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Internal and exterior environment examination for IMAX

*Strategic Management: A Approch (8th model) by Charles Hill and Gareth Jones. *Startegic Management : Creating Competitive Benefit (5th release) by Gregory Dess, G. T Lumpkin and Alan Eisner

*Strategic Management (6th edition) by John Pearce and Richard Robinsons

Environmental Analysis

IMAX as a global firm interacts with multiple surroundings. Company calls for inputs and distributes its end result. Like every company, IMAX has its internal and exterior environment which affects its outputs.

Internal Environment

IMAX's interior environment includes techniques and inputs which are being used to accomplish its tactical goal. Company got effectively developed 3D cams and other equipment to produce nearly reasonable 3D images. Images screened by IMAX are brighter and sharper than those within conventional cinema. The company had also invented new techniques of 3D directional audio, offering its customers audio tracks clearness and depth.

One of the primary centers of IMAX Corp. is Research and Development, as it needs to present movies using newest technical methods and systems in the marketplace. Quite big chunk of its earnings is redistributed towards R & D part of its business.

Worth mentioning is the fact that as part of lease, IMAX is advising its customers on theater design, supervising installing their systems, training whole theater staff which is preserving the installed system.

External Environment


Increase in the demand of Hollywood productions,

High reputation of seeing IMAX format videos,

Joint projects with other studios,

Opening more IMAX theatres within existing Multiplexes or transforming existing multiplex displays into IMAX format,

Opening up IMAX theatres in rising expanding countries (e. g. BRIC),

Lack of competitors converting videos into large format,

Special significance given by Motion Picture Association of America to documentary videos segment.


Piracy of movies,

High quality DVD's and BluRay Disks,

Home theater entertainment systems,

Joint partnerships (AMC with its own big screen theatres),

Political Involvement,

Change of Taste of consumers.

There are multiple external factors and causes that impact IMAX's performance.

For example customers signify potential doubt to the IMAX. It is because of their taste changes. Understanding that reality, IMAX should create more educational and entertainment movies and suggest to them in full display format. Demand for animated and technological base movies keeps growing and IMAX should consider merging with some greater players in the industry (e. g. Pixar) to have the ability to match the needs of consumers.

Despite the fact that IMAX possessed developed the data, skills and capabilities to design and put together the complicated 3D movie systems, most of the components included in the equipment were purchased from the contracted suppliers with whom IMAX got maintained permanent relationships.

Presently IMAX encounters taugh competition from digital cable tv, satellite, Dvd disks and the internet. All these mass media offer customers a much broader choice than only few years ago.

One should also bear in mind about socio-cultural, political/legal, demographic and technical environments that indirectly impact the IMAX's overall performance. Movies offered in IMAX theatres should represent the high socio-cultural content, because of the fact it is mostly viewed by university or college educated or school audience. A lot of the IMAX customers comes in the age range between 19 and 65, and IMAX's current and future projects should fulfill wishes of that group.

IMAX Current strategy

Vertical Integration

IMAX is into vertical integration as it is into control, syndication and exhibition of its films.

IMAX in the beginning was focused on large format videos which were educational yet engaging and the theatres were found in organizations, museums, aquariums and nationwide parks. IMAX onward integration occurred when it became the distributor of its own produced motion pictures. IMAX is relatively small when it comes to rival studios and theatres however in itself IMAX is the first choice on the market when it comes to producing image in large format. IMAX not only enjoyed its movies in its own theatres but offers its films to other theatres in order that they would further promote them.

As it was before mentioned, IMAX was mainly focused on producing films which were of large format. To take action obviously they might require special surveillance cameras, projectors, screens etc. From past 15 years IMAX has acquired few companies listed below:

Imagery Renting (1995) - whole ownership

Mainframe Entertainment Inc. (1999) - minority shares

Sonics Associates Inc. (2009) - complete ownership

David Keighley Development (2009)

Digital Projection International Ltd. (2000)

Cinema Plus Ltd. (2006).

IMAX has a subsidiary company (51% possession in that company) - Sonics Affiliates Inc. , which is an sound development company. It produces the sound systems for IMAX. David Keighley Development, which is wholly managed by IMAX, works on the post development.

