San Francisco Symphony Strategic Challenges

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Company San Francisco Symphony (SFS) is a California based orchestra group. It was founded in 1911. SFS performed its first concert in December of the same year. The time was just five years after the great 1906 earthquake. Since its founding, the group has grown to become one of the best orchestras in the world (Martin, 2011).

Its founders and members have dedicated themselves to the group. As a result of decades of excellent artistic work, SFS has managed to gain both national and international recognition. The company comprises of two other groups. They include San Francisco Symphony Youth Orchestra and San Francisco Symphony Chorus. Since 1911, the organization has developed to become an integral part of San Francisco city life and culture.

During its first season of existence, SFS comprised of sixty musicians. According to Miles (2010), the group managed to hold thirteen successful concerts. In spite of the wide recognition and accomplishments achieved in the early years, SFS was faced with bankruptcy in 1926. However, Standard Oil of California came in and settled all the debts that the organization owed. In return, the oil corporation was awarded broadcast rights of the entire year’s concert series.

For decades, SFS group has experienced phases of great success and severe financial challenges (Rothe, 2011). At times, the survival of the organization was made possible by the generosity of the people of San Francisco. The people provided their support through public financing and other interventions.

In this paper, the author will identify the current strategic challenges facing SFS Company. In addition, key long-term strategies will be recommended to help the organization overcome the various financial constraints. The plans will be aimed at achieving two primary goals. They include closing the deficit in 2018 and keeping the orchestra group in surplus by 2030 and beyond.

Strategic Challenges Currently Facing SFS

For decades, orchestra groups in the United States have been suffering from financial problems. For example, in 2010, 9 out of the top 10 major orchestras were reported to have been operating on deficits. In April 2011, the Philadelphia Orchestra filed for chapter 11 bankruptcy cover (Vogel, 2014). The group is ranked as one of the top-tier orchestras in the United States of America. The reports reveal that financial challenge is a major problem affecting groups in the country. The problem is not unique to SFS.

For decades, SFS has enjoyed great musical success. Over the years, the group has achieved local, regional, and international recognition. However, the group’s artistic reputation does not correspond with its financial status. The company is reported to be in a major financial crisis. In 9 out of the last 12 seasons, SFS has operated on deficits (Martin, 2011). The problem is caused by one primary issue. The reason is that expenses are always higher than the revenue earned.

The monetary setbacks have resulted in constant lockouts, strikes, and cancellation of concerts. In March 2013, SFS Company was experiencing a major strike. The primary cause of the stand-off was pay and healthcare benefits. According to the organization’s officials, SFS musicians were seeking a pay rise in order to be at par with their counterparts in other orchestra groups in the United States.

Due to the strikes and labor stoppage at SFS, some concerts scheduled to take place during the month were cancelled. According to Leyshon (2014), the performances were not rescheduled. Patrons with tickets for the concerts were advised to exchange them for other upcoming shows. Others were encouraged to donate the tickets or file for refunds.

Prior to the 2013 strike, SFS had experienced a lockout in Minneapolis. Due to this, the organization was left with no choice but to cancel the East Coast Tour. According to Rothe (2011), SFS Company receives an annual public funding support of about $2.6 million. In spite of the aid, the organization still faces financial problems and low pay for musicians. Over the years, union officials have claimed that utilization of the funds lacks transparency.

It is noted that between 2009 and 2013, the revenues generated by SFS Company increased by 2.4% per annum. On the other hand, expenses incurred during concert production grew by 8.1% within the same period (Vogel, 2014). As a result, the orchestra group operated at a debt during the entire four years period. Other factors resulting in financial constraints include increased pension and healthcare costs for the personnel. In addition, SFS is facing the challenge of ‘poor’ awareness and low expectations among the audience.

The department most affected by the problem is San Francisco Girls Chorus [SFGC] (Smith, 2010). SFGC has won numerous awards from the American Society of Composers, Authors, and Publishers (ASCAP). In addition, the group has been featured in five Grammy Award-winning classical music recordings. In spite of the great success, SFGC still fails to attract crowds to its performances.

Patrons who attend most of the group’s shows include the artists’ friends and family members. The poor audience turnout has resulted in reduced financial gains (Madura, 2014).

Long-Term Strategies to Close Deficit in 2018 and Keep the SFS in Surplus by 2030 and Beyond

The process of developing long-term strategies and action plans to help SFS is a daunting task. The reason behind this is because the organization faces a low subscriber base for concerts. There is also the issue of instabilities in the stock market and a rise in the cost of hiring and retaining musicians and other personnel. In addition, there is continued competition for the philanthropic dollar (Miles, 2010). In spite of the numerous challenges, long-term strategies can be developed through collaborative efforts.

The problem of poor revenue generation on an annual basis results from poor audience turnout. To address the issue, SFS needs to carry out market research to enhance the development and execution of an engagement strategy. To engage new patrons and maintain the existing clientele, it is important for the group to understand the needs of the target audience.

According to Kotler and Armstrong (2014), rigorous market research is needed when evaluating the progress of a given company. A proper understanding of the preferences of the target clients will help the group provide what is required. As a result, the rate of ticket sales will increase over time. The end result of this will be improved revenues. In today’s economic times, every dollar counts. As a result, market research is essential.

