News and entertainment in turbulent waters
A research to get an organization into safer waters
Thesis for Master of Science in Business Administration -Amsterdam. Februari 2004-
Author: J.J. van den driest
Student number: 0996173
University: RijksUniversiteit Groningen
Faculty: Business Administration
Specialisation: Business Development 1st supervisor: Drs. H.P. van Peet
2nd supervisor Prof. Dr.ir. F.P.J. Kuijpers Supervisor at the organization P.Smulders
Preface
This report is written for Radio Holland, Radio Holland Content@Sea and the University of Groningen in completion of the requirements for the Master of Science
“Business Development” at the faculty of Business Administration in Groningen.
In June 2003, about ten months ago I started with my final assignment at Radio Holland Netherlands BV. A lot of questions and nervousness and eagerness went through my mind in entering the final stage of my education, an experience which could not be compared by any previous one. In retrospect the greatest lesson
learned for me in this was the use of my own mind in putting theory into practice, in a totally strange and new environment.
I could not have done this research and made this thesis without the help, especially on the theoretical framework, of Ms. H.P. van Peet. Her good advice, support and understanding about the practice of writing a thesis helped me a great deal,
especially through some difficult times in which her help proved to be invaluable. I am of course very grateful for her assistance.
On some crucial moments in the research, the comments of Drs. H.P. Van Peet were complemented with the suggestions and line of thought of Prof. dr. ir. F.P.J. Kuypers.
He also helped me greatly in writing this thesis in a coherent way, for which I am very grateful as well.
Practically speaking I am very grateful for the opportunity given to me by Mr. D.
Slager, who has offered me the possibility to perform a research at Radio Holland Content@Sea. Within Radio Holland and Content all possible guidance and
assistance was given to me by Mr. P. Smulders and Mr. N. Riet. Despite their busy schedule they always were available to offer their assistance, provide information and give suggestions in performing my research and writing my report. Thank you very much for your enthusiasm, time and help!
Executive summary
Radio Holland Content@Sea is a subsidiary organization of Radio Holland
Netherlands. The organization’s main activity is the delivery of a video service with news and entertainment aspects to the Dutch nautical sector. Content@Sea is a small organization and provides a service that has but a few direct relations to Radio Holland. There is insecurity about the future of the organization so the management wants to get recommendations on a product-market strategy. The main problem of the management has been transformed into a research question;
What does a product/market-strategy for Content@Sea which guarantees the continuity of the organisation by creating extra value for Radio Holland through synergy, which is based upon the developments in the external environment, the bargaining power of and the threats from the industry environment, the wishes and needs of the market and the core competencies of Content@Sea look like?
The research has been done for the Dutch and the British market.The research has mainly been structured according to the general-, industry- and internal environment.
The wishes and needs of the target market were also specifically researched to create a strategy based on an outside-in perspective.
The general environment of Content is very turbulent in respects of new technologies like in the developments in satellite- and internet technologies. The legal environment in Great Britain is complicated in sense that the laws and practices concerning
copyrights are expensive, treated under criminal law or impossible to come by.
There are various (potential) substitutes for the service deriving from the
developments in the technological environment. Only in the British market there is threat of competition because there is already an organization active in video and DVD rental for the maritime industry.
Synergy derived from strategy and control, allocation of capital between the units and portfolio management is already present at the moment. Synergy can also be
achieved by combining marketing efforts and emphasising on the inter-relations (reliability, quality, flexibility) between the organisations in order to exploit the image of the organisations.
Finally a product market strategy is designed. This strategy aims for Content to grow through internationalisation and diversify the service through a customers focus Main synergy aspects which have to be pursued are:
• Synergy derived from ‘brand name’
• Synergy from crosselling the video service with Hardware
General Introduction
The Netherlands as well as Great Britain have great histories as seafaring nations.
Seafarers have an image of being tough adventurous men and the profession is surrounded with wild and intriguing stories of hard work and far away exotic places.
Working on a merchant ship does have distinctive characteristics, like being away from home for a long time, going places, long work hours, improvising on the job, intense contact with colleagues etc. However, with the passing of time and developments in ships and related technologies the profession has become more structured, time in harbor became shorter and work hours more regulated. Working and living conditions clearly have improved greatly, but on the other hand the
profession has lost some of its old glory. This process was inevitable because of the major responsibility that comes with sailing a large expensive vessel with a major cargo. Every hour of delay costs a shipping company a lot of money.
Some things however remained the same in sailing great distances with a ship; when there is no immediate work to be done on the ship boredom arises. Besides that, being on open waters means that it is hard to be up to date on current events and aspects of the home country are missed.
Radio Holland Content@Sea provides a service to these seafarers that aims to fulfill these needs which is defined as “producing a television experience with news and entertainment aspects to seafarers”. The service contains a package of Video cassettes with current events, various television programs from the Dutch television and feature films to Dutch ships.
The company is a part of the Radio Holland organization and has a long history of serving the nautical sector. At the moment the total profits of the organization are relatively small compared to the rest of Radio Holland. Therefore the organization is contemplating how to proceed into the future. This report aims to give the
management of Radio Holland as well as the management of Content@Sea
recommendations on a possible product market strategy for the company. This has lead to the following results:
• An internationalisation strategy of diversification with a customer focus
• The British market is not to be entered
The report is structured as follows. In the first chapter a general introduction of Content@Sea as well as the Radio Holland organization is given. The second chapter is an analysis of and an approach to the problems at hand. The third and fourth chapters are an analysis of the general- and industry environment. Then, in chapter five the wishes and needs of the target market of Content will be analyzed.
