Sky TV's Strategic Turnaround: Differentiation and Growth Strategy

This case study examines Sky Television Ltd. in New Zealand, focusing on its loss of market share due to increasing competition from internet-based services like Netflix and Amazon Prime. The analysis recommends a differentiation strategy, emphasizing unique product development for diverse consumer segments, such as Asian channels and expanded sports rights. Action programs include market research, service-oriented differentiation, extensive branding, and gathering post-sale feedback. Growth strategies based on the Ansoff Matrix suggest product development and diversification, specifically expanding to application-based and website-based services and entering new markets in the Asia Pacific region. The study concludes that a related diversification strategy would be most appropriate, leveraging internet technology to grow the business and improve its market position. Desklib provides access to this document along with a wealth of study resources, including past papers and solved assignments to support students.

Running head: SKY TV
SKY TV
Name of the Student
Name of the University
Author Note

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Table of Contents
Introduction: About the case............................................................................................................2
Answer 1: Generic Strategy.............................................................................................................2
Answer 2: Action programs to be adopted......................................................................................4
Answer 3: Growth Strategies...........................................................................................................5
Answer 4: Appropriate diversification strategy...............................................................................7
References......................................................................................................................................12

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Introduction: About the case
The case study of Sky Television Ltd in New Zealand is a typical case of a business
succumbing under the business environment pressure (Sky.co.nz, 2018). In this case, Sky
Television Ltd. has lost a majority of its market share due to the increase in the internet based
television series and other subscriptions to channels like Netflix and Amazon Prime. For this
reason, the management had earlier thought of reducing the base price of the products being
offered to gain a larger market share but instead in order to cover up its content cost, it increased
the base price and this resulted in the loss of market share and customer base as well because the
higher costs deviated them (Stuff.co.nz., 2018).
Answer 1: Generic Strategy
A generic strategy can be rightfully defined as the strategy which is adopted by the
organization at large for the future approach. Using a generic strategy Sky Television will be
successfully able to ensure that they can turnaround their current positioning and gain a larger
share in the business environment. The generic strategy which will be adopted for Sky television
is the Differentiation Strategy (Baaij, 2017). A differentiation strategy can be defined as the
strategy whereby Sky television can develop and market unique products for different consumer
segments. It can aim to provide Asian channels because the Asian population in New Zealand is
around 11.8% and can be successful move because New Zealand is diverse country, it can be
taken as an appropriate move to capture this crowd (Stats.govt.nz., 2018). In sports, they have
rugby telecast rights and they can go for cricket rights as well because cricket is also a famous
sport in New Zealand. Sky TV can give more focus on internet-based service as well along with
the new idea. As per today’s market people are relying on internet services rather than the dish
connections. To ensure action they can develop more effective and easier to use application and

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website. In such a scenario, the firm employs a differentiation strategy where there exists a
presence of certain competitive advantages and it can work through it. The suitability,
acceptability and feasibility of the recommended strategy have been provided as follows:
Suitable: The suitability can be defined as the quality of being appropriate. The
differentiation strategy will be suitable for Sky Television because it will be suitable for the
environment in which the company functions. As the market is being taken over by internet
based channels just like Netflix and Amazon Prime, with Netflix having around 2 million users
in the country (Roymorgan.com., 2018). Sky television will greatly benefit from this strategy
(Rothaermel, 2015). Secondly, after the assessment of the capability of the differentiation
strategy was done, it could be understood that the company has adequate resources to carry out
this strategy and hence lastly, with respect to the stakeholder and cultural influence the adoption
of this strategy is advised because this strategy will assist the organization to gain adequate
revenues which will then help the investors to gain higher returns. (Bowen, Baker & Powell,
2015).
Acceptability: Accessibility can be described as the characteristic of a situation being
worthy of being accepted by all. The reason why the differentiation strategy will be suitable for
Sky TV is because it will assist the firm in gaining sufficient returns which will bring about
positive margins. Secondly, the risk involved as per the strategy on the firm is comparatively low
because it makes use of the existing resources of the organization and shall have a positive
impact on the financial ratios of the firm (Hill, Jones & Schilling, 2014). In addition to this, the
stakeholder reactions who are the board members investors, employees and customers shall also
be positive. In addition to this, they can outsource their customer service to save costs and
manage the firms well. The differentiation strategy shall provide a new business model to the

