Hollywood Goes Global - Case Study on Globalization

4 pages
1016 words
Sewanee University of the South
Type of paper: 
Case study
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Movie industries exist to provide wealth and earn profits to their shareholders. Every company has a corporate strategy to pursue its goals. A company with customer-focused strategic intentions will have a corporate strategy that reshapes its marketing. When an organization can envision and predict the long-term profit implications of a customer, it can adjust its approach to attract as much of that customer's lifetime value as possible. Also, a company with solid customer satisfaction has a competitive advantage and can leverage its relationship with faithful customers by introducing new services or products. There are three key principles by which a movie industrys success can be evaluated that is financial performance, critical evaluations, and movie awards. These standards represent both economic and aesthetic assessments. Several types of research focus on commercial success, including how to predict financial success, (Litman & Kohl, 1989). For Hollywood studios to achieve the maximum success, they must understand that the role of knowledge-based resources and human capital are gaining increased attention when reviewing creative industries. Also, geographical location is a determinant that gives movie companies a competitive advantage. Since they tend to make good use of, local talents, stories, scenery, not to mention locally inclined support projects.

Its a booming display out there; China recently added more screens, which despite a quota on international film it has proved enormously profitable to Hollywood. And while some films have had to try murky deals that ensure the inclusion of Chinese talent and setting to get the appreciation for exhibition in China e.g. the latest iteration of Transformers. Others pay little notice to such cultural pandering and meet with same success. The Financial Times some time ago wrote that Furious 7 had no Chinese elements, but still managed to break the all-time box-office records, taking in almost $390m. China is due to be the biggest movie market in the globe in less than three years. Chinese People will see anything while the experience is still fresh and interesting. While good for profits, it does mean that content produced will be increasingly skewed to lowest average denominator viewing that titillates rather than stimulates (Lev, 2013).

The CAGE Distance Framework identifies administrative, cultural, economic, and geographic differences or distances between nations that organizations should approach when crafting international strategies. It offers a comprehensive view of distance and provides another viewpoint on the geographic location with the associated opportunities and risks related to global arbitrage. As a distribution manager in Hollywood movie studio, I will use this framework to assess and identify the impact of distance on our company. I know that the more two countries vary across these dimensions, the riskier the target foreign market. By contrast, connections along these dimensions suggest great potential. Application of the CAGE framework requires me as a distribution manager to identify attractive locations based on access to markets, raw material, costs, or other key decision criteria. Culture has a permanent influence on people`s behaviors and values. Distance barriers are not connected to geographical distance only but also with other aspects such as administrative and cultural ones.

According to the recent research conducted by The Motion Picture Association of America (MPAA), Hollywood loses billions of money a year on illegally sold copies of movies. The losses are impossible to calculate accurately since it is not clear how many people pay a few dollars for a pirated DVD or download copies over the Internet. On the contrary, I think online piracy has not come to destroy consumer entertainment, but it is more likely its savior since it is a viral advertising hub and market expansion tool. Distributing movies has gotten less costly now that digital copies have taken the place of film. And piracy-heavy nations such as Russia and China have been fed a constant diet of lofty American action movies, creating huge desires for franchise spectacles. The prospect of immediacy created by file sharing has also opened up a new income source called video on demand. There are many ways in which videos, including movies, are downloaded and illegally distributed. Channels for sharing and downloading of movies are both technical and social. The social perspectives involve people authorized to download the content illegally, thereby starting the sharing process. This can only be prevented by executing strict cyber security protocols within the distribution channel so that people with access to videos can be held responsible for the information.

The main menace for the Hollywood studios nowadays is piracy. Where hackers sell the duplicate DVDs and CDs, and Online piracy has also come into operation, and every unauthorized download cost to the film industry is tremendous. It is common knowledge that people get attracted to the internet as it is free. Online piracy has been seen to cause massive losses making the movie industry to lose up to $460m yearly according to leading motion picture studios and distributors report. A recent report estimated around 144,000 films is downloaded daily across the world. The central piracy is done with the aid of camcorders in the theaters. Avatar was the most grossing movie in the cinema production as well as the most pirated film. It was downloaded 1 million times in the first week of release and most shockingly 500,000 times in its first two days in theaters (Lev, 2013).

The most significant factor in determining a companys ability for growth and sustainability are its potentials to take a reasonable share of revenues produced by any successful content that it makes (Litman & Kohl, 1989). Movie studios which have shown on-going success have often profited from long-term relationships with top creative talent, in particular with writers and directors. This is an important element in facilitating a film business to build on prior successes and strengthen its capability to get projects off the ground in future. Companies with the well-established international links tend to thrive, especially if those networks include bigger businesses which are operated on more corporate lines.


Lev, P. (2013). Hollywood Studios. Oxford Bibliographies Online Datasets. doi:10.1093/obo/9780199791286-0231

Litman, B. R., & Kohl, L. S. (1989). Predicting financial success of motion pictures: The '80s experience. Journal of Media Economics, 2(2), 35-50. doi:10.1080/08997768909358184

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