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Remember the days when a person would have to wait in line for two days just to purchase U2 tickets? Remember the days of tapes and videos? Hey, let’s get with the program, it’s now the 21st century, the information, technology age. All one has to do is flick on the computer, get on-line, type in www.knitmedia.com and one has opened the doors to the “Entertainment Company of the 21st century.” In the convenience of a person’s home, one is able to download music, purchase a compact disc, and even download a performance. Michael Dorf, founder and CEO of the Knitting Factory had this dream, and what almost seemed impossible has finally come to pass. This dream needed a group of managers to put it into action. According to Management Leading People and Organizations in the 21st Century by Gary Dessler, “21st century managing, is a management approach to the rapidly changing business world that emphasizes responsiveness and effective leadership”, (pp. 24-25). The Entertainment Industry is Infamous for the dynamic nature in the way business is conducted. The way a company reacts to trends in the Music Industry affect whether a company sinks or swims. Through expansion both here in the United States and abroad, Michael Dorf faces both challenges met and to be addressed. From examination of his management style, we can observe that this company, KnitMedia is swimming.
Few industries are undergoing as much rapid change as music, entertainment, and Internet/new media-industries that KnitMedia is in. Compile a list of the trends (such as consolidation of the music companies) taking place today for which Michael and his colleagues will have to plan.
Using WEB resources, make a list of the competitor in New York City for the Knitting Factory.
Examples of some of these trends include the use of the Internet, the packaging of music, and clubs, which allow a person to experience the music in person.
According to an article on the KnitMedia website, “Dave Brenner, Vice President, New Media oversees the development and implementation of all Knit media online properties and is involved in all levels of technology including network infrastructure, e-commerce, application development and interface design.” Thanks to Brenner one can easily access the knit media website and download music. In the past when a person hears a tune on the radio, he or she must hop into their car and drive to a music store. Now, all a person has to do is click onto the knit media website and a person can listen to the music without having to leave home.
According to an article on the KnitMedia website, “Stephanie Oxley, Vice President, KnitMedia Labels, has experience with both Independent and Major recording companies: independent distributor sales, singles promotion; A&R scouting and convention panel creation. She has a seasoned understanding of the Knitting Factory Records international brand having worked Knitting Factory Records Label Manager and Shimmy-Disc Label Manager. She currently manages the day-today operations of KnitMedia.” By owning four independent Record Labels: JAM, Shimmy Disc, Knit Classics and Knitting Factory Records it gives the Knitting Factory an advantage by being able to specialize, allowing each label to better meet the needs of their unique customer base.
According to an article on the KnitMedia website, “Ed Greer, Senior Vice President, a performing musician, sound engineer, production manager, construction supervisor, night manager and club general manager which makes him uniquely qualified for his current position in developing and overseeing position in developing and overseeing the network of The Knitting Factory clubs and their operations.” The Information Age definitely has its advantages of convenience and efficiency but it doesn’t give a person the “feel”. A person can’t smell the smell of a music room filled with smoke, a person can’t taste the drink made from a bar or see a band up close and personal at arm’s length. Not only is The Knitting Factory on-line but they also have clubs in New York, Los Angeles and Berlin. By being able to go to one of these clubs one can experience the ambience of a Jazz Place.
What international strategies have Michael and his company used so far to “go global”? How would you suggest he build on his success to date abroad?
Beginning in the 1990’s, Michael and his company started a 24 city European Tour with the Knitting Factory bands. In addition, the company opened an office in Holland. Plans are in the making to open Knitting Factory clubs around the world with the first in London. The Knitting Factory has also hooked up with MCI in order to initialize global Internet music broadcasting while Michael’s company has formed an alliance with Sony Music for further expansion.
To build on his success, Michael Dorf, may consider franchising The Knitting Factory around the world. In this way, Michael may help the cash flow of his Company while maintaining control over the newly opened clubs around the world. For tours, he may also consider increasing sponsors and perhaps hiring an individual whose only occupation is for obtaining financial aid in their expansion endeavors.