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firm which will then be useful in the sense that with the help of the new offerings, the earning
capabilities and the activities of the firm shall undergo a considerable change which shall be
beneficial for the firm at large.
Feasibility: The feasibility study can be described as an assessment of the practicality of a
project. The feasibility study of any strategy or a new project plan looks into the execution aspect
of the strategy and sees to it whether the firm will be able to carry out the particular strategy
successfully or not. It is advisable that all the organizations should carry out this particular
strategy. Moreover with respect to the feasibility of the strategy, financially and resource wise,
the given differentiation strategy will be suitable for Sky Television. This is because, the
organization has the capital which is required to be invested in and moreover, and its expert
management will be able to handle the strategy execution well. (Chen, 2017).
Answer 2: Action programs to be adopted
The different actions or the programs which can be adopted by Sky TV in order to make
the Differentiation strategy action oriented can be given as follows:
1. Conducting a proper research: In order to attain success in the long run, Sky TV needs
to ensure that it conducts in proper research of the market to identify the appropriate
variables which will allow it to become successful in the long run. In this research Sky
Television can successful check the number of users who will be willingly adopting its
differentiation offering and moreover, this step will be essential to execute the generic
strategy a research would set the firm in the right direction.
2. Engage in service oriented differentiation: While providing differentiation based on
product is easy, Sky TV should aim to provide service oriented differentiation which will

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assist the firm in leaving a positive impact on the different consumers by allowing free
services and loyalty programs (Rothaermel, 2015). Sky television can make use of a free
post sale service for the customers and offer them bonus points in order to make sure that
the different customers feel valued. Service differentiation allows any firm to gain a
competitive edge in the long run.
3. Engaging in extensive branding: Sky TV needs to engage in excessive branding
activities which shall allow the firm to remain successful. It can engage in branding by
using digital media techniques or mobile marketing techniques in order to ensure that the
brand becomes more popular. Moreover, the firm can also provide extra offers to the
existing customers and ensure that they remain loyal.
4. Gain feedbacks post sale: In order to understand customer perception, Sky TV should
gain feedback post sales which will help them to understand their shortcomings
(Leonardi, 2015). This feedback can be gained by the firm through surveys and
questionnaires which would then assist the firm to results
5. Offer variety of products: Lastly, Sky TV needs to widen its portfolio and offer a large
variety of products to the different customers in order to ensure success in the long run.
This can be done by adding to the services like HD, Mobile TV, website television or by
adding extra music channels and other relative channel which the people can enjoy.
Answer 3: Growth Strategies
Under the Ansoff Matrix, the four different growth intensive strategies can be given as
follows:

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Market Penetration: The Market penetration strategy is a strategy whereby the
organization sells existing products to the current markets (Shen, Au & Yi, 2018). It considers
improving the quality, marketing and productivity. It involves low risk.
Market development: The market development is a strategy whereby the organization
aims to extend the existing offerings of the firm to new markets such as the Asia Pacific region
in order to increase the sales and improve the overall welfare of the organization (Shen, Au &
Yi, 2018). It involves medium risk. As stated earlier, the new markets in the given case can be
the developing countries or Australia
Product Development: The product development strategy is strategy whereby the new
offerings are offered into the existing markets. This is usually done by modifications or
extensions. It involves medium risk (Ethiraj, Gambardella & Helfat, 2017).
Diversification: A diversification strategy is one which allows the business to expand
beyond their current offering but in a similar line of work or another line of work as well in order
to assist the firm in gaining a larger market share (Robson, 2015). It is a high risk offering as the
new line introduced may or may not be successful.
Hence, the two strategies from the above which will be chosen for Sky TV is the
Diversification strategy and the Product Development strategy. With respect to the Product
Development strategy, Sky TV can go beyond its present DTH offering and expand to an
application based provider or a website based provider (Robson, 2015). A product development
strategy will assist the organization in modifying its current offerings. It can do this by looking
into the provisions of its competitors which will then help the firm to ensure adequate sales and
profits.

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However, in the case of the Diversification strategy, the organization Sky TV, can
develop additional products and then select a new market for expansion. The selected market can
be the Asia Pacific Region. Using the Diversification strategy, Sky TV Ltd. Can ensure that it
takes a risky strategy to extend its offerings but the benefits received from this strategy are also
large. The Product Development strategy will assist the firm in increasing its sales but the
Diversification strategy will assist the firm in increasing its profits as well.
Answer 4: Appropriate diversification strategy
In case, the Board of Directors of Sky TV Ltd decide to diversify in order to capture
major market share in the Pacific region, they should make use of a plausible diversification
strategy to ensure that they accomplish their objectives.
The diversification strategy will go a long way in assisting Sky Television to grow their
business and successfully be able to ensure that their presentation situation improves with respect
to the declining market share. A diversification strategy is one which allows the business to
expand beyond their current offering but in a similar line of work or a new line of work
(Wheelen et al., 2017). The Related diversification strategy allows the growth of the company in
a similar line of business whereas the unrelated diversification strategy allows the business to
expand by engaging in operations which are quite different from its former line of activity
(Robson, 2015). The type of diversification strategy which has been chosen Sky Television is
the related diversification strategy, this is because it will require less investment for the company
and it will lie within its domain itself.
About the strategy

