Introduction and Key Issues
The concerning and challenging issues before the Yash Raj Films (YRF) and its managing director Aditya Chopra is to emulate the recent global success and impact of the Baahubali franchise which created a global impact and made successful results worldwide by generating a total revenue of $ 21.5 billion from its series Baahubali: The Beginning 1st part and Baahubali: The Conclusion second parts. The YRF is a fifty years old film production company with a remarkable success record and searching the contemporary options to pursue its success goals by adopting the modern technologies like modern computer graphics, better screenplay, and storytelling which have a global impact on the movie industry worldwide.
The recent challenge is the change of movie production, use of advanced graphics technique, global competition, regional competition from other industries like Tamil and Telugu industry with the Bollywood and government regulation changes the production scenario from the past. This change resulted in lukewarm or average response to the YRF films in recent years. The managing director of YRF is looking into the external as well as an internal issue like expanding too much in several activities like film production, distribution, and talent management. He is assessing the impact of quick expansion whether these expansion works in favor of the YRF or he should limit the activities and focus on tradition successful formula of film production management.
External Analysis
The following is an external analysis of Yash Raj films. The purpose is to identify the forces that contribute positively or negatively and determine whether the industry is attractive or not. It will also affect the activities and performance of the company.
PEST Analysis
The PEST analysis will be presented with the importance of highlighting external factors that affect the industry. The proposed strategy must be prepared to address the following factors.
Factors that are associated with the political environment will determine and influence the activity and success of the company in the future. In the case of Yash Raj Films, potential political factors affecting the business could be the different laws of local and international governments on movie productions and movie distribution. Laws involving copyright and different permits needed to produce and distribute movies. YRF will have to keep research and development constant to stay informed on laws that affect their industry in order to avoid legal issues.
On the economic side, it is important to analyze, think and study current and future economic issues that can affect YRF in the execution of their growth strategy. Issues like economic cycles, economic policies, interest rates, inflation and income levels and the unemployment rate. The Bollywood industry is in a period of high growth. Due to its booming success, it has an encouraged an increased presence in the global market. When analyzing the macro-environment, it is very important to consider the sociocultural factor, meaning the cultural characteristics and the behavior of the various social groups that are in YFR targeted market. Demographics play an important role since its changes have a direct impact on businesses. This is because the supply and demand of goods and services in an economy is strongly linked to the population.
Finally, the technological factor is vital for most companies. Technology is a driving force of business, it improves quality, reduces the time to market services and lowers costs. These factors can help reduce barriers to entry and improve the quality of service. Based on the data in Yash Raj Films analytical research, the development in the IT division is still at a beginning period and most players are seeking new advancements in better graphics, colors and high quality picturization on the screens that can engage them to procure a higher bit of the profit. Advancements in technology will set them apart from the competition.
Porter Five Forces
Porter’s Five Forces is a great business concept by means of which resources can be maximized and by analyzing how the company can overcome competition.
Threats of new entrants could vary from medium to high. The Bollywood film industry is already established and has a recognized brand. It can be costly for new entrants to enter the business. However, there are no mentioned legal barriers to entry therefore startups could begin their business anytime they desire.
The buyer’s power is high, there is a vast selection of movies. The presence of movies from other film industries is high. Therefore, consumers can choose to watch movies from a variety of film industries.
There is a high threat of substitutes. There is a wide variety of comparable substitutes for movie industries. Movies from the American, United Kingdom and the Middle East movie industry are available for all.
The power of supplier is low. There are many suppliers that are available for the supply of materials needed for movie production and distribution.
The competitive rivalry is high. Competitors around YRF are continuously increasing then it is difficult for them to maintain profit. The rivalry can be costly to YRFs unless they change their usual film making style and innovate new ideas about scripting and build new twists in the films, so that viewers develop greater interest in their films. YFR needs to find unique ways that set them apart of the competition.
SWOT Analysis – Opportunities and Threats
Opportunities
- Change in the movie genre from romance to other can be helpful to target the local market
- Booming growth in the Bollywood industry
- Making animated and action movies could also result in high profit for them
Threats
- Government laws
- Brand acknowledgment is connected more with executives than the film studio
- Not a lot of different types of movie genres
See more SWOT analysis examples here.
Internal Analysis
Listed below are Yash Raj Films resources and capabilities:
Resources:
- Talent
- Facilities
- Brand
Capabilities:
- Movie distribution
- Movie production
- Talent management
- Marketing
VRIO
Table I, defines what advantage each resource and capability bring to the company. From the VRIO analysis, the source of sustainable competitive advantage is the talent that they manage.
SWOT Analysis – Strengths and Weakness
Strengths
- YRF is known to be one of the biggest production company in India
- Multiple big Bollywood stars such as Shahrukh Khan, Aamir Khan and Salman Khan work for Yash Raj films, all of them are highly recognized actors
- The movie Dilwale Dulhania Le Jayenge is the most watched movie in Hindi cinema
- Universal affiliation acknowledgment being a remarkable generation house
- Most award-winning industry through their production
- They are known to produce high-profit films
Weaknesses
- Innovation in YRF is very limited
- According to anthropologist and film scholar: The Hindi film industry is a star-arranged, star-driven, and many would grumble, star-controlled industry. Makers frequently raise account for their movies on the quality of the star cast instead of content. Contents are normally composed considering explicit male stars, and stars can advance or crush ventures
- Fewer directors are associated with YRF
Alternatives
The grant of industrial status to the film making industry, Bollywood, in 2000 led to the entry of many film producers in the industrial arena which imposes a strong challenge for the existing film producers like YRF. The status of industry extends the option of loans and investment in the industry which encourages other businesses to diversify and enter into the film making industry like Reliance Group, Birla Group and foreign players like Walt Disney and 20th Century Fox.Bollywood is generating around $900 million annually by producing around 300 movies annually and have a huge scope of extending their earnings because the global theatrical earnings are $38.6 billion which reflects Bollywood can expand globally and generate more revenues by producing movies of global impact like Baabhubali, Dangal, and PK. YRF should search for the possible options of producing a movie which reaches the global audience and invest in that. Nowadays movie is not just the storytelling and artistic work, but it needs a very strong message, technically sound, beautiful graphics, better screenplay and entertainment factors which encourages the audience to watch that movie. YRF with their huge experiences in film making, better resources, and techniques they should formulate a plan to produce a movie which has the factors adding to the factors like in the Baahuballi to influence the and connect well with the audiences.
Recommendations
The indication of the case shows that several domestic and foreign production houses face financial challenges due to the poor performance of their movies. The other important revelation is the 65-70 % of the total revenues collected by the commercially successful movies are the movies of the top five Bollywood stars. So, one of the recommendations for the quick commercial betterment of YRF it is required to sign the top 5 listed actors who help them in making the movie the commercially successful.
The distributors are the link between the film producers and exhibitors (theatre owners) of the films and plays a vital role in the supply chain of the movie and its movement from the producer to the exhibitor. With the advancement of digital print, the availability of prints increased tremendously for the Indian and global audience but still, the Indian audiences are underserved. There are many domestic and international players like Warner Bros. and Sony there is scope for YRF to take initiatives in this field and cater the underserved audiences which may help in enhancing their overall revenue.
2019-5-29-1559165791