Business and Management
Submitted By muffun77
Before the merger, Utah Symphony had financial and leadership strengths and weaknesses. Financial strengths Symphony was the $8.8 million average endowments. A national trend led to the increases in ticket prices to yield higher revenues. The season prior to the merger, the symphony brought in considerable amount of revenue from events. The symphony brings in enough revenue to provide for full time positions for musicians through yearly contracts and salaries. The symphony is owned by the Salt Lake County; which potentially means the county could provide additional revenue through strong economic and demographic times. Another financial strength of the symphony involves a high rate of return on revenue through increasing the number of performances. By frequent repeat performances the costs are minimal compared to the generated revenue.
Some financial weaknesses included donations for symphonies decreased nationwide. With ticket prices increasing, the attendance dropped and expenses increased due to a slow economy and rising supply prices. By the symphonies having such in slope in the attendance, it became pretty much impossible for the Utah Symphony to even consider adding more performances to the season, because they could not afford to hire on more musicians to accommodate these more performances. Another weakness includes a falling of revenues in order to support full time positions to staff members and musicians. The slow economy prevents the government from providing as much support for the arts. Even if the symphony could provide some additional performances, the generated revenue from the repeat performances is decreasing due to lower ticket sales.
The Utah Symphony leadership strengths are primarily focused on the former conductor and director Maurice Abravanel, and the current music director Keith Lockhart. Maurice Abravanel was the director from 1947 to 1979, were he developed the symphony into a world class orchestra. Abravanel helped achieve a name for the group as one of the first symphonies from the west to travel internationally. Furthermore, he secured recording contracts with Vanguard, Vox, Angel, and CBS. Abravanel secured full time positions for his musicians with yearly contracts and full time salaries.
Keith Lockhart was hired as music director in 1998. He is credited with developing the symphony into one of the most involved orchestras in the USA. Through his leadership, the symphony began offering performances year round. Lockhart’s experience involves conducting over 600 concerts for the Boston Pops Orchestra, Cincinnati Symphony, Cincinnati Pops Orchestra, and the Utah Symphony Orchestra. In addition, he created 50 television shows including PBS Evening at the Pops and Pops Goes the Fourth. Under his leadership, the symphony is considered to be at the top of Group II Symphony Orchestras in the USA.
The leadership weaknesses the Utah Symphony encountered was that Maurice Abravanel is no longer directing or conducting. The legacy of his memory is however evident in Mrs. Abravanel’s involvement in the symphony guild. Her heavy involvement could potentially hinder Keith Lockhart and others from making necessary decisions to improve upon traditional leadership. Mrs. Abravanel’s support of the symphony could hold back management from making cuts to musician contracts since full time contracts was one of Mr. Abravanel’s achievements for the symphony. Another weakness of the Utah Symphony centers on Keith Lockhart. Lockhart has been a champion for the development of the orchestra into one of the most involved symphonies in the USA; this may also be his greatest weakness. He cares so much about the well being of the musicians that he may not be able to make some hard decisions concerning cuts (Delong & Ager, 2005).
Anne Ewers can modify the organization mission in the area of endowments. Since these have shrunk, she needs to find a way to either increase them, find organizations that will increase their donations, or find another source to take the place of the previously expected endowment funds. Ewers will need to find ways to increase attendance and/or increase ticket sales prices. She will also need to consider hiring additional full time orchestra musicians for the increase of performances, I would suggest until the merger is profitable, she could hire temporary musicians for the mean time. She will also need to find a way to increase government grants.
Anne needs to make sure everyone involved understands Keith Lockhart’s authority in the organization. In addition, Anne needs to make sure Mr. Lockhart understands his boundaries. She is the CEO and Keith will work under her authority. When decisions are made, everyone needs to respects the decision and know that is in the good health of the organization. Anne needs to consistently show how each action will support the health of the symphony as well as the opera.
One of the greatest financial strengths for the Utah Opera is their $5 million average endowment. In addition, the opera has $4.8 million assets including a 2.9 acre productions studio, 17 productions sets, and costume inventory. A national arts trend led to the increases in ticket prices to yield higher revenues. In fact, the opera brings in enough revenue to provide for full time positions. Artists are hired for specific productions. The opera has 130,000 annual audience patrons at the Salt Lake City Capital Theatre. In addition, the opera is currently debt free. The county could potentially provide additional revenue through grants during strong economic times.
Once again, endowments for the arts have decreased nationally. While ticket prices did increase, attendance dropped and expenses increased due to a slow economy and rising supply prices. The opera only performed 4 productions in the most recent seasons, and there was not a plan for additional performances. Also providing full time positions to staff members drained some of the revenues. The slow economy prevents the government from providing as much support for the arts. Even if the opera could provide some additional performances, the generated revenue from the repeat performances is decreasing due to lower ticket sales.
The leadership strengths for the opera have been committed to staging opera productions and creating opportunities for young artists. Anne Ewers became the general director in 1991. She grew the annual productions from 3 to 4. Anne worked to reach 70,000 additional audience members through offering performances to students throughout the state. Anne is responsible for retiring a $450,000 debt she inherited from the previous management. She was instrumental in developing the endowment fund. During her 11 year tenure at the Utah Opera, she grew the budget from $1.5 million to $5 million. She has been very successful at fundraising including drawing from sources outside the state.
