Executive Summary
Pay Television (TV) is an emerging medium that continues to develop in Australia. The services provided by Pay TV are considered as superior to free TV, which is limited. In addition, the availability of Pay TV provides a better option to households that seek to upgrade their viewing experience. Despite the price tag of Pay TV, the Australian consumers have recognised its value. Hence setting up another Pay TV network appears to be a good venture. There are some notable players that have established their presence in the market. Macas World plans to implement a different approach to reinvent Pay TV.
The Pay TV services that Macas World proposes are mainly focused on movies. Since the Company is licensed to distribute DVDs and other movie platforms, then such idea is critical. The Company attempts to expand the business by injecting all-movies channel as a Pay TV alternative. Macas World will create a market niche with a portion of the Pay TV market that prefers movies instead of the other options. The funds for the project will mostly be used for permits, technology, and marketing.
The Broadcasting Industry
Livingston (1994) stated that public communication has driven the creation of colonial governments during the pre Commonwealth era. Forms of communication have also improved through the years. Wireless communication has developed in the country. But because of proliferation and complaints, the Minister of Communication has intervened. The agency worked to ensure adequacy of wireless broadcasting.
The Australian government has established control in wireless forms of broadcasting through the Wireless Telegraphy Act of 1905. Day (1994), however, argues that the frameworks of this law are incomprehensible. But the government asserts that the law discourages monopoly in the industry. The Australian Government maintains that intervention is needed to promote economic viability. On the other hand, the government clarifies that these policies are transparent and well structured. Hilliard (1985) contends that the policies are designed to provide uniqueness to broadcasters.
Changes and Amendments
The amendments for the Broadcasting Services Act are provided in three phases. The first change took effect last February 2007, the second part will be applied upon Proclamation, and the final stage is scheduled for implementation on January 2009. There are several elements associated with the proposed changes. The purpose of the change is to boost the industry and make it more competitive (Australian Government, 2006).
The impact of the amendment in the Broadcast industry is focused on the ownership and content. As discussed by Brown and Cave (1992), broadcast in Australia has been historically regulated. There are rules when it comes to ownership and methods of financing. Despite these regulations, some owners managed to control other media outlets. As expected the role of the government is to control any signs of monopoly. Aside from ownership restrictions, there are rules on entry in the industry. Individuals are provided with strict guidelines before planning to penetrate industry.
The amendments provided in the new legislation are important. This will define the role of the government and specify the responsibilities of broadcast firms. There have remarks made over the laxity of regulations when it comes to ownership (Manning, 2006). But the Australian government wants to emphasise that laws are available to close the gaps. These regulations are motivated by several aspects. Although the government is more focused on the economic views, it is undeniable that there are social influences in these regulations.
The Australian government has been efficient in zeroing on certain aspects instead of focusing on the entire law. Through this measure, the process of regulating the industry will be effectively manifested. Some policies have failed because the focused of these regulations are general. Specific changes are necessary to gradually change the schemes. After these modifications, the government can focus on other aspects of the law. Overall, the impact of these changes to the plans of the Company is crucial. But the changes also provide opportunities for Macas World to establish the Pay TV.
The Company
The Company is a small-sized firm that mainly operates as a distributor movie DVDs. Macas World also provides rental services for a wide-range of DVD copies. Since Macas World is limited to these activities, the growth of the firm has become dependent to consumer interest on movies. To further expand the Company, Macas World devised a strategy that will fully use the DVDs in the inventory. The scheme will allow households to save since DVD players are not required because of all-movies Pay TV.
The Service
Macas World intends to use the DVDs in the firm’s inventories as tool in delivering a new Pay TV experience. The idea is to set up a Pay TV service that is focused on movies. The initial plan is to provide 10 channels that cater to various movie genres. The limited channel is established as a test and gauge on the reaction of the market. As the service gains market following, expansion of the channels will be provided. Like other Pay TV services, movies are delivered with less commercials and advertisements. Macas World, however, will consider promotional placements in limited forms.