Most of the organizations mentioned above were the suppliers to IMAX. Through integration IMAX has reduced the chances of suppliers effecting the prices. When IMAX has made itself impartial in developing all the aspects necessary to deliver high quality large format film, it gained access to all the new technology which can be an essential component in IMAX success.

Through backward integration IMAX has made itself more robust by being its supplier. They have gained control over the technology and cost of processing the systems that produce 2D or 3D images as well as sound systems.

Horizontal Integration

Direct competition

IMAX experienced only two rivals that produced images in large format. One was Iwerks, another one was Megasystems. IMAX has extended its functions to the commercial business (e. g. changing 35mm Hollywood videos into large format), Iwerks didn't do this. It limited itself to drive simulation plans that are positioned in theme parks or museums and similar locations. Megasystem, formerly producing projection systems, just lately stopped doing that, renamed itself to Pollavision, and today is only involved with consultancy services of the large format film theaters. IMAX, Iwerks and Pollavision all were the manufactures of hi-def image projection systems, and currently the only firm left on the market, that changes commercial movies into large format is IMAX.

Indirect competition

In the category of studios and theaters, IMAX is relatively really small. In my judgment it would not have an effect on IMAX, if it didn't combine with other studios. It really is because of the fact that consumers have grown to be fully alert to IMAX format videos, and there is and increasing demand for viewing movies in large format. It if merges with one major movie studio room (e. g. Disney), you won't be easy to cooperate with other studios.

The good option for IMAX would be introducing more commercial theatres, where it can run changed into large format Hollywood films, such that it can compete keenly against large theatres like Regal Enternaintment Group.

Porter's Five Pushes Model

Threat of Alternative Products

Threat of substitute products means how easily IMAX customers can switch to IMAX opponents product. IMAX is the most significant and most thrilling film format in the world, with superior images, ten times larger than traditional theatre format. There would be a high risk of substitute if there would be many alternative products available against the ones provided by IMAX, customer could easily find the merchandise or service that Imax's offering at the same or less price, quality of the Imax rivals product would be better.

IMAX customer can certainly switch to substitute products (e. g. film movie theater), but the screens in IMAX theatres will be the biggest in the world offering different experience than regular monitors. Audio is also critical to the IMAX experience. The film soundtracks are supplied through a top category digital surround sound system created by Sonics Affiliates Inc. - one of the world market leaders in audio system design.

Presently it is easy to find DVD's and VCD's with great resolution. Even in regular cinemas the quality of the projected films is actually good. That might the explanation for customers never to go to IMAX theater and pay a supplementary $4-$5 to watch a movie in 3D.

Threat of New Entrants

A new admittance of your film theatre into the market would also weaken IMAX market electricity. Particular segment is more attractive if there are high entrance barriers and low leave barriers. According to advertise research carried out by World's Biggest Displays Pty Ltd. , IMAX can maintain a placement as a premium cinema destination not only because it offers a much better experience than other theatre destinations, but because it offers a very different movie theater experience. IMAX is perceived as being at the leading edge of new cinema, possibly offering new experience in film. Additionally it is about the strong sense of realism of the film style which allows visitors the sensation of destination exploration, the sensation of "being there".

Industry Rivalry

Industry rivalry means the intensity of competition among the existing film theatres on the market. Level of rivalry is determined by the number of film theater and their capabilities. Poor film fall into line, combined with the aftershocks of company restructuring in season 2000, resulted in low attendance figures. Presently IMAX's marketing key objectives are release a at the least 6-8 new films in each market it works in, introduce an organization sales program with a key focus on niche market visitor groups (e. g. classes, organized categories) and develop value-based special offers to operate a vehicle business in usually softer trading periods. This marketing aims are going to be executed using the entire range of the marketing mix including.

Bargaining Power Of Suppliers

Bargaining Vitality of suppliers means how strong is the position of the film theatre. How much film theatre's suppliers have control over increasing the price tag on offered products. It's quite apparent that film marketing calls for the form of the blend of elements (i. e. advertising, publicity & promotions, word of mouth, website and e-communications). Movies are released usually every 6-8 weeks in a staggered program timed to coincide, where possible, with key institution holiday periods. The discharge of a fresh film is the excellent driver to attendance.

