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Fundamental of Entrepreneurship is a subject of study entrepreneurial methods of management to establish a successful organization. Moreover, it allowed us to learn about the knowledge of identify, conceptualize and harvest new ventures. We can utilize such knowledge and to apply it in the functional areas towards the goal of commencing a business.
The title of Fundamental of Entrepreneurship assignment is starting a new business. Jerry is a young graduate and has just starting a new business enterprise. As an experienced business executive, I was required to give advice to Jerry to succeed in his business.
Task 1 discuss about the review of performance of Jerry Success Cineplex. Jerry Success Cineplex is in the industry of media and entertainment which provide film distribution service. Moreover, the Cineplex is located at Kinta City, Ipoh where it consists of 5 Cineplex halls with 750 seats. The profit that Jerry Success Cineplex had earned in 2012 is 25.2 Thousand.
Task 2 regarding to the strength and weakness of Jerry Success Cineplex. The strength of Jerry Success Cineplex that allowed Jerry to gain over his competitors are the customers can purchase the movie tickets through internet, the seat is suitable and the movie they showing is more than the others Cineplex in Ipoh. On the contrary, Jerry Success Cineplex's weaknesses are the choice of snack foods and drinks they sell is less, the movie ticket's price is expensive and the Cineplex does not provide bench at the entrance to Cineplex hall.
Task 3 discuss about the plan of action that will capitalize on the Jerry Success Cineplex's strengths and overcome its weakness. Jerry should update his company website daily, maintain the sound system and air-condition system periodical and allocate the movie show time according to the sales to capitalize on his Cineplex strengths. On the other hand, Jerry should provide more choice of food and drink to the customers and using pull strategy to attract more customers, apply competition based pricing strategy and provide benches at waiting area to overcome its weakness.
Finally, Task 4 discuss about the ways to maintained and strengthened the existing performance of Jerry Success Cineplex. In order to strengthen the existing performance, Jerry should take over, joint venture with another company and expand his business to more shopping complex. Jerry also can reinforce his business performance through globalization.
2.1 Review of Performance
Jerry is starting up a new business in media and entertainment industry. The business that Jerry operating is a Cineplex that provides the services of film distribution to his value customers. Jerry's new business name is Jerry Success Cineplex and it was located at Kinta City, Ipoh. As a result of Kinta City is nearby the town and the crowds of Kinta City are bustling, therefore, Jerry had chosen to operate Jerry Success Cineplex at Kinta City, Ipoh.
2.1.1 Overview of Jerry Success Cineplex
Jerry Success Cineplex consists of five Cineplex halls. According to Tgv's overview website (2013), it stated that the invention of 3D movie is become popularity. In order to meet the expectation and satisfy customers' demand, Jerry Success Cineplex had provided two digital screen movie halls for 3-Dimensional (3D) screening. Boswell, D. (2012, p.25) illustrates in his study that "the term 3D is typically a reference to a motion picture that enhances the illusion of depth perception." Thus, within the five Cineplex halls, it has 3 normal screen movie halls for normal screening and two digital screen movie halls for 3D screening.
Besides that, the total seats of Jerry Success Cineplex are 750 seats where each of the Cineplex halls consists of 150 seats. Out of 150 seats, 24 seats are couple seats in each Cineplex halls. On the other hand, the price of the movie ticket that Jerry Success Cineplex sell is depends on the types of seat and the day that their customers choose to watch the movie. For example, the ticket price for couple seats may more expensive than the normal seat, customers can purchase cheaper movie tickets on every Tuesday and the ticket sells on every Sunday will more expensive than the normal day.
The customers who purchase at Jerry Success Cineplex include teenagers, single adults, married adults, married adults with kids, men and women. However, the range of customers who purchase to watch the movie is according to the film rating system. Earlier research (The Film Rating System (CARA) website, 2012) demonstrated that the main aim of film rating system is to provide information for the parents to decide whether the film is suitable for their family. Thus, the rating of movie is categorized into Guidance Audiences (G), Parental Guidance Suggested (PG), Parents Strongly Cautioned (PG13), Restricted (R) and No One 17 and under Admitted (NC17). (For more detail information, see Appendix A)
For example, the movie of "Flight" by John Gatins is under "restricted to 18 years and over" of the film rating system. Thus, the people who less than 18 years old is not allowed watching this movie. However, the movie of the "Spiders" by Joseph Farrugia &Tibor Takács that showing recently is under the rating of Parents Strongly Guidance (PG13). "PG13" represented that this movie may have mild sexual and/or drug references and it is suitable for the audience aged 13 and above. (For the motion picture rating system of the movie of "Flight" and "Spiders", see appendix B1 & B2)
Finally, Jerry Success Cineplex is generating profit. The interest rate that Jerry Success Cineplex had made is 15% and the revenue is 25.2 thousand for 2012. It shows that Jerry Success Cineplex's business performance is at the growth stage. Therefore, Jerry is decided to improve his business to the maturity stage.
