Qualification - Higher National Diploma in Business
Unit Name - Business and the Business Environment
Unit Number - Unit 1
Unit Reference Number - L/508/0485
Assignment Title - Business Environmental Analysis of the BBC vs Netflix
Learning Outcome 1: Demonstrate the interrelationship of various functions within an organisation and how they link to organisational structure
Learning Outcome 2: Use contemporary examples to demonstrate both the positive and negative influence/impact the macro environment has on business operations
Learning Outcome 3: Determine the internal strengths and weaknesses of specific businesses and explain their interrelationship and external macro factors
With the massive increase in streaming services such as Netflix and Amazon Prime Video, the BBC have to continuously adapt to the digital landscape for their programmes. You have been recruited as part of the Business Development team at the BBC and as part of your role you are required to assess the internal and external factors that impact achieving current objectives and future business decision-making in an attempt to compete with Netflix.
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The present report is based on the business environment analysis of the British Broadcasting Corporation (BBC) in comparison to Netflix. Business environmental analysis is defined as the first step towards strategy management from a business perspective before any major decision-making process. The BBC is England's public Service Broadcasting channel, having is headquartered in London, United Kingdom. It is the oldest national broadcasting corporation of the globe. BBC also offers live streaming and TV programs on channels like BBC iPlayer, BBC sports, and BBC news (Garnham 2018).
With the advent of online streaming channels like Netflix, Amazon Prime and Now TV, there has been an increased challenge for the BBC. According to reports, these online video streaming services holds more subscriber then the traditional pay-TV services like BBC(Garnham 2018). The Britons are more interested in online streaming services and abandoning TV licenses (Smith 2017). In such a situation, the state-funded broadcasters are facing threat to their audience from online services, fears to invest billions for the content. The present report evaluates the organizational structure and functions of the BBC. Apart from this, PESTEL analysis and SWOT analysis of BBC will also be conducted to identify the impact of the external and internal environment on it.
1. You are required to examine the BBC's functions, organisational structure and how they support achieving their business objectives - as part of this examination you are required to evaluate the interrelationship of the functions and structure. In addition, address the difficulties within the interrelationship in comparison to that of Netflix
Organizational structure and functions of the BBC
BBC was started under Royal Can on the basis of agreement that is made with the Secretary of State for culture, sports, and media. One such functional divisions are the BBC news, that collects and distributes information and news in general. The organizational structure of BBC comprises of Board of governors, the creative board, the executive board, the journalism board, and the commercial board. The creative board, the commercial board, and the journalism board have the responsibility to the Executive Board, who further reports to the Board of Governors. Ultimately, the Board of governors has to report to the Queen. The Board of Governors is appointed by the Queen by consulting with her ministers. It has been identified that the Board of Governors comprises of 12 trustee members (Watson 2016). Moreover, the Executive Board comprises of 9 directors who have to report the information to the Director-General. The core values of the BBC are based on six concepts; quality, trust, audiences, teamwork, creativity, and respect. The company was started with a commercial objective to sell radio sets which further transformed into an independent beauties broadcaster channel that is able to educate, entertain and inform the whole United Kingdom. The company is free from external fisher related to commercialization or politics. The BBC board is responsible for monitoring and ensuring that the channel is able to accomplish its mission and public purposes. At present, the chairman of the BBC is Sir David Clementi. The employees of BBC are organized into specific divisions and each of them is provided with a particular remit. These divisions include; BBC studios, news, design, and engineering, radio and education, executive, content, marketing and audiences, and Nations and regions. In addition to this, there are few more divisions that comprise of finance and operations, human resources, and managing director.
The hierarchical organizational structure of BBC flows from top to bottom in the direction; BBC trust, executive board, executive team, and management board. According to the charter, the BBC is firstly governed by the BBC Trust, which is the governing body of the British Corporation who has the right to declare a strategy for it (Watson 2016). The trust also holds the duty for performance evaluation of the executive board. Right under the BBC Trust, there exists the Executive Board, who holds the charge of Corporation's operation. In reality, it is the executive board who runs the Corporation (Smith 2017). The director of the executive board is the chief executive officer and editor-in-chief of the BBC. Under the Executive board, there exists an Executive team which comprises of other directors of BBC Scotland, BBC Northern Ireland, BBC CYMRU Wales, BBC digital and marketing (Herzog and Tracey 2016). The final part of the hierarchical structure is the management board who holds the responsibility to manage the problems which are pan-BBC in nature. The management board includes director-general, director of news and current affairs, director of television, director of radio (Watson 2016).
The complicated organizational structure of the BBC fails to workunder social responsibility that includes lackof interests of others despite any external legal pressure, which is not observed in the case of Netflix. The organizational values of BBC are designed by the BBC trust committee based on their perception related to moral responsibilities and ethical behavior (Herzog et al 2016).
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2. Complete a PESTLE analysis on the BBC and evaluate the impact that various macro environmental factors have on the BBC - you should make reference to globalisation and international competition from Netflix, and the influence and impact it has on the BBC's objectives and decision making
Political - BBC is basically an independent and self-regulated company. The political policies of the United Kingdom do not affect the BBC as the government has full control over the license fee which is being paid by households. With a stable political system in the UK, there exist opportunities to make expansion strategies. However, the corporation has to face pressure from the government because the broadcasting license has been issued for the infinity period, and hence there exist the risk of potential conflict. In the case of transition of government and change in policy, the UK have consistency in policy-making with a change in government, which in turn minimizes the risk for BBC (Frischmann 2019). On the other hand, the UK has numerous government agencies that eventually maximize the time and cost required for the BBC to get clearances and certifications. Additionally, in situations such as a terrorist attack, the BBC beam needs to work for live broadcasting, under the fear of life loss. Therefore, Corporations should take a prudent policy like insurance to mitigate the loss of life and property.