For decades, SFS has been operating on debts. The main reason is because annual expenses are more than the revenues generated. In addition, there are tensions between musician unions, board of directors, and management staff. The wrangles between these parties make it hard to reach a consensus regarding the future of the company (Martin, 2011). In times of financial constraints, tensions will always exist. However, to tackle the existing problems, all the three groups should come together to develop a lasting solution.

The work of formulating strategies should not be left to the board of directors. Through collaborative efforts, the parties can work on long-term strategies aimed at attracting a bigger audience base. In addition, the groups can settle on payment programs that are in line with the revenues generated each year. According to Vogel (2014), 50% of the company’s operating costs go to salaries. Pay increments should be gradual and tied to annual returns.

Another long-term strategy for SFS would involve looking for sponsors. Sponsorship deals tend to be long term (Wheelen, Hunger & Wicks, 2005). In addition, they facilitate quick injection of finances to an organization. With the help of such deals, SFS can retain its top musicians. In addition, it can attract new talents and fund initiatives aimed at boosting annual revenues. Sponsorship can be from different groups. Each deal should last for a specified period of time.

A ten year deal, for example, can help SFS close the deficit by 2018 and beyond. Effective marketing is essential in attracting a huge audience base to performances. According to Madura (2012), sponsorship acts as a marketing tool that can be used to reach out to a wide audience base both locally and internationally. The initiative is beneficial to the companies and groups involved. Other benefits of funding include enhanced image, increased sales, and positive publicity.

SFS should give its audience a platform to engage with the artists in new and refreshing ways. A number of musical companies have succeeded by providing new avenues through which the audience can find a way into their art (Smith, 2010). With the help of the initiatives, the popularity of SFS in the public domain will soar. In addition, the move will convince more people to support the group.

SFS can engage viewers by creating unique social gatherings that encourage discussions that can help the group. The organization can also provide interactive and educative programs aimed at introducing new audience to the art of music. Public interest results in an increase in the turnout of fans and sale of tickets (Leyshon, 2014). SFS can use visual communication engage the artists in new and refreshing ways.

Financial Impact of the Proposals

The primary aim of this recommendation is to help SFS overcome its current financial problems. In times of monetary constraints, proposals should contain ideas aimed at easing the stress (Wheelen et al., 2005). The suggestions made will have a positive impact on the company’s financial standing. In 2014, the total revenue earned was $68,663,441.

Expenditure was $72,390,582 within the same period (Vogel, 2014). The statistics reveal that expenses were more than the revenues earned during the financial year. A look at the proposals shows that returns will increase if the recommendations are implemented. In terms of spending, the organization will be incurring few costs, which will not surpass the revenue generated.

Impacts of the Suggestions on SFS’s Artistic and Community Pursuits

As a musical organization, SFS works to entertain people across the globe. Due to this, concerts are the main source of income for the group. In the recent past, shows account for less than 50% of total annual income (Rothe, 2011). The recommendations made will have positive impacts on SFS’s artistic and community pursuits.

When the strategies are properly implemented, SFS will be able attract a huge audience base to all its concerts. It will also enhance its relationship with fans. In addition, more people will become interested in the company’s artistic work. Implementation of strategies takes time. As a result, gains are not automatic. However, with proper execution, positive results can be felt within the next one year.

Primary Implementation Challenges

Implementation of recommendations is not an easy task (Wheelen et al., 2005). The reason behind this is because different strategies are characterized by unique complexities. In addition, not all proposals are supported by each member of an organization.

A recommendation that encounter challenges during implementation is the one involving reaching an agreement with unions and musicians in relation to salaries. In today’s tough economic times, some artists are not ready to give organizations the time to adjust to new strategies (Miles, 2010). Such musicians will advocate for a pay rise at all costs. In addition, they will threaten to move to other orchestra groups. As a result, the company may lose some of its best talents.

Conclusion

Organizations are faced with unique challenges at different times. However, financial constraints pose the greatest threat to the existence of modern business entities. An organization cannot realize its full potential without sufficient funds. Employees may move to other companies. In addition, the business may lack the power to attract new workers.

However, sound strategies can help the company to manage its problems. Majority of orchestra groups in the world are currently facing financial hardships. The issues facing these entities can only be dealt with through collaborations and strategic planning.

References

Kotler, P., & Armstrong, G. (2014). Principles of marketing (15th ed.). Upper Saddle River, N.J: Pearson.

Leyshon, A. (2014). Reformatted: Code, networks, and the transformation of the music Industry. Oxford: Oxford University Press.

Madura, J. (2012). International financial management (11th ed.). Mason, OH: South Western Cengage Learning.

Martin, A. (2011). Symphony city. San Francisco: McSweeney’s McMullens.

Miles, L. (2010). The orchestra. Chicago: Raintree.

Rothe, L. (2011). Music for a city, music for the world: 100 years with the San Francisco Symphony. San Francisco: Chronicle Books.

Smith, S. (2010). Building audiences one encounter at a time. Web.

Vogel, H. (2014). Entertainment industry economics: A guide for financial analysis. New York: Cambridge University Press.

Wheelen, T., Hunger, J., & Wicks, D. (2005). Concepts in strategic management. Canada: Prentice Hall.

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