The internal environment will be described after that with a focus on resources and synergy with the rest of Radio Holland in chapter six. Findings on all previous
chapters will be used in chapter seven where Swot analyses will be made. In chapter eight the research will be concluded with a product market strategy for Content and interesting synergies with Radio Holland and recommendations for the organization.
TABLE OF CONTENT
1. INTRODUCTION... 4
1.1. General introduction... 4
1.2. History of Radio Holland Content@Sea ... 4
1.2.1. Changing business ... 5
1.3. Introduction of Radio Holland... 5
1.3.1. Business definition ... 6
1.3.2. Missions ... 6
1.3.3. Vision ... 6
1.3.4. Strategic goals... 6
1.4. Radio Holland Content@Sea... 7
1.4.1. The service... 7
1.4.2. Structure... 7
1.4.3. Strategy... 8
2. METHODOLOGY AND RESEARCH METHOD... 9
2.1. Methodology... 9
2.2. Management questions ...11
2.3. Problem definition...13
2.3.1. Research goal ...13
2.3.2. Main Research question...15
2.3.3. Preconditions...16
2.4. Definitions...17
2.5. Research methods ...17
2.6. Theoretical framework ...17
2.6.1. The general environment ...18
2.6.2. Industry environment...20
2.6.3. Wishes and needs of the target market ...22
2.6.4. The internal environment...22
2.6.5. Strengths, Weaknesses, Opportunities and Threats ...24
2.6.6. Product/market strategy ...24
3. THE GENERAL ENVIRONMENT ...26
3.1. The Global, economic and sociocultural environment ...26
3.1.1. Global environment ...26
3.1.2. Economic environment ...28
3.1.3. Sociocultural environment ...31
3.2. The technological environment ...33
3.2.1. Selecting, editing and copying...33
3.2.2. Distribution ...34
3.2.3. Data consumption ...38
3.3. The demographic environment...41
3.3.1. The Dutch shipping market...42
3.3.2. The British shipping market ...44
3.4. The legal environment ...45
4. INDUSTRY ENVIRONMENT ...50
4.1. Buyers ...50
4.2. Suppliers...53
4.3. New entrants and substitutes ...55
4.3.1. Potential substitutes ...55
4.3.2. New entrants ...58
5. WISHES AND NEEDS OF THE TARGET MARKET ...60
5.1. Customers ...60
5.2. Consumers ...63
5.3. Customers in relation to consumers ...66
6. THE INTERNAL ENVIRONMENT...67
6.1. The primary process ...67
6.1.1. Input ...67
6.1.2. Primary process ...68
6.1.3. Output ...69
6.2. Resources...70
6.2.1. Tangible resources ...70
6.2.2. Intangible resources ...72
6.3. Capabilities ...75
6.4. Core competencies ...76
6.5. Synergy with Radio Holland...77
7. SWOT ANALYSIS ...81
7.1. Strengths ...81
7.2. Weaknesses...82
7.3. Opportunities...83
7.4. Threats ...84
7.5. Comparisons ...87
8. FUTURE OF CONTENT ...90
8.1. Product/market-strategy...90
8.2. Synergy ...93
8.3. Conclusions and recommendations...94
8.3.1. Conclusions...94
8.3.2. Executive conclusion...98
8.3.3. Recommendations ...99
8.3.4. Reflection ... 101
9. SOURCES ... 104
10. APPENDICES ... 108
1. INTRODUCTION
In this chapter the organisation will be described. After a short introduction of Radio Holland Content@Sea the history of the organisation will be described. Before Content@Sea will be described in terms of service structure and strategy the holding organisation, the Radio Holland Group will be introduced.
1.1. General introduction
Radio Holland Content@Sea is an organisation which generally provides two services. The company produces video’s and rents them to shipping companies. The other service of the organisation is that it provides shipping companies with subscriptions on satellite television. The main market segment the company focuses on is the nautical sector (or maritime industry). The objective of Content@Sea is to provide a “Dutch television experience on board seagoing vessels”. This report focuses on the video service of Content@Sea, therefore the subscription service to satellite television will not be described in detail.
Content is a small organisation with one full time employee, the director, Mr. N. Riet and a part-time employee. Basically the organisation further consists of one office with a recording, editing and copying studio. There are two main areas where programs and movies are recorded from television, these are located et the homes of the employees. The organisation is based in Leimuiden, near Schiphol.
1.2. History of Radio Holland Content@Sea
Until the mid-1970’s seagoing vessels had to rely on 16mm film for visual on-board entertainment. Because film copies are expensive to produce, specialized ‘maritime entertainment’ companies catered for world-wide exchange systems and at the pinnacle of it’s existence UK market leader Walport Telmar boosted over a 100 exchange depots. The introduction in 1972 of U-matic video, was the beginning of the end of the film era.
