Example Of Case Study On Challenges Faced By Imax

IMAX

The story of iMax is that of a company that got into a business environment that already had big names that seemed almost impossible to rival. The film industry is an old one and getting into it as a new entrant requires a firm strategy. When iMax ventured into the industry, it had spotted a niche in the market that needed to be bridged. It became the first company in the world to be involved in all facets of large format films. Being the first of its kind and seeking to compete with other giants, iMax had its fair share of challenges that it had to overcome. Alongside the challenges also came the opportunities to be exploited and spur the growth of the company.

iMax has faced and overcome a number of challenges since its inception way back in 1967. The following is an in-depth analysis of some of the challenges the company has faced.

Competition

The company faced stiff competition from other companies that were also in the large format films industry. They included Pixar/Disney, Iwerks, Megasystems, amongst many others. Many firms got into the large format films industry which meant that iMax’s management had to raise their game in order to stay in business. It led to an inception of the diversification idea whereby the company got involved in what can be described as multiple industries. These were Photographic equipment and supplies industry, motion picture and video tape production industry, and motion picture and video distribution industry. The diversification provided the company with multiple revenue sources and thus, minimized its risks by spreading them across the three industries. It helped in coping with the rising competition but the firm still needed to do more to aid its growth in the industry. In order to raise more revenues, iMax theaters were located in prestigious locations that portrayed it as a unique brand. The company also invested heavily in research and development thereby enabling it to make high quality films that deeply satisfied the audiences. The impact that research and development brought to the company was massive and underlines the importance of such investments especially in the current more dynamics business environment. An investment of as much as 5% in research and development underlines the desire within the company to keep improving and growing. The growth is in both strategies and the quality of goods and services offered to the clientele.

Business Fluctuations

In 1994 when iMax was listed in the NASDAQ it had a market capitalization of $196 million. As of December 2008, its capitalization was at $125 million indicating a massive drop. That alone shades the picture of how the industry is for iMax. The constant competition sometimes leads to business fluctuations. The company has been in a constant roller-coaster having to deal with constant industry dynamics.

Advancing Technology

The level of technological advancement has constantly been a threat to iMax’s business. There are currently, thousands of television station around the world that people can turn to for entertainment. There are also a number of popular sports that people would prefer to watch rather than watch a movie in the theater. Millions of people around the world have the luxury of watching their favorite sports at the comfort of their living rooms thanks to technology. Although the advancing technology helps iMax to improve the quality of its delivery, it also gives more entertainment options to the potential customers. Theaters are now becoming places that majority of the young generation can only visit occasionally. iMax has to deal with the challenges of growing technological advancement on its business.

Social issues

IMAX has had to cease the screening of some movies in certain parts of the world due to what some social groups in those geographical areas term are moral issues. For instance, the company cannot screen Volcanoes of the Deep Sea in some parts of the USA because it conflicts with the religious beliefs of some of the residents in those areas.

Opportunities For iMax

Although the company has had to deal with a great deal of challenges, the company has also had opportunities that has given it a chance to stay in business. The succeeding section seeks to explore some of these opportunities.

Expansion Opportunities

The company has constantly expanded both by opening new theaters in various continents and also by providing services that are not within a single industry. iMax has been more involved in converting Hollywood films into the iMax format. It has aided in spreading its popularity but at a costing of risking its identity and uniqueness. The company’s executives are afraid that continued conversion of Hollywood films into iMax format may erode its brand name. However, the conversion has helped the company’s course as it has enabled to stage Hollywood movies alongside its own. This ensures that the company has a bite into the Hollywood’s client base. It is important to note that Hollywood films are popular especially with some star actors and actresses who command a huge fan base. It would, therefore, be suicidal for iMax to ignore Hollywood films. The company may have to design a strategy that will enable it to continue converting Hollywood films and be able to keep its identity and brand name at the same time. The movie industry has become global and IMAX has the opportunity to expand to different parts of the world where movie theaters are popular and have the advantage of introducing them.

Research and Development

It is apparent that company has put a lot of emphasis on research and development. In 2007 for instance, it used 5% of its revenue on sales to boost research and development. The investment is paying off as the company was able to come up with 3D cameras and systems for projection which could realistically produce 3D images. It was a magnificent step in the right direction. The company also received grants to help enhance their research and development activities. The company’s efforts were finally recognized when it won an Oscar award in 1997 for scientific and technical achievement.

IMAX’s Business Strategy

The company had a well calculated business strategy that has enabled it to survive in the industry even during its most turbulent time. The company’s strategy is to diversify its activities so as to be able to bring in revenues from various sources. It, therefore, implies that any loses from the Photographic equipment and supplies industry can be offset by gains from the motion picture and video tape production industry, and or the motion picture and video distribution industry and vice versa. The strategy of converting Hollywood films also seems to work quite well for the company as the revenue numbers indicate in the company’s financial statements. The company’s competency in implementing their strategy lies in their massive investment in R & D and also in their ability to minimize their costs. The company has also developed a strategy that enables it to capture all client groupings. They have classified movies that can be screened during the day for families and those that can be screened in the evenings for adults only.
The company’s is very sound strategically as it endeavors to change its strategies whenever necessary. It would be difficult for the company to thrive solely as a niche player who only makes large format films. This is because, as mentioned earlier, the technological trend is driving large film formats out of the market as it gives customers an alternative to visiting film theaters. The strategies implemented by IMAX have been successful so far and they are likely to maintain the company’s growth. The modern business environment is very dynamic and requires constant evaluation of business strategies and making necessary changes. IMAX seems to be doing that very effectively.

Conclusions and Recommendations

There are concerns over IMAX continued exhibition of Hollywood movies. Research suggests that the company is running the risk of losing its identity by screening more Hollywood movies. The research suggests that the company will keep its identity by screening more educational films as it used to than entertainment films that Hollywood films are. The best recommendation for the company is that it should balance between the Hollywood movies and its own educational films. The co-CEOs should research on strategies that would make the company more popular around the world while it operates on its own. Making the company part of a larger studio such as Disney or Sony is viable but not good for shareholders.