Economic - The organizational structure of BBC has transformed from centralized to decentralized with an intention to mitigate the organizational bureaucracy. However, the reformation of this organizational structure is considered identical to economic management. BBC can also leverage The increasing GDP growth rate in the UK by expanding the range of products and there were targeting new customers. Household income in the UK over the last decade is constantly increasing, which creates a scope of opportunity for the BBC to expand its market beyond traditional customers. This can be achieved through and playing a different form of a marketing campaign. Workforce productivity in the US has increased from 20 to 30% for the past few years, which is not visible in the UK(Frischmann 2019). Hence, Netflix being an American company got the leverage to hire skilled and knowledgeable labor as compared to the BBC.
Social - Unlike, UK, the US has adopted the strategy of avoiding stagnant economy with the increase in the birth rate hand increase in the level of immigration. Hence, Netflix got the opportunity of increased future demand through increasing birth rate and flowing economy as compared to the BBC. The UK has a low level of social concern within the society which results in lower consumer activation, thereby creating a challenge for the corporation. Apart from this, one of the positive aspects is that the UK has been the digital leader in the globe and strives to introduce a better quality of living for the Britons, through cultural and social benefits. This creates a greater scope for the BBC to expand its business and increase the customer base. With digitalization, it is evident that the internet has become an integral part of people's everyday life. There exists a threat that leading online streaming channels like Netflix can take leverage this opportunity. Hence, the BBC needs to identify this opportunity and plan the strategy accordingly. The BBC channels was also introduced for children within the age of 12, are increasingly attracting teenager customers because the young population watching public service programs is reduced drastically (McDonald and Smith-Rowsey 2016).
Technological - The level of acceptance of technology is increasingly in the UK. Therefore, the BBC has to figure out this level of acceptance prior to the introduction of new products in order to compete with other online broadcasting channels like Netflix. BBC should carefully conduct the technology transfer and licensing procedure of IPR and other digital assets to avoid breaching and other thefts. With the rapid growth in technology, there has been a parallel change in consumer behavior as well. However, the BBC has maximized its website that is currently viewed by more than 25 million populations on a weekly basis (Frischmann 2019). One of the areas in which US-based Netflix lacks is the mobile payments system. Therefore, the BBC should grab this loophole of Netflix as its strength and opportunity for growth. Incorporation of technology in its daily work processes, he's able to reduce distribution costs and maximize journalism opportunities, thereby increasing the rate of profit (Garnham 2018).
Environmental - BBC follows the environmental awareness and the global requirement to protect the environment. Its head office is operated through the rainwater harvesting process and there is no permission of disposable cups weed in the office. BBC has the address to the recycle and waste management policies and hence have installed a centralized recycling point for waste recycling. It feels to be responsible to remain aware of its surrounding environment, and therefore facilitate fair and ethically service to the public, irrespective of cultural diversity (McDonald et al 2016).
Legal - The prime legal issue identified BBC is its dependence on government. As the government is responsible to choose the Board of governors, and they decide the amount of the license fee. Additionally, the broadcasting has been granted to the BBC only for a limited period(Garnham 2018). The macro-environment of the BBC is also dependent on Security Law, Data Protection Law, employment law, Business Law, and Health and safety law.
3. Produce a detailed SWOT or TOWS analysis of the BBC's departments to identify the important strengths and weaknesses of the organisation to meet the requirements of globalisation. Clarify how your internal micro environmental analysis connects to the external factors to support decision-making. Based upon your research and findings you are required to critically evaluate part 2 and part 3 to determine how the macro and micro environmental factors influence and support the achievement of current objectives and future business decision-making when competing with Netflix
Strengths - Old reputation and strong brand image of the BBC are its major strengths. It has started his journey since 1922 and has become the largest broadcaster in the world by employing more than 23,000 workers (Garnham 2018). BBC always remain updated with the trend in the existing market, which helped it to remain ahead of other broadcasters. HD channels, Color TV, 3D channels and the contribution of BBC. BBC house giving tough competition to Netflix through its advanced marketing strategies to remain in a win-win situation. It has also gained a reputation as TV broadcaster and online streaming service.
Weaknesses - The news covered my BBC often gives advice perspective to the audience. This does not go out with the people and they raise allegations of being broadcast as biased. The news item covered by BBC often status de sensitive issues, thereby creating controversies and raising an uproar (Frischmann et al 2019). High operating cost is one of the major weaknesses of the BBC, while its major competitor Netflix is able to conduct the business at a very low price.
Opportunities - Creating a joint partnership with other potential satellite channels has maximized the popularity of BBC. It is believed that such an approach will maximize business-related opportunities, and help in competing with Netflix. People like those channels who are in trend. Hence, BBC has transformed itself from a serious news channel to entertainment, fashion, technology, and kids channel.
Threats - One of the major threats for the BBC is strong competition from other online streaming channels. Netflix is the major competitor for BBC in the UK, as it has become the leading streaming video on demand having 130 million subscribers (McDonald et al 2016). There are some other domestic channels and newspapers as well that give tough competition to the BBC.
In summary, it is evident that despite a strong reputation and brand image, BBC has the threat to lose its position with the emergence of streaming services like Netflix. Hence, the BBC should cope up with the changing technology and customer requirements, along with maintaining value, quality, and satisfaction. As on-demand services have become the mainstream, therefore BBC should strive to reverse this momentum and provide the customers of Netflix a source of entertainment which is worth switching over on a regular basis.