Business Strategy Assignment PDF

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Assignment which discusses the importance of business strategy and how it applies specifically to Glastonbury and the music/entertainment industry...

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BUSINESS STRATEGY Glastonbury Module Coordinator: Paul Dickson Registration I.D: B00680245 Module Code: BMG527 Student Name: Lee Ferguson Submission Date: 1st April 2020 Word Count (Excluding; tables, citations & headings): 2,103 [email protected]

Table of Contents Why is strategic development important in the entertainment industry?...............................................................................................2 A macro environmental analysis of Glastonbury’s position in the entertainment calendar........................................................................5 The macro-environment and what choices are available to Glastonbury to ensure continued success going forward..................10 Reference List......................................................................................13

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Why is strategic development important in the entertainment industry? Glastonbury is a music festival which began in 1970, they are in the entertainment industry/business. They are in the business of allowing people to people to come together and enjoy a short time away from the stresses of modern life. That is the value they bring to the table. That and the chance to go and view their favourite performers live. To truly understand the success of Glastonbury and any business for that matter, we must look at what benefits it gives Consumers. That is how we know what business they’re in, by assessing the benefits they sell. Customers buy into benefits, not products. Surasky, (2010) says people don’t buy a car to own a good-looking sculpture made of steel, plastic and glass. They buy cars to get to work safely, to travel in comfort, to impress the world or to express their good taste. It is not enough to simply say they are in the music business. Going forward, this report will discuss Glastonbury from a strategic perspective, exploring relevant theories and the ever-changing external environment which influences and drives change within Glastonbury and the entertainment industry as a whole. It is extremely important that an organisation exercise strategic development, in order to sustain long term growth and gain/maintain competitive advantage. Johnston et al (2017) defines strategy as the long-term direction of an organisation.

Newcorn (2018) states that strategy development, also known as strategic planning, is fundamental to creating and running a business. Simply put, it’s a game plan that sets specific goals and objectives but like a game plan, it is capable of being changed in response to shifting market dynamics.

The entertainment industry is extremely competitive, in order to stay in business and turn a profit an organisation must consider its strategic position. Lees (2018) states that the strategic position is concerned with the impact on strategy of the external environment, internal resources and competences, and the expectations and influence of stakeholders. Lees (2008) also suggests that the organisation can exploit its unique collection of resources and competences to gain competitive advantage and in a way that is difficult for competitors to imitate. Competitive advantage, also known as a USP (Unique selling point) is what separates most successful organisations in the entertainment industry from the failures.

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External environment The external environment is ever changing and can completely change the dynamic of any business without warning. It does not wait for any individual or company. It continues on its path regardless. The market environment or business environment is a marketing term and refers to factors and forces that affect a firm's ability to build and maintain successful customer relationships. The business environment has been defined as "the totality of physical and social factors that are taken directly into consideration in the decision-making behaviour of individuals in the organisation (Duncan, 1972). There are various frameworks/tools in which organisations use analyse the external environment. The PESTLE (political, economic, social, technology, legal, environmental) analysis and the SWOT (strengths, weaknesses, opportunities & threats) analysis are very popular tools companies use to gather information about the macro influences of the external environment. One of the most popular ways a company gains information regarding the external environment is by looking into the past, specifically looking at the history of an already established company in their field or similar fields. Organisations that have stood the test of time and developed over generations are an excellent resource to learn from. McGee et al (2010) states that organisations can easily become programmed to the degree that they are more accurately described as a collection of ready-made solutions looking for new problems, rather than there being any proactive approach towards taking strategic decisions. Organisations within the entertainment industry should also be aware of industry specific micro influences such as suppliers, any competitors, barriers to entry and the specific requirements of their customers.

Strategic capabilities Lees (2008) defines strategic capabilities as what customers value in terms of product and service features. The organisation first needs to understand the threshold features that all providers must offer if they are to stay in the market. This also links back to competitive advantage, in the way of resources and competencies. In the entertainment industry, companies should effectively use their resources in order to develop various competencies, which in turn can become USP’s. Resources can be categorised into the following: -

Physical resources Human resources Financial resources Intangible resources/Knowledge

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Companies can obtain various types of these resources in order to separate themselves from the competition. For example, Glastonbury festivals success did not go unnoticed. Their growth prompted other festivals to crop up, which focused on various problem areas of Glastonbury. Live Nations-City based festival seen that Glastonbury had an issue with wet weather and customers sleeping outdoors in poor conditions. It offered customers the option to sleep under a roof, either in a hotel or at home due to its location. This was a point of competitive advantage that Glastonbury could not offer in terms of physical locations/resources. Human resources are often seen as the ultimate way in which companies can sustain competitive advantage. For example, in the entertainment industry, specifically Glastonbury, their ability to attract hugely popular acts/performers really sets them aside from smaller events.

