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Ministry Of Sound Case study Essay

Ministry of Sound London, is a nightclub, based in London, England and an associated record label. Ministry was ranked sixth in the 2009 DJ Magazine top 100 clubs poll 2009. As well as the nightclub in London, there is another in Egypt. The Ministry of Sound brand also includes various other products such as dance music compilations and clothing. Ministry of Sound is owned by MSHK Group Limited, which has offices in London, Sydney, Berlin and New York. The Chairman of MSHK Group is James Palumbo who is also the majority shareholder; a small minority share-holding having been sold to private equity house 3i in 2001.

The Chief Executive Officer of MSHK Group is Lohan Presencer. MSHK Group has global sales of £80 million and employs up to 500 personnel worldwide Within only 15 years the Ministry of sound has grown from a start-up with a primal investment of £ 340.000 into an enterprise with a worth of £ 150.000.000. The ministry of sound turned from a dance-club into a corporate enterprise with and within a couple of years it became even the most recognisable and successful dance music brand in the world. Strategic position means identifying the impact on strategy of the external environment and an organization’s strategic capability.

Environment
Dance music has its origins in so called acid house, which has its roots in the electronic music scene of the gay clubs in New York and Chicago. Dance music in the beginning was associated with drugs such as ecstasy. The Ministry of sound dissociated itself from the drug movement and had security staff which was not linked to local drug gangs.

James Palumbo founder of the Ministry of sound created a safer and cleaner environment, which is a competitive advantage to other clubs. The Ministry of sound was intentionally placed in an area far away from the typical London nightclub locations. The initial strategy behind that was among other things to drive down costs for the location. The saved costs could be used to invest in better club facilities and sound equipment. To emphasize the attitude towards drugs the Ministry of sound campaigned nationally against drug abuse. A drug free environment and the high quality of the club were features that attracted people.

Strategic capability
The mission statement of Ministry of sound is: “to create the moments that people live for”. Because of the great success James Palumbo decided to spread the activities of Ministry of sound and to operate worldwide. Business developed in many different directions. Besides the club Ministry of sound started a magazine aimed at the clubbers, named Ministry which had great success also a radio show was broadcasted. Furthermore festivals all over the world were organised. Strategy behind all that was to strengthen the knowledge of the brand. To increase revenues a record label was founded and merchandising products were sold. Ministry of sound became a global brand with clubs all over the world.

The success of the brand attracted investors, so in 2001 the venture capitalist company bought 20% of Ministry of sound. The next strategic aim would have been a stock marked listing, however it did not come to that yet. Things started to deteriorate in 2002 the dance music experienced a market fall and a lot of dance clubs either downsized or closed. As a consequence the magazine ministry had to be closed. After the closing of the Ministry of sound nightclub in Bangkok because of the local laws, a new strategy had to be developed. James Palumbo the founder of Ministry of sound quit as chief executive and became a chairman of the company. This was a strategic decision, because Palumbo might have realized that a new style had to be introduced and changes had to be done.

The new executive manager Mark Rodol launched a strategic review of the whole enterprise. The intention behind that was to examine what ministry of sound actually is and to examine possible strengths and weaknesses to be able to develop a new strategy. The strategy was to focus on new target groups and new trends, merchandising was expanded and a Playstation game was released.

Ministry also launched a on online broadcasted music channel with the potential to be broadcasted via mobile phone. Rodol the new executive manager set a few strategic long-term goals such as having a Ministry of sound club in every big city in the world. To reach those goals the company was also reorganized and divided in different management departures. Also strategic long-term partnerships with other companies such as Philips and Bacardi were in the main focus. One further big issue was keep the edginess of Ministry of sound, which was also one of the key factors of success at
the beginning.

Conclusion / Further recommendations Ministry of sound is an enterprise which had great success from the start on. Probably that is a reason why problems were realized very late. Otherwise the company maybe could have reacted earlier on changes in the company’s environment an other problem might have been, that the company diversified the product line without really setting long-term goals or a long-term strategy.

However the management reacted on the changing environment and reorganized the management. A new long-term brand strategy was introduced e.g. focusing on the lucrative category groups such as merchandizing. Furthermore the company set up long-term goals and wants to become a big mass marked brand, but retain the edginess. Ministry of sound should further focus on new technology and integrate them into their distribution and advertising, for example selling their music via iTunes store or other internet based music stores. A further recommendation is to focus on the core businesses, the ones that are very lucrative and built strong brands such as MoSTV.





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