Strategy Analysis of British Broadcasting Corporation

(BBC)
Name: Rohan Roy
Section: B
Roll Number: 14PGDM053

Table of contents
1) Introduction
2) Mission, Vision, Values
3) Business Model
4) Organizational Structure of BBC
5) SWOT Analysis
6) PESTLE Analysis
7) Value Chain Activity
8) Porter Five Forces Model
9) Product Life Cycle
10) Boston Matrix
11) Conclusion
12) Bibliography
1. Introduction:
In 1987 when John Birt took over responsibilities of the British Broadcasting
corporation (BBC) as deputy director general, no matter how reputed and well
establishes the BBC was there were some critical challenges which took place
during his era which required the BBC to have a rapid change of culture in order to
make the organization competitive and resourceful in the broadcasting business.
The BBC already having a very high overhead cost with less revenue earned was
faced with crisis situations which lead to the need of a radical change which needs
to be taken place in strategy of BBC for their long term sustainability. The below

analysis elaborates the change of technique which could be introduced during this
time of need for a rapid change in the organization.

2. Mission, Vision, Values

Mission
To enrich people's lives with programmes and services that inform, educate and
entertain.The aim of the BBC is sustaining citizen, encouraging education and
learning, motivating creativity and best culture, getting UK in world and world in
UK, representing UK, delivering emerging communication and technologies

Vision
To be the most creative organisation in the world.

Values
The BBC values in trust (independent, impartial and honest), customer oriented,
taking pride, quality, creativity, respect and team work

3. Business Model

4. Organization structure of the BBC

The organization structure of the BBC is a centralised structure and is highly
bureaucratic. In the BBC, Board of Governor and Director General make decisions
and passes those decisions to the managers at divisional level ensuring in each
operating level follows the policy.

5. Swot Analysis:

Strengths

Weaknesses

1. Reputation for honest reporting, outstanding quality and

best program maker
2. Establishment as the market leader
3. Ample resources to cover any major event

1. Highly bureaucratic procedures resulted in

inefficiency and resource wastage (25-50%
resource wastage)
2. Regionally centralized unwarranted authority
distribution
3. Lack of business process intelligence for
portfolio planning

Threats

6. PESTLE ANALYSIS

1. Diminution of Licence based revenue and

incremental rise in cost of operations
2. Unbalanced financial records (Deficit of 100m)
6. PESTLE Analysis
3. Boost in technological development (Digital
Technologies) and emergence of new market
players (BskyB)

Opportunities
1
2
3

Cost optimization through optimum resource management

New business markets and models
International Expansion
4 Technology Transformation

Political
Regarding the political environment, it has to be outlined that , the BBC is
founded on a Royal Charter and controlled by a Board of Governors. It is not
reflecting any interest of advertisers or justifying the actions to shareholders.
However political policies do influence the BBC as the government controls the
amount of license fee paid by the households. BBC also has to face pressure of
the government as the license to broadcast has never been issued for infinity and
therefore conflict can certainly arise.

Economical
BBC doesnt operate on commercial grounds. As a national institution and non
profit organization , it is funded by a license fee, delivering 3.5 million pound a
year. However due to cost cut in government spending, BBC agreed to keep the
license fee at the current amount for the upcoming years. Nevertheless, the BBCs
notably high income is guaranteed. Comparing it to other economies, only
Germany invests a higher share of GDP into broadcasting.

Social
The UK has been a leader in a digital revolution and strives to enhance the quality
of living by getting Britain fully connected and having people benefit from the
cultural and social benefits of BBC. Being actively present on social network like
Twitter, Facebook etc, BBC has reacted to the change of consumer behaviour in
terms of usage of new media. Furthermore, the BBC has introduced channels for
children till the age of 12.

Technological

Due to increase in internet coverage all over the world, the BBC has enhanced its
website, which is currently viewed by over 25 million people on a weekly basis.
By integrating new technologies in internal work processess, the BBC is profiting
from a major reduction in distribution cost as well as advanced journalism
oppurtunities brought by the internet. It has become easier to identity news and
stories that are worth researching.

Legal
The legal issue for the BBC is the dependence on the government as the board of
governors is still chosen by them and they decide on the amount of the license fee.
Furthermore, the broadcasting permission is only granted for a certain phase and
never for infinity.

Environmental
Regarding the environmental issues, the BBC is now following the upcoming
environmental awareness and the global urge to protect the environment. Thus
environmental features have been incorporated. The BBCs headoffice is suppored
by rainwater harvesting system and water saving toilets. Disposable cups are not
permitted in the office and they have a centralized recycling point for waste. There
are many more features such as energy saving lightning or the use of fair trade
products to name a few. The corporation feels responsible to be aware of its
environment and to provide fair and ethically correct services to the communities
by respecting cultural diversity.

