Report to the Board of Directors of VYP

regarding the main issues facing the company

as of 30 of March 2012 and potential strategies

for the future

Date: March 30, 2012

Team: Fantastic Four

Participants: Guseynova Tamam

Kopytkin Alexander

Surzhik Daria

University: Moscow State Institute of International Relations

Report to the Board of Directors of VYP regarding the main issues facing the company as of 15 May of 2010 and potential strategies for the future

Contents

1.0 Introduction 4

2.0 Terms of reference 4

3.0 Prioritization 4

3.1 Top priority – Proposal to expand into corporate advertising videos 4

3.2 Second priority - Fee negotiation for new children’s programme 5

3.3 Third priority – Re-commissioned drama series 5

3.4 Fourth priority – “Banks – friend or foe?” – A new documentary by VYP 5

4.1 Proposal to expand into corporate advertising videos 6

4.2 Fee negotiation for new children’s programme 7

4.3 Re-commissioned drama series 9

4.4 “Banks – friends or foe?” 9

5. 0 Ethical issues and recommendations on ethical issues 13

6.0 Recommendations 15

6.1 Proposal to expand into corporate advertising videos 15

6.1.1 Recommendations 15

6.1.2 Justification 16

6.1.3 Actions to be taken 16

6.2 Fee negotiation for new children’s programme 17

6.2.1 Recommendations 17

6.2.2 Justification 17

6.2.3 Actions to be taken 18

6.3 Re-commissioned drama series 19

6.3.1 Recommendation 19

6.3.2 Justification 20

6.3.3 Actions to be taken 21

6.4 – “Banks – friend or foe?” – A new documentary by VYP 22

6.4.1 Recommendation 22

6.4.2 Justification 22

6.4.3 Actions to be taken 24

7.0 Conclusion 24

8.0 Appendices 24

Appendix 1 24

Appendix 2. SWOT analysis 26

Appendix 3. Porter 5 forces analysis. Independent TV production industry 27

4. Threat of substitute products: Medium 27

If programme ideas are innovative, then there is no threat 27

Many companies provide high quality programmes, so viewers can easily switch to watch them 27

Tastes of the viewers quite different from each others 27

5. Intensity of competitive rivalry: High 27

A large number of small independent TV production companies exist and each company’s market share is small. 27

Appendix 4.The market growth potential - PEST ANALYSIS 28

Appendix 5. Industrial and financial analysis. 29

Appendix 6. Profit and Margin for 3 variants of actor’s salary. 30

НОМЕР!!!) 30

Appendix 7. 31

1. Introduction

V and Y Productions (VYP) is an independent TV production company based in the UK which is commissioned by the BBC, ITV, Channel 4 and Channel 5 to make programmes. It generated total revenues of £28.6 million and made over 121 hours of programmes last financial year. The company, established in October 2004, is now placed within the top 20 TV-production companies in the UK due to its &&& growth performance (39% growth in terms of revenue from the previous financial year).

Since 2008 VYP has been selling programmes and programme formats for the rest of the world. In the financial year ended ended 30 September 2011, the International Sales Department achieved total revenue of £1.3 million, while generating a high profit margin of 62.3%.

In terms of Porter’s Generic Strategies, VYP is a differentiator focusing on innovative, high quality programmes.

2. Terms of reference

We are the team of Management Accountants from CIMA appointed to write a report to the Board of Directors which prioritises, analyses and evaluates the issues facing VYP as at 31 March 2012, and makes appropriate recommendations.

3. Prioritization

3.1 Top priority – Proposal to expand into corporate advertising videos

Steve Voddil’s friend has approached to him with an idea for VYP to produce advertising video of Coffee Shops, which will be shown on local independent TV. It has also been suggested that more modern channels might be appropriate.

This is considered to be the top priority as it is a new global market, on which the company may have the profit and that is the main aim of the company.

TV industry is changing and innovative, so to keep audience the company should follow the new trends and penetrate a new a market or improve efficiency of the production.

This issue is considered to be a strategic proposal as company wants to penetrate into a new market of corporate advertising.

3.2 Second priority - Fee negotiation for new children’s programme

This issue is the second priority as VYP is likely to be a success entering a new area (children’s programmes production). £350, 000 per hour offered by the broadcaster, which is considered to be generous, represents more than 22% of the last year’s total revenue. And given the rave reviews from critics and pilot programme viewers, VYP hopes ‘Sammy Squirrel’ will be re-commissioned in future. It may result in good merchandising sales figures, which are very important in terms of recouping production costs. That is why the issue of the ownership of merchandising rights is crucial. Some research is needed to estimate likely sales levels and decide whether a 40% share of the merchandising margin is worth the 35% drop in fees.

3.3 Third priority – Re-commissioned drama series

This has been placed the third priority as VYP has received a new contract from BBC to re-commission the last year drama series at 2011 prices less 10%, and VYP is interested in seizing the opportunity to get more money from BBC to make decent profit. Now it’s vital that company’s services should not fall in prices and that the myth that re-commissioning costs cheaper should be destroyed.

Moreover, John Strong, one of the original members of the cast needed to film the second series is currently unavailable since he is contracted for another 10 months with another TV company. It is necessary that VYP take action to release him from this contract and get him to play in the second series for it to be better received by the public.