Strategic Analysis: Understanding a Firm's Competitive Environment

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This is part 1 in a 2-part case. The second part is based on chapter 9: The Strategic Management Process.

Megan Parnell is a young woman from Gitanyow. She went to school at Coast Mountain College for Business Administration before transferring to University of Northern British Columbia in Prince George to finish her degree. She fell in love with the city of Prince George, a hub in northern British Columbia of approximately 75,000 people. There are 2 movie theatres in Prince George at the moment, and Megan thinks she's got a big idea that will work: a premium movie theatre.

Both the current movie theatres in town offer the conventional movie-going experience. Tickets are $15 with a food canteen that sells snacks sold at a minor premium.

Megan's plan is something different. Instead, she wants to make a small-scale theatre with a premium movie-going experience. Conventional theatres have 200 seats per viewing, but Megan wants a theatre with 30 D-Box seats. They are large seats that move and vibrate with the action in the movie and have the speakers built in for a totally immersive movie experience. Further, movie-goers are able to order food, drinks, and snacks from an electronic menu built into the seat. Meals that can be ordered include hamburgers, lasagna, and salads, among other things. The meals have rubber plates and utensils to reduce noise and the seats have built-in optional noise cancellation technology.

However, this will lead to its own challenges. Megan anticipates that her fixed costs per customer are going to be significantly higher if there are only 30 seats, and each of those seats are individually more expensive to build. Further, the variable costs are going to be higher too as other movie theatres don't need a built-in restaurant with wait and food staff.

Megan has found a good space just outside of Prince George's downtown core, and she has the financing available from her life savings, personal line of credit, and some gifts from her family members if she needs it. However, before pursuing this business any further, she wants to do some homework to ensure the idea is really as good as she thinks it is. She sits down with a pen and paper and gets to work.


Questions

  1. Conduct a SWOT analysis for Megan's theatre idea.
  2. Conduct an analysis of Porter's 5 Forces.
  3. What generic strategy is Megan's business engaging in? Explain.
  4. Optional: Conduct a PESTEL analysis. You will have to do outside research to complete this analysis.
  5. Based on what you have analyzed from the macro-environment, do you think this business is a good idea? Why or why not?

Source: Scott van Dyk, https://collection.bccampus.ca/course-packs/introduction-to-management/#module-13
Creative Commons License This work is licensed under a Creative Commons Attribution 4.0 License.

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