7. Value Chain Activity

Primary Activity
BBCs supply chain supports all of its business locations in 193 countries. The
BBC clearly understands their mission is to enrich people's lives with programmes
and services that inform, educate and entertain. All of their primary activities are
concern to provide quality programmes and services which add value to customers.
a. Supply chain management

The BBC encourages procurement opportunities with a diverse community of

suppliers all around the globe to provide diversified programmes and to make
those programmes more informing, educating, and entertaining. It makes valuable
contributions to the global economic growth educating the people about business,
lifestyle, economic situation, and others. The raw materials for the BBC are raw
news, innovative idea for program, conflict reports, and new story of the
environment. BBC broadcast all their news from London as a central hub;
therefore all those news are supplied to London.
b. Operation
The major business units of BBC are radio, T.V., satellites, and Internet. BBCs
main operation focuses on the events, happenings, phenomenon and cases which
are occurring anywhere in the universe. Journalist, reporter, videographer, camera
man, writer and other news collectors scattered around the world and they work as
a complete team to convert events, wars, natural disasters, political matters, and
business happenings into viewable news, and present those through their media to
the public. The whole system works in network where all the players (journalist,
managers and technicians) work in extremely furious and timely manner.

c.

Distribution

After editing the raw news, conflicts reports, and innovative programme,
distribution is carried out by the BBC. The distribution of the BBC is support by
the head office and other unit of localized broadcasting channel of country in
which BBC is operate.

d. Sales and Marketing

Marketing is carried out simply through brand positioning and advertising. The
BBC has always been committed about maintaining customer loyalty. Because
of free and untainted information broadcasting, viewers/listeners are loyal toward
the BBC. The BBC does marketing in its own channel. For example: For 9 Oclock
news, headline of the news is shown 24 hours on the bottom page of TV screen,
which adds value. Further if the BBC launches any new programme it informs,
persuades and reminds viewers though advertisement in its own broadcasting
media which add value to viewers/listeners as well as for BBC.

Support activities
All those primary activities of BBC depend on the support activities. The support
activities are:
a.

Infrastructure
The digital infrastructure of the BBC is run through Leitch's NEO platforms which
run all the channels and the BBC news digital video server system and its wider
analogue environment. The infrastructure of the BBC is accommodating by NEO's
through course-plotting, supplying, clock and signal reference products, etc.

b.

Human resources

The BBC has high qualified human resources. Professional on research and
development and expert on collecting and disseminating qualitative information
are key success factor for bringing success to the BBC. Recruiting of high quality
human resources with innovative and creative ideas bring more value to the BBC.
c.

Technological development
The development of fast and innovative technology adds value to the BBC. With
the change in preference of viewers/listeners, they are demanding for more better
and diverse programme. Therefore the BBC has adopted the innovative technology
to add more value to customers. For example: demand for the BBC satellite from
viewers force the BBC to catch of the innovative technologies which add value to
customers.

8. Porter Five Forces Model

Threat of New Entrants
Threat of new entrance to the media industry could possibly come from newly
opening news channels, both locally and internationally; thus the overall threat is
relatively low.
The start-up costs for entering the industry create a serious barrier. Brand
awareness and establishment cost would be higher due to the customer loyalty on
existing news channels. Expensive licence fee and high capital investment with
long payback period is another barrier for new entrance. In this industry, the
barriers to entry is really high and the barriers to exit is low, therefore only the few
companies can maintain their position in the market, while others companies could
give up altogether or are merged with bigger firms.

In the news channel industry, currently there are fewer but more powerful
companies, therefore strengthening the barriers to new entrants, and weakening the
potential for new entrant success.
The BBC is already well established company in media; BBC has been around
with its customer since long time and BBC has segmented its market in such a way
that satisfy the need of each customers; which is the key factors that create the
more band loyalty of customers towards BBC.
The Bargaining Power of Supplier
Suppliers power generally depends on volume purchase by companies. The more
powerful suppliers are, the less profitable the industry is. Suppliers for the news
channel industry come from both international and local dimensions, and each
group holds different level of powers. Since the different countries have different
rules and regulations regarding information they want to publish. International
suppliers have more bargaining power than national suppliers.
The bargaining power of suppliers has medium high to medium low bargaining
power, depending on the experience, popularity and demand of viewers/listeners.
For example: if big celebrity such as Angelina Jolie, Brad Pitt, Tom Cruise,
Metallica, etc are supplier then supplier would have high bargaining power, mean
while if supplier are common actors, journalist, fresh graduate, product maker or
have less experience, than supplier will have low bargaining power.
Bargaining Power of Customer
The bargaining power of customers of news channel industry is relatively higher
due to the intense rivalry with in the news channel industry and substitute products
are available in the market with lower price.

