Competitive Strategy Application: Sydney Symphony Orchestra Report

This report provides a comprehensive analysis of the Sydney Symphony Orchestra (SSO), examining its strategic issues and applying relevant business strategy models. The report begins with an executive summary and table of contents, followed by an introduction detailing the orchestra's history and market context. It identifies key strategic challenges, including competition from other music genres, the need to attract younger audiences, and high operational costs. The core of the report explores various business strategies such as product differentiation, cost differentiation, growth strategies, mergers and acquisitions, and customer relationship management, offering specific recommendations for the SSO. The report also discusses strategy development and implementation, including the application of Porter's generic strategies, such as cost leadership and differentiation. The analysis incorporates academic sources and concludes with a bibliography, providing a detailed and structured framework for understanding and improving the SSO's competitive position.

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Competitive Strategy
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Professor
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Table of Contents
Executive Summary.....................................................................................................................................3
Introduction.................................................................................................................................................4
Identification of strategic issues..................................................................................................................5
Business strategy.........................................................................................................................................5
Growth of new products strategy............................................................................................................6
Finding new markets...............................................................................................................................6
Product differentiation strategy..............................................................................................................6
Acquisition strategy.................................................................................................................................7
Cost differentiation..................................................................................................................................7
Customer relationship management business strategy...........................................................................7
Strategy development and Implementation................................................................................................8
Cost leadership........................................................................................................................................9
Differentiation strategy...........................................................................................................................9
Cost focus strategy..................................................................................................................................9
Differentiation focus strategy..................................................................................................................9
Conclusion.................................................................................................................................................10
Bibliography...............................................................................................................................................11

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Executive Summary
The Sydney Symphony Orchestra was established in 1932. Currently, the Orchestra has
over 90 members. SSO has over the years enjoyed a good government support and funding
through philanthropy and patron support. However, it has become increasingly difficult for the
Orchestra house to tap into the younger demographics who are attracted to contemporary music
genre. SSO faces a myriad of challenges such as huge competition from other music genres and
Chamber music groups. Additionally, SSO has to meet high production and operation cost. The
analysis of the business strategies can enable SSO to come up with better methods to address the
challenges that it faces. The business strategies include product differentiation, cost
differentiation, growth strategies, mergers and acquisitions and customer relationship
management. SSO can also use online distribution channels to attract millennial consumers. SSO
can apply Porter generic strategies to gain a competitive advantage in the market.

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Introduction
The Sydney Symphony Orchestra (SSO) was established in 1932 and started with 24
players. After the Second World War, SSO expanded to become one of the leading orchestras in
the world. The primary market for the orchestra is the city of Sydney in Australia. Sydney has a
population of about 5 million people and has high per capita income. A classical concert is
totally different from the current pop or rock concert, with the audience formally dressed and
exhibit discretion in their behavior. This has made it hard for it to appeal to the younger
generations who are used to lively events. Classical music is also an expensive affair due to the
many players needed for performance and the cost of hiring the halls. However, SSO has made
tickets to its event affordable; for instance, in 2016, the tickets were ranging between 95 and 140
Australian dollars (Anon, 2019). Some of the problems encountered in the classical music
industry include piracy, with websites such as ‘The pirate bay’ making it easier for people to
steal music. Many orchestra houses have shut down due to low revenues. The Australian
government has offered support to orchestras through the Australian Council for the Arts. The
SSO in 2014 received 71 million Australian dollars from government funding. Currently, SSO is
a full orchestra with over 90 musicians and a world-renowned conductor. The players are also
well paid as compared to other orchestra houses. SSO engages in a number of CSR programs
such as music education programs and artist development programs. SSO offers an annual free
concert at the Opera house. It also has a good hiring policy and has first-rate musicians.
Although the total operating profits have been declining over the years, SSO generates
significant income from its own activities. In 2014, the total revenue including government
funding was 393 million Australian dollars (Scharff, 2015, pp.102). SSO partners with Emirates,
Credit Suisse, and Visions of Vienna. However, SSO faces strong competition from other forms
of music such as pop, rock, and Jazz. These substitutes appeal to a larger demographic than

