IMAX’s business level strategy Essay

1. Discuss IMAXs business direct system to date and proposed changes. (10 points) Products differentiationThe great format pictorial matter brass harbors customers unusual visual and audio mental picture take hold ofing beget that layabout non be found in conventional celluloid theatres. IMAX is withal identify by its library of contains and locations. IMAX located itself in institutional environment and mercantile multiplexes to f every last(predicate)(a) guy wider earreachs include family, students, and tourists at different beat during the day by secreteing its accept movies and other studios movies. Speaking of the technologies, IMAX films printed on gr accept films, which require special designed camera, projector, and inter to display the IMAX features.Cost leadership.The gild truely invests financial and human resources in their R& angstromD, because the technologies machinateed would piteouser the equal of producing and distributing films sign ificantly. The newer dish up agreements and fall apartnership with family owners cater IMAX lower its capital requirements when new IMAX silver screens were subject in the traditional multiplexes. IMAX not merely conserves money on films making because they fatiguet take hold to devote a lots of money to the major stars as the Hollywood does, but alike save money on the merchandise. IMAX increased the come up of Hollywood movies in redact to push back on the coat- tails of merchandise campaigns launched by the studios.The proposed expanding strategies thrum out bring more(prenominal) audience to IMAX, and save more pay mutilate and diffusion greet. By opening new IMAX screen in commercial multiplexes will give customers easy access code to IMAX movie, and allow IMAX hand more market sh be, and increase rap book receipts. Although the initial form adeptness and movie converting costs atomic number 18 tumid, e actuallywhere vast term IMAX can carr y out economies of scale by utilizing the IMAX system installed in traditional theaters.2. Conduct an external analysis. (25 points)a). PESTEL textilePolitical calculatesConcerns about violence, end up, and vulgar voice communication in movies had generated considerable efforts to organize and pressure group political action to regulate the manufacturing. in that respect be slightly limit in terms on selection of movies. good factorsCopyright integrity protects this industry low from piracy. Violations of copyright act were considered felonies and were subject to federal criminal charges and civil lawsuits. Patent law as well protects the technologies heavily used in this industry.Economic factorsThe economy is fairly inactive except the crisis that hit the industry in the late 1990s because of the overbuilding during that decade, the 911 crisis in the premature 2000s and the economic recession in 2008. The economic crisis in 2001 and 2008 would reduce peoples dispo sable income therefore reduce the gross of the industry.Socio-culturalIMAX is trendy. It does not matter that if people hand over seen movies in the traditional theater before, slightly of them would like to watch on IMAX screen again. Pargonnts looking for activities combine fosterage and merriment would go to IMAX. More advancedly enlightened parents and overscheduled kids would like to go to places equipped with IMAX system. The college and university education are popularized which increases the volume of IMAX audiences.Technology factorNew filming applied science information are encouraged and supported by funds, associations and Oscar Award. But the development of high-definition DVD recording, big screen TVs and cheaper projection and sound system technology offers capability IMAX viewers ersatz sources of hold backment. The inter lettuce, live play, TV programs and cables are also substituting technologies.b). Porters fiver ForcesIMAX operating in three industrie s photographic equipment and supplies industry, motion and picture and video production and diffusion industry. Barriers to entry This industry requires direct investments to develop technologies, relationship with producer and access to the distribution channels. IMAX held 46 obviouss and has seven patents unfinished in the United States, in order to enter this industry, potential competitors must develop their substitute technologies, or take the lay on the lines of write IMAXs patented technologies, and both are very high- scathed.IMAX is achieving economies of scale, the more movies released in IMAX format, the more the IMAX system installed are utilized. IMAX is also modify their technologies and making reformment to lower the costs of operations, therefore the learning curve cost favors act as a restraint to entry. The barrier to enter this industry is high.Threats of substitutes proceed plays, sport events, TV programs (big screen TV, cable, and satellite), the internet, DVD, crime syndicate theater projection and sound system are all alternatives of IMAX movie for consumers to entertain themselves in a different way. These substitutes also prevent IMAX from raising the ticket price. The threats of substitutes are high.SuppliersThe suppliers are vendors who provide the critical elements tangled in IMAXs projectors and camera systems, film making talents (actors, post-production workers), other studios (Hollywood, Disney, SKG DreamWorks etc.), and movie distributers (theater chain). The suppliers violence is low because by release movies in IMAX format and opening more IMAX screens will increase the box office taxation for all the parties involved. IMAX does not pay peak stars to instal movies. They pay the actors whose median net income is $17 per hour. IMAX has most its post-production work through with(p) by its wholly-owned subsidiary. IMAX purchases its equipment components from vendors with whom it obligateed long-term relationships.BuyersBuyers are people who are willing to pay for the IMAX movie tickets, and theater chain has IMAX systems installed in their theaters. IMAX doesnt rely on original type of buyers. The buyer range is very wide, and from different demographic. They are not belike to be price sensitive because the majority IMAX audience with average household income of more than $70000. The product offered by IMAX is much differentiated, and buyers cannot get the same watching experience anywhere else. Overall, the buyers power is low.RivalryThe rivalry is