Radio Holland immediately recognized the advantages and possibilities of ‘video’ for on board entertainment applications: program material was readily available on TV and could easily be edited and copied. Moreover, Video cassettes (even the old U- matic type) are less bulky and considerably cheaper than 16 mm film reels, thus simplifying distribution. Realizing the copyright issue, Radio Holland started talking with the Dutch Broadcasting Organization (NOS), resulting in ‘an understanding’
which allowed Radio Holland to use Dutch origin TV materials for the production of a weekly video-summary for crew entertainment on board Dutch flag vessels. This slightly tricky ‘situation of understanding’, combined with the fact that the activity was regarded as a bit out of the ordinary, prompted Radio Holland to form a new limited company. In 1976 Radio Holland Television B.V. therefore was established and the first weekly summary of Dutch television was dispatched.
1.2.1. Changing business
Business for Radio Holland Marine Television developed well and as of the first year of its existence the company made a profit. Since playing back video cassettes required a video player and a monitor, the company also provided for this hardware.
In the mid-1980’s a number of things happened. Forced by the economic situation the number of vessels in the Dutch fleet reduced significantly. Furthermore the VHS video cassette system was introduced and enabled the ship owner to very cheaply source his video-entertainment from the local video shop in any port. Even though the effects tried to be minimized, subscribers halved. However, at the same time satellite TV reception at sea developed and the company started shifting the emphasis of it’s activities from the cassettes to hardware. Re-named Radio Holland AV Systems B.V., the design, assembly, supply and installation of marine audio- visual systems became the main activity.
Over the years the company matured well in this particular area, realizing major projects in the offshore industry, the luxury mega yacht and cruise vessel markets. In 1999 the turnover was greater then ever before of which 80 per cent came from hardware (installation) activities. In order to increase efficiency, minimize vulnerability and maximize sales opportunities and market exposure, it was the same year decided to merge the ‘hardware activities’ of Radio Holland AV systems B.V. into the parent company Radio Holland Marine B.V.. Since it was recognized that for vessels with a world-wide sailing pattern satellite TV due to it’s complex nature was no option and that those vessels for the next 5 to 10 years for on board entertainment, Radio Holland AV systems B.V. was to continue this activity under the new name; Radio Holland Content@Sea (Content).
From the beginning of 2000, DVD’s became a popular alternative for video cassettes.
DVD technology is digital and therefore produces a higher quality of sound and image and the quality last longer. Since the beginning of 2004 Content has introduced a DVD service besides the video Cassette service. The company is intending to eventually switch completely to DVD’s but as long as a major part of its customers still desire video cassettes they can choose between video cassette and DVD. DVD’s contain exactly the same content as the video cassettes although the total playing time is shortened to be able to guarantee a high quality level.
1.3. Introduction of Radio Holland
The Radio Holland Group is the holding company of Radio Holland Netherlands, which in turn is the mother organization of Radio Holland Content@Sea. The strategy and business definition of the Radio Holland Group is executed by its branch offices.
Radio Holland Netherlands operates, as the largest, primary branch office and is located very near to the Radio Holland Group office. Therefore, only the Radio Holland Group will be treated here.
The Radio Holland Group is a world-wide holding organization of companies that are competent in the sales and service of a variety of products to the maritime industry.
This comes down to the sales and service of products varying from fire detection systems to radar systems and from engine room automation to ships bells.
1.3.1. Business definition
The Radio Holland Group supplies innovative, efficient and functional solutions in the fields of Satellite and Radio Communications, Automation, Navigation, Observation and Audio Video systems for various maritime users. Additionally, the organization offers fast and reliable service 24 hours a day worldwide for a wide range of products.
1.3.2. Missions
Radio Holland has four missions, each relevant for a specific group of stake holders of the company.
Customer:
The customer is the center of everything Radio Holland does. The company strives for customer specific, innovative solutions in products and services in electronics for maritime applications. Radio Holland offers fast and reliable services for a broad product range.
Share holders:
Radio Holland strives for maximization of share holder value and a good yield on invested capital.
Employees:
The employees of Radio Holland feel connected to the company. Radio Holland strives for a good work climate where motivation and a focus on results are being stimulated by the opportunities for self-realization, an open corporate culture and appreciation for achieved results.
Suppliers:
For the strategic suppliers Radio Holland is an indispensable partner and advisor.
From an independent position Radio Holland works for the common interests of suppliers and Radio Holland. The organisation forms an indispensable link between the supplier and the maritime sector.
1.3.3. Vision
The Radio Holland Group is the number one in providing all global ship operators with complete solutions for their electronic requirements to operate their vessels in the most efficient and effective way.
1.3.4. Strategic goals
Focus on new technology & opportunities
Partnership for the worldwide customers and suppliers
Safeguard the quality of service through training and knowledge exchange in the Group
Realize additional market share for selected areas Provide worldwide airtime services
1.4. Radio Holland Content@Sea 1.4.1. The service
The service Content delivers is a package of three video cassettes with a total duration of 9 hours. These video cassettes contain a selection of television programs and feature films which have been recorded in the past week. The total program contains sports, highlights of the news, documentaries, comedy shows, video clips, two feature films etc. The package contains an ‘A’ cassette with sports, news and a series in Dutch, a ‘B’ and ‘C’ cassette in English with Dutch subtitles. The package further contains three pages of product information, this means a schedule and some general information of the content.