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traditional orchestras. There is also competition from much smaller and easier to operate
chamber music groups. These startups can play in smaller halls and have much fewer
expenditures than SSO. An example of these is the Australian Chamber Orchestra (ACO)
Identification of strategic issues
Some of the issues facing SSO includes the gap in tapping to the younger generation
market. SSO audience is mainly made up of old patrons who are increasingly failing to attend the
concerts. Its dominant audience has made SSO fail to appeal to the millennial who prefer jagged
rhythms and participation through dancing. SSO also faces huge costs of hiring performance
halls and meeting the expenditures, most of the revenues acquired by the orchestra house are
used in meeting recurrent expenditures such as salary, marketing costs, and production costs. For
example, in 2014, SSO spends all of its 393 million Austrian dollars total operating profit to
meet the expenditures. Another issue facing SSO is strong competition from other music genres
including rock and pop. Most of the broader demographic are attracted to the contemporary
music genre with the number of the audience attending SSO concerts dwindling over time.
Additionally, the chamber music groups are proving to be a strong competitor due to their low
operating costs.
Business strategy
A business strategy is the combination of actions and decisions that are performed by a
business to achieve business goals and secure a business position. Business strategy leads a
business to the desired goals (Blackburn, Hart and Wainwright, 2013, pp.20). The following are
some of the business level strategies that can be employed by the Sydney Symphony Orchestra

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Growth of new products strategy.
This strategy entails the introduction of new product features into the existing products.
Sometimes, companies may be forced to modify their products to keep in line with the trends in
the market (Oestreicher and Zalmanson, 2013, pp.600). SSO needs to introduce a new genre of
music into their performance to attract the younger audience. For example, SSO can collaborate
with other pop genre to introduce a hybrid of both orchestral music and pop music.
Finding new markets
SSO can discover new markets through global tours and performance. Even though the
Sydney market has spending capabilities, expanding into other cities in Australia and across the
globe can market orchestra music to other states (O’Brien, Driscoll and Ackermann, 2014,
pp.268). Although Orchestra is mainly European centric music genre, SSO can introduce the
music to Asian and African cultures.
Product differentiation strategy
Product differentiation is a key business strategy that aims at improving the product
quality to surpass the competition (Kenny, Driscoll and Ackermann, 2014, pp.216). SSO has
been using differentiation by hiring first-rate musicians and conductors. Such Ensures that SSO
produces better quality classical music than the competition. SSO can additionally uses the
product differentiation business strategy to the advantage of the business by offering additional
features that the competitors are lacking (D. Banker, Mashruwala and Tripathy, 2014, pp.889).
Classical music by itself is a business niche since there are not many orchestra houses existing in
the modern time (Davcik and Sharma, 2015, pp.777). SSO can use classical music as a business
strategy by marketing themselves and offering an alternative to contemporary music such as rock
and jazz. The customers therefore will be willing to pay more due to the uniqueness of the music.

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Acquisition strategy
SSO may use the merging and acquisition strategy to gain a competitive advantage. This
involves purchasing the competitor or their products in order to increase the competitive
advantage (Kansal and Chandani, 2014, pp.210). For instance, SSO may purchase or merge with
the smaller chamber music groups such as the Australian Chamber Orchestra (ACO).
Cost differentiation
Cost differentiation is a business strategy that focus on the pricing element of the
business. This strategy helps a business to position itself strategically in the market by pricing the
product right. SSO has the advantage of operating within an environment that has high per capita
income. Additionally, SSO has used cost differentiation by pricing the tickets within the range of
a common consumer (Baden-Fuller and Mangematin, 2013, pp.420). The ticketing for SSO
concerts range between 95 to 140 Australian dollars. This pricing tempts the consumer to attend
the events. SSO should use the cost differentiation strategy to ensure the price is within
manageable limits. The pricing should not be too high or too low. High prices would fail to tap
into the market of the middle class (Salavou, 2015, pp.85). Additionally, low prices can make the
customers question the quality of music produced and showcased by SSO. Low prices can also
result in losses for SSO as it would not be able to cover the cost of the inputs and generate
enough revenue for profit and the expenditures.
Customer relationship management business strategy
The classical music industry in Australia has witnessed a growing decline in Orchestra
subscriptions. This trend is occasioned by the failure by the new generation to subscribe to
classical music. The industry is widely supported by old patrons who are finding it increasingly
difficult to attend the events. The subscriptions of the events used to provide SSO with over 70
percent of the revenue (Triguero, Moreno-Mondéjar and Davia, 2013, pp.30). However, the shift