2.2 Strength and Weakness
Every company has its strength and weakness. Strength is the traits of the company that are functional to achieving the objectives. Strength also refers to the advantages of a company has over its' competitors. However, weakness refers to the attributes of the company that are destructive to achieving the objectives and it is the drawback of a company which may cause the company unable to suppress their competitors.
2.2.1 Strength of Jerry Success Cineplex
The first strength of Jerry Success Cineplex is the Cineplex had provided the services of buying movie tickets via internet. Nowadays, technology has become very popular to human beings and it has brought a lot of advantages to the society in different field such as business, education, and entertainment. Thus, Jerry Success Cineplex is utilizing this point and allowed their customer to buy movie ticket via internet.
In this way, the consumers can choose an appropriate time to watch the movie they want. Other than that, the office workers who go to the work from 9.00 a.m. until 5.00 p.m. may not have time to go to Jerry Success Cineplex to purchase movie tickets. Therefore, the services of buying movie tickets online by Jerry Success Cineplex allowed the customers do not need to utilize their lunch or break time to line up at the ticket counter to buy movie tickets.
Secondly, the seats in Jerry Success Cineplex hall are wide and suitable. The model of seats that Jerry had selected is "Reclining Cinema Chair HJ95B" which had the certification of ISO9001:2000 & ISO14001:2004. (For the information about the seats, see references C) Although the total seats within Jerry Success Cineplex is lesser than the others cinema in Ipoh, however, Jerry is persist to provide first class services and environment for their customers. It is because Jerry hopes that the consumers have a homely feel when they are watching movie at Jerry Success Cineplex. Furthermore, each of the seats in the Cineplex hall has provides a cup holder for the consumers to place their drinks.
Finally, the numbers of movie that showing in Jerry Success Cineplex is more than the other Cinema in Ipoh. Every day, Jerry Success Cineplex will show 8 movies. The earliest movie showing time is 10:30 a.m while the latest movie showing time is 11:45 p.m. However, the latest movie showing time in weekend and holiday is 12:25 a.m. Besides that, each of the movies will show 3 times daily. This allowed the consumers who missed the movie has the chance to watch the movies at another time at the same day.
2.2.2 Weakness of Jerry Success Cineplex
First of all, the choice of food and drinks that sells in Jerry Success Cineplex is less than its competitors. For example, one of the competitors of Jerry Success Cineplex, TGV cinema which located at Aeon Station 18, Ipoh has sells various types of snack food and drinks for the consumers who purchase at their Cinema. The snack food that TGV cinema sells include normal popcorn, caramel popcorn, sausage, mashed potato while their drinks include ,soft drink, Ice Lemon Tea, can drink such as Mocha and Latte. However, the snack food that Jerry Success Cineplex sells only has normal popcorn and biscuit while the drinks they sells merely mineral water, Coca-cola and Nescafe.
Secondly, the movie ticket of Jerry Success Cineplex is more expensive than others cinema at Ipoh. For example, the movie ticket of TGV cinema at Aeon Station 18, Ipoh at normal day is RM10 while Jerry Success Cineplex sells their movie ticket's price at RM13. Other than that, a movie ticket price of TGV Cinema on weekend and holiday is RM12 while Jerry Success Cineplex is RM15. Furthermore, TGV cinema sells the couple seats movie ticket at RM34 while the price of couple seats movie ticket at Jerry Success Cineplex is RM 40.
Finally, Jerry Success Cineplex had not provided benches at the waiting area of the Cineplex. As a results of Jerry Success Cineplex does not provided benches for their customers who waiting for the movie opening time, the consumers will force to stand at the waiting area until the gate is open for them to enter to the Cineplex hall. In addition, it is inconvenience for the consumers who stand at the waiting area with holding their foods and drinks.
In short, things are not perfect where everything with strengths must also have its weaknesses. The strengths and weaknesses of Jerry Success Cineplex has provides information that is useful in matching his business resources and capabilities with the competitive environment that it operate in.
2.3 Plan of Action
After analyzed the strength of Jerry Success Cineplex, Jerry should implement various plan of action in order to reinforce the performance of his business. A study by Buchanan, J. (If Better is Possible, 2008, p.18) argues that "if better is possible, good is not enough." Thus, Jerry should suggest action that will capitalize on the company's strengths. Other than that, the weakness of Jerry Success Cineplex would lead the business making loss. Therefore, Jerry must plan action to overcome its company weakness to gain over the competitors.