This package is sent to shipping companies on a weekly basis, which in turn send the package through to ports where their ships (vessels) are or will come. The service therefore has the purpose of functioning as means to bring the “Dutch television experience” on board ships as well as informing the ships crew with television images of current events.
1.4.2. Structure
Radio Holland Content@Sea (Content) is a subsidiary company of Radio Holland Netherlands B.V., which in turn falls under the holding organisation, the Radio Holland Group B.V. Content is a separate limited company of which Radio Holland Netherlands is a 100 per cent share holder. The organisation is very small compared to Radio Holland Netherlands and the Radio Holland Group, with a net turnover which represents approximately 0,7 per cent of the total turnover of Radio Holland Netherlands, a company with 235 employees. The net turnover of Content@Sea represents approximately 0,2 per cent of the total turnover of Radio Holland Group and there work in total approximately 700 employees.
Radio Holland Group:
The Radio Holland Group is a world-wide holding organization, located in Rotterdam.
In the holding organization there work seven people. The Group is active in 17 countries around the world with a total of 48 branch offices placed in all the countries with major maritime industries and on important ocean routes. According to de Leeuw (2001) a divisional organization divisions function relatively independent and have the characteristics of profit centers. All the various branches of the Radio Holland Group have profit responsibility and are located at specific geographical dispersed locations. Therefore, the structure of the Radio Holland Group is a divisional structure according to the theory of de Leeuw.
Radio Holland Netherlands:
Radio Holland Netherlands is by far the largest subsidiary company of the Radio Holland group. The organization has been located in the same building as the Radio Holland Group until the spring of 2003 in Rotterdam. At that time the holding
organization moved out of the building to an office a couple of blocks away. The organization has a buying division, a sales division, a financial division, an
administrative division etc. Within these divisions there are account managers with a certain amount of customers for whom they function as contact point for all possible
services Radio Holland can provide. However, Radio Holland Netherlands has 8 branch offices throughout the Netherlands. These branch offices are responsible for a specific geographical area. Besides this the organization is characterized by a functional structure. Finally there are also project- and account managers. In terms of de Leeuw (1997), the structure of Radio Holland Netherlands therefore can be
labeled as a Matrix organization, partially based on geographical divisions, partially based on functional divisions and partially based on project-, or customer- basis.
An organization structure of Radio Holland Netherlands can be found in Appendix A.
Radio Holland Content@Sea:
Radio Holland Content@Sea is a subsidiary company within radio Holland Netherlands. The company is, with its one full-time and one part-time employee, so small that there hardly is an organization structure to analyze. According to Mintzberg (1993) this type of structure can be labeled as a simple structure.
An outlining of the corporate structure of the Radio Holland Group can be found in Appendix B.
1.4.3. Strategy
Until 2001 the sales of Hardware was the main activity of Content. The video service was merely a small part of the organization and did not have a specific strategy.
Since Content split up and only the software branch stayed within Content the video service got all the attention and the organization specifically aimed for growth of the service again. However, since the organization, the target market and the customer base is so small the director never consciously implemented a specific strategy.
Analyzing Content, a strategy does come to light. In terms of Van der Aa and Elfring (1999) the company has a focus strategy. This means ‘the organization wants to realize growth by specializing on a specifically defined form of service.’1 For Content this comes down to “providing an entertainment and news service which can be consumed via a screen on board Dutch vessels”.
1 Aa, van der, W. & Elfring, T., Management van dienstverlenende bedrijven, Schoonhoven, 1999, p.142
2. METHODOLOGY AND RESEARCH METHOD
In this chapter the methodology of the research will be described. This methodology is used to reform the management questions in a problem definition. The problem is structured through a theoretical framework which is outlined for the research question and sub-questions.
2.1. Methodology
‘It is impossible to approach a problem unprejudiced. Un-inevitable there always is the first question for the organization. This question is founded on a number of
methodological choices.’2 Choices in this report are made rationally and are based on the reality of the researcher. According to Ramondt (1996) ’Rationality isn’t a clear cut fact but rationality is made. In the end rationality is founded on the level of reasonable argumentation and interpretation.’3 Therefore, the conclusions of this research can not be seen as certain truths but as indications of the truth according to the researcher.
According to Ramondt (1996) there are 6 methodological choices to be made before the first question to the organization can be posed. This research however, is initiated by the organization. Starting point of the research is a number of questions the
organization wants answered. Therefore, the first question of the researcher has been preceded by questions of the organization. This means the research can not be started objectively and the first question is subjective in nature.
The following 6 choices are made:
1.) Choice in the nature of knowledge that is wished to be developed. That is, the choice between explaining- and designing research.
The research will be a designing research. The management questions that were posed before hand clearly stated that they wished ‘design’ knowledge to be the result of the research. The choice on the nature of knowledge is highly dependent on the preconditions of the research.
In designing research there are three forms of reality;
- possible future - probable future - desired future
Figure 1: the coherence of desirability’s, possibilities and probabilities
2 Ramondt, J.J., Organisatie diagnostiek,, Schoonhoven, 1996, p.7
3 Kunneman, H., De waarheidsrechter, Een communicatietheoretisch perspectief op wetenschap en samenleving, Meppel, 1986
Possible futures Probable futures Desired futures
Radio Holland states that they want the possible future to be researched to be able to provide an entirely new solution. The possible- and the desired future therefore coincide in this research.