Briefly explain how the economic, sociocultural, and technological components of the international environment have affected KnitMedia to date.
Technologically, Michael’s company has joined forces with MCI for global Internet music broadcasting. KnitMedia is also technologically influenced in the sense that Michael is always electronically in more than one place at a time while he is also interested in building a club network to keep tabs on everything occurring in Knitting Factories around the world.
Economically, KnitMedia has very few layers of management, keeping unwanted bureaucracy to a minimum. Globally, the company has had problems in the past with foreign exchange rates changing. For instance, while touring in Germany, the Germany monetary system between East and West was combined which led to a monetary loss for KnitMedia. Michael has mentioned that at times, as far as marketing is concerned, he has had to go with his gut instincts and go over the budget to achieve goals.
Socioculturally, The Knitting Factory’s music itself crosses such boundaries wherein acts are obtained from a region’s local talent. The music itself caters to “different” venues and therefore different sociocultural tastes.
What “international management” challenges has Michael had to face to date in planning, organizing, leading, and controlling the company’s expansion abroad, and what challenges do you anticipate as he opens new Knitting Factory clubs overseas?
The challenges Michael has had to face include problems with differences in foreign currency exchange rates as aforementioned in Germany, a greater need for cash flow in marketing The Knitting Factory and its music, as well as situations in booking Tours. For instance, one time, while several Knitting Factory bands were on tour in Europe, a booking problem occurred in a pub in Sweden. The pub could only host 30 people, and as it were, the place could only hold enough people to cover The Knitting Factory’s musicians, let alone, local patrons.
Future problems include diverse needs and fragmentation as well as situations in researching foreign markets whereby information may be inaccurate. There may even exist legal issues such as in Africa. In some places in Africa, it is against the law for local hiring of individuals by a foreign investor or company. That means that problems may arise for hiring locally even for local talent.
What competition do you see Michael and his company facing abroad in Europe as they expand abroad? How do you suggest they address that competition?
The competition that KnitMedia may be facing abroad is acts sent on tour from major record companies like Sony, Warner, and Universal. In addition, when creating Knitting Factories around the world, so to speak, KnitMedia may face rivalry from the region’s local clubs. Besides, Europe is known for musicians playing their fair in the streets which brings up the question of whether or not locals would pay to get into a club to hear KnitMedia’s music.
As far as competition from major record companies is concerned, KnitMedia has already addressed this issue in forming an alliance with Sony. In addition, Michael is convinced that The Knitting Factory offers a venue of music not popularized by major record labels. In order to deal with local competition overseas, Michael may consider forming alliances with local clubs as well as hiring from that region’s talent.
Assume that it is possible that the Knitting Factory could have incurred a substantial loss without electric power for that weekend, and that ConEdison was aware of that. Do you believe that ConEd’s decision to cut them off was an ethical one? Regardless of the decision to cut off the power, do you think the manner in which they did cut off the power was ethical?
Given the fact that ConEd could not be contacted until the following Monday, what would you have done if you were Michael Dorf? Would that have been ethical?
Important factors involved in business regarding ethics include value judgments on working relationships within the corporation, with stockholders, as well as with clients and customers. The examples of poor ethical business and questionable business practices are displayed in the matter concerning the New York-based utility company, ConEdison, and their customer, the Knitting Factory, an alternative jazz club and bar. The actions taken by the utility company, although legal, could have resulted in severe financial penalties for their customer, while at the same time, having had little effect on the overall profit of ConEdison. These business practices should be viewed as unreasonable as well as unethical.