The bargaining power of customer of the BBC is relatively high. The reason why
customers bargaining power is high is that the BBC cannot force customers only to
watch their channel. Though the BBC is free in UK, they still have to pay licensing
fees for TV and beside the BBC Customers have numerous choices to watch. At
the same time ITV, Channels 4 and Channel 5 are also free in air. Further, viewers
can get bigger package of channel when they subscribed in with BSKYB which
increase the bargaining power of the customers.
Threat of Substitutes
The substitute products of news channel industry are news paper, magazines,
internet, movies, social networking sites and others. The threat of substitutes to
news channel industry is high due to many factors. To begin with, the same news
and information are easily available from different substitutes with more
convenience and low cost. Another reason is that switched over cost from news
channel industry to its substitute is low.
In present situation biggest threat is social networking sites in which user can
registered to create personal profiles and puts the blogs, video and songs, link to
other users and communicates with them. Therefore the threat is a substitute
product is relatively high.
Intensity of Rivalry among Competitor
The news channel industry has few competitors, most of whom hold significant
percentages of market share. BBC basically competes with American news channel
and other national channel such as ITV, BSKYB, and CNN. BBC is the leader in
the news channel industry, which accounts for 40% of total market coverage in UK
market. The company is able to leave its competitors behind by not changing any
fees to its customers.

The intensity of rivalry among competitor is relatively high because the industry is
slow growing market with few strong competitors. Even though customer loyalty
is typical for industry, all companies are concentrated on implementing new
competitive strategies, diversification, and distribution capabilities.

9. Product Life Cycle

The BBC is in the mature stage of product life cycle, while its business units are in
different stage of product life cycle. Currently BBC has following business units:
BBC radio, T.V., satellite, internet and digital (T.V. and radio). Digital radio and
T.V. of the BBC are in an introduction phase of product life cycle, satellite and
internet division are in growth phase, and the BBC radio and T.V. division are in
mature phase of product life cycle.

10.

BCG Matrix

In case of the BBC the Boston Matrix can be used to analyse portfolio of whole
business, different business unit and product.
The BBC is in Cash Cow in Boston matrix which is in mature stage of product life
cycle and has high market share and relatively low market growth.
Business units: The BBC TV and radio is in Cash Cow of the Boston matrix which
have high market share and relatively low market growth. Satellite and internet are
in Star of the Boston matrix which has relatively high market share and high
market growth. And digital (T.V. and radio) is in Question Mark of the Boston
Matrix which in introduction stage of Product Life Cycle and has high market
grow and relatively low market share.

Through the Boston box analysis, the BBC can identify different opportunities
open to a company as a profile of core capability and how the BBC can developed
to sustain certain existing business and leveraged to create a new business
opportunities. For example to start more entraining and innovative programme

such as strictly come dancing, little Britain, strictly fabulous and so on will create more
opportunities for the BBC.

11.

Conclusion

BBC has been proving itself as a successful business since its first establishment in
1922. Although, the BBC has faced different political, socio-cultural, economic
and technological challenges and issues, it has overcome those challenges through
its innovative ideas, culture and specialized human resource. Through
environmental scanning tools, it is identified that the BBC is currently facing the
threat of license fee and heavy competition. Viewers/listeners are demanding for
multi-cultural and diversified programs. One of the major threats of the BBC is
that it has heavy competition with CNN, Fox News and other local media
companies such as BSKYB, ITV, etc and there is the possibility of new entrance
from international brand in the market where BBC is currently dealing with. Not
only this, but also there is the threat in BBCs source of revenue. One way to
minimize the impact of these threats or to mitigate their impact, BBC can expand
its services offerings into emerging global power like Brazil, China and India. In
addition to this, the BBC can extend all its services in internet targeting different
group of viewer/listeners. And to tackle its threat related to its revenue, it can turn
around and do more advertisement so that it can generate additional revenue to
compensate its possible revenue loss from the licensing loss in the future.
However, in order to maintain its current market share and to be more competitive
BBC may have to prepare itself for more technologically adoptive company by
quickly adopting any technological change in the market place along with
introducing itself as a first mover in innovative ideas and product or service
offerings.

12.

Bibliography

BBC News - BBC is facing 'moment of realism', by Mark Thompson

Competitive strategy- Michael E. Porter

Google images
BBC Wikipedia page