lions Gate are enjoying high profit margins and are considered to be the major competitors of the industry (Barnes 2011). Therefore, it is evident that Hollywood requires effective marketing strategies to salvage itself from the stagnation and impending state of decline.
Macro Environmental Analysis (PESTLE) of Hollywood Film Industry
The Link between Critical Success Factors and PESTLE
The marketing environment has micro- and macro-environments. The macro-environment includes the factors that are beyond control and manipulation of organisations. According to Orcullo (2008), political, economic, socio-cultural, technological, legal, and environmental factors are some that dictate the macro-environment of marketing. Hollywood cannot underscore these factors since they have an extensive effect on its overall performance.
The political environment of a country is very instrumental in determining the trends and dynamics of potential consumers, whereas the economic state of the nation is a factor that affects the purchasing power and buying habits of consumers. Furthermore, products offered by an organisation need to be in line with socio-cultural orientations of the target society because any violation of their values and beliefs leads to a decline in sales volume and reduced demand for the products.
As a result, it is important for industries like Hollywood to ensure that its production and marketing strategies are in tandem with technological advancements.The marketing environment is significant in the study of the relationship between critical success factors and PESTLE. It is important for Hollywood to understand that critical success factors help them identify client needs and convert them into the products that are highly demanded in the market.
Through a good research on the prevailing market conditions in the macro- and micro-environment, the industry will be in a good position to understand consumer behaviours, their purchasing power, and their trends. With a good understanding on consumer behaviours, their purchasing power, and market trends, the industry will deliver films that meet the expectations of clients in terms of quality, price, and demography (Dursun & Ramesh 2010). Therefore, critical success factors are very important if their applications are in line with an extensive study of PESTLE.
Evaluation of Lions Gate and Business Level Strategies
Strategic Choices Framework
The strategic choice framework has three important factors, which are business strategy, strategic directions, and strategy methods (Johnson, Whittington, & Scholes 2009). Factors of the strategic choice framework dictate how an organisation undertakes its activities in the marketing environment because they are key ingredients in the success of any organisation.
Business strategy relates to competitive decisions of the industry, such as the decision to apply the Blue Ocean thinking framework or the Red Ocean Competition Strategy. The strategy relates to how an organisation positions itself in the market in relation to its competitors and the target customers. Using the business strategy, an industry is able to position itself strategically among its competitors. Moreover, a good understanding of the business strategy helps an organisation identify existing gaps that other competing firms have failed to exploit and thus use the gaps to its advantage.
Strategic direction is another choice that the strategic choice framework offers to organisations regarding the production and sale of products to achieve success and increase their sales volume. Johnson, Whittington, and Scholes (2009) argue that the strategy makes organisations understand the importance of diversification or using a certain product line to achieve their core objectives for effective growth and development.
In the case of the Canadian based film producing company, Lions Gate, it has identified the significance of operating in a solitary manner to satisfy clients’ requirements through the production of films and the use of television units. Therefore, it is clear that effective application of strategic direction helps a firm to identify its customer segment and effectively meet customer needs (Johnson, Whittington, & Scholes 2009). Diversifications, introduction of new products, or modifications of the existing products are some of the decisions that organisations make using the provisions of the strategic direction.
Strategic method is the third aspect of the strategic choice framework, which explains the importance of choosing the right technique in achieving success in any bussiness. The strategy highlights the importance of using a good method that has a advantage over competitors and helps the industry succeed and increase its market share. The Lions Gate Film Company has realised that the best method to achieve success would be through the amalgamation of its business with television channel companies since the majority of its customers prefered to watch TV (Barnes 2011). As a result, the company achieved success and increased purchases of its films and movies. Hence, the success of the Lions Gate Film Company elucidates the relevance of choosing the appropriate method or strategy in the acquisition of market share and sale of products by organisations.
Barnes, B 2011, Lionsgate and Tyler Perry Said to Be in Cable Venture, Web.
Dursun, D & Ramesh, S 2010, ‘Predicting the Financial Success of Hollywood Movies Using an Information Fusion Approach’, Journal of Industrial Engineering, vol. 21, no. 1, pp. 30-37.
Johnson, G, Whittington, R, & Scholes, K, 2009, Exploring strategy (9th ed.), Pearson, New York.
Johnson, G, Whittington, R, & Scholes, K 2011, Fundamentals of Strategy (2nd ed.), Prentice Hall, London.
Orcullo, N 2008, Fundamentals of Strategic Management, Rex Bookstore, Inc, New York.