When making decisions that could profoundly affect another companies’ profits, it should be the obligation of the executives and managers of any company to set an example of ethical business practices and maintain a set of values that exhibit appropriate behavior. The moral minimum is a philosophy suggests,
The purpose of the corporation is to maximize profits, but subject to the requirement that it must do so in conformity with the moral minimum, meaning that the firm should be free to strive for profits as long as it commits no harm.1
When ConEdison decided to shut off the electricity of the Knitting Factory directly before a large volume weekend, they exhibited actions that were extreme in nature and unnecessary in the overall business relations between the two companies. Although the Knitting Factory had apparently paid bills late in the past, there was nothing to suggest that they did not eventually pay them. If the utility company’s concern of non-payment had propelled the decision of ConElectric to cut off electrical supply, there would be a more substantial and more ethical reason to cut off their service. However, ConEdison’s ignored the attempts on the customers’ behalf to pay in a reasonable manner, their formal complaints, the letters from the client’s president, and instead, demanded a deposit of $800 on their $2000 bill. The client did not warrant the somewhat “defiant” action of discontinuing service from ConEdison.
Although the client is obliged to pay their service bills on time, if not punished in the past, it is reasonable to assume that they would not incur such an extreme penalty on any future late payment. If ConEdison would have, perhaps, given a limited time-frame for payment, or advised their customer of their stringent schedule for payment, they could have avoided this relatively simple situation and allowed the customer to comply with their requests.
In addition to their unreasonable actions, they performed business practices that could be considered illegal. By having an employee enter the premises at 5:45 on a Friday (15 minutes before the ConEdison Company closes), and explain that he was in for the meter reading and then instead, turned off the electricity, the company misrepresented itself and gave incorrect information to its customer. This could be considered very poor business and in the event of deregulation of the utility industry in New York, the business from the Knitting Factory would have definitely been lost to a competitor.
Is KnitMedia an organization for which you’d like to work? Would you be motivated to excel? Why or why not? Explain.
KnitMedia is excellent for someone who wants to be part of a fast-growing, small organization without the layers of management of a large organization. Additionally, it fosters an independent work environment, where employees are empowered to think and act alone. Furthermore, it attracts employees who share the same interests musically and professionally.
Based on what you’ve learned from the text, what is your assessment of Michael Dorf’s efforts to expand to other countries and become global?
KnitMedia is in the process of expanding its record label globally and opening clubs in the US and abroad. It is based in New York and has an office in Amsterdam to oversee European operations and establish relationships with local musicians, agents, promoters, and retailers to overcome cultural differences. Although, it only has one club, located in New York, it plans to open two more within a year, one in Los Angeles and another in London, and more in the following years. The company is “thinking globally but acting locally” (Dessler, 1998, Chapter 2 Video). Its brand of clubs will globally provide new and experimental music with a local element. While growth continues abroad, control remains domestically. Michael Dorf’s efforts are those of a multinational company, “defined as an internationally integrated business that is controlled by a parent corporation, owned and managed essentially by the nationals of its home country” (Dressler, 1998, p.44).
Based on your reading thus far, how would you characterize Michael’s management style? How is it effective or ineffective? Explain.
Michael Dorf’s management style is a way a life for him. He has the real desire to work with people and help them succeed as well as helping the organization succeed. He performs the four major functions of management: plan, organize, lead, and control. He is a top line manager playing the roles of a figurehead, leader, liaison, spokesperson, and negotiator.
What role does Michael’s ethics play in the development of KnitMedia? In what ways is this manifested?
Michael’s ethics reflect the stakeholder theory; “a social responsibility to serve all the ‘corporate stakeholders’ affected by its business decisions. A corporate stakeholder is any group which is vital to the survival and success of the corporation” (Dressler, 1998, p.91), such as employees, customers, suppliers, and community. For example, he pays his musicians fairly, hires the homeless, and does not compromise the integrity of the way he conducts business.
In conclusion, KnitMedia is a company that is meant to swim, due to a variety of circumstances and attitudes. More than just the mainstream music’s packaging of tours and CDs as with Warner or Sony, KnitMedia is utilizing the Internet, clubs, tours, and a reputation for integrity. This company is also multi-national, with plans to open two more clubs in the United States as well as one in London. The bureaucracy is kept to a minimum with few layers of management while Michael Dorf’s management style reflects the company’s aura of honesty, desiring the company to succeed while working well with others.
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