Key Issues that are Critical for the Long Term Success of Sydney Theatre Company - Case Study Example

A Report on Key Issues that are Critical for the Long Term Success of Sydney Theatre Company (2,471 words) Table of contents 1. Introduction Sydney Theatre Company is currently undergoing a transformation. For the first time since its formation back in 1978, the company has posted positive performance as measured using both financial and non-financial parameters (Sydney Theatre Company, 2013). Since the company has managed to achieve growth under an environment that is characterised by limited resources and great expectations from the state and the general public, there is need to ensure that the company maintains its success over the long-term. This report presents five key issues which are critical for the long-term success of the company. Whether the company achieves long-run success depends on how well the management of the company handles these issues. The report is divided into five sections, each handling different issues and recommendations which the management needs to take into account when assessing the design and operational processes of the company. In presenting the recommendations, the issues are assessed in relation to Sydney Theatre Company as well as the trends in the global theatre industry. 2. Issue one: Trends in the theatre industry One issue that is critical for the long-term success of the company is gaining a full understanding of current trends in the business environment in which it operates. This is important because it will enable the company to fully understand the current structure of the theatre industry and the strengths and weaknesses of the competition in the market. Such knowledge is critical in helping the company make appropriate decisions that can help it maintain its competitive advantage in the industry. Theoretically, the external environment of a company can be analysed under the Porter’s five forces model of competitive analysis. Under this model, an organisation is faced by five forces as follows: the competition, new entrants, the customers, suppliers and substitute products and services (Porter, 2008, p. 4). The success of organisations is determined by how best they respond to these factors. This model can be applied to the current situation in the theatre industry to help the company develop the right responses to the situation. For instance, the rise of substitute products in the form of the home cinema and other digital technologies has posed a serious threat to the traditional theatre companies (Silver & McDonnell, 2007, p. 6). In addition to this, the value proposition of theatre companies in general is under serious threat due to the rise of broadband and other technologies which enable consumers to have near theatre experiences from the comfort of their homes. There is therefore the need for the company to develop appropriate responses to counter the effect of substitutes in the industry. For the case of the customers, the company needs to take into account several realities that are affecting the entire industry. For instance, there are changes in the demographics of primary theatre goers, with the majority of consumers being individuals in their 50s and 60s (Silver & McDonnell, 2007, p. 7). This is in contrast to the former years when the theatre was primarily a preserve of the young. Since this is the trend in the industry, there is need for the company to realign its marketing to this new group of consumers. Also, the management of the company needs to develop strategies to handle the current pressure on theatre companies that arises from the suppliers represented by movie companies. Since these companies have collective channel dominance, theatre companies, as weakened buyers, have been forced to attain profitability only through concession sales (Silver & McDonnell, 2007, p. 4). Since this is not sustainable in the long-run, there is need for the company to develop sustainable strategies to ensure that the company’s profitability is sustained over the long-term. 3. Issue two: Sustainable funding The second issue that is critical to the long-term success of the company is how to obtain sustainable sources of funding. Sydney Theatre Company is a state-funded corporation that largely depends on the state, donors and philanthropists for funding its operations. However, the current state of financing for theatre companies in the country is complex. Changes in social and political factors have led to reduced funding from government agencies for theatre companies. With increased cuts in government funding as a result of political reasons, the company has already realised the need to develop sustainable models of funding its operations (Sydney Theatre Company, 2013). This strategy should be built around the four traditional sources of funding for the company: government agencies, corporations, individuals and foundations. For the case of acquiring funding from foundations, the company should be prepared to face the stiff competition that characterises the sector. This stiff competition is witnessed in soliciting for funds from both local and international foundations. One way in which the company can beat the competition in this process is by using the personal contacts of the members of its board to build important relationships with potential donors. Also, since the company has realised that funding from government agencies cannot be relied upon as the only source of funding in the long-term, there is need for the company to increase its use of individual donors. The attractiveness of individual donors lies in the fact that the supply and flexibility of this kind of funding is unlimited (Silver & McDonnell, 2007, p. 9). This means that an organisation is able to build a sustainable pool of individual donors who can sustain its operations in