2.3.1 Plan of Action to Capitalize on the Strength
One of the plan of action to capitalize on Jerry Success Cineplex's strength is to update the company's webpage daily. For example, Jerry needs to update the movie's show time daily in order to allow his customers check the latest movie show time. Jerry also should provide the movie trailer and detail such as the synopsis, rating and language of the particular movie on his company webpage. Besides that, Jerry should offer a blog page on his company webpage to let the customers leave their comments and feedbacks after they watched the movie. In this way, the customers who want to buy movie tickets online can do a deep research about the movie they want to watch which helps them to allocate their time and decide an appropriate movie for the family.
Secondly, a wide and suitable seat may not enough to satisfy customers' needs. Therefore, Jerry also needs to ensure the customers able to purchase their services in a superior environment. For example, Jerry must instruct his employees to spend at least 15 minutes to clean up the Cineplex halls once the movie is end. Again, Jerry should maintain the sound system and air-conditional system of the Cineplex halls periodical in order to make sure the operation is able to work smoothly as well as to avoid any mistake happened at the movie showing time.
Although Jerry Success Cineplex has provided various choices of movie for their customers, however, not every movie is acceptable by the customers and it may affect the sales of the movie drop. On the contrary, people will watch their favorite movie repeatedly because people love to learn and understand the things they love where it will make them happy. Earlier research (The Science of Re-runs website, 2012) had shown that "if we can took at the underlying drivers of re-consumption, we can help business to better understand their customers and help them create products that consumers will use again and again."
For example, if the box office of a particular movie is poor, Jerry should plan to stop showing the movie in order to reduce wastage. However, if the box office of a particular movie is popular by the customers, Jerry should decide to extend the showing time of the movie. It is because it may allow Jerry to generate more profit by reducing the wastage.
2.3.2 Plan of Action to Overcome the Weakness
Due to the choice of food and drinks that sells at Jerry Success Cineplex is less, therefore, Jerry should plan to provide more choices of food and drinks to sell at the Cineplex. In addition, Jerry can apply pull strategy to attract more customers. Padua, D. (2013, p.208) have proposed that "a pull strategy involves motivating customers to seek out your brand in an active process." Thus, Jerry Success Cineplex can implement the pull strategy through sales promotion at the special days such as Chinese New Year, Valentine's Day, and Christmas day.
For example, Jerry Success Cineplex has showing the movie of "Titanic" on Valentine's Day. Then, Jerry should provide limited edition couple mug with the image of the actor and actress of "Titanic". Moreover, Jerry must carry out few terms and conditions for those who want to get the limited edition couple mug. For example, after the consumers purchase the foods and drinks above RM20, they should only add on another RM15 to get the limited edition couple mug. In this way, the consumers may buy more in order to get the limited edition couple mug and it may increase the sales and profits of Jerry Success Cineplex.
Jerry Success Cineplex's movie ticket is more expensive than others cinema. In order to overcome this weakness, Jerry can apply one of the pricing strategies which known as competition based pricing. Pride, W. et al. (2011, p.385) have proposed that "a company that apply competition based pricing strategy might decide to be lower than competitor's price, slightly higher than competitor's price or at the similar level." Thus, Jerry Success Cineplex can charge the same price on the movie ticket based on the price of movie tickets that its competitor charges.
For example, if TGV cinema at Aeon Station 18, Ipoh sells its movie ticket at RM10, then, Jerry Success Cineplex should charge the same price level as TGV cinema charged. Macroeconomics in Context (Goodwin, N. et al., 2009) demonstrated that "people tend to look for cheaper substitute." Therefore, Jerry Success Cineplex is able to attract more consumers to purchase at his Cineplex as the price of movie ticket is reduced and same as the other cinema.
Finally, Jerry should provide few benches at the waiting area for the consumers who waiting for the movie opening time. Once Jerry had provided benches at the waiting area at his Cineplex, the customers do not need to stand in front of the waiting area with holding their foods and drinks. Other than that, it allowed parents able to look after their children by let the children sit at the benches and waiting for the movie.
It is important for Jerry to develop plan of action in order to capitalize the strengths and overcome the weaknesses of Jerry Success Cineplex. It is because it may improve the performance of Jerry Success Cineplex. Hence, different strategies such as pull strategy and competition based pricing strategy need to apply in the business to overcome the business weaknesses.
2.4 Improvement Growth
Jerry wants advice from an experienced business executive to help him investigate the ways in which the business' existing performance could be maintained and strengthened. In order to improve the growth of Jerry Success Cineplex, few suggestions are giving to Jerry for him to expand his business. The ways for Jerry Success Cineplex to strengthen his business are takeover and joint venture with another company. Jerry also can expand his business to more shopping complex through bidding and globalization.
