Strategic management Case Study Example | Topics and Well Written Essays - 500 words - 1

Strategic management - Case Study Example Distributors are the â€Å"intermediaries between the studios and exhibitors.† Distribution consists of marketing, logistics, and administration. Studios have traditionally desired full vertical integration through theater ownership, which enabled greater control over audiences and being able to tap into exhibition profits, such as advertising revenues. Falling ticket sales and the amplified costs connected with developing megaplexes promoted the consolidation among exhibitors. Four companies control the exhibition market: Regal, AMC, Cinemark, and Carmike. Regal focuses on mid-size markets using multiplexes and megaplexes. In 2009, Regal’s average ticket price of $8.15 is the uppermost among the leaders. AMC operates more in urban areas with megaplexes and focuses on the large population centers, such as California, Florida, and Texas. Cinemark operates in smaller markets, and is often the sole theater chain in over 80 percent of its markets. Cinemark’s average ticket price of $5.46 was the lowest of the major competitors. Carmike focuses on small to midsized markets. Carmike’s standard ticket price in 2009 was $6.56, but at $3.21, their average concession revenue per patron is the uppermost among the majors. There are three main sources of revenue for exhibitors: concessions, advertising, and box office receipts. Movie goers regularly complain about the high prices for concessions. In 2009, concessions reached an average of 30 percent of exhibitor revenues. Direct costs are a smaller amount than 15 percent of selling price, which makes concessions the principal source of exhibitor profit. These are affected by the three factors: attendance, pricing, and material costs. The most central is attendance: more attendees mean more concession sales. Exhibitors also produce revenue through pre-show advertising. Even when it makes 5 percent of revenues, it is highly lucrative. Ticket sales constitute two