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The Related Diversification Strategy can be described as the type of diversification
strategy which is quite close to the existing line of the selected business activity. Being a variant
of the diversification strategy, the related diversification helps a company to extend and expand
its activities beyond the current markets as well as products being offered along with continuing
to operate within their existing capability and functioning within the network. In relation to Sky
Television it could be stated that if they decide to follow a related diversification strategy then, it
would be considerably easier for them to expand their business operations and see to it that they
are successfully able to grow their revenue and utilise their resources effectively (Leonardi,
2015). The manner in which Sky Television will be able to diversify is by making effective use
of the internet technology to make their services online and they can even start a mobile
application which allows the current as well as new users to successfully watch television on
their mobile phone.
Justification of the choice
The given Related Diversification Strategy has been selected for Sky Television due to
the following reasons:
 It will provide the firm an opportunity to share the resources for further growth. This will
then assist the firm in ensuring that it is able to increase its profits and sales
 It shall also allow the company to engage in strategic integration which then helps the
firm to make efficient use of resources (Ethiraj, Gambardella & Helfat, 2017).
 In addition to this, the given option is less risky and will help Sky Television to be sure of
its opportunities as well as Threats. With respect to this it is meant that, the firm will be
dealing in a similar line and thus, it will be backed by expertise.
Steps for implementation

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Sky Television will be required to take the following steps in order to ensure that it is
able to implement its Related Diversification Strategy:
1. Identifying Opportunity: The first step which Sky Television needs to take is to ensure
that it identifies relevant opportunity which lies in the external environment and the use
of which can be successfully made by the business. In such a scenario, Sky Television
should review the market and check the reason why it’s lagging, once this has been done,
it would be required to check where it can improve. Once the application and the internet
streaming idea is identified, the firm can proceed towards the next step.
2. Assessing risks related and costs associated: The next step which is required to be
taken by Sky Television involves assessing the risks associated with the idea
implementation. This means that the firm will be required to measure the costs of the
expansion and align it against the revenue earned and in case it is a profit, this justify the
choice of the firm.
3. Conducting market research: The third step of the strategy implementation for Sky
Television involves conducting a market research (Chen, 2017). Conducting a market
research will be crucial for the organization as it will help them to understand the exact
demand of the consumer and develop offerings accordingly.
4. Development and Conducting test marketing: The internet based application and the
website should be developed and the test marketing should be conducted by Sky
Television and the response of the audience can be measured.
5. Modification and Implementation: The fifth step involves modification and
implementation (Hill, Jones & Schilling, 2014). In this step, the new offering will be

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released in the market and this will help the firm in understanding the response of the
new offerings.
6. Measuring and Control: The last step involves ensuring that the strategy which is
implemented is measured and controlled effectively (Baaij, 2017). This can be done by
assessing the success of the strategy by using Key Performance Indicators like the Sales
incurred, Increasing in the viewership, Number of downloads made and other relevant
measures. Moreover, in case of the execution, the Strategic control aspect is also crucial
and guides the firm in case it makes any deviation from the stated plan.

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Timeline/ Gantt chart of Strategy Implementation
The Gantt chart is of 7 month
Activity Months
Oct 18 Nov 18 Dec 18 Jan
19
Feb 19 Mar 19 Apr 19
Identification of
Opportunity
Assessing risks
related and costs
Conducting market
research
Development and
conducting test
marketing
Modification and
Implementation
Measurement and
Control

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Planning, 50(1), 17-19.
Bowen, H. P., Baker, H. K., & Powell, G. E. (2015). Globalization and diversification strategy:
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Chen, C. M. (2017). Supply chain strategies and carbon intensity: The roles of process leanness,
diversification strategy, and outsourcing. Journal of Business Ethics, 143(3), 603-620.
Ethiraj, S. K., Gambardella, A., & Helfat, C. E. (2017). Reviews of strategic management
research. Strategic Management Journal, 38(1), 3-3.
Hill, C. W., Jones, G. R., & Schilling, M. A. (2014). Strategic management: theory: an
integrated approach. Cengage Learning.
Leonardi, P. M. (2015). Materializing strategy: The blurry line between strategy formulation and
strategy implementation. British Journal of Management, 26, S17-S21.
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lightbox-skytv-neon-vodafonetv-youtube-june-2018-201808100738 (Accessed on: 24
Sept. 2018).

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Shen, N., Au, K., & Yi, L. (2018). Diversification Strategy, Ownership Structure, and Financial
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Available at:https://www.sky.co.nz/ (Accessed on: 20 Sept. 2018).
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peoples.aspx (Accessed on: 24 Sept. 2018).
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