Anne’s leadership weakness is not entirely a weakness. Her desire to contribute to the arts community by developing the opera could make it hard for her to see clearly when making necessary cuts. She grew the budget from $1.5 million to $5 million. This is quite an achievement. She may find it difficult to make cuts after working so hard to increase the budget.
The key steps I would suggest to Ewers are very similar to the steps that would be taken with the symphony, Anne needs to find additional sources of revenue to replace low ticket sales and reduced endowment funding. Ewers will need to find a way to increase attendance and or offer additional performances to increase revenue. The additional ticket sales could increase revenue. And lastly, she needs to find a way to increase government grants. Anne may need to create a committee to help maintain objectivity when making merger cuts. Through these steps she will need complete and full support from the board members, directors, musicians, and all staff. Through these steps she will need complete and full support from the board members, directors, musicians, and all staff.
The scorecard focuses on customer service, financial analysis, internal processes, and learning and growth. The visions for the two organizations are similar, but differ enough to potentially create conflict during the merger. For the merger to be successful there must be a way provided for each organization to maintain its identity and develop its vision. At the same time, sacrifices will need to be made in order to create a successful merger. It’s important to understand each organizations vision in order to see how the merger can provide an adequate solution to the problems they face while maintaining their vision.
The main differences between the two organizations in their financial strategies are: The Utah Symphony wants to sustain 83 full-time musicians with yearly contracts by generating revenue from high quality concerts. The Utah Opera wants to generate additional revenue through increasing their endowment fund. The issues are that one wants to be world class while another wants to be nationally renowned. Another difference focuses on financial stability. Both obviously want financial strength, but they want it for different reasons. The symphony wants to have enough revenue to keep full-time musicians, and the opera wants increased savings through an endowment funding for overall financial solidity.
The main differences between the two organizations in their customer satisfaction are: The Utah Symphony wants to be accustomed to customer desires in developing and maintaining world-class performances. The Utah Opera want customers to recognize them for regionally and nationally acclaimed performances. The Utah Symphony wants to achieve their goal through hiring top quality talent. The Utah Opera wants to achieve their goal through excelling in quality performances. The Utah Symphony wants to measure their goal achievement by receiving feedback from exiting patrons. The Utah Opera wants to measure their goal achievement by having sold-out or near sold-out performances.
The symphony will have to travel abroad to attain their goal of world recognition. This will create a need to satisfy a very broad variety of interests throughout the world. The opera is focused on providing nationally recognized programs. Their audience will be primarily American attendees. The symphony attempts to develop a world class orchestra may be exactly what they need to do. Opening their performances up to more audiences will help increase ticket sales. There will essentially be many new markets the symphony will potentially have access to. The symphony is attempting to maximize their leadership strengths by attracting world renowned business and improve upon their financial weaknesses through fundraising. The opera is attempting to reach a nationally acclaimed status. They clearly want to expand their customer base. However, if they were to seek ways to expand worldwide, they may have increased opportunities for attracting new talent. They are attempting to maximize their leadership strengths through attempting to reach national acclamation.
The main differences between the two organizations in their internal processes are: The Utah Symphony strategic goal is to have flexibility in decreasing expenses due to fundraising gaps. The Utah Opera strategic goal is to maintain financial stability and attract top talent. The Utah Symphony wants to achieve their goal through renegotiating contracts with musicians. The Utah Opera wants to achieve their goal through having successful negotiations with selected performers. The Utah Symphony wants to measure their goal achievement by improving profitability. The Utah Opera wants to measure their goal achievement by measuring profitability and having reviews noting quality of performances.
Both organizations want to use their resources wisely. The symphony wants to be able to make internal process adjustments as needed to deal with revenue and fundraising fluctuations. The opera want to be able to consistently attract top talent through having necessary funding. Both want to be able to consistently and fairly negotiate with musicians and performers to make this happen. To make their respective world class and national acclamation visions occur in the lagging economy, management from both organizations will have to learn to make some tough decisions. A weakness of both leaders may be that they don’t want to make necessary cuts and adjustments in full time musician and staff to realize their visions.
The main differences between the two organizations in their learning and growth are: The Utah Symphony strategic goal is to include a wider variety of symphonies offered to appeal to a more varied audience. The Utah Opera strategic goal is to ensure production of high-quality performances up to 5 a year. The Utah Symphony wants to achieve their goal through a successful marketing campaign that advertises different symphonies to younger audiences. The Utah Opera wants to achieve their goal through measuring increases in the endowment fund and ticket sales. The Utah Symphony wants to measure their goal achievement by having improved ticket sales and returning audiences. The Utah Opera wants to measure their goal achievement by meeting their capital needs through ticket sale revenue.
The symphony wants to offer a wider variety of performances while the opera wants to offer a higher quality of performances. The symphony goal makes sense because in order to increase ticket sales, it will have to reach more audiences. The opera wants to increase the endowment fund by improving the quality of performances. This might be difficult to do since endowment funds have reduced nationally.