The Movies
As stated, Macas World plans to establish 10 channels all playing movies and other related videos. There are premium channels which show movies that are still being shown at cinemas. There is also classic channel which delivers movies from the past. Macas World will also include local movies to promote the industry and improve consumer awareness. A channel for documentary will be allotted for educational purposes. Moreover, Macas World will show the usual movie genres such as action, sci-fi, suspense, and comedy. For some additional services, all-movie Pay TV subscribers can access movies of their preference. A special channel is provided serve as exclusive for each household.
Legal Issues
The Company understands that there are several requirements that need to be obtained before proceeding with the service provision. Broadcasting rights is primarily the most important legal aspect involved in this endeavour. Movie licenses are also vital since the Company is only allowed to distribute movies and provide limited public showing. In addition, the issue of piracy will arise as the operations commence. Based on the account earlier, the Australian Broadcast industry is highly regulated by authorities.
Industry Analysis
Porter (1980) introduced the concept of five elements that seeks to analyze the competition in the industry. The threat of new entrants involves market openness to new players. There are few operators in the market that has gained success. The industry remains controlled by limited players because of stiff regulation and high cost. The substitute to Pay TV is considered as the strongest indicator of competition. Free TV is still preferred by more than 90% of the population. In addition, the presence of the Internet has significantly reduced the market for Pay TV.
The bargaining power of the consumers relates to buying capacity and preference. Consumers have been meticulous when choosing for Pay TV services. The issue of value for money is often emphasized in this process. The bargaining power of the suppliers highlights the ability of suppliers to meet the demand of clients. In this service, the availability of supply is secured because Macas World distributes DVDs. In summary, competition is provided by free TV, the Internet, and industry luminaries such as Austar, Foxtel, and Optus.
Value Chain
Value adding is an important process that improves the products and services of the Company. The additional value provided to the services is important in controlling the market. There are two value adding activities that the Company provides to up the quality of services. The first involves the provision of perks and privileges to clients. Increasing the value for money is an important aspect that the Company attempts to provide. Aside from the quality services, loyal customers will be accorded with discounts and other promotional gifts. This important is building that trust with clients.
The other value adding activity performed by Company is customer services. Other Pay TV providers consider the initial transaction as the final engagement between customers and the firms. But the Company believes that continuous communication is a key to long-term success. The Company will be in constant connection with customers to ensure that the high quality movie viewing is experienced. In addition, the Company will seek for comments and suggestions to further enhance service quality.
Marketing Aspect
Marketing is a major activity that drives firms to success. Appropriate marketing strategies are critical in bringing in consumers. There are several methods used by companies to enhance marketing initiatives. Some firms have opted traditional print and broadcast strategies. These companies have been hiring creative minds to further expand the scope of these conventional methods. In addition, firms have decided to directly reach the consumers through various promotional activities and road shows.
Marketing audit is considered as a vital component of marketing processes. Brownlie (1993) stated that it is the initial stage in undertaking managerial initiatives in marketing. The focal point of the marketing audit is its design which ultimately determines the process in performing such method. Marketing audit is a systematic and comprehensive approach that evaluates the marketing initiatives of the company. This is manifested to identify possible problems in the organization, personnel, and marketing activities.
Market Targeting and Segmentation
Positioning refers to the perceptions developed in the minds of the target market. The process entails the creation of image of the brand and the entire firm (Trout and Rivkin, 1996). Market positioning is purely procedural and relies on the completion of stages before making further improvements. The initial stage involves the definition of the firms’ target market. The main target of the Company is the existent clients that Macas World maintains. These individuals are used to rent DVDs and other similar products.
Aside from the specific targets, there are specific general clients that the Company will try to penetrate. The first include individuals in the 30-40 years age bracket. Among the current clients of the firm, this group is considered as the majority. The interest of this group to movies is high such that having an exclusive all-movie Pay TV provider is desired. Another group of individuals that can be targeted belong to the 50-75 years age bracket. Most of these individuals are retired and prefers quality movie viewing.
