CHAPTER 8 STRATEGIC MANAGEMENT

Case Study

• Presented By:Shakeel AhmadFarman ElahiAdeel AzharNabeel Nasir

• INTRODUCTION:1. Live Nation is a Live-events Music company based in

Beverly Hills, California. (www.livenation.com)

2. Main focus is on Concert Promotions.

3. Live Nation formed back in 2005 as they separated from Clear Channel Communications,

then merged with Ticketmaster in 2010 to become Live Nation Entertainment.

INTRODUCTION Cont’d...

4. Company Type:....................Public.5. Working Employees:............6,500.6. Employee growth rate:........51.2 %7. 2010 Ending Key Figures:

a) Sales:.....................5063 Million $b) 1 Year Growth:...... 21.1 %c) Net Income:.......... 228.4 Million $

8. It is World's largest ticket seller & promoter of concerts in 2010 & expanded its ticketing services by purchasing TICKETMASTER ENTERTAINMENT (Deal worth 889 Million $).

9. It Operates more than 125 venues in North America & Europe10. Annually 64 Million people attend their 28,000 events.11. Live Nation owns a stake in about 250 artists' music including their albums,

tours & merchandise.12. Live Nation also owns the HOUSE OF BLUES chain of venues.

LIVE NATION’s Webpage Layout:

HOUSE OF BLUES: Chicago, Vegas & New York.

Paperless Ticketing System.

CENTRAL ISSUES:

1. Music Business is struggling.2. Michael Rapino (President, CEO & Director of Live Nation) is

still not satisfied with dominating only in Concerts.3. In Oct 2007, Rapino signed a 10 year deal with Madonna

(worth 120 Million $) who left her long time partnership with WARNER RECORDS. Madonna let Live nation to handle all of her business except for Publishing.

4. Madonna manager said, ‘’Warner Records are in Trouble while Live nation is taking Risks & its leading to a change.’’

FIRM’s GOALS:

1. Live Nations’s mission is to maximize the live concert department to maximize their revenue.

2. They want to add as much as superstars to its roster as possible. (made similar deals with Shakira, Jay-Z, Nickleback, U2 etc).

3. Their strategy is to Connect Artists with fans.4. Bought TICKETMASTER ENTERTAINMENT to resolve their

ticketing issues.

LIVE NATION’s Strategy:VERTICAL INTEGRATION:1. Live nation’s uses Vertical Integration strategy to grow. The term vertical integration describes a style of management control. It is

either backward, forward or both.

2. Vertically integrated companies in a supply chain are usually united through a common owner. Usually each member of the supply chain produces a different product /service, and the products combine to satisfy a common need.

3. Vertical integration is one method of avoiding the hold-up problem.

4. Live Nation's approval from the U.S. Justice Department for its merger with the Ticketmaster Entertainment is a modern day example of Vertical Integration.

SWOT ANALYSIS of LIVE NATION Inc.

STRENGTHS: 1. Global Market Leader.2. Economies of Scale.3. Brand Name.4. Paperless Ticketing System.

WEAKNESSES:5. Only Young Consumers.6. Not Covering All Music Aspects.

SWOT ANALYSIS Continued....

OPPORTUNITIES:1. Concert Revenues.

THREATS:2. Merger Regulation.3. Terrorism.4. Diseases of Various kinds.

SWOT ANALYSIS Explanation:Strengths:

1. Global Market Leader: Good economic position, High margin of Net income/revenue.

2. Economies of Scale: Low Costs & Increased Services to costumers.

3. Paperless Ticketing System: Tickets buying and booking through credit card system.

SWOT ANALYSIS cont’d...

Weaknesses:

1. Only Young Consumers: Only Young Followers. Unpredictable clients. Also they are more likely to get unemployed.

2. Not Covering all Aspects Of Music: Live Nation is not covering all aspects of music e.g Publishing.

SWOT ANALYSIS cont’d...

Opportunities:

1. Concert Revenue: Decrease in records sale revenue is compelling more and

more artists to perform onstage. Generating huge revenue. Live performances are becoming more popular so the demands for ticketing services are becoming more and more important.

SWOT ANALYSIS Cont’d...

Threats:

1. Merger Regulation: Combining two companies together (Live Nation &

Ticketmaster). Mergers usually have to go through a regulatory panel which

decides whether the merger is fair or not and does not lead to monopoly powers. Also there is a RISK of merger rejection... If they don't co-exist well in future... Which will leave Live Nation in serious trouble with its ticketing issue.

SWOT ANALYSIS Cont’d...

2. Terrorism: Most common threat these days specially in crowded areas.

3. Diseases: Skin Diseases, Swine flu (for a short while, it was an issue),

Allergies of several kinds can be transferred easily in crowded/public places.

IMPLEMENTATIONS:

1. To Lure middle aged & aged people through recruiting artists who can serve them well i.e. (Opera singers, Unplugged, Acoustic Music etc).

2. They should become independent and should handle their ticketing issues themselves.(as they call themselves ‘’The Future of Music Industry’’).

3. Their Customer Feedback System lacks quality (Some Clients are very unsatisfied with their feedback system).

IMPLEMENTATIONS Cont’d...

4. People are not happy / satisfied with their ticket prices. They are charging more than they should. Also sometimes the ticket prices increases without any notice, which is quite annoying for costumers.