Living Large – The Case of Live Nation Executive Summary After the spun-off from the radio giant Clear Channel Communications in 2005, Live Nation, the world’s largest events and live music promoter is now preparing itself to go even bigger. Led by CEO Michael Rapino, Live Nation is revolutionizing the music industry from a concert business to a one-stop shop that would make every fan and artists musical ends meet. Live Nation’s arising strategy is to connect the artists to the fans in every aspect possible by going after the music star’s themselves rather than Just their live music.
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In October 2007, Rapino signed a first-of-its-kind deal with Madonna and still has not shown signs of slowing down as it signed with other music stars and hopes to even add more. Problem Statement A. Short Term How to meet and connect the existing musical needs of the fans and the music stars? B. Long-Term How will Live Nation gain Competitive Advantage over competitor, increase fans and music stars satisfaction and loyalty, and add value to the business in the long run? Key Success Factors 1. Good planning and strategic management 2. Ability to respond to change and trends in the environment 3.
Establishing strong connection/communication between the company, the fans and the artists Proper application of Information System Assumptions 1 . The point of view in this case is the top management of Live Nation. 2. The rival companies of Live Nation does not embrace making a significant change (i. e. expansion, restructuring) in their current operation given the existing situation. Alternative Courses of Action 1 . Expand the Business through Vertical Integration Growth Live Nation may 4. pursue expansion by owning the control of the inputs, processes and outputs in the oncert business and other related activities.
This alternative provides the company more sources of revenues especially if it involves music superstars and proper management is implemented. This alternative is good for situation where high potential growth and market trend seemed to prevail. Possible problem may arise if the company becomes too big for the company’s current resources to manage and meet all the demands of fans and artist. 2. Expand the Business through Related Diversification In this alternative Live Nation will still aim for growth but in a different way.
Instead of handling all the activities related to the concert business/live music, it may decide to combine with other firms in the same industry. Live Nation can combine with firms that handle recordings and digitalization of concerts and firms that sell albums and other merchandise of the music artist. This way, Live Nation can exploit the efficiency and effectiveness of the other firms in the related industries and still make significant music industry slow down the high potential growth of the business. 3. Maintain the Stability of the Business
While expansion may be a desirable action to make, Live Nation can also Just remain in its current operation. This is a good alternative for the company especially if the economic uncertainties are high. Live Nation as a concert may see itself as successful already and growing the business may Just ruin their operation. Though, the company is dominating the concert business it may not guarantee that it will still do the same if it expands its product/service line or even combine with other firms in the same industry.
If the company doubts the previous alternatives it may Just hoose to strengthen or stabilize its current operation. On the weak side, this strategy might actually disregard opportunities that would give more value to the company. 4. Restructure the Business Operations Live Nation can also restructure the current operation of the concert business. Perhaps, some of the company’s resources are still not into its most effective use even though they are dominating the concert business. It is also possible that by changing the current operation they may actually discover untapped resources and develop their core competencies.
In this case, it is better that Live Nation reorganize the oncert business in order to minimize cost or even increase revenues. However, it might be unlikely for a company like Live Nation to restructure its operation given that it is already dominating the business. Analysis and Recommendation A good starting point for Live Nation is to make a SWOT analysis. In the short run, Live Nation must first understand it’s operations whether it is operating effectively or not. In order to meet the current musical needs of the fans and the artists, the company must strengthen its current operations and exploit any untapped resources they ave.
The best strategy would be to maintain stability of the business and not make any major actions that could lead them to failure. In the meantime, Live Nation must understand the changes that are happening in the music industry and look for trends which they can use to base their long-term strategy. In the long run, Live Nation must prepare a strategy based on the feedback and the continuing trend in the music industry. Since Live Nation is already a star in the concert business, it would be best for them to expand and reach other products and ervices that would add source of revenues to the company.
By becoming a one-stop shop through vertical integration growth they can gain control of the inputs, actually give them competitive advantage over competitors who only desire stability strategy. In the process Live Nation should sign high rising music stars and provide them with their musical needs while also providing quality service to the fans. With the high growth potential of the added products and services to the business, a well implemented strategy is highly needed to reach their goals.