Marketing Action Plan
The marketing group will be the department in-charge with the planning and implementation of the plan. The marketing group identifies the specific roles that other groups will assume to avoid confusions. Most of the tasks will be carried out the marketing group along with the approval of minor change that is required in the plan. The marketing group will be further divided into smaller teams and provided with responsibilities. This is a basic assumption because there are tendencies that other departments intervene, which in effect will cause disharmony and will eventually dampen the efforts in the marketing plan.
Combining the different aspects associated to marketing is vital to the company. The development of marketing plan entails strategies that are design to ensure consistency in the quality of performance. The first aspect that has to be considered is the price of the product. Despite the high quality of inputs used by the company, the price of the services has been competitive. The company has to devise better strategies to reach the lower echelon of the market. This means increasing demand and extending the market beyond the current targets.
Marketing Strategies
The different aspects associated to marketing are vital to the company. The development of marketing mix entails strategies that are design to ensure consistency in the quality of performance. The price of the service is a common aspect that needs to be assessed. Since Macas World is starting on a selected market, pricing is crucial. There are three service levels that the Company provides. The first starts at $12 and the service provide 16 channels all playing quality movies. The premium service allows the clients to choose their movies and charged as $14.5. The special service will cost a customer $17 since 3 channels are added and new movie options are offered.
Promotional activities have to continue using all the options available. Television is an effective media and providing print advertisements is highly recommended. Most important, the company has to focus its promotional initiatives on the extensive use of the Internet. Aside from being cost-effective, the strategy has worked for most firms in the industry. Online advertising is important because the scope that the Internet covers is wide. Such market coverage is needed to fully introduce all-movie Pay TV to the public.
Aside from traditional advertising, the Company will bring the service directly to the market. The initial advertising activities will involve direct contact with current clients. Traditional advertising materials such as flyers and leaflets will be distributed. Moreover, the Company will provide demonstration in stores. The goal of this initiative is to provide a first hand experience to clients. This will continue until permits are secured and roll out is possible. The demonstration will allow clients to surf the channels are observe the quality of movies.
Operations Aspect
Operations management is defined as the design, operation, and improvement of the system that creates and delivers firms’ products and service combinations. Moreover, it deals with the proper allocation of resources and the strategic acquisition of technology. Some managers contend that the external environment is too influential to be ignored. Operations management also includes the proper consideration of the outside entities as contributing agent that will eventually affect the performance of the firm. The external environment consists of the customers and other economic indicators.
The analysis of operations management is critical in the success of firms. In fact, some practitioners have instituted organizations that specifically tackle issues concerning operations management. There are strategies implemented to ensure that quality is maintained. In addition, operations management provided an avenue for the company to continually grow. The Company recognizes the importance of operations as catalyst for efficiency. Processes and systems are valuable to sustain success and eliminate failure.
Focus on Quality
Quality is an aspect that is highly maintain in the Company. The Company knows that there is a need to attain quality results in all the process of production (Deming, 1986). The technical process pertains to the emphasis of quality in the different stages of operations. The rationale behind this strategy is that the continuous inclusion of quality in the process will result to highly competitive and superior services. The social process involves communication with clients which can provide honest feedback with regards to the quality of the services.
Macas World ensures that the services delivered are managed by various personnel. The movies for viewing are selected based on the preference of the clients. Before households are provided with all movie Pay TV connection, forms are accorded for general preference on movies. Aside from the movies, the firm will conduct regular checks on connections. It is vital for Macas World to ensure that the lines are capable of bringing the service to the clients. Macas World will also engage in the development of the services. These include enhancement and provision of other services.
