Centralcasting, servicization of operations management and globalization…

Posted on 21 Ιουνίου , 2006



A theory perspective 

Author: Apostolos Tsorakis

Operations management focuses on carefully managing the processes to produce and distribute products and services. Slack et al, (2001), clarifies that the operation function of the organization is the arrangement of those resources which are devoted to the production and delivery of its products and services however, not all types of organizations will necessarily call the function with this name. Under this perspective, and beyond operations, there are core functions, such as marketing and product/service development, and support functions such as the accounting/finance and human resources. The core functions according to Slack et al, (2001) will be found in all organizations since they fulfill fundamental needs of selling their products, satisfying their customers and create a sustainable relation with them, while the support functions enable the core functions to operate effectively.

These are the legacy of the changes that have taken place over the last 200 to 300 years from the use of home-based craft production systems to the relatively more efficient modern industrial systems of today. The application of these techniques has resulted in a “relative abundance of physical goods at low cost, available in a fantastic range of items undreamed of by our ancestors” (Buffa, 1976).

Skinner (1985) challenged the role of operations as being solely concerned with the internal efficiency and effectiveness. The challenge has specifically been taken up in the development of “manufacturing strategy” and recently “operations strategy”. This subject has been concerned with the fact that while operations has a key role to play in implementing corporate strategy, it should also be involved in the formulation of strategies to provide competitive advantage (Hayes and Wheelwright, 1984).

This subject has become concerned not only about its integration with corporate strategy but also its relationship with other functions such as finance, marketing and organizational behavior. Fitzgerald et al., 1991 described the link of the operational measures of performance with financial measures while Bateson, 1985 described the link between operations and marketing and the customer interface. Finally Mills and Morris, 1992 wrote about the motivation and role of operations personnel in dealing with customers.

Another related development of the subject has been the focus of recent debate is the servicization of operations management. This interest in service activities is relatively new, despite the existence of service operations for at least as long as production activities. During the 1970s there has been recognition from theorists that services are important to the economy and that service is a competitive advantage for many organizations, both manufacturing and service organizations. The mutual concern over similar issues has led to the evolution of a new area that became known as “service management”.

There is a significant factor though in 1970s and 1980s which is linked with the service sector and has to do with the widespread introduction of the use of computers into organizations, which in 1990s was underpinned by the telecommunication breakthrough and led to the Internet era. The 1980s and 1990s have also seen the acceptance and implementation of the “new” management philosophies of just-in-time and total quality management. These are now the mainstream functions of production practices in many manufacturing firms, while the information liberalization followed by internet breakthrough, introduced the knowledge based competition.

Knowledge according to Johnson and Scholes (2002), is awareness, consciousness or familiarity gained by experience or learning. The information that is unleashed by the digital technology leads to a knowledge-based competition, where the ability of an organization to develop, nurture, and mobilize its intangible assets is critical for success. (Kaplan and Norton, 1996) Interestingly though, some technology experts and academic scholars have observed that there is no direct correlation between IT investments and business performance or knowledge management. For instance, Erik Brynjolfsson, a professor at MIT Sloan School, notes that: “The same dollar spent on the same system may give a competitive advantage to one company but only expensive paperweights to another.” Hence a key factor for the higher return on the IT dollar is the effective utilization of technology. (Malhotra, 1998)

Trends towards the globalization of communication, technology, the markets and finance have resulted in unprecedented business competition, especially for small firms. Globalization has accelerated a process of “industrialization of cultures”, closely linked to technologies and the formation of global conglomerates involved in media, entertainment and sometimes other industries. Economic globalization on the other hand, is a historical process, the result of human innovation and technological progress. It refers to the increasing integration of economies around the world, particularly through trade and financial flows. (Knight and Cavusgil, 1996).

In the broadcasting industry a television station’s business is to source and broadcast programs, whether these are produced in-house, commissioned to outside producers or acquired. A Television channel could be considered an intense data production facility. It is required to broadcast 24 hours a day, 365 days a year, totaling 8760 hours of continuous scheduled footage broadcasts on the television screen.

The television operations can be modeled according to Slack et al, as the processing of input transformed resources such as sitcoms, one hour dramas, live shows, news, sports etc which are being utilized by the input transforming resources such as studios, cameras, staff, hardware etc. to be scheduled for broadcasting along with channel ID’s, interstitials, trailers (advertising what viewers can watch in the near future) and advertisements. Content is created in studios, newsrooms, and by specialty producers. The channels nowadays are delivered over a variety of networks— cable, satellite, terrestrial, and recently via broadband Internet. The audience that gathers around the content is attractive to third parties such as advertisers.

About five years ago some broadcast group owners began to see that the trends in the industry would never reverse and sought ways to cut costs to stall the decline in broadcast cash flow and began to toy with the idea of moving air operations to centralized sites, with the thought that the savings in labor would be more than the cost of interconnection lines. Simply defined, central casting is “the management of various aspects of broadcast operations, including technical, accounting, and programming support for multiple broadcast facilities from a central location.” (ETVCookbook.org. “Centralcasting,” April 25, 2002)

Targeting to the opposite of the central casting model, matrix organizational structures as Graham (2002) point out attempt to combine the benefits of decentralization (e.g. closeness to markets, speed of decision-making and implementation) with those of co-ordination (e.g. achieving synergies across business units, territories and products).

It has been observed that in the media industry many family groups own significant portion of interests. Mandel describes that the complexity of family business is appropriate to be examined from various perspectives of management, psychology, and finance. Family businesses are different because the principals make decisions based on the complex interaction among business, family, and ownership systems. (Mandel, 2001) There are though some differences among family businesses due to the degree of inclination of business-first or a family-first philosophy (Cromie et al., 1995).


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