the long-term. As a way of achieving this, the company should exploit middle level individual donors in addition to high level ones. This is because middle level individual donors represent an important pool of potential donors that can be easily isolated and carefully integrated into the activities of the company. Since this remains a practical option for the company, considering that it has established contact with a large pool of young potential donors across the world in the recent past, there is need for the company to reduce its dependence on government as well as corporate funding. This is because corporate funding, just like government funding, has been subjected to frequent cuts in the recent past. Additionally, since corporate funding always comes with requirements for benefits to the funding corporation, the company cannot depend on it entirely. Therefore, the only way in which the company can develop sustainability in funding is through building a large pool of individuals donors. This should take place at both the local and international stages. 4. Issue three: Management of key personnel The third issue which is critical for the long-term success of the company regards the personnel of the company. Theoretically, the personnel of a company play a key role in determining its overall organisational strategy. This is because the structure of the organisation is modelled upon the overall organisational strategy (Dransfield, 2000, p. 37). The annual reports of Sydney Theatre Company indicate that the company is currently undergoing a phase of growth (Sydney Theatre Company, 2013). It follows that the company should adopt a growth-oriented strategy which favours innovation and flexibility as a way of responding to the external environment. It is also important to note that one key factor that has initiated the recent positive performance of the company is the availability of a highly creative and committed executive team (Sydney Theatre Company, 2013). With the combination of the right individuals and the right strategies, the company has been able to improve in performance with regard to all parameters. In order to achieve sustainable success in the long-term, there is need for the company to adopt strategic human resource management practices. Such an approach entails an organisation seeking to attract, develop and maintain a quality team of professionals in its management (Sims & Sims, 2007, p. 311). The situation is made serious when one considers that the contract of the current team of management of the company is set to expire soon. As a result of this, the company should focus on attracting the best talents in arts administration. Such a team is crucial in applying entrepreneurial skills in managing the company within the context of not-for-profit organisations. Much emphasis should be laid on attracting business-trained graduates who are capable of bringing their skills to the company. With the right exposure to how the theatre industry works, such individuals would achieve the highest levels of career development early enough so that continuity of top talent in the leadership of the company is ensured. In the process of building a sustainable supply of leadership talent for the company, there is need to recognise the role played by motivation and rewards in helping employees achieve their highest performance. Theoretically, the reward system of a company takes into account both material and non-material needs of individuals. This is reflected in financial and non-financial rewards being awarded to employees (Dransfield, 2000, p. 127). Since the company cannot manage to maintain high financial rewards for its top leadership, there is need to pursue alternative forms of rewards and motivation for the top leadership. It has already been seen that allowing the management a free hand to combine creativity with business skills in implementing the plans at Sydney Theatre Company has been instrumental in helping the company achieve its growth in the recent past. Since this strategy has proven successful, it should be taken as the primary strategy of maintaining a high calibre management team at the company. 5. Issue four: Maintaining the current structure of the organisation The fourth issue that is critical for the long-term success of the company is about how effective the structure of the organisation is in sustaining the growth of the company. It has already been seen that recent performance reports indicate that Sydney Theatre Company is undergoing a growth phase. It follows that the company should pursue growth strategies as a way of maintaining growth and helping it handle the effects of the external business environment in which it operates. Since pursuing growth strategies begins with having the right organisational structure in place, the company should seek to enhance a structure which supports such a strategy. This can be achieved in several ways. Theoretically, building an organisational structure takes into consideration the overall process of arranging resources together with human effort in such a manner that the objectives of the organisation are achieved (Daft, 2010, p. 91). This is important since it marks the beginning of implementing the vision and mission of an organisation (Aquinas, 2009, p. 139). For the case of Sydney Theatre Company, the current organisation structure has succeeded so far in implementing the core mission of the company which is ‘Theatre without borders’ (Sydney Theatre Company, 2013). The management team has succeeded in planning, organising, controlling and leading the organisation to achieve its growth so far. One key issue behind the success of the company is that it has maintained a contingency approach to applying its functional organisational structure. Such an approach is important in helping the organisation quickly adapt to rapid changes