IMAX Case

IMAX Case

Background of the Company

IMAX is a movie producing and selling company that is owned by Wechsler and Gelfond. In addition to the two shareholders, Wasserstein Perella Partners are also the owners of the company. Three shareholders bought the company in 1994 at cost of $ 80 million from the previous owner (Nair, 2009). In 1994, the company went public with an aim of raising funds to finance its project. IMAX would raise huge capital that would enable it to implement its expansionary projects on time. According to Nair (2009), shareholders of the company have enjoyed the growth of the company and in most cases have managed to get high returns for their investments in the company. The company has been able to make high profits in cases when most of its movies have gained popularity in the growing market of entertainment. One of the company’s best movies was Flashback, which was produced in 2004.

IMAX managed to make huge sales from the movie, making it one of the best movies to have been produced by the company in terms of the reception that the movie received from the targeted audience. Despite the good economic times that the company has enjoyed over the years, in the recent years the company, sales have suffered a great decline due to questioning of the analysts over its ability to sustain its demand from customers in the long-term (Nair, 2009). The analysts doubt the ability of the company to sustain the growing demand from customers. This has been proved right by the recent drop in the demand for movies that the company has been producing. It is important to understand that the company has been concentrating in one of the movie market niches. The company has been producing and selling Hollywood movies over the years. The drop in company sales and profit can be attributed to its concentration in one type of movie. This makes it hard for the company to sustain growth in the long-term.

Company Customers

The company customers are movie houses, movie theaters, and individuals from all lifestyles. Given that the company has been concentrating in production of Hollywood movies, most of it customers are those people who love Hollywood movies. Most of the customers of the company are low-income earners who love watching Hollywood movies (Nair, 2009). The company has been producing movies that suit all categories of viewers. This has made the movies gain popularity among children, women, men and young people around the globe. The company’s ability to produce outstanding Hollywood movies, in terms of quality, has made the company maintain and win new market share.

Company Competitors

Given that the movie industry is a diverse industry, in the recent years the numbers of companies producing movies have been on the rise making the industry one of the most competitive industry. First, the company is faced with competition from other types of movies such African movies and Bellwood movies. Therefore, the company has been facing stiff competition in marketing its movies in market segments where these types of movies are popular. Therefore, it would be sound to conclude that all companies producing other types of movies other than Hollywood are the major competitors of the company products as they offer substitutes for movies produced by the company. According to Nair (2009), the products of the company have been receiving competition from other forms of entertainment such as video games, music and others. This has seen the number of sales made by the company decline in the recent years due to the stiff competition received by other forms of entertainment. In conclusion, the main competitors of IMAX Company limited are those companies that are involved in production of various forms of entertainment products such as video games, movies, and music.

Context

IMAX is currently been faced with a problem of recording high levels of decline in its sales for the last one year. This problem has been attributed to many analysts as being caused by the company concentrating in one niche. This paper is concerned with carrying out SWOT analysis of the company to come with solutions to the existing problem. The analysis will focus on the objectives of the company, strengths, weaknesses, threats, and opportunities (Nair, 2009). The analysis will help the company identify its strengths and weaknesses and develop measures aimed at reducing the impact of this threats to its business operations

Company Weaknesses

The company has a major weakness when it comes to diversifying its investment. The company has been concentrating in one market niche, making it hard to withstand harsh economic times when the demand for its products goes down. Instead of diversifying its movie production, IMAX has been concentrating in the production of Hollywood movies (Nair, 2009). This has made the company weak when it comes to competing with other companies that produce all forms of movies. The company has also been blamed for overpricing it movies. Competitors offer competitive prices. Therefore, the pricing strategies pursued by IMAX do not take cognizance of the competitive market arena. Pricing its products higher than its competitors gives the company competitive disadvantage and therefore, it need to reconsider its pricing strategy for it to remain competitive.

Company Strengths

The company ability to concentrate in one niche maybe viewed as weakness on one hand, but in a way, this is strength to the company. Through concentrating in production of Hollywood movies, the company produces high quality movies that attract a huge consumption from the movie consumers. The company also has one of the highly motivated workforces making it possible to exploit their talents for the good of the company. The leadership style embraced by the company management is a participative one (Nair, 2009). This style makes it easier for idea generation, which leads to the production of high quality movies. The ability of the company to produce movies that are attractive to all categories of viewers is marketing strength to the company as it can sell its products to any individual. The company has a well developed chain of supply. If well utilized, the company can benefit from the existing chain of supply; given that it can easily distribute its movie products to all regions in the world, unlike its competitors who do not have w ell established chain of supply and distribution.

Company Opportunities

Given that currently the company has been able to exploit just one area of the movie industry, it has many unexploited opportunities that need to be explored. According to Nair (2009), the company needs to invest in production of other forms of movies rather than concentrate in one niche. The company can also consider setting up movie production firms in the African markets. This strategy will help IMAX to explore the opportunities that are there given that the market has not been fully exploited. The company can use its existing market share to explore the other movie production opportunities that exist in various market segments around the world. The company has the opportunity of expanding its production activities by diversifying its investment in other entertainment products. The company uses it existing product loyalty to build on the new products that it may decide to produce. The company should make use of its existing brand loyalty to explore new investment opportunities.

Company Threats

The company is faced with a number of threats and unless they are addressed it would be hard for the company to survive in the movie industry for the next one decade. First, the company is faced with the threat of competition from companies that are producing substitute movies to the ones that the company is producing. This is a major threat facing IMAX. Indeed, unless IMAX develops marketing strategies to overcome the stiff competition brought about by substitute products, it will not survive in the market for the next three years (Nair, 2009). The company is also faced with a threat of emerging film making companies. Competitors make it hard for the company to enjoy the monopoly it has been enjoying over the years. Finally, the company is faced with the threat of losing its best employees given that some of its competitors are giving better pays to employees that the company is doing. Losing the best of its employees will be a major blow to the company, as the quality of its products will be highly compromised.

Company Objectives

The objectives of the company first are to maximize the welfare of its employees and customers. This will be achieved by providing an environment that is conducive for team work and giving the employees fair wages and salaries. In addition, the company has an objective of meeting the needs of customers by ensuring that their welfare is well catered for by providing high quality products. Moreover, the company also has an objective of maximizing the wealth of the shareholders. To achieve these diverse objectives, IMAX has embraced a diversifications strategy. Indeed, entering a new market will help the company achieve these objectives. Finally, the company has the objective meeting the expectations of society. Corporate social responsibility is necessary for any company that expects to survive in the current competitive market arena. For IMAX, the focus is on activities that take into account the overall welfare of society. The company is seeking to create an environment that is conducive for its employees to work and achieve growth in their career.

Reference

Nair, A. (2009). IMAX: Larger than Life. Richard Ivey School of Business Foundation