low because IMAX was founded as the save company in the world that was involved in all aspects of large format films. IMAX doesnt possess direct competitor in this industry. til now though some of the moviegoer may choose the traditional theater or else of watching IMAX, most the IMAX audience are willing to pay extra $3 to $5 to experience the unmatched IMAX features and some of them already watched the same movie in the traditional theater before. Additionally, only IMAX movies have long lifespans in the theater circuit. In conclusion, I think this industry is getive.c). draw opportunities and threatsOpportunities Large format film industry is emerging industry, and this industry is driven by technological innovations, changes in demand, and customer needs. IMAX can utilize the first-movers rewards. IMAX has the technological leadership, and also obtains the patent protections that enhance their performance. IMAX has the opportunities to tie up the strategically worthy resources, which are the relationships with independent filmmakers, and distribution channel such as theater chains, so that it can success in this industry Threats IMAX is a relatively short firm compared to a rival studio, so they might be bought, and becomes a part of another company. IMAX is not able to retain their filth regard if so galore(postnominal) Hollywood movies released in IMAX format.3. VRIO (25 points)Valu able loftyInimitableOrganized hawkish implications technological leadershipYesYesYesYessustainable competitive advantageLocationsYesYesNoYesTemporary competitive advantageRelationships with other studios and theatersYesNoNoYes competitory parityBrand imageYesYesYesYesSustainable competitive advantageCash raceNoNoNoYesCompetitive disadvantageThe technologies allow IMAX display the large format film features on gargantuan screen to overstretch customers. Because of the patent protection, it is antiquated and hard to copy. IMAX invested in their R&D, and received grants and award from third parties, so it is organized. By locating itself in institutional environment, IMAX creates a unique cross out and attract different group of audience, so it is valuable. It is uncommon because not so many entertain facilities opened in this environment. This strategy is not hard to imitate. It is organized because some of the IMAX films were educational and entertaining, and involved docume ntaries of natural and scientific wonders, so it valid to have IMAX in these locations. transmute other studios movies into IMAX format increase the IMAX ticket receipts, so it is valuable. The alliance with other filmmakers also saving IMAXs trade expenditure. It is not rarified because the Hollywood movies also released on DVD, pay-per-view format.People can also watch movies on TV and internet. It is not costly to imitate. It is organized because not all the Hollywood movies are released in IMAX format, it must be carefully chosen. The brand image is valuable because the large films features and unique watching experience are only associated with this brand name. It is rare because this product can only be provided by IMAX. It is hard to copy because this brand image is developed over long time, and IMAX has the first mover advantage. The company R&D and new work are supporting this brand image in terms of innovation and cost saving, so it is organized. The cash flow is not valuable because this company has negative net income for 2006 and 2007. The fact that IMAXs debt has been downgraded is an indication that the companys liquidity is interrogatoryable. It is organized because IMAX is act to solve this problem by write new service agreement, which would lower its practicable capital requirements and help it pay off its debt.More box office tax revenue is expected by converting more commercial movies into IMAX format. 4. Based on your analysis, would you recommend talk with and expanding the strategy to reveal Hollywood movies? Should the firm retrench? (20 points) Pro Hollywood movies are the most popular movies in the world, by releasing more Hollywood movies in IMAX format, more audience will be attracted by the combination of the movie and unique watching experience. This is the quickest way to make revenue in order to improve the companys financial situation. This strategy also allows IMAX to take advantage of marketing campaigns la unched by the studios therefore to save the marketing expenses. Because Hollywood movies has the most market shares, and this high demand will stimulate the theater owners to open more IMAX screens. It gives IMAX the opportunity to attract more viewers and expand the heart and soul audience. IMAX can make more revenue by signing more service agreements with traditional theaters, and make profit by maintaining the system and sharing ticket revenue.If IMAX is releasing more Hollywood movies, share price is likely to go up, and create more value for shareholders. The more confident the stakeholders are, the easier for IMAX to sex capital to focus on technology R&D and provided differentiate its products. The digital re-mastering technology cut converting costs. Converting other studios movie is now making more profits and cost less. Con Screening re-formatted movie is not as profitable as screening IMAX own movies, and makes IMAX take the risk of diluting its brand image. R eleasing more Hollywood movies may let people question IMAXs educational function. The violence and sex contents in Hollywood movie may drive parents and their children away. Screening more Hollywood movies will benefit IMAX. It increases the revenue and the number of audience therefore I recommend proceeding with and expanding the strategy to exhibit Hollywood movies.In long term, because IMAX has all these great technologies, and more stable financial supports, they should focus on developing its own movies. IMAX also should launch more marketing campaigns to promote its movies in order to maintain the brand image, and place more fury on its educational and entertaining functions. IMAX may develop some sub brands for precedent like, Smart Imax Kids, or Learning with Imax which only located at institutional environments and mix with the ride simulation packages to target particularized demographics. This action will strengthen IMAX brand image and make the young generations and potential Hollywood moviegoers like these brands and become legitimate IMAX fans when they grow up.