2.) The relation the researcher wishes to develop with the organization that is the subject of the research.
In designing research of an organization the researcher is intensely confronted with the unique character of an organization. His observations always have an intervening character.4 The researcher therefore needs to pay attention to structuring the relationship with the organization.
In this research there is a symmetrical relationship. This means that Content and Radio Holland are actively participating in the research. The amount of
information that is supplied by both companies and the direction to the research that is given by them exemplify their active roles. The researcher thereby is lead by the insights of the organizations.
3.) The way in which the research question is developed.
All research originates from astonishment. This astonishment surfaces through a theoretical statement or a phenomenon in reality.
This research is based on problems that are experienced by Radio Holland and Content. Their awareness of a problem is why they wanted this research to be executed. In problem based research the research question is developed in accordance to the development in the field of research.
4.) The structure of research steps.
This research has several management questions that need to be answered which provide a framework for the process. However, since the field of research is not clear on forehand, the research questions will evolve with the widening of the field of research. Therefore the structure of the research steps will be cyclical. In cyclical research formulating the research question is part of the research process.
5.) Neutral or intervening research
All research has a meaning of intervention and has consequences on ways in which people think, act and operate. The question is if one wants to give this a place in the research. This research is an intervening research since it has a place for opinions and interventions of the organization. The report will clearly be made to bring viable solutions for the organization. An example of this is that the provisional conclusions were presented to the organizations to be discussed before final conclusions were drawn.
4 Aken, J.E. van, De bedrijfskunde als ontwerpwetenschap, de regulatieve en de reflectieve cyclus, Eindhoven, 1993
2.2. Management questions
Radio Holland Netherlands had several questions that they wanted answered. The following questions functioned as a starting point for the report;
Is the current form of the service of Radio Holland Content@Sea suited for the next 5 – 10 years?
If yes, what recording and transfer media will be most suitable for the service?
Are there possibilities to develop new services in the short term with sufficient synergy with the current package of products and services?
In what form does the organisation of Radio Holland Content@Sea need to be modified for the business models mentioned above?
Is there synergy with other Radio Holland Group companies which can improve the total return for the Group?
The research was instigated by the board of the Radio Holland Group, the management general manager of Radio Holland Netherlands however posed the management questions.
Organisational problems are problems that are intertwined with the organisation and that are formulated in terms of a professional representation of the organisation.5 One main problem can be derived from these management questions;
The lack of a vision and a strategy to achieve the continuity of Content@Sea.
This problem can be divided into three sections:
1) The organisation does not have an explicit strategy.
2) The continuity of Content is at risk.
3) Total return of the Radio Holland Group from the cooperation with Content needs to be improved.
The first two problems can directly be derived form the main problem, which in turn is derived from the management questions. The third problem, the need to improve the return of the Radio Holland Group, is a precondition for the Radio Holland Group to continue the service of Content when the director of Content retires which is in approximately 5 years.
1. The lack of an explicit strategy: This problem does not directly influence organisational functioning; therefore it is an instrumental organisational problem.
The instrumental problem, the lack of strategy, comes from the lack of (infra-) structure within the organisation to be able to produce a good vision and strategy.
5 De Leeuw, Prof. Dr. Ir. A.C.J., Organisaties: management, analyse, ontwerp en verandering, 1990, Assen, p.239
This is a functional problem since it directly influences the functioning of the organisation.
Since Content is a small organisation and specifically requested this research to be done to create a strategy and a vision, only the instrumental problem will be dealt with in this report
2. The continuity of Content: This problem is a functional problem since it directly influences the (future) functioning of Content. The continuity of Content is at risk because the environment of Content is turbulent and there is no explicit strategy to deal with the changing circumstances caused by this turbulence (problem No.1) and because the Radio Holland Group wishes the returns from the cooperation between the organisation and Content to grow (problem No.3).
3. The returns of the cooperation between Content and Radio Holland: This is a functional problem since organisational functioning of Content in the future is directly influenced by it. If the total return that the Radio Holland Group gets from the cooperation with Content does not improve the continuity of the organisation is at risk. Therefore a strategy has to be developed.
According to de Leeuw (1990, 2001), problem owners are individual members of an organisation where problems can be attributed to. In this case the individual ‘problem owners’ are members of various management teams. These problem owners are;
A. The board of the Radio Holland Group B. The board of Radio Holland Netherlands
C. The board of Radio Holland Content@Sea (Content)
The interests of the boards of Radio Holland Netherlands and the Radio Holland Group are equal and amount to the interest to keep or increase profits of Content@Sea. The two ‘problem owners’, the ‘Group’ and ‘Netherlands’ will therefore be treated as one (Radio Holland) from now on.
The two groups (Radio Holland and Content) are ‘problem owners’ of the first two problems;
1. The lack of an explicit strategy: The lack of vision and strategy is a problem for Radio Holland and Content in the sense that it brings uncertainty for them and that brings extra management effort and costs time for decisions to be taken to improve the organisation(s). Examples of this could be decisions in stimulating synergy or for increasing profits.
2. The continuity of Content: The possible lack of continuity is a problem for the Radio Holland in the sense that it endangers future profits of Content. It is a problem for Content in a sense that its survival is at stake.