Stakeholder Expectations Manging the expectations of a company’s stakeholders is very important when developing a strategic direction. Customers are more likely to use an organisation that shares their values. Business Reality Check (2020) states that some 53% say their companies focus on stakeholder engagement during strategic planning sessions. Indeed, there are strong strategic reasons for stakeholder initiatives. They can protect a company against threats such as consumer boycotts, enforcement actions and reputational damage.

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A macro environmental analysis of Glastonbury’s position in the entertainment calendar As previously mentioned, a PESTLE analysis is a tool that companies will use in order to help better understand the external environment and what are the key areas affecting their organisation. PESTLE analysis, which is sometimes referred to as PEST analysis, is a concept in marketing principles. Moreover, this concept is used as a tool by companies to track the environment they’re operating in or are planning to launch a new project/product/service etc (Pestle Analysis, 2020). This also allows them to pinpoint their key drivers for change. The external environment is ever changing and a tool such as PESTLE can help to gather relevant information which can be used to aid the development of business strategies/plans for success going forward. PESTLE has come under criticism for various reasons. However, it is a widely used and popular method. Lynch (2018) says there is no well-tried and generally agreed scientific formula for finding the strategic route forward.

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P. E. S. T. L. E

So what? 1. The outbreak has led to the event being cancelled. This may also have an adverse effect on some of the near future events as heightened levels of anxiety begin to balance out.

Political 1. Corona Virus 2. Artist content

2. Some artists may be popular but their performances may evoke controversy and could be potentially inappropriate for the occasion. 3. The income of many people is limited. This can cause potential issues as ticket prices fluctuate.

Economic 3. Disposable income 4. Brexit

4. Brexit has caused much confusion. Travellers from Europe and further afield may find increase formalities when attempting to attend the festival

5. Performers payment

5. Performers have to be paid and this can be an area where conflicts of interest shine through. Performers want as much money and exposure as possible. Glastonbury wants to remain as cost effective as possible as well as retain as mush profit as possible. 6. Drug abuse at festivals can have an adverse effect on the publics’ perception of not just Glastonbury but the festival industry as a whole.

Social 6. Illegal drug abuse 7. Serving Alcohol

7. Minors are permitted to attend Glastonbury. This can cause potential issues with the sale of alcohol at the event. 8. Technology moves at a staggeringly fast pace. Improvements in equipment bring both opportunities and challenges

Technological 8. Equipment 9. Internet 6

for Glastonbury. 9. The internet is a huge tool for Glastonbury in terms of marketing and ecommerce (ticket sales). This also brings about issues such as fake news, ticket price gauging etc. 10. Festivals and large events of this nature will have strict health and safety laws and guidelines which must be adhered to. E.g. Legal capacity, barriers, security, first aid services etc.

Legal 10. Health and safety 11. Licensing 12. Noise pollution

11. The appropriate licenses must be held in order for the festival to operate legally. E.g. Alcohol, PRS if broadcasting music around the grounds, entertainments license etc. 12. Depending on location, surrounding neighbours and license requirements. Glastonbury may have set times in which they must cease to broadcast loud music. 13. The festival causes significant traffic congestion and issues with public transport. The large amount of festival attendees also brings about a large litter problem.

Environmental 13. Traffic, litter & carbon footprint

Key drivers for change Conducting a macro environmental analysis allows an organisation to really focus on the main areas of significance. It allows them to see where their focus should 7

predominately be. This leads on to the key drivers of change. Spacey (2018) defines drivers of change as an internal or external pressure that shapes change to an organisation. COVID-19 has actually caused Glastonbury to cancel their 2020 festival. This will have significant effects right throughout the events industry as a whole. The heightened effects of COVID-19 may mean that events and festivals alike may not come back into full swing until much further down the line. Another technological factor which stems from this would be contactless payments becoming increasingly popular following on from the outbreak. This will be from heightened anxiety surrounding bacteria on surfaces, people and objects such as cash. Rolfe (2020) stated that cash has long been known for its “dirty” origins, but now the WHO is warning against using cash and moving to contactless payments to slow the spread of Covid-19 or Corona virus. A huge economic factor would be Brexit. As Glastonbury is held in the UK, travelling artists from Europe may find themselves with extra obstacles in their way. Brexit may also have significant effects on the economy which could lead to more or less disposable income. With the uncertainty surrounding Brexit, it is more than likely going to be less for the foreseeable future. By identifying some of the main drivers of change, we can then begin to look at some opportunities and threats for Glastonbury. Opportunities and threats come from the SWOT model. Strengths at weaknesses will not be looked at in this case because they are concerned with the organisation internally, where as this report is focused on once again, the external environment. In order for Glastonbury to maintain competitive advantage, they must be constantly analysing the external environment, using tools such as SWOT & PESTLE. This will allow them to adapt and position their company more favourably. Spotting the key threats will allow Glastonbury to mitigate their impact. By spotting the opportunities, Glastonbury can really reap the rewards from acting on the information they have gathered.

