Fantasy Film Business Portfolio and Dynamic Capability Development Report

This report analyses the dynamic strategies and disruptive innovation applied by the Fantasy Film Company for its survival in the competitive film industry. It evaluates the performance of the four business units and recommends investment decisions. It also explains how Fantasy Film can create, seize and transform its dynamic capability to achieve its business goals.

Business Portfolio and
Dynamic Capability
Development Report
Fantasy Film
[Student Name] – [Student Number]

Introduction
Fantasy Film Business Portfolio
• The study seeks to address dynamic strategies and disruptive innovation that
have been applied by the Fantasy Film Company for its survival in the
competitive film industry.
• Fantasy Film is a digital animation studio with its headquarters in Sydney.
Besides Sydney, the company has other production facilities in Los Angeles,
San Francisco and Brisbane.
• Fantasy Film operates four business units each serving a differentiated market
segment. The business units are Fantaspace, Advantage, Anisoft, and DigiTX.
• Each business unit has its managerial structure which makes business and
investment decisions.
• The study is divided into two parts namely: Portfolio analysis and Dynamic
Capabilities.
 Portfolio analysis addresses the performance aspect of the business units
and the Company in general.
 Dynamic capabilities address how well the company can apply its
resources to gain a competitive advantage in the market.

Portfolio Analysis: Introduction
• Portfolio analysis refer to analysing an organisation’s product or unit
mix to establish an optimum method of allocating resources.
• Two measures of portfolio analysis are market share and market
growth rate.
• Portfolio analysis will help in determining which business unit
Fantasy Film should; Maintain at its current state, Invest more resources into, Dispose of by selling out.
• The portfolio analysis will be completed using three analysis
techniques; BCG Matrix GE-McKinsey Matrix Synergy Matrix

BCG Matrix
?
Relative Market Share
Market Growth Rate

GE-McKinsey Matrix
Growth
Competitive strength of
business unit
High Med Low
Industry attractiveness High
Med
Low
Growth
Harvest
Selective Harvest
HarvestSelective
SelectiveGrowth

Synergy Matrix
Misfits
Incoming:
Benefits from belonging
to portfolio
+-
Fits
+
-
Outgoing:
Benefit to portfolio
Altruists
Givers
Parasites
Takers

Business categorisation
BCG
Matrix
GE-McKinsey
Matrix
Synergy
Matrix
Fantaspace Star Growth Fits
Advantage Cash Cow Selective Giver
Anisoft Question Mark Selective Taker
DigiFX Dog Harvest Misfits

Fantaspace
Analysis
• The business unit operates in a highly competitive segment.
Fantaspace requires high investment to maintain its high growth rate
in the market.
• The business unit is highly attractive.
• Fantasy Film should increase its investment to maintain/ improve the
potential for growth and generate high income (McKinsey &
Company, 2015, p. 112).
Recommendations
• The business unit operates in a highly competitive segment.
Fantaspace requires high investment to maintain its high growth rate
in the market.
• The business unit is highly attractive.
• Fantasy Film should increase its investment to maintain/ improve the
potential for growth and generate high income (McKinsey &
Company, 2015, p. 112).

Advantage
Analysis
• The business unit is at its maturity stage.
• The company can continue earning high income from
low investment into the unit.
• The Business unity is worth investing in to maintain
the market share and revenue realised from it (Hult,
2012, p. 127).
• Lastly, the business unit is categorised as a giver
hence a continued investment is justifiable
Recommendations
• Fantasy Film should maintain the business unit
through low investment.

Anisoft
Analysis
• The Anisoft business unit has the potential to grow
into a star and a cash cow.
• On the other hand, is the market share is not
maintained, the unit can become a dog.
• Based on the synergy matrix, Fantasy Film should
continue investing in the unit (Alon & Eugene,
2012, p. 99).
Recommendations
Anisoft has a potential to grow in the future.
Therefore, Fantasy Film should continue investing
in the unit to gain a higher market share.

DigiFX
Analysis
• DigiFX has a low market share and a low market
growth rate. Therefore, no further investment should
be made in the business unit.
• Based on the GE- McKinsey Matrix, the company
should either sell or liquidate DigiFX
• Synergy matrix shows that DigiFX is a misfit for the
company’s business portfolio (Gluck, 1985, p. 18).
Recommendations
Fantasy Film should not invest more capital in the
business unit. The company should consider selling
out DigiFX.

Conclusion
Fantasy Film Business Portfolio
• Portfolio analysis evaluated the four business units operated
by Fantasy Film Company.
• The business units are Fantaspace, Advantage, Anisoft, and
DigiFX.
• The portfolio analysis techniques that were used are BCG
matrix, GE- McKinsey Matrix and Synergy matrix.
• The following recommendations have been made for the
company;
a. Increase the resources and financial investment for
Fantaspace unit
b. maintain low investment for Advantage unit
c. Continue investing into Anisoft unit
d. Sell / liquidate DigiFX unit

Introduction
Fantasy Film Dynamic Capability
• Dynamic capability refers to the ability of an organisation to
employ its resource base fully. Dynamic capability occurs in
three ways creation, extension or modification of the
resources base (Nijssen & Frambach, 2013, p. 29).
• Fantasy Film is at its maturity stage. At this stage, the
company should understand its core competencies,
establishing the market trend and identify the available
internal and external opportunities.
• The company should then mobilise its resources and invest
in the opportunities. The case of Script Doctor show lack of
dynamic capability at the company.
• The report explains, analysis, and recommends how
Fantasy Film create, seize and transform its dynamic
capability with an objective of achieving its business goals.

