IMAX Case Study Example | Topics and Well Written Essays - 2500 words

IMAX - Case Study Example IMAX originated in the market since 1967, was popular among all the business organizations. IMAX was the first company in the world getting involved in producing all characteristics of large format films (MPAA, 2009 Case Facts In 1994 Wechsler and Gelfond had purchased the long established business of IMAX Corporation from its traditional owners. The company was purchased for 80 million by the new owners. However, observing the growing competition in the market of movie theaters, the new owners launched the shares for the company to the public in 1994, in order to raise more capital for further business growth of IMAX. The investors who invested in the company started to face high volatility in their profits due to uneven business conditions of IMAX. At this juncture it became a primary matter of problem for all the investors and analysts to forecast sure economic surplus for the company in future in the presence of such growing uncertainties. At the time of the purchase the stock va luation of IMAX in NASDAQ was $196 million while in December 2008 its worth came down to $125 million. Despite of the large number of IMAX theaters in more than 40 countries in the world, the business of the company is decrementing over time (Chakravarty, 2002). Internal and External Constraints The commerce of IMAX is facing several internal and external limitations that have made the analysts worry about the long term success of its business. Internal Constraints The theaters of IMAX may lose its popularity and brand worth because its strategic managers only concentrate in non educational entertainment Hollywood movies. Further, the CEO’s of the company are in a dilemma to sell IMAX to some large media partners like Sony, Time Warner or Disney. The officials are also in a dilemma to release the Hollywood movies in both regular and large formats in IMAX. It is also a matter of internal constraint for the firm managers to analyze the requirement for further rise in Hollywood movie releases in IMAX theaters (Olijnyk, 2002). External Constraints Figure 2: Growing Substitutes of Movies (Source: IVEY, 2009) The number of movie viewers is higher than any other entertainments, as the ticket prices for movies are comparatively low. But it should be analyzed that the growing numbers of substitutes in the market of entertainment have lowered the aggregate movie viewers. Figure 3: Rising number of DVD Consumption in U.S. (Source: IVEY, 2009) The above schedule shows that the total DVD use in U.S. increasing with time, greater use of DVD has lowered visitors in movie theaters. Figure 4: Increasing Movie Ticket Prices (Source: IVEY, 2009) The falling Gross Domestic Product and increasing prices of movie tickets have lowered the total number of theater audiences, although the theater owners virtually find their revenues increasing. Statement of Criteria (Objectives) The objectives of business that IMAX should exhibit for its economic prosperity in future are: To bec ome a niche player in the competitive market of movie theaters. To diversify its operations. To augment the brand loyalty and tap more potential clients. Situation Analysis The context of situation analysis will help the readers