The Growth of BBC Management - Term Paper Example

B300 TMAO1 - The BBC Case Study - Table of Contents I. Short Introduction …………….……………………………………. 3 II. Use of Analyses to Illustrate the Situation Faced by BBC in 2001 … 3 III. Potential Areas of Conflict for BBC ………………………………... 6 a. Producing its Own Programs ……………………………… 6 b. Competing for Ratings with Other TV Channels …………….. 7 c. Being a Global Provider ……………………………………… 8 IV. Decision Making Process in Responding to BBC Situation in 2001 .. 8 V. Government Policy on BBC in Relation to 2001 Situation ………… 9 VI. Conclusion ………………………………………………………….. 10 References …………………………………………………………………... 11 - 12 Short Introduction BBC started its business as a private corporation selling radio receivers in 1922. It was in 1925 when the company started to expand its business into broadcasting. The BBC radio was very successful. The company started to widen its radio programs to captivate the young audiences and the adults. It was in 1960s when the company started to monopolize the radio stations in UK. It was in 1936 when BBS television was established. At first, the company was able to capture almost 20 million people patronizing the shows. For so many years, BBC was able to monopolize the television industry. The demand for BBC shows started to decline when the UK government signed and implemented the Television Act of 1954. This provision gave way to other independent television companies to compete with BBC shows. As early as 1923, BBC entered the printing industry. The production of the Radio Times and selling of magazines became an instant success as well. Use of Analyses to Illustrate the Situation Faced by BBC in 2001 Due to high technology that has been developed in the past few years, a lot of television competitors have emerged in the television industry. This allows many viewers to have a lot of channels to choose from. ITV including GMTV is considered as the close competitor of BBC 1 & 2. As of December 2000, ITV and GMTV were able to capture 30% share of viewing.1 The availability of cable and satellite network has captured as much as 18% of the viewers away from BBC television. This is also one big factor why the over the past few years, BBC television 1 and 2 is slowly loosing its share of total viewing to other sources of media. (See Table I and Chart I on page 4) Table I - Share of Viewing - As of December 2000 -   Share of Total Viewing   Dec. 2000 BBC 1 (incl. breakfast news) 27.5 BBC 2 10.7 ITV (incl. GMTV) 28.8 Channel 4/S4C 10.1 Channel 5 5.1 Other Commercial Viewing 17.8 Total 100.0 Source: Broadcasters Audience Research Board In year 2001, globalization has become the market trend for all the industries. The opening of the international trading itself has become the main factor of a tighter competition in all businesses. This also affects the television and broadcasting business of BBC. It is therefore expected that the number of other commercial viewing will continue to grow in case BBC fails to maintain its loyal viewers. BBC is continuously striving hard to hold on to its present market share by keeping its operational costs down and at the same time doing its best to motivate the employees to work well despite the fact that the company has decided for a mass lay-off in 2000 in order to save some money in sustaining the production of program.2 It has been evident in the past that the choices of people changes with time. Back in 1920s, people are much satisfied and amazed with listening to a broadcasting radio.3 This trend was changed in the late 1930s when the use of television became more in demand.4 (See Diagram I – The Transition of Modern Technology Over the Years below) The year 2000s has been so much into the use of high technological gadget and inventions such as the use of the internet. It has already been foreseen that in the near future, competition will revolve around the use of digital, cable and satellite channels.5 Since many people have been going in and out of the country for business purposes, their need for news reports and other sources of recreation will also change. It would be unlikely if not limited for American businessmen to find a US printed newspaper in Asian countries. Therefore, these people will have to start looking for other sources to capture the US local news. The answer to this type of human needs is the decision of BBC to invest in the new technology called ‘digitalization.’6 The decision of BBC to invest in ‘digitalization’ seems to be very promising because BBC Online is already considered as one of the most popular internet sites throughout Europe. In fact, it has even captured more than twice the number of home page visits than any of its competitors in UK.7 Potential Areas of Conflict for BBC Producing its Own Programs Producing its own programs is a conflict for BBC because of the implementation of the Producers Choice during the 