Opportunities -

COVID-19 has brought out the culture of greed among some organisations. Glastonbury can use this opportunity to be seen as an organisation that cares 8

by doing what they can to help in any way possible. Many companies are doing this through the use of the internet and social media. Which is an extremely powerful and free method of keeping a brand in consumers subconscious thoughts. Glastonbury should take this opportunity to improve their online engagement. -

When the global pandemic is over, there is predicted to be a rush of people going out to bars, clubs, restaurants etc. Glastonbury could capitalise on this energy by marketing heavily for the next festival. If they are able to secure large acts earlier than usual, this could turn out to be a successful campaign.

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Glastonbury have an opportunity to be first to market in regard introducing festivals to new technologies e.g. Augmented reality streaming? VR streaming? The possibilities are endless.

Threats -

COVID-19 has caused a lot of financial pressures among organisations. Glastonbury festival had to be cancelled which means that many tickets have to be refunded. Measures to mitigate the situation may be attempted such as re-scheduling the event. However, it is more than likely most people will request a full refund instead.

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Brexit may place more obstacles in the way of travelling festival goers. This means that there will be increased pressure to ensure an enticing line up is set for future festivals. Trend (2017) says now that Britain is leaving the EU, arrangements will have to be made for new air service agreements if British airlines like easyJet, are to continue operate freely all over the EU, and Irish airlines, like Ryanair, or German airlines like Eurowings, are to continue to fly in and out of the UK without restrictions.

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Brexit formalities may also make it more difficult when booking acts/performers. This may need more financial resources to solve in future.

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There may be lasting effects regarding social gatherings. As people begin to transition out of the COVID-19 pandemic, there will inevitably be a percentage of the population that will have been adversely affected by the outbreak, in regard to personal hygiene and being around other people, this may have negative effects on Glastonbury and the events industry.

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The macro-environment and what choices are available to Glastonbury to ensure continued success going forward Below is the Ansoff matrix, it is a tool used by organisations which allows them to develop strategies in regard to growth going forward. Johnson et al (2017) states that strategic choice involves the options for strategy in terms of both the direction in which strategy might move and the methods by which strategy might be pursued. Each area of the matrix represents different methods of entering/approaching a market with products and/or services. The Ansoff Matrix is a strategic planning tool that provides a framework to help executives, senior managers, and marketers devise strategies for future growth (Spencer, 2013).

(Vllegar, 2019)

Market Penetration Market penetration refers to the successful selling of a product or service in a specific market. It is measured by the amount of sales volume of an existing good or service compared to the total target market for that product or service (Higuera, 2016). Glastonbury could consider offering more comfortable accommodation. Sleeping in a tent, in a field may be enough to put off even some hardcore fans, especially

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during adverse weather conditions. Perhaps a VIP camping area with a roof? Priced accordingly.

Product Development New product development strategies look at improving existing products to invigorate an existing market or create new products that the market seeks (Leonard, 2019) Glastonbury could use their branding and notoriety to enter new but similar markets. With an increased emphasis on hearing protection, Glastonbury could consider selling different tiered ear buds (Budget to professional). This could be as a standalone product or potentially as a ticket up-sell. This strategy does come with a notable degree of risk. Venturing into areas that are unknown can be financially dangerous. There is also a lot to consider when creating/making changes of this nature in regard to market research, financial requirements and overall available resources. However, if the opportunity does arise, not taking action could be detrimental.

Market Development Market development is the second market growth strategy in the Ansoff matrix. This strategy is used when the firm targets a new market with existing products (Smartdraw, 2020). A great way to increase sales and exposure of your product in new markets is to increase the marketing budget. This can be done by targeting new geographical areas. This strategy can have huge returns in terms of growth, finding a new successful market for your products can boost a company significantly. However, again this comes with the risks of venturing into areas that are unknown which by itself comes with costly financial implications. For Glastonbury, there are no doubt many people out there that would be very much interested in attending the festival, they just haven’t been reached.

Diversification Diversification is a corporate strategy to enter into a new products or product lines, new services or new markets, involving substantially different skills, technology and knowledge (Ansoff, 1957). Glastonbury could expand into new markets that are somewhat related to their existing market. With diversification, the sky is the limit. They could open their own online music equipment/merchandise store. They could offer various courses e.g. Events planning, live sound engineering, building an events business etc. They could use their financial backing to get into the insurance business. “Got a travelling band with a lot of expensive music equipment? Glastonbury LTD now offer 11

equipment contents insurance” etc. There are many directions this can take, which can allow Glastonbury to move away from some of its declining offerings. This strategy does have a lot of positives, however there are some negative points to consider also. It is definitely considered the riskiest of all the strategic options. Similar to product development, venturing into new territory can be risky and full of unpleasant surprises. Gaining the knowledge and/or expertise can be financially significant, depending on which form of diversification Glastonbury were to take. Each of these strategies mentioned above come with their own pros and cons. However, they are all based around success through competitive advantage. Regardless of which direction a company takes, t...