Only Radio Holland is the ‘problem owner’ of the third problem;
3. The returns of the cooperation between Content and Radio Holland: The total return of the cooperation between the Radio Holland Group and Content needs to be improved in order for Content to stay a valuable asset for the organisation. Since the cooperation will only be ended after the retirement of the board of Content the ‘problem owner’ in this case is Radio Holland since it can miss the small amount of extra returns Content generates.
2.3. Problem definition
‘A problem is a situation of subjective discomfort of the ‘problem owner’ with the wish to do something about it’. 6 According to de Leeuw (1990) a problem consists of three elements; the reality of the situation, the aim of the ‘problem owner’ and the
perception of the ‘problem owner’. Sometimes a problem has to do with the actual situation in the reality, sometimes with a future situation. The latter occurs when a
‘problem owner’ foresees that an unusual situation will arise. In such a situation the problem (in the subjective meaning in which we think about problems) is present and actual even though it has reference to a future situation. In this analysis of the
problems of Radio Holland Content@Sea the problems that were presented by its management will be defined and analyzed.
According to de Leeuw (2001) a good problem definition has to be able to express
‘what one wants to know and why’. The problem definition has two sides; on the one hand it is a connection to concrete practical problems, on the other hand it is focused on appropriate theory. The problem definition contains a research goal, research question and a set of preconditions that relate to limitations of the research.
The problem definition is developed by taking the problems of Content and discussions about them with the various problem owners (board of Radio Holland Netherlands and Content@Sea).
2.3.1. Research goal
According to the theory of de Leeuw (2001) this research is management-supporting practical research. ‘Management supporting research is research of which the results enlarge the rationality of the management process in terms of effectiveness, purpose and meaning for the actors.’7
‘Management supporting research can be characterized by the fact that it is important to exactly specify what the aim of the research result is. Formulating the research goal is specifically appropriate to specify the aim of the research.’ 8
The development of a product-market strategy for Content@Sea and formulation of subsequent recommendations for the management of Content@Sea and Radio Holland Netherlands.
Before the research question can be formulated a conceptual model is developed.
According to de Leeuw (2001) conceptual models have to be able to make the problems understandable and operationalisationable.
6 De Leeuw, Prof. Dr. Ir. A.C.J., Organisaties: management, analyse, ontwerp en verandering, Assen, 1990, p.209
7 De Leeuw, Prof. Dr. Ir A.C.J., Bedrijfskundige methodologie, Assen, 2001, p. 207
8 De Leeuw, Prof. Dr. Ir A.C.J., Bedrijfskundige methodologie, Assen,2001,p. 210
Figure 2: Research model of the research at Radio Holland Content@Sea
The research model
- First of all the general environment of Content will be analysed. The general environment is specifically important in this research since it is very turbulent and gives an indication of future (im)possibilities on how to design the service. This is directly relevant for the development of a product-market strategy.
- Secondly the industry environment will be analysed. This will reveal the position of Content within the British and Dutch market for the deliverance of an
entertainment- and news service for the nautical sector. The characteristics of the target market of Content will be defined here
- Thirdly the wishes and needs of the target market will be analysed.
- Then internal environment of Content will be analysed. This will be done by analysing the primary process, the core competences of the organisation and the synergies with Radio Holland.
- Finally all previous analyses will be used to produce SWOT analyses for Content, these analyses will form the foundation of the product-market strategy.
Figure 3: Conceptual model of the research at Radio Holland Content@Sea
This model represents the structure of this research and is primarily based on the theoretical framework of Hitt and Ireland (2001).
Product- market strategy Primary process
Synergy Resources
Core competencies Capabilities
Purchasing needs
Organisation
Bargaining power
H3: General environment
H6: Internal environment H4: Industry environment
H5: Wishes and needs of the target market
H7: SWOT analysis H8: Design of a product-market strategy
2.3.2. Main Research question
According to de Leeuw (1996) the main research question has to have a fit with the theoretical framework, it is the main starting point for the elaboration of the research in the sub-questions.
What does a product/market-strategy for Content@Sea, which guarantees the continuity of the organisation and creates extra value for Radio Holland
through synergy, look like?
The strategy will be based upon the anticipated developments in the general-, industry and internal environment and furthermore on the wishes and needs of the of the British and Dutch target market of Content@Sea.
–
Points of attention are:•
Technological developments•
Legal considerations in Great BritainThe main research question has been divided into several sub-question, mainly on the theoretical framework of Hitt and Ireland (2001). For a clear overview of the structure of these questions, according to which the report is written, a model is placed in Appendix A.
1. What does the general environment of Radio Holland Content@Sea look like and what are the expected developments in the general environment?
a. What are the current and expected global, economical and sociocultural developments that could be relevant for the service of Content@Sea?
b. What are the current and expected technological developments that could be relevant for the service of Content@Sea?
c. What are the current and expected demographic developments in the Netherlands and Great Britain that could be relevant for the service of Content@Sea?
d. What are the current and expected legal developments in Great Britain that could be relevant an introduction the service of Content@Sea?
2. What does the industry environment of Radio Holland Content@Sea look like and what are the expected developments in the industry environment?
a. What is the most relevant group of buyers for the service of Content@Sea and how big is their bargaining power?
b. What are the suppliers of the service of Content@Sea and how big is their bargaining power?
c. How big is the threat of potential new entrants in the market and what are the possible substitutes for the service of Content@Sea?
