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    BBC - Strategic Analysis

    Posted on May 29, 2012 by admin in Articles

    Introduction

    This paper attempts to analyse the strategy followed by BBC over the last decade…

     

    Literature Review

    There is a plethora of literature on the formulation, implementation and evaluation of high level decision making that is referred to as strategic management. This also includes the specification of organisation’s objectives, development of plans and policies to achieve these objectives and the allocation of resources for the implementation of specified objectives (Dess, 2004). The strategy is normally formulated and approved at the highest level involving the board of governors and presented and implemented by the higher management led by Chief Executive Officer (CEO). Strategic management emerged as a distinct discipline in 1950s and 60s with the influential work of Alfred Chandler, Philip Selznick, Igor Ansoff and Peter Druker (David, 2006). Chandler emphasised on the importance of overall or combined strategy of different parts of the organisation and also focused on the long term perspective and impact of decisions made. Selznick recognised the importance of external factors that affect the organisation’s operations. Later his ideas were further developed to establish the SWOT framework which will be discussed later (Wheelen and Hunger, 2007). Ansoff built on Chandler’s work by introducing the concepts of horizontal and vertical integration, product development, market penetration and diversification strategies. Drucker pioneered the concept of knowledge management and emphasised on the importance of objectives. He developed the theory of management by objectives (MBO) and claimed that the process of setting goals and monitoring progress towards achieving them should be the prime focus of an organisation. In the recent years the prominent work in strategic management has been done by Gary Hamal, C.K. Prahalad and Michael Porter. Hamel and Prahalad introduced the concept of core competency which are those things that the company does the best and that provides it advantage over others (Hamel, 2002). Michael Porter developed a number of tools to evaluate strategy and the internal and external environment of an organisation such as Five Forces model, model of generic strategies and diamond model etc. (Wheelen and Hunger, 2007). This paper however uses SWOT analysis. The development of SWOT analysis is credited to Albert Humphery during his research project at Stanford University during 1960s and 70s. The SWOT analysis aims to identify key internal and external factors that affect the organisation (Menon, 1999). The internal factors are further sub-divided into strengths and weaknesses while external factors into opportunities and threats. The strengths and weaknesses may include the company’s personnel, finance, capabilities and other resources etc. while the opportunities and threats may stem from macroeconomic environment, technological change, changes in laws and socio-cultural preferences etc. SWOT analysis is not only beneficial for the profit making organisations but also the public sector and NGOs (Armstrong, 2006).

     

    SWOT Analysis of BBC

    This section presents the analysis of BBC using the SWOT framework.

     

    Strength

    BBC is a well known brand in the world of news, media and entertainment (Alvesson and Thompson, 2004). Its strong brand name has been built on company’s long lasting commitment to quality and innovation. The BBC brand is not only recognised and respected all around the world but has also enabled it to dominate the local markets in most of the countries it operates. Its sound financial position is also an important strength. BBC has a large pool of customers in a number of countries and enjoys high level of brand loyalty. It has successfully positioned itself in the market as a up-market, sophisticated brand with unravelling perception of quality services. Its brand name is thus its most valuable strength (Harris and Wegg-Prosser, 1998). Also over the years, BBC has got extensive experience in gathering news and developing creative programs and this extensive experience is likely to sustain the brand in the longer term. The brand has managed to attract the masses, thus maximising the profit margins along with consistent growth in the domestic and international market which means that the company is in strong financial condition and capable of launching ambitious campaigns. The company has developed strong supply chain and a number of highly experienced, skilled and creative human resources both in domestic and international market where it is already a well known brand. The management team at BBC is highly experienced and diverse. It has been able to develop clear strategies and strongly focus on objectives and goals (Harris and Wegg-Prosser, 2007).

     

    Weakness

    Despite doing well in established markets like Western Europe and North America, BBC’s performance in major emerging markets including Eastern Europe, South America and Central Asia is a cause of concern (Anonymous, 2005). This may mean that it is struggling against fierce competition from CNN, Fox News and the local media companies and may be seen as a sign of weakness (Alvesson and Thompson, 2004). Also with respect to internal management, the company needs to tackle the complexity of its operations and better utilise the latest technology which remains a key challenge despite establishing CIS (Computer Information Systems) department. Also BBC needs to catch up with the increasing trend of digital content and focus its spending on the digital form rather than the analog broadcasting especially in radio where the digital radio is herald as the dominant technology of the future (Wegg-Prosser, 2001).

     

    Opportunity

    Most of the revenue generated by BBC internationally has traditionally been in Europe and North-America while the Asian and the South-American markets have so far been neglected. However with the recent tide of globalisation and the boom of the economies of the countries like China, India and Brazil, BBC has a large market with substantial opportunities to expand. In the domestic market as well, the growing economy of United Kingdom means growing disposable income of the potential customers and therefore presents ample opportunities for the brand to tap into (Harris and Wegg-Prosser, 1998). Also, the increasingly penetration of Western culture, including the English language, cloths, food and other accessories means that the youth can be more attracted towards the foreign brands and English news and entertainment services such as BBC when it comes to media industry. In the internal market, the company can benefit hugely from the deregulation of telecommunication industry in United Kingdom. This provides BBC an opportunity to further diversify its content delivery channels and media. Also being a government owned organisation and still being able to generate huge amount of funding through license fees along with commercial merchandising, BBC can exploit the opportunities much better than its most competitive (Alvesson and Thompson, 2004).

     

    Threat

    The increasing trend of globalisation while opening opportunities for BBC, at the same time increases threat as well in the domestic market where the international brands are easier to enter and compete. This is expected to create intense rivalry among brands due to more competition. Major risks are the recent mergers between many entertainment and media giants and their consolidation in typically BBC dominated markets. These include the News Corporation and CNN groups (Harris and Wegg-Prosser, 2007). The BBC needs to develop a comprehensive strategy to compete in this possible situation by projecting itself as a modern and forward looking brand and one way of doing this may be using the latest ICTs as mentioned in one of the above sections as well. It however needs to emphasise more on brand awareness as lack of advertisement may help its competitors build a better image for themselves (Anonymous, 2005).
    Overall, BBC is expected to consolidate its position in the global news, media and entertainment market on the back of its brand name, knowledge and experience of about a century along with rapid diffusion of technologies and the increasing convergence of services offered on its basis. It will inevitably however have to change constantly and adapt new realities and innovate constantly to stay ahead of intense competition (Wegg-Prosser, 2001).


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