in the business environment, thus gaining a strategic advantage over the competition as noted by Burton and Obel (2004, 173). Because of this, the organisation should maintain its functional structure and seek to make the right replacements for key members of staff, particularly during times when the contracts of senior members of the management team expire. Also, since the adaptive design adopted by the company has been instrumental in the recent growth, the company should maintain the tradition of minimum bureaucratic features, high empowerment of the workers as well as teamwork. Teamwork and autonomy for the management team should be maintained as a way of ensuring that the organisation maintains its growth over the long-term. 6. Issue five: Relationships with key stakeholders The fourth issue which the company needs to consider for its long-term success is the relationships with key stakeholders in the industry. Relationships are key factors that determine the success of organisations. Under the stakeholder theory, the success of an organisation depends on how well the organisation builds and maintains its relationships with key stakeholders in the business environment (Phillips, 2003, p. 21). These stakeholders include shareholders, employees, competitors, customers, labour unions and the general public. The history of Sydney Theatre Company has been built on building and establishing strategic relationships with key stakeholders in the industry. This has been demonstrated by pursuits such as creating sustainable business relationships with potential sponsors for the company, diversification from the core business operations of the company and strategic management of all the operations of the company (Sydney Theatre Company, 2013). Since building sustainable relationships with all stakeholders is a key factor in determining the success of the company in the long-term, there are several recommendations which the company can consider for implementation as a way of enhancing its effectiveness on this front. First, the company should maintain its relationships with its emerging clients. This is significant given that there are demographic changes in terms of the primary client base of the company as reflected in emerging markets at the international stage and through the realisation that the core client base for theatre companies lies in the adult population. Second, the company should consider ways of maintaining its public relations. This is important because it enables the company to establish increased visibility at both the local and international stages. Lastly, it has been seen that the company has derived considerable success from cross-promotional activities in the recent past. Programmes such as arts for schools and other initiatives have been important in helping the company maintain visibility both at the local and international level. Because of this, the management of the company should consider allocating more resources to such initiatives. 7. Conclusion This report has presented five key issues and recommendations that are critical for the success of the Sydney Theatre Company. From the report, several things can be concluded as being necessary for the management of the company to consider when reviewing the design and operations of the organisation. For instance, it is recommended that the company focuses on middle level individual donors. This group of donors can offer a sustainable funding base to the company in the long-run, thus ensuring that it achieves long-term success. Second, there is need for the company to maintain the current organisational structure that emphasises on employee empowerment and teamwork. Third, the organisation needs to use strategic management as a way of attracting, developing and maintaining key personnel. Also, the company should focus on maintaining good business relationships with all its stakeholders. Lastly, the management of the company should take into consideration the impact of different competitive forces in the environment in shaping the theatre industry both locally and internationally. This will be important in helping the company quickly adapt to new trends in the industry. The long-term success of Sydney Theatre Company is hinged on how best the management of the company handles these issues. References Aquinas, P. G. (2009). Organizational Structure and Design: Applications and Challenges. New Delhi: Excel Books. Burton, R. M. & Obel, B. (2004). Strategic Organizational Diagnostics and Design: the Dynamics of Fit. Norwell: Kluwer Academic Publishers. Daft, R. L. (2010). Organizational Theory and Design. Mason: South-Western Cengage Learning. Dransfield, R. (2000). Human Resource Management. Oxford: Heinemann Educational Publishers. Freeman, R. E. (2010). Strategic Management: A Stakeholder Approach. Cambridge: Cambridge University Press. Phillips, R. (2003). Stakeholder Theory and Organizational Ethics. Francisco: Berret-Koehler Publishers. Porter, E. M. (2008). On Competition. New York: Harvard Business Review. Silver, J. & McDonnell, J. (2007). Are movie theatres doomed? Do exhibitors see the big picture as they lose their competitive advantage? Retrieved 14 December 2013, from: http://www.google.co.ke/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&ved=0CCsQFjAA&url=http%3A%2F%2Feprints.qut.edu.au%2F12880%2F1%2F12880.pdf&ei=x1qsUs2JBeX_ygOvtYGACg&usg=AFQjCNFYseeZOBMG2eChDXtwZLJEt1GuvA&sig2=i2W4xjo1sz7vHuKz0_tChQ&bvm=bv.57967247,d.bGQ Sims, R. R. & Sims, S. J. (2007). Human resource development: issues, challenges and opportunities. In Sims, R., R. (ed) Human resource Management: Contemporary Issues, Challenges and Opportunities. New York: Information Age Publishing. pp. 304 - 319. Sydney Theatre Company (2013). History. Retrieved 14 December 2013, from: http://www.sydneytheatre.com.au/about/sustainability.aspx Read More