3. What are the wishes and needs of the target market of Content@Sea?
a. What are the wishes and needs of the customer of Content@Sea in relation to the service the Content has to offer?
b. What are the wishes and needs of the consumer of Content@Sea in relation to the service the organization has to offer?
c. What are the wishes and needs of the customer of Content@Sea in relation to the wishes and needs of the consumer in relation to the service?
4. What does the internal environment of Radio Holland Content@Sea look like and what are the expected developments in the internal environment?
a. How is the primary process of Content@Sea structured?
b. What are the resources of Content@Sea?
c. What are the capabilities of Content@Sea?
d. What are the core competencies of Content@Sea?
e. What are possible synergies of Content@Sea with Radio Holland?
5. What are the strengths, weaknesses, opportunities and threats for of Radio Holland Content@Sea?
6. How can Content@Sea be modelled in a way that the organisation can keep functioning while adding extra value to Radio Holland to guarantee the continuity of the organisation?
a. What is a product/market strategy that can realise growth of future profits and thereby guarantee the continuity of Content@Sea?
b. What are potential synergies with Radio Holland for the designed product/market-combination?
c. What are recommendations for the management of Radio Holland concerning the ways in which the service of Content@Sea can be positioned within Radio Holland and the market?
2.3.3. Preconditions
According to de Leeuw (2001), preconditions define the limitations the of the research results. This relates to product- and process limitations.
Process:
• The research within Radio Holland had to be done within the scope of 6 months (December 2003).
• The employees of Radio Holland as well as Content@Sea can not be hindered to a great extent in their daily work by this research.
• Customers of Radio Holland can only be questioned through the use of inquiries.
• Research has to be done from home or the Radio Holland office.
Product:
• The research had to have value as a report for Radio Holland and Content@Sea, as well as value as a thesis for Business Administration.
• The report for Radio Holland has to be in English.
• The markets that are researched are the Dutch and the British nautical sectors.
• The research is done of the video service of Content.
2.4. Definitions
Entertainment all possible sorts of entertainment and relaxation which can come to you by (television or computer) screen.
News All possible sorts of news and current events which can come to you by (television or computer) screen.
Nautical sector All shipping companies active in sea transportation Maritime sector is nautical sector and vice versa
Ships crews Group of employees active on ships in the nautical sector Seafarers Ships crewmembers employed in the nautical sector Ships are vessels and vice versa
2.5. Research methods
To acquire the necessary data the following research methods were used:
a) Inquiries
b) Informal conversations c) Interviews
d) Document analysis e) Internet research
a) Inquiries were sent to the (potential) customers and consumers of Content.
Other means of gaining information from them was not possible because of the preconditions of the research.
b) Informal conversations were few since the research was performed from home and Radio Holland and not the office of Content. Informal conversations did happen though, this was mainly in unplanned situations (lunch etc.)
c) Interviews took place in Radio Holland as well as Content and with various persons like the general-, sales-, communications- and financial management.
Main sources were the director of Content (Mr. N. Riet) and the general manager of Radio Holland (Mr. P.Smulders).
d) Few documents on Content were available since this is the first research ever to be performed on the company. The documents were mainly about Radio Holland and the general environment of Content.
e) Internet was a huge source of information and especially proved to be useful in the research on the general- and industry environment.
2.6. Theoretical framework
All the aspects concerning relevant aspects to the research are stated with the theoretical handle with which it will be treated in the report. The composition of the various aspects will be according to the structure of the report. A general overview of the theoretical framework can be seen in table 1.
Table 1: main theories
2.6.1. The general environment
The general environment is composed of elements in the broader society that influence an industry and the firms within it.9 These elements are grouped into six environmental segments: global, economic, sociocultural, technological, demographic and political/legal. Firms cannot directly control the general environment’s segments and elements. Accordingly, successful companies gather the types and amounts of data and information that are required to understand each segment and its implications so that appropriate strategies can be selected and used.10
Global environment
‘The global segment includes relevant new global markets, existing ones that are changing, important international political events, and critical cultural and institutional characteristics of global markets. Although the segments we have examined so far are analysed in terms of their domestic and global implications, some additional specific global factors should be analysed as well. Many global markets are
becoming borderless and integrated. In addition to contemplating opportunities, firms should recognize potential threats in these countries and marketplaces’.11
Economical environment
‘The health of a nation’s economy affects the performance of individual firms and industries. Because of this, companies study the economic environment to identify changes, trends and their strategic implications.
The economic environment refers to the nature and direction of the economy in which a firm competes or may compete. Economic issues are intertwined closely with the realities of the external environment’s political/legal segment.’12
Sociocultural environment
‘The sociocultural segment is concerned with a society’s attitudes and cultural values. Because attitudes and values from the cornerstone of a society, they often drive demographic, economic, political/legal, and technological conditions and
changes. Companies must understand the implications of a society’s attitudes and its cultural values before they can expect to offer goods and services that will meet consumer’s needs and interests. Sociocultural segments do differ across countries’.13
