Case Study of Vyp
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CONTENT
A．INTRODUCTION
B．TERMS OF REFERENCE
C. PRIORITIZATION OF FIVE KEY ISSUES
D ANALYSES OF ISSUES
I REORIENTATION OF THE COMPANY
Ⅱ EXPANSION IN OVERSEAS MARKETS
Ⅲ DECISIONS ON BROADCASTING PROGRAM PORTFOLIOS
Ⅳ COST CONTROL AND CASH FLOWS MANAGEMENT
ⅤHUMAN RESOURCES TALENTS RESERVATION TO MAKE CORPORATE MORE INNOVATIVE
VI OTHER ISSUES
VII ETHICAL ISSUES
E. RECOMMENDATIONS
Ⅰ REORIENTATION OF THE COMPANY
Ⅱ EXPANSION IN OVERSEAS MARKETS
Ⅲ DECISIONS ON BROADCASTING PROGRAM PORTFOLIOS
Ⅳ. COST CONTROL AND CASH FLOWS MANAGEMENT
Ⅴ HUMAN RESOURCES
VII ETHICAL ISSUES
F CONCLUSION
APPENDIX
APPENDIX1-S.W.O.T ANALYSIS
APPENDIX2- PEST ANALYSIS
APPENDIX3- MENDELOWS MATRIX
APPENDIX4- ANSOFFS MATRIX
APPENDIX5-5 FORCES ANALYSIS
APPENDIX 6-SCENARIO ANALYSIS
A．Introduction
Located in UK, VYP is a TV production company established in 2003 which mainly produces 4 genres programmes. Among these 4 genres programmes, documentary is the most representative and successful one.
Nowadays, VYPs commission revenues have suffered a slight decrease from 10.1% to 9.4% due to the recession of this industry in the last few years. However, the international sales keep at a high profit margin of 62.3% which we should focus upon.
Thanks to the change of authority policy that application of TV broadcasting regulations has been relaxed，it is possible for VYP to seek this opportunity to enter broadcasting industry. Definitely, it is a coexistence of challenges and opportunities to the development of it.
Using the SWOT analysis (Appendix 1) and PEST model (Appendix 2),we will have a more clear understanding of the external and internal issues arising from the case.
B．Terms of reference
As a consultant of VYP, our team is required to analyze and give recommendations on the issues which VYP must address. In the following report, our team priorities and analyses the issues facing VYP and makes our recommendations.
C. Prioritization of Five Key Issues
We prioritize issues as following. First comes reorientation of the company because the strategic future direction has been changed from program production to the combination of program production and broadcasting according to the ultimate corporate development goal. Considering the importance of developing overseas market and choosing broadcasting program portfolios, expansion in overseas markets and broadcasting program portfolios decision making need to be addressed urgently. Additionally, VYP faces the huge financial pressures due to the nature of TV industry, especially after the reorientation of the company, so cost control and cash flows management can not wait. Human resource plays an important role in TV industry due to its uniqueness required by its products and future expansion, so it follows. Some other issues and ethical problems also need consideration.
D Analyses of issues
I Reorientation of the company
The corporate profit is not ideal due to the reduced commission revenues from broadcasting companies.If the company doesnt make some critical changes to corporate long-term strategies, it would absolutely have difficulties on profitability, certified by financial statements that profitability rate of program production in domestic market in ten years has decreased to 9.4%.This form an obvious comparison to that of program production in overseas markets which reaches up to 62.3% in 2010 from 55.5% in 2009. Judging from the data of financial statements, Overseas sales, has become a significant factor which should be focus on in the reorientation of corporate production strategies.
At the same time, adequate cash flow for further expansion should be guaranteed to maintain and increase domestic TV program production market share.
In addition, the company also comes to the crucial turning point of deciding whether or not to step forward into the TV broadcasting industry. According to the Ansoff Matrix below, domestic TV broadcasting industry in the fields of New Products and New Markets, contains a number of uncertain factors into which an immediate and reasonable research is needed to be conducted. Be faced with both enormous challenges and attractive opportunities, deciding whether or not to enter the broadcasting field and what kind of a TV broadcasting company it expects to be if VYP decides to enter are the most urgent and important issues currently .
Ⅱ Expansion in overseas markets
International sales of VYP has started from 2007 which currently belongs to the growing period .It keeps profit margin around 50% in the past few years with continuous increasing trend. Judging from the appendix 4–Analysis of margins by programme genre in the past two years, VYPs operating cost reflected in the international sales is 405000 pounds, occupying 1.64% [450000/(revenue-operating cost)=45000/(27310000-2572000)=1.64%] of domestic one. Although operating cost of international sales in 2010 has increased, it has only reached 1.98% of domestic market. Therefore, the growth speed of investment in the domestic market is higher than that of international sales. However, facing multiples of income from international sales than domestic ones, the ignorance of fully expanding of overseas markets isnt good for achieving the goal of maximum profit.
In overseas market sales, ownership and the distributed profits of IPR depend on the broadcasting company which commissioned the programme and the actual contract. Therefore, VYP is burdened with product production