1990s. ‘Producers Choice’ was developed in order to justify all the expenditures that is spent on BBC Production.8 It will also serve as a measurement in determining who among the BBC producers spend BBC money unwisely. As part of the main goal of implementing the Producers Choice is to cut down on its production costs. In 1998, only 20 percent of the workforce is on a fixed-term contract. The decline of the in-house program production has resulted to the formation of having a new independent production companies and the use of freelance staff.9 It is clear the BBC is facing a tight financial budget because of the present competition in the market as well as the company’s investment on digitalization. The business environment is very much different today as compared to when BBC is able to monopolize the broadcasting industry and television industry. Producing its own show will be very costly for BBC. Considering that most of BBC revenues are being invested on the new technology: digitalization, it would be quite a financial problem for them to produce their own programs. Also, a lot of producers will take it as bias and unjust decision because of the possibility of unequal allocation of funds. It will not be fair for other BBC producers who are given a limited fund to freely choose their own talents and at the same time create shows using their own ideas. For example, in case BBC would produce its own television program, it is possible that other BBC producers as well as other BBC networks on radios 1 to 4 would also request BBC to produce its own broadcasting program. This will create a lot of controversy and political issues within the BBC management. It will also create a lot of bias with the BBC managements’ decision on implementing the Producers Choice. Since the Producers Choice have been slowly accepted by the BBC employees on BBC Broadcast, BBC Production, BBC Resources, BBC News, and BBC Worldwide, it will be unwise to introduce the idea of having BBC produced its own programs since it will definitely cause a riot when it comes to the distribution of funds. It will also violate the goal of BBC management of making the company more efficient and competitive.10 Competing for Ratings with Other TV Channels It would be a conflict for BBC to compete with other channels because BBC is trying to maintain its reputation as a premier broadcaster around the world. BBC is not similar with other TV channels that are funded by commercials or advertisement including the lenient ties that these independent television companies has with the government.11 In the case of BBC, the company is funded from the broadcast receiving license fee and a portion from the revenue that has been generated from the sale of radio receivers, magazines, etc.12 Because of the company’s limited funds, producers were forced to create an attractive ratings and at the same time keeping the costs of production down. In case a producer would come up with a very good idea about a specific show and if the cost of production is too much, the BBC managers will not agree to produce the show. This fact itself has resulted to demoralization of many of BBC employees. Since the late 1990s, the company has lost a lot of its talented and creative ideas.13 Being a Global Provider Being a global provider is a conflict for BBC because the commissioner and the producer of the World Service were split into two. This change has resulted to the misalignment of the World Service news according to its overseas listeners. It seems that the US government is biased with BBC spreading news globally.14 Also, as the effect of the Producers Choice, the person in-charge for the international news could no longer be able to sustain the high costs of going from one country to another just for them to be able to broadcast something that is relevant to other countries. Decision Making Process in Responding to BBC Situation in 2001 When making a business decision, the managers of the company should foresee the future market by carefully analyzing the market trend. In case a business fails to visualize what will be in demand in the future, the company would definitely lose its clients to other players within the same industry. We have clearly seen the business starting from the time when people were very much into listening to a radio network that was broadcasted by BBC. The demand for BBC radio gradually declined because of the existence of the BBC television. Slowly, the market of BBC has been grabbed by its competitors as well as the satellite and cable industry. Today, the market trend is very much focused on the use of internet. Aside from looking at the market trend, it is equally important for the company to determine what exactly does the present generation look for in a television or news network. A business feasibility study or a survey can be done to let the company know the customers’ expectation when it comes to television programs, music, news, etc. Knowing the target market is also critical for BBC. Since the company has already invested a lot in the application of the new technology, it is important that the people who are in-charge of decision making to be firm with the kind of service they are planning to render to the public. There is definitely no room for the company to go on an actual trial and error basis since it would only make the company’s reputation as an efficient and reliable sources of news suffer. For example, if BBC news is planning to target the local businessmen who goes around the world, the news should be presented in a way that these businessmen could be updated with what is going on a country’s economy as a whole, the latest news in a business sector or industry, report on forecasted economic and business trend, what is new in the global market, etc. Government Policy on BBC in Relation to 2001 Situation Yes. Government policy is a factor of constrain to the ability of BBC to respond to the 2001 situation. Looking back during the 1950s, it was the government that gave way to potential competitors to enter the television industry in UK. Before the Television Act of 1954 was implemented, BBC monopolizes the television broadcasting in UK.15 Since then, BBC has slowly losing its market share as well as profit to its competitors. Another factor is the fact that ‘the growth of BBC management was partly due to the government’s restrictions on the license fee agreement.’16 Five years of license contract to operate the business is such a short time for BBC to cope with the tight competition in the television industry. In the case of the other independent television companies, the government has been lenient with them in terms of license fee.17 If only the UK government would be lenient enough with the licensing fee of television broadcasting by extending the number of years of allowable operations, BBC would not have to face a very tight financial condition in producing highly competitive shows. Lowering the tax rate on television networks could also help the players within the industry to compete with the global market. Conclusion Because of the constant changing world, it is important for any businesses to be able to foresee the next trend. This is the only way that the business can survive for many years in service. The restructuring that was made by the BBC Management team has proven to be very effective. It proves that expanding the number of BBC employees does not show efficiency and quality of TV, news and radio broadcasting production. The person who has thought of implementing the Producer Choice is a real genius because most of the old employees have resigned from the company according to their own will. It means that the BBC company did not force these unproductive personnel to leave the company. Therefore, BBC company is not obliged to pay them a certain amount of money for the number of years they have worked with the company (separation pay). The cut down on operational costs is really necessary for BBC to be able to compete with the increasingly competitive world of Television and Radio broadcasting industry including the printing of newspapers and magazines. *** End *** References: 1 ‘Hours of Viewing and Share of Audience’ B300 Case Study: The BBC –part 4. BA in Business Studies p. 50 2 ‘Growth of Management’ B300 Case Study: The BBC – part 4. BA in Business Studies p. 45 3 ‘The Formation and Development of BBC Radio’ B300 Case Study: The BBC – part 4. BA in Business Studies p. 40 4 ‘BBC Television’ B300 Case Study: The BBC – part 4. BA in Business Studies p. 41 5 ‘BBC Commercial Services’ B300 Case Study: The BBC – part 4. BA in Business Studies p. 44 6 ‘Investment in New Technologies: Digitalization’ B300 Case Study: The BBC – part 4. BA in Business Studies p. 51 7 ‘Investment in New Technologies: Digitalization’ B300 Case Study: The BBC – part 4. BA in Business Studies p. 52 8 ‘The Commissioning Model’ B300 Case Study: The BBC – part 4. BA in Business Studies p. 46 9 ‘The Decline of In-house Program Production’ B300 Case Study: The BBC – part 4. BA in Business Studies p. 48 10 ‘The Commissioning Model’ B300 Case Study: The BBC – part 4. BA in Business Studies p. 45 11 ‘BBC Television’ B300 Case Study: The BBC – part 4. BA in Business Studies p. 42 12 ‘The Formation of BBC Radio’ B300 Case Study: The BBC – part 4. BA in Business Studies p. 40 13 ‘Growth of Management’ B300 Case Study: The BBC – part 4. BA in Business Studies p. 44 14 ‘The Commissioning Model’ B300 Case Study: The BBC – part 4. BA in Business Studies p. 46 15 ‘BBC Television’ B300 Case Study: The BBC – part 4. BA in Business Studies p. 42 16 ‘Growth of Management’ B300 Case Study: The BBC – part 4. BA in Business Studies p. 45 17 ‘BBC Television’ B300 Case Study: The BBC – part 4. BA in Business Studies p. 42 Read More