9 Fahey, L., Competitors, 1999.
10Hitt, M.A., Ireland, R. D. & Hoskisson, R.E., Strategic Management, 2001, p.50
11 Hitt, M.A., Ireland, R. D. & Hoskisson, R.E., Strategic Management, 2001, p.65
12 Hitt, M.A., Ireland, R. D. & Hoskisson, R.E., Strategic Management, 2001, p.60
13 Hitt, M.A., Ireland, R. D. & Hoskisson, R.E., Strategic Management, 2001 ,p.61 General environment Hitt &Ireland (2001) Industry environment Porter (1985) Internal environment Primary process De Leeuw (1997)
Core competencies Prahalad & Hamel (1990)
Synergy Wijers (1994)
Product-market strategy Van der Aa & Elfring (1999)
Ansoff (1957)
Technological environment
‘Given the rapid rate of technological change, it is vital for firms to study the technological segment quickly and thoroughly. The importance of such efforts is suggested by the finding that firms, which are early adaptors of new technology often, achieve higher market shares and earn higher returns. Thus, executives must verify that their firm is continuously scanning the external environments to identify potential substitutes for technologies that are currently in use, as well as to spot newly
emerging technologies from which their firm could derive competitive benefits’.14 Demographic environment
As mentioned in Hitt and Ireland (2001), the demographic segment is concerned with a population’s size, age structure, geographic distribution, ethnic mix and income distribution’.15 However, the definition of the demographic environment is different for Content in this report. The population of the Netherlands and Great-Britain are not really relevant for a service Content has to offer since the service is only (indirectly) influenced by fluctuations within the nautical sector and not within the population as a whole. What is (indirectly) relevant for Content is the size and composition of the nautical sector. With nautical sector, the total number of merchant vessels and number and composition of the seafarers to man those vessels is meant. The
number of merchant vessels (ships) is directly linked to the number of seafarers, they have a supply and demand relationship and therefore are both important. The
number of seafarers and the development in these numbers are thereby also an indicator of the total nautical market size. These figures reflect on the general environment of Content for they are broader then the market of Content which has yet to be defined.
The definition of the demographic environment in this report therefore is a function of supply and demand;
- the number of merchant ships registered by companies in that particular country
- supply nationals new = supply nationals old – outflow + inflow16 Supply nationals new; is the supply of national nautical officers.
Supply nationals old; is defined to be equal to the number of national people currently working in the nautical sector.
Outflow is defined as people who retire or stop working on board ships for other reasons.
Inflow into the nautical sector consists mainly of people who just come out of school.
The number of merchant ships registered by companies in that particular country means the number of ships under the flag of that specific country. The composition of a ship’s crew depends for a large part on the flag of that ship. Ships under national registers often have a crew that consists of national officers.17
14Hitt, M.A., Ireland, R. D. & Hoskisson, R.E., Strategic Management, 2001 , p.63-64 Song, X.M., Strategic Management Journal, 1990, 20, p.811-836
15 Fahey & Narayanan, Macroenvironmental Analysis, p. 58
16 Veenstra, A.W. & Waals, F.A.J., Supply and demand of nautical officers, Rotterdam, 2001, p.2
17 Veenstra, A.W. & Waals, F.A.J., Supply and demand of nautical officers, Rotterdam, 2001, p.4
Legal environment
‘The political/legal segment is the arena in which organizations and interest groups compete for attention, resources and a voice of overseeing the body of laws and regulations guiding the interactions of nations. Essentially, this segment represents how organizations try to influence government and how governments influence them.
Constantly changing, the segment influences the nature of competition. Because of this, firms must carefully analyse a new administration’s business-related policies and philosophies’.18
2.6.2. Industry environment
'An industry is a group of firms producing products that are close substitutes. In the course of competition, these firms influence each other. Typically, industries include a rich mix of competitive strategies that companies use in pursuing strategic
competitiveness and above-average returns. In part, these strategies are chosen because of the influence of the effects of an industry’s characteristics.'19 Compared to the general environment, the industry environment has a more direct effect on
strategic competitiveness and returns.
The intensity of industry competition and an industries profit potential (as measured by the long-term return on investment capital) are a function of five competitive forces: the threats posed by new entrants, suppliers, buyers and the intensity of rivalry among competitors. The five forces model of competition from the theoretical framework of Porter (1985) expands the arena for competitive analysis. Historically, when studying the competitive environment, firms concentrated on companies with which they competed directly. However, today competition is viewed as a grouping of alternative ways for customers to obtain the value they desire, rather than as a battle among direct competitors. This is particularly important, because in recent years industry boundaries have become blurred.20
Buyers
Firms seek to maximize the return on their invested capital. Buyers want to buy products at the lowest possible price, at which the industry earns the lowest acceptable rate of return on its invested capital. To reduce their costs, buyers bargain for higher quality, greater levels of service, and lower prices. These outcomes are achieved by encouraging competitive battles among the industry's firms.21
18 Hitt, M.A., Ireland, R. D. & Hoskisson, R.E., Strategic Management, Cincinnati, 2001, p.60 Fahey & Narayanan, Macroenvironmental Analysis, p. 139-157
19 Brush, T.H., Bromley,P., The relative influence of industry and corporation on business segment performance: an alternative estimate, Strategic Management Journal, 20, 1999, P.519-547
20Hitt, M.A., Ireland, R. D. & Hoskisson, R.E., Strategic Management, Cincinnati, 2001, p.69
21 Hitt, M.A., Ireland, R. D. & Hoskisson, R.E., Strategic Management, Cincinnati, 2001p.73