Identify and assess opportunities
Analysis
• Fantasy Film comprises of four business units namely;
Fantaspace, Advantage, Anisoft, and DigiFX. The company is in
its maturity stage of the business cycle.
• Strength: Fantasy Film’s core competency lies in its
Fantaspace and Advantage units. The Anisoft unit has a
potential of growing to become the company’s star. A question
should be asked whether or not the Anisoft will have the
necessary competitive advantage. DigiFX has no sustainable
future (Hoskisson & Hitt, 2012, p. 112).
• Weakness: First, The case of Script Doctor shows lack of
dynamic capability. Second, the existing management structure
is not suitable for the business. The company applies a
centralised management style where the four units report to the
senior management for fund and project approval differently.
The Script Doctor’s fiasco would not have arisen if the two units
reported every progress and process to the senior
management. Solving the problem would increase the company
dynamic capability (Helfat, 2009, p. 53).

Identify and assess opportunities
Recommendations
Fantasy Film should;
a) Share, implement, and transfer technology and
knowledge among its business units to enhance its
dynamic capability. Sharing and transferring
knowledge will support the growing Fantaspace
and Anisoft units.
b) Sense new market trends and potential markets to
increase its success.
c) Create a team with members from the four units to
develop a unique competitive advantage plan.
d) Collaborate with other companies like Apple, Tesla
Motors and Dreamworks to create animations
(Hamel & Prahalad, 1996, p. 91).

Mobilise resources
Analysis
• Fantasy Film has a problem in its management structure
which hinder flexibility in decision making.
• The Company should seize the markets for Fantaspace
and Anisoft unit because their future is promising.
• Using its specialization, ability, and experience, the
company should create new products and businesses.
• Build a centralised team that would foresee the sharing
and transfer of knowledge among the four units.
• Form a mutual relationship with its customers to improve
the exchange of ideas, technology and knowledge to
increase the company’s ability (Cordes-Berszinn, 2013, p.
126).
• Fantasy Film should be flexible enough to shift into other
business opportunities.

Mobilise resources
Recommendations
• Redesign the managerial structure to have a
representation of all units when making decisions.
• Apply Lean Six Sigma to minimise operating cost and
eliminate waste.
• Generate new technology, strategies and innovations to
attract more customers and keep the company going
(Grant, 2008, p. 222).
• Use its abilities and core competency in animation and
software units to develop competitive products.
• Partner with other organization’s as abovementioned to
create sustainable growth and development for Fantasy
Film.
• Invest in other businesses or industries should gain a
competitive advantage.

Transform and reconfigure
Analysis
Fantasy Film want to enjoy dynamic business capability on its resources. The
company should;
a) Create a solid business foundation.
b) Change from a centralised management style to decentralised.
c) Create an internal strategic alliance that brings the skilled and innovative
employees to come together to develop new products that meet the
unsatisfied needs of customers.
d) Develop a flexible business culture that responds quickly to changes.
e) Identify the causes of problems at the company.
f) Transform and reconfigure its operations based on the market trend.
g) Develop a unique product that improves competitive advantage and
increases customers’ satisfaction (Gruchmann, 2018, p. 79).
h) Apply its core competencies to develop new technological products.
i) Reform its production and creativity processes to improve business
sustainability.

Transform and reconfigure
Recommendations
Based on the analysis, the management should consider the
following recommendations;
• Build dynamic business capabilities by venturing into new
businesses and industries.
• Decentralise the management style and give unit management
levels the ability and authority to make decisions without waiting
for the senior management.
• Apply Total Quality Management for continuous improvement.
• Be flexible to learn new strategies and integrate them with the
existing ones to increase the company’s transformation
capability.
• Improve the organisation’s ability to deploy resources to achieve
desired results.
• Take advantages of opportunities that can increase competitive
advantage (Itami, et al., 2009, p. 176).

Conclusion
Fantasy Film Dynamic Capability
• The Company can sustain its dynamic business capability on
resources by sharing knowledge, transferring knowledge,
developed skilled employees and support innovative technology.
• Fantasy Film should use its core competencies to redesign the
current weaknesses in its management structure.
• SWOT analysis shows that the company should transform its
management style from being centralised into being
decentralised. The move will give unit management the authority
to make decision and support innovation at their levels.
• Creating an innovative cross team will enhance innovation and
collaboration among skilled employees to develop new
technology and products.
• Develop a culture that supports transformation into a new line of
business or industry to increase competitive advantage.

References List
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References List Cont…
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