Inventory System
Inventory handling is one of the most important aspects that require attention. Among the inventory schemes used, just-in-time inventory is the most preferred. This method has been used by the biggest firms and has enjoyed success. This will be applied the DVDs that is in the possession of the company. The goal is to dispose the old resources through selling and other profitable methods. The same is implemented in the facilities owned by the Company. Obsolete equipment are properly segregated to decrease handling costs
Strategic Planning
The role of planning in the Company is clearly defined. Before any activity is pushed, the personnel undergo massive planning stages. Planning is done because uncertainties in the market are abundant. The technical process of realising strategic management is divided into two areas. The first phase regard planning as course for intended strategy and the patterned actions are the realised strategies. The second part involves implementation and possible changes on the activities maintained.
Product development has to produce a master plan. The master plan will detail the manner in which the available resources will be used to make the project succeed (Hormozi, et al., 2000). The primary attributes that has to be promoted in this stage are aggressiveness. In addition, the components of the project have to be defined. The objectives, tasks, and resources have to be managed effectively. Enhancing the morale of the individuals tasked to perform the project through tem-building will boost the changes of success.
Technicalities
Some of the movies will be shown using Dolby channel surround sound. There also Pay-Per-View options for current movies and other classic movies. This option is available for all Pay TV services provided by the company. Interactive TV is also provided to make movies more pleasing to the viewers. For safety purposes, the Macas World will use a reliable encryption instruments. This will prevent piracy and other forms of illegal copying. Since the Company has yet to maintain a satellite, Macas World will seek for partnerships with existing Pay TV players in the market.
The Company will include technologies such as Component Video, Coaxial digital audio outputs, and S-Video. The subscribers are provided with two satellites where one serves as the functional device and the other for support. The Macas remote is similar to the remote controls used by other Pay TV providers. The remote is powered by long-lasting rechargeable batteries and is fire and water proof.
Human Resource Management
The primary task of Human Resources Management is to seek for competent applicants that will contribute and make a difference once hired (Miller, 1987). HRM practitioners identify suitable training schemes that are designed to improve the skills and competency of the employees. HRM revolves on the creation of programs that will keep the employees loyal and productive. This task has been expanded as HRM practitioners have been accorded the capacity to settle employee related disputes.
Financial Aspect
Financing is considered as the life of firms. Without financial capital, it is difficult to attain the goals of the company. There are several aspects that need to be considered in this section. Funding source is an aspect that requires analysis and meticulous study. The financial projections are also important. Financial success is valuable because it is the most tangible evidence of success. Assets and liabilities are also financial elements that are included in the projections. The same go with cash inflow and the sales as the distribution of Pay TV progresses.
Budgetary Requirements
The exact financial requirement for the project is estimated at $3 to $5 million. The breakdown of the cost includes 80% for the operations and 20% for other activities. From the 80%, the Company will acquire technologies and other equipment needed to power the Pay TV service. The budget will also cover expenses for permits and other legal obligations. The other part of the fund will be used for marketing and personnel. As the operations continue, the cost breakdown will become even for operations and other activities.
Assets are valued as fair market. Depreciation method used for the assets is straight line. The portion of the assets includes patents and materials. The cash is used for short-term financing and requirements for materials. The firm will also use the cash for marketing initiatives. Contingency is provided to fund some unexpected expenses. This is important to ensure that the business is operating even in uncertain periods.
Profit and Loss
The revenue of the Company will mainly come from the subscription for the all-movie Pay TV. Profit is gained when the earnings from activities is more than the expenses. Based on the pricing scheme, subscribers will be charged at $12 minimum per month. Other services will cost subscribers $14.5 for premium and $17 for special services. To sustain the operations, the Company needs to be profitable in the shortest possible time. When this is achieved, then future developments will follow.
The cost of the Company will come from two sources: administrative expenses and operations expense. The administrative expense will mainly cover employee compensation, legal fess, utilities, marketing and promotions, and other miscellaneous expenses. The operations cost will include any expense that is incurred by the operations. These expenditures are mostly related to materials, equipment, machineries, delivery, and maintenance. The Company projects that 67% of the expense will be incurred by the operations and 33% administrative.