2.4.1 Ways to Maintain and Strengthen Business Performance
People tends to takeover others business when their business growth bigger. Machiraju's Merges, Acquisitions and Takeovers (2007, p.3) asserts that "takeover refers to change in the controlling interest of a company." Takeover not only allowed the business's new owner to perform their business effectively and efficiently, it is also enables the company to retain the existing market share and avoid administrative procedure. It is because the new business's owner already had established customer network as well as the past experience in overseeing and coordinating in their past business.
For example, Jerry Success Cineplex and ABC Cineplex are two different Cineplex that serving different area's customers. Then, Jerry has capital to buy ABC Cineplex and ABC Cineplex is willing to sell the Cineplex to Jerry. Once ABC Cineplex takeover by Jerry Success Cinema, ABC Cineplex will not exist anymore and the whole ABC Cineplex will be organized by Jerry Success Cineplex. Hence, Jerry Success Cineplex is able to retain its existing market share as well as expand his business.
In order to achieve growth, Jerry may decide to implement joint venture. Joint Venture in the International Arena (Prescott, D. & Swartz, S., 2008) commented that "joint venture refers to a joint undertaking by two existing business in which they share risk, control and management." When a company performs joint venture, the whole supply chain is owned by the company itself. Hence, the company is able to share strength, reduce risks and increase competitive advantages in the market place.
For example, Jerry Success Cineplex joint ventures with Fee Fye Confectionery Sdn. Bhd. and Foe Fum Beverages Sdn. Bhd. that supply snack food and soft drinks to his Cineplex. Then, Jerry Enterprise will form to control Fee Fye Confectionery Sdn. Bhd. and Foe Fum Beverage Sdn. Bhd. In the end, Jerry Enterprise may also supply to certain outlet and Jerry may joint ventures with their consumers again. In this way, Jerry's businesses will growth bigger and he is capable to expand his business in the future.
Besides takeover and joint venture, Jerry can strengthened his business through expanding Jerry Success Cineplex to more Shopping Complex at another states. In order to expand Jerry Success Cineplex to more Shopping Complex, Jerry should actively bid for the contract to build his Cineplex in the coming new shopping Complex. Once Jerry gets the rights to build his Cineplex in new shopping Complex, he is able to expand his business to other states within Malaysia. In addition, its business wills growth bigger and the market share will be increased.
After expand the business to other states in Malaysia successfully, Jerry can plan to globalize his business in the future. Economic globalization is a historical process, the result of human innovation and technological progress. It refers to the increasing integration of economies around the world, particularly through trade and financial flows. The terms sometimes also refers to the movement of people (labor) and knowledge (technology) across international borders.
As a result of globalization refers to the process where each and every country's international market and production become increasingly interdependent as a consequence of changing dynamic of products and services, hence, it assists expand economic freedom and spurs competition. The research shows (Erwin, J. & Smith, Z., 2008, p.2) globalization raises the productivity and living standards of people in countries that open themselves to the global marketplace. For example, if Jerry expands Jerry Success Cineplex to the foreign country, it will bring benefits to the citizen in Malaysia where globalization has reduced poverty and assists our country's living standard growth rapidly.
In a conclusion, people tend to expand their business rather than pristine guarding a business when their business growth bigger. Therefore, Jerry is looking for different ways to improve and expand his business. As an experienced business executive, I had recommended Jerry to growth his business through take over and joint venture with another company. Besides that, Jerry may expand his business to more Shopping Complex at other states or considered to globalize his business to the world.
3.0 Conclusion and Recommendation
In Task 1, I had stated the business performance of Jerry Success Cineplex. First and foremost, Jerry Success Cineplex is generating profit. The revenue of Jerry Success Cineplex at 2012 is 25.2 Thousand. Jerry Success Cineplex consists of 5 Cineplex halls with the total of 750 seats. Then, customers who purchase at Jerry Success Cineplex include teenagers, adults, married adults and married adults with kids as well as men and women.
In task 2, I found out that every business will has its strengths and weakness. Moreover, the strengths of a company also known as the competitive advantages that enable the company to utilize these advantages to gain over their competitors in the same industry. On the other hand, the weaknesses of a company also refer to the dangers that lead the business making loss. Thus, Jerry should identify and understand Jerry Success Cineplex's strengths and weaknesses in order to capitalize on the company's strength and overcome its weakness by implement different strategy.
Task 3 regards to the plan of action that will capitalize on the Jerry Success Cineplex's strengths and the ways to overcome its weaknesses. Based on the drawbacks of Jerry Success Cineplex, I would advise Jerry to using the pull strategy and competition based pricing strategy to overcome its weakness. On the other hand, the actions to capitalize Jerry Success Cineplex is Jerry should update his company website daily, improve the sound system and conditional system periodical and decide the period of showing the particular movie properly.
Finally, I had learned the ways to maintain and expand business. Based on my opinion, the few advise that I had given to Jerry for expand his business is takeover and joint venture with another company, operate the Cineplex to more shopping complex at another states in Malaysia and globalization.