Strategic Management of the BBC
The British Broadcasting Corporation (BBC): Investigate Business, Corporate and Network Level Strategy, Industry, International Context and Organisational Context, and Organisation Purpose.
Strategic Management of the BBC
The dimensions of strategy and organisational purpose involve strategic process, strategic content, and strategic context and each of these three are not different parts of strategy. Firms operate to fulfil a purpose and adopt strategies to ensure that their purpose is accomplished. To achieve such outcomes, companies need strategic process, which is associated with how strategies will be formulated, implemented and controlled, as well as with who needs to be involved and when necessary activities should take place. In contrast, strategic content is involved with what is, and should be, the strategy for companies and each of their business units (De Wit & Meyer, 2005). Strategic context is concerned with where strategic process and strategic content can be embedded within firms and in which type of environment.
However, each of these strategic problems are by their very nature three-dimensional, possessing context, process and content, and it is only by analysing each dimension within each problem that companies will develop in depth comprehension. Therefore, this essay aims to examine strategic dimensions, using the British Broadcasting Corporation (BBC) as a framework. The BBC is the UK-based public service broadcaster whose purpose it is to serve in the interest of the public’s benefit instead of for purely commercial concerns (Hastings, 2004). The dimensions of strategy which will be investigated in this essay include strategy context, organisational purpose and strategy content.
With respect to the organisational purpose of a company, it can be defined as the reason for which a firm exists. Without organisational purpose it would be difficult for firms to evaluate strategic options since organisational purposes can function as fundamental principles against them (De Wit & Meyer, 2005). It is necessary for companies to have an organisational purpose as it can provide a strong guide during the process of strategic thinking, strategy formulation, and strategy change. Organisational purpose comprises of two different perspectives, profitability and responsibility.
In the case of the BBC, its organisational purpose falls under social responsibility, which involves acting in the interest of others even when it is not legally bound to do so. The organisational purpose of the BBC has largely remained unchanged over the last 80 years, in both an analogue and now a digital age: it is to “enrich the life of every person in the UK with programmes that inform, educate and entertain” (BBC website, 2007). The corporate mission of the BBC consists of three elements: organisational beliefs, organisational values and business definition (Rarick & Vitton, 1995). The organisational belief of the BBC involves important assumptions about the nature of the environment within a communication industry where digital TV is dominated by pay-to-view channels. Thus, the BBC strives to make its programmes more mainstream in order to cultivate its reputation, increase its audience numbers and to drive effectively towards digital take-up.
The BBC’s organisational values are formed by The BBC Trust’s committee who determine what they see as worthwhile activities, ethical behaviour and moral responsibilities. This has a huge impact on its strategic direction. The BBC has created its corporate governance values in six main ways: promoting education and learning, reflecting the UK’s nations, regions and communities, supporting citizens and civil societies, bringing the UK to the world and the world to the UK as well as delivering to the public the benefit of emerging communication technologies and services (BBC website, 2007). Therefore, this indicates that the business direction of the BBC has a social rather than a commercial focus.
The BBC exists to fulfil the demand of its stakeholder values. The main stakeholders of the BBC comprises of the Government, the public and BBC employees. The Government wishes to see the BBC as secure with a steady stream of income and to be distinctive in an age of growing choices. BBC employees expect to see the BBC provide them with health and safety in the workplace, which can lead to their commitment to the organisation, both emotionally and practically. The public have a right to expect great things from a great cultural institution such as the BBC. Obviously the BBC cannot please everyone within the market segment, nor should it seek to do so. However, in return for each licence fee it receives from the public, it has a responsibility to deliver experiences of quality and value. Therefore, without a doubt, the BBC is the foremost cultural institution in the UK and the world’s most well-known and highly regarded international brand (Meech, 2001).
Strategic context is about relating organisations to their environment. It is necessary for firms to take the entire outside world into account, focusing on the direct environment in which they need to compete (Leiva et al., 2006). Firms mainly track and monitor the trends of industry developments because of the rules pertaining to what must be done by these firms in order to survive within their chosen line of business. In other words, they decide what the conditions are of the competitive game that will be played (De Wit & Meyer, 1999).
The strategy context dimension comprises of the industry context, organisational context and international context of the BBC. Firstly, industry developments mean that the structure of the industry changes and as Porter (2000) clearly explains, the five important factors of industry development (i.e., competitors, buyers, suppliers, new entrants and substitutes), whether individually or in combination, are necessary for this change to occur. In the industry context in which the BBC operates, the communication industry, development is rather dynamic.