Break Even Analysis
The Company seeks to deliver the service to the market after 1.5 years of operations. As planned, Macas World will attempt to cater to 100,000 households within the market. Of the target figure, half is expected to be provided with the basic all-movie Pay TV service. At least 35,000 clients are expected to subscribe the premium service and the rest will be provided with the special service. The goal of the Company is to increase the subscription base by 20% annually during the next five years to sustain the operations.
Cash flow is another important aspect that needs to be considered. In the initial year, the company expects cash inflow of $0. This is expected because the product has yet to reach the market. By the second year, cash inflow is valued at $1,500,000. The inflow of cash will pick up in the third year since $3, 500,000 is projected to be returning to the company. In terms of borrowings, the Company will seek loans when opportunity for short-term financing occurs. Improving the firm’s creditworthiness is another important element.
Financial Reporting
Preventing failures in reporting financial information requires the development of quality financial reporting systems (Burns, 2006). Effective financial reporting system allows stakeholders to accurately evaluate the financial ratios and other information relevant to decision-making. Also, effective financial reporting clearly shows the value of the company. Even without the usual promotional activities, firms can easily invite investments through the precise figures presented in the financial report. The Company will implement accounting procedures based on prevailing legal requirements.
The systems used are critical because it serves as the framework used for the preparation. Also, the individuals taking part of the process has to develop some sense of honesty, responsibility, transparency, and accountability. The principles and guidelines have to be constantly evaluated and reviewed to determine their conformity to the changing demands of stakeholders. Institutions have to contribute their share to ensure that accounting practises remain basic and financial reporting is classified as accurate in form and in substance.
Project Implementation and Evaluation
The product life cycle is characterised as the process of creating concepts, development of the ideas to finished products, and terminate the products. Project managers usually divide the process into stages so that projects are managed with efficiency. The project reaches a point of maturity as it is exposed to several stages of production. The cycle includes the point of inception until the project is terminated. Each phase independently functions and overlapping is observed as a rare situation.
Project Development
The initial stage involves the development of service. This is the start that is manifested by the product development team. The team considers several aspects in developing all-movie. Competition and financial capacity are the primary considerations. The returns and possible sustainable growth of the product are also viewed meticulously. The development takes time and will require 4-6 months. The specified time is needed to properly evaluate the opportunities and threats in the market.
Production Process
The production stage has four phases. The first segment includes buying of materials, machineries, and equipment. The second part of the production seeks to develop the service schemes. The initial service will be tested and demonstrated to the public. After quality checks, evaluations, and suggestions, the Company will go to the final phase. This stage will take 8-12 months of the firm’s schedule.
Distribution and Enhancements
The initial delivery process will be carried over the Company and retail stores. The distribution will first focus of paper stores before moving to specific clients. After the three Pay TV services are determined to be successful the Company will introduce additional sizes. The firm will be planning to increase the size of stationery to legal size. Moreover, the firm will develop stationery that will surpass the recover capacity of Macas World. Pay TV service in mobile and computer are also targets.
Performance Evaluation
Assessing marketing performance is an increasingly important task for managers and other corporate stakeholders. The use of financial schemes has three significant functions (Otley, 1999). Multi-disciplinary perspectives on performance measurement are increasing the attention given to non-financial measures of performance in general. Measures traditionally used by managers were inappropriate given the modern manufacturing environment. Changes in technology and working practices resulted to the assigning overheads on the basis of direct labour resulted in wildly erroneous product costs.
Benchmarking provides cost savings in executing operations and its support of the organization’s budgeting and strategic planning process. Benchmarking is designed to leave the past behind and embrace the future. The benchmarking process has many defining features (McNair and Leibfried 1992). In order to benchmark effectively, a company needs a strong strategic focus and some flexibility in achieving management’s goals.
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