Recently 3D films have surpassed 2D films as the utmost popular. However, there is a limited way to obtain 3D videos to choose from (they are really much more expensive to make). Film makers often analyze the success of past titles and the potential audience reaction to new headings. If particular film has performed well abroad, it may do well in a few other foreign marketplaces as well. Research is conducted on regular basis to find titles that present an chance to draw a fresh market in to the theatres and encourage trial.

When suppliers have more control over supplies and its prices, as it is in movie industry, segment is apparently less attractive. Your best option is to make a win-win relationship with suppliers and also have multi-sources of supply.

Bargaining Electric power Of Buyers

According to advertise research carried out by World's Biggest Screens Pty Ltd. , 78% of individuals who have seen an IMAX film exhibit the intent to return. There are some specific activities, which encourage visitors to do so. Frequently the interior of the theatre is utilized to highlight new produces. There are usually light bins featuring coming soon videos and stands with "just around the corner" brochures. Also delivering trailers at least 3 months prior to the feature release can be an appropriate strategy.

Bargaining power of clients can be reduced by offering differentiated types of movie theatres. If IMAX offers service to few huge volume tickets ordering buyers, then they would have the power to determine IMAX the price.

Competitive adventage

According to Michael Porter, there are three different bottom part strategies which allow company to get competitive advantage. They are:

Differentiation strategy,

Cost management strategy and

Focus strategy.

In the truth of IMAX, a primary reason for going after onward, backward and horizontal strategies is to get cost leadership benefits. IMAX as quite diversified firm might certainly be a part of three different business:

Photographic equipment and items,

Motion pictures and video tape production and

motion picture and training video distribution,

that are integrated horizontally. The goal of such an integration is to keep overhead at minimum level, and minimize firm's costs as much as possible. It might be acceptable for IMAX to produce and disperse its videos in digital format, what would allow company to lower its functional cost significantly.

As it is going about differentiation strategy, IMAX has a unique feature of its large format films. That differentiated company with others creation residences and filmmakers.

IMAX's library of movies and reality of locating itself in renowned venues got created a distinctive brand image. The purpose of IMAX is to provide his customers with high quality entertainment and documentary videos with 3D images and top quality looks.

If only IMAX would be able to continue advancements of the product quality and trustworthiness of its products, it could gain even much larger competitive advantage that won't be easy to be studied away. To produce such a strong competitive advantage a firm must be able to support that its main competencies. IMAX must be developed the abilities, knowledge and functions to design and put together the critical elements in its equipment and follow fast pace of technological changes.

When it comes to growth opportunity for IMAX, firm should focus on retention of the existing customers and attracting new audience. Relating to IMAX website, more than 20 percent of its audience were college group, about 70 % of its viewers were between 19 and 65 years, and the majority were college or university or university educated. IMAX had a need to discover a way to draw in this demographic group. Company should stay focused on entertainment movies and documentaries.


The BCG matrix is a tactical tool used to identify that which business of the organization offers high probable and which were draining organizations resources.

In season 2007 over 50% of the total revenue was produced by IMAX system sales like cams, displays, projection systems. As IMAX comes with an advantage above the technology of larger-than-life image production, it should commit more in R&D of the systems used to produce 2D and 3D videos.

Presently many studios convert their videos into IMAX format, but IMAX profits not much from it. As IMAX is not part of any studio, it generally does not get big share in the revenue. It looks like the expansion in converting films is high however the IMAX's market show is low.

In the motion picture industry, documentary segment is considered more significant than others. The FILM Connection of America provides separate accolades for documentary films in the grand Oscar Award. IMAX is originally known for producing documentary videos. Since calendar year 2008 IMAX itself produced only 1 documentary - Space Stop, and it looks like it's not growing on the tempo it should.

Corporate Strategy

A commercial strategy is one that specifies what business a company is at or would like to maintain and what it desires regarding those business. It's predicated on the objective and goals of the organization. Objective on IMAX as explained by co-CEO Gelfond is :

"It's[IMAX] is designed to deliever the worlds most immersive movie experience"

IMAX designs and companies large image producing format surveillance cameras and projection system as well as film development, production, post production and syndication to IMAX associated theatres worldwide. IMAX has about 400+ theatres in 47 countries.

IMAX's strategy is to lure consumers happiest in front of 60-inch plasma screen TV. In order to get a consumers out of these homes and make sure they are go watching an IMAX format movie, the business needs to give them something amazing and something special. And IMAX should it.

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