The communication market is in the hands of only a few companies (Henson, 2005) and the industry is being overwhelmed by a handful of large communication firms, largely due to mergers and acquisitions. Several communication firms form and share a part in the market, or obtain a share through merging with existing companies in the industry (De Wit & Meyer, 2005). The communication industry is in a state of fermentation and fluctuation. The Digital Age is characterised by a series of acquisitions, mergers, takeovers, and of alliances and deals. This is because companies make every effort to assess the core competencies they require and to then acquire those which they believe they need for survival. For instance, Virgin merged with Telewest and NTL to launch its new communication brand, Virgin Media.
The BBC cannot influence the structure of the communication industry because it cannot control technology development which impacts upon the communication industry. Thus, compliance with the rules of the game is a vital strategy for the survival of the BBC in the Digital Age (Changes to schedule at the BBC, 2005). Under the concept of compliance, the strategic demand is for managers to adapt the organisation to the industry context (Berman, 2004). The BBC understands the circumstance in the communication industry, where the Digital Age has taken over from the Analogue. Thus, to achieve compliance with the industry rule, it has developed structures, processes and a culture in which observing and adapting to the environment has become essential (Allen & Helms, 2006).
In compliance with the new communication industry rules in the advent of the Digital Age, the BBC has complied with industry rules by developing structures, market orientations, processes and culture. In 2006 under Lord Burns, the BBC Trust committee reviewed the role of the BBC and its activities within the Digital Age, resulting in the launch of two important documents: Building Public Value – reviewing the BBC for a digital world and a Government progression report on the progress towards digital switchover (BBC website, 2007). The BBC’s position within this Digital Age is hands on and wide ranging. It perceives itself as taking a key role in creating a fully digital Britain. In 2002, the BBC was quick to take advantage of the opportunity presented by the downfall of ITV Digital, thus allowing the BBC to begin constructing its Freeview platform. By 2003, the BBC had created a set of six digital channels, including BBC News 24, BBC Parliament, BBC Three, BBC Four, CBBC, and CBeebies (Harris & Wegg-Prosser, 2007).
Secondly, at the organisational context level, the BBC has both management control and organisational chaos. Top management control requires leaders or managers to be able to direct development within the organisation. Leaders need to have the power to make the necessary change in the organisational structure, processes and culture to fit the organisation to the demands of environment. The BBC Trust uses its leadership influence in an attempt to guide organisational development, using cultural areas to direct its influence towards achieving strategic change. To be able to change the organisation, the BBC Trust has changed people’s beliefs and associated behavioural patterns (Drejer, 2000).
At the same time, a transitional organisation like the BBC also allows a certain amount of organisational chaos by using the organisational dynamic perspective and allowing bottom-up communication from its workers. Organisational chaos unfreezes existing structure, process, routine and beliefs, allowing people to be creative and come up with out-of-the-ordinary initiatives (Shin, 2006). The BBC Trust might be independent when making decisions, but it has always taken into consideration the responsibilities and risks which its journalists and staff encounter whilst doing their jobs and allows them to give opinions regarding the strategic vision, so that they can have a share in the process of vision development.
Thirdly, in an international context, the BBC has to meet a demand for global synergy and a demand for local responsiveness. Under the concept of global synergy, a firm can achieve cross-border synergies by leveraging resources, integrating activities and aligning product offerings in more than one country. In the case of the BBC, it uses synergy by leveraging resources (Thompson, 1996). The BBC uses a resource replication strategy by sharing its tangible products. The practices of the BBC can be described as global convergence with the use of standardisation.
The BBC has employed standardisation as a way to deal with the border-crossing nature of its international markets. Standardisation is an easy way for the BBC to jump across border synergies as it enables the BBC to do the same thing in each country without any pricey adaptations (Cole, 1997). This is because the English language is an international language which most people around the world can understand. Therefore, people in other countries can watch and understand the content on BBC World Service, which will be repeated sporadically to fill the gap between time differences in each continent. Thus, BBC content can be perceived as a global product because the processes employed to widen the BBC’s global accessibility reduces international variety (Woods, 2005).
With regards to strategy content, this refers to the product of a strategy process. Strategy content involves what should be strategies of the organisation and each of its strategic business units (De Wit & Meyer, 2005). Strategy content comprises of three levels: business level strategy, corporate level strategy and network level strategy. Firstly, business level strategy is associated with both market adaptation (outside-in) and resource leveraging (inside-out). The BBC focuses on the market adaptation perspective (outside-in). Market adaptation involves adapting to the environment and new market conditions of a firm. It is necessary for companies to respond to shifts in such factors as customer preference, competitor moves and distribution structure (De Wit & Meyer, 2005).