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in the music industry has seen a decline in the subscription due to life being more demanding and
complicated as compared to the past. Fewer consumers are willing to subscribe to season of
performance and many are preferring single events tickets. SSO therefore need to put the
consumer at the center of their business strategy in order to understand them better. The SSO can
target into this single market niche to achieve a competitive advantage. SSO can achieve this by
being consumer-centric instead of product-centric (Trainor, Andzulis, Rapp and Agnihotri, 2014,
pp.1206). Through the use of customer relationship management strategy, SSO can understand
the need of the consumers and channel their product to meet these needs. For example, if SSO
can be able to identify the market gap in the single ticket performance, the orchestra house can
identify the budget of certain music productions and hall renting and implement ticket pricing
that will guarantee profits. This will give SSO a strategic marketing position by using
competitive CRM for profit making. CRM can enable SSO to understand the needs of the
customer, enhance the relationship between them and the customers, and maintain existing
customer relationships (Casadesus‐Masanell and Zhu, 2013, pp.473). CRM will enable SSO to
segments its market, position itself strategically and differentiate its product to meet the needs of
each market segment.
Strategy development and Implementation
Strategic development and implementation are putting up plan and strategies into actions
in an organization. Strategic implementation is a crucial factor in an organization and is often
implemented after a successful analysis of the internal and external factors affecting an
organization (Huo, Qi, Wang and Zhao, 2014, pp.372). However, there is no one single strategy
that a business can implement. This is because business faces different challenges in their

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operating markets (Kapoor and Lee, 2013, pp.290). SSO can make use of the Porter competition
generic strategy to implement the above discussed business strategies.
Cost leadership
This strategy involves selling the products at a cheaper price than the competition. The
challenge in these is that an organization has to ensure the input is also of low cost in order to
maintain the profit margin (Tanwar, 2013, pp.15). Reducing ticket prices to orchestra events can
attract more customers. SSO has to create a balance to ensure that the reduction does not impact
the profit margins
Differentiation strategy
This strategy involves identifying an attribute that can make a product unique. SSO has
already implemented this strategy by hiring first market musicians (Rakowski and Mongan,
2014, pp.477). Good hiring results in high-quality music. Good differentiation creates value for
the product and increases sales.
Cost focus strategy
This strategy focuses on a specific segment in the market and offers the lowest prices to
this segment. SSO should focus on the millennial to attract them to classical music events
Differentiation focus strategy
Just like cost focus, this strategy targets a specific group in the market. Differentiation
brings a unique future to a product (Dhliwayo, 2014, pp.122). SSO can use this strategy in its
distribution channel. Most of the millennial are heavy uses of Social media sites such as
YouTube. SSO can use these online channels to reach out to these potential consumers
(Westerlund, Leminen and Rajahonka, 2014, pp.8). SSO can also differentiate its product by
mixing classical music with contemporary music type. This differentiation will give SSO a
competitive advantage as the music genre will be unique.

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Conclusion
The main issues identified in the analysis of SSO is competition from other music genres
and chamber music groups. Additionally, the audience of this classical music has been dwindling
over time with the younger generations interested in contemporary music such as pop and rock.
SSO can apply business strategies including the growth of the new product, product
differentiation, entry into new markets and acquisition and mergers. Additionally cost
differentiation and customer relationship management can give SSO an edge over the chamber
house groups. The generic strategies by Michael Porter should be used in SSO to implement the
business strategies identified.

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Bibliography
Anon, (2019). [online] Available at: https://www.sydneyoperahouse.com/events/resident-
companies/sydney-symphony-orchestra.html [Accessed 28 May 2019].
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Huo, B., Qi, Y., Wang, Z. and Zhao, X., 2014. The impact of supply chain integration on firm
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