Merged Company Balanced Scorecard
• The vision for the merged company is to be a world-class symphony and opera. • The business model is to provide the same quality of performances both audiences bases desire by identifying and integrating the business processes the two companies allocate, and keep the employees who implement these processes.
• Strategic Goal: Reduce overall P & L ratio.
• Critical Success Factor: Consolidate employees from both organizations.
• Measure: Increase the profit to expense ratio after implementing employee consolidation.
• Strategic Goal: Maintain audience base for both the Utah Opera and the Utah Symphony.
• Critical Success Factor: Provide the same quality of performances both audiences bases desire.
• Measure: Increase ticket sales and received feedback from the audience.
• Strategic Goal: Integrate the business processes of the two companies and Retain key employees.
• Critical Success Factor: Identify/Integrate the business processes the two companies allocate and keep the employees who implement these processes.
• Measure: Improving profitability and performance efficiency with the key employees.
Learning and Growth
• Strategic Goal: Identify and pursue mutual opportunities between the two companies.
• Critical Success Factor: Work on creating performances that benefit both companies at the same time as maximizing profit and satisfying the audience.
• Measure: Increase audience attendance.
With the Utah Symphony and Opera merger the balance scorecard in section B does have both its strengths and weaknesses. Financially, the merged company’s strategic goal is to become profitable and cut down its loss. In order to do this, both organizations will have to be willing to consolidate their employees into a manageable number. A weakness I see from this balance scorecard, it that consolidating the staff can only help improve profit so much. The merger cannot depend on reducing staffing level to help create profitability alone. Financially, this merged companies will need to further look else were in order to create the financial stability they look for.
The Customer section in the balanced scorecards shows the merger to be focused on maintain on both the fan base each the Opera and Symphony already have, while providing the same desired performances. This is strength and strong tactic to pursue since the merger wasn’t too hot in some people’s eyes in the first place. With the arts already in a slump nationwide, both companies will have to fight and entertain in order to keep their audience. A weakness that could be proposed is the feedback that will be received. Not everyone was happy with the merger or the increase in ticket prices, so the feedback might not be helpful in improving the merged companies.
The internal process section in the balanced scorecard was strong since it went along with the financial strategic goals, which involved the employees. A strength I see here is integration of the business processes of the two companies and retaining key employees that identify and integrate the business processes the two companies allocate by keeping the employees who implement these processes. The weakness I feel this section encounters is that the life of the merger depends on practices that primarily worked separately, rather than practices they find fit for both through trial and error.
The Learning and growth section in the balanced scorecard shows strengths through working on creating performances that benefit both companies at the same time as maximizing profit and satisfying the audience. By identifying and pursuing opportunities they see fit for each company. A weakness I see in the section could be increasing their audience. The times this merger took place was during a difficult time for the arts communities, with how bad the economy was I see increasing their fan base being a battle that would not be easily won.
A probable issue that could arise during the merger is finance. The symphony built a program to provide yearly full-time musician contracts. Primarily the symphony did this through additional ticket sales and increased fundraising. The opera vision involves providing adequate financing to attract high quality talent for the performances. They want to achieve this primarily through increasing the endowment fund. When the merger takes place the balance and distribution of all the revenue will put a bump in the two company’s agreement.
Another probable issue in the merger will be human resources. The symphony wants to keep full time musicians while the opera wants to hire performers per performance. Both organizations have office personnel. An issue that will arise will be how to consolidate office personnel responsibilities for both organizations. This will help each organization identify which employees are more valued for the merged companies so no duplicate work is created within. Which means unfortunately, some people will be laid off or preserved for positions the merged organizations will need. This process will definitely cause some issues.
Lastly, a probable issue in the merger will be customer satisfaction. Both companies have different audience demands. When the merger takes place, it will be critical for the new organization to find out how to keep existing audience attendance while increasing new patron’s interest. This will cause a “titter totter” effect concerning the satisfaction of the performances. The merged companies will need to make sure there is cooperation, preservation of existing audience interests, and representation of new performances for additional audiences.
Some mitigating actions that the new merged company executive could take include Anne Ewers, to work closely with Keith Lockhart in managing the finance issues. With the Symphony familiar and comfortable with Keith Lockhart, Ewers will need to show the entire organization that she values his input and suggestions. With that being said, Lockhart will support Ewers when financial decisions are being made. And a must, Ewers needs communicate her objectives when implementing financial issues.
When it comes to human resources and some cuts that will definitely have to be made, it will be important for Ewers to show exactly what cuts are being made, how they are being made, and the why they are being made. Board members from both organizations need to agree on a method for identifying what jobs will be duplicated and which employees will be cut. It will be a critical element of to show how specific cuts will benefit both organizations of the merger.
Lastly, Ewers and Lockhart must work together in determining the best ways to satisfy customers for both organizations. Without continued customer support and growth, there will be no money to satisfy financial or human resources issues. Together, both leaders need to identify what to include in the new performances to keep existing customers. They will also need to identify new potential customers and how to satisfy their interests in the arts.
Delong, T. J., & Ager, D. L. (2005). Utah Symphony and Utah Opera: A Merger Proposal. Harvard Business School , 16.