In recent years, pay-to-view homes tend to watch fewer high-brow programmes such as the News, Current Affairs, serious factual programmes and the Arts. Consequently, the BBC has related itself to its business environment, balancing the distance between pay-to-view channels and fulfilling the demands of consumers by providing both high-brow and low-brow programmes via its different channels. Examples of this include BBC News 24 which also runs overnight 24-hour News on BBC One, whilst CBBC is an educational channel for children aged 6–12-years-old. This creates a competitive advantage for the BBC over pay-to-view channels as it differentiates itself from rivals by fulfilling its organisational purpose to inform, educate and entertain the public (Eryl-Jones, 2003).
Secondly, the successful corporate level strategy of the BBC involves both synergy and business responsiveness. Moving towards another business can result in increased stakeholder value if three essential tests are achieved: attractiveness test, cost-of-entry test and better-off test. Multi-level synergy firms need to create more added value than the extra costs of managing a more complex organisation (García-Murillo, 2005). Thus, multi-level synergy firms need to see opportunities for synergy between business areas and manage a company in such a way that synergies can be recognised.
The BBC is obviously a portfolio organisation because it has developed specific strategies for each business and allocates the responsibility for each business strategy to a separate strategic business unit. This means that each of the strategic business units of the BBC can respond effectively to the competitive dynamics in the communication industry, while being a clear unit for liability to the corporate centre (De Wit & Meyer, 2005). The BBC has been integrating the activities of each business unit by sharing the value-adding activities of its content distribution channel: each BBC channel advertises each other’s upcoming programmes to increase audience numbers.
For example, the BBC’s policy is to use the Internet to complement the full range of the BBC’s output, and to extend the profundity, interactivity and smooth accessibility of BBC content (Kavanagh, 2004). The BBC also intends to open up its treasure box, the world’s largest radio and television archive. This will allow people to download and keep extracts or programmes for non-commercial purposes. The BBC has also developed this initiative in partnership with other major public and commercial audio-visual collections in the UK. This shows that the BBC has created linked relations with other firms, both upstream and downstream, because it needs a variety of inputs, as well as clients, to access its variety of programmes.
At the same time, BBC On Demand has been developed to provide viewers and listeners with access to recent radio and television programmes on the Internet. This service has recently been extended to cover television programmes. The BBC has launched a new easy-to-use service called the ‘iPlayer’, which enables audiences to access a week’s worth of catch-up TV via personal computers, thus allowing free downloads of their television programmes for up to seven days after transmission. This shows that the corporation’s distribution of BBC business units achieves equal attention and so an optimum set of its businesses are integrated into the corporate whole, thus building the brand name through its own product alliance.
Thirdly, network level strategy involves both competition and cooperation. Inter-organisational competition can be explained as the act of working against others. This is labelled as the discrete organisation perspective and refers to the fact that each organisation is being attacked by its environment (De Wit & Meyer, 2005). Under this market condition, firms will be fighting for a larger market share. To be competitive, a company must have the power to overcome its competitors and must have the ability to use its power. The main rivals of the BBC are satellite broadcasters like Sky Television, Time Warner’s CNN, Fox News Channel and STAR TV which is owned by The News Corporation. STAR TV (Hong Kong) is the main distributor used to broadcast BBC content in many Asian nations, with the noted exception of China where political enforcements restrict or prohibits this type of material.
One of the most important factors that can shape the power of an organisation is its relative resource dependence. This also applies to the BBC which remains strong and independent as a cultural institution of real size and scope (Greenley, 1989). To maintain the obligation requirements of public broadcasting in the Digital Age, the BBC does not only broadcast minority programmes, it is also seen as the keystone of public broadcasting given that commercial broadcasters have also met public broadcasting requirements.
It can be concluded that the BBC’s organisational purpose is for social rather than commercial interests. However, the development of the communication industry has moved from an analogue towards a digital era which is mainly influenced by a three-phase revolution: free-to-air dominant, but pay and multi-channels on the rise – free-to-air in decline, with pay dominant and broadcasting increasing – and broadband and on-demand dominant. These developments have influenced the BBC to move towards a digital platform. Inter-organisational relationships with other firms, inside and outside the industry, have ensured that the BBC maintains its competitive position within the communication industry and exists to accomplish its organisational purpose.
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