This is an individual exam, which should not be discussed or reviewed with any other person, nor should anyone else write, in whole or in part, any response to this take-home exam. This is an examination of your knowledge of and facility with integrating the course material. As the responses you submit are to be yours and yours alone, you are not expected to research or retrieve data from independent sources not already provided. However, should you refer to the work of others in your response (i.e. academic literature, news items or on-line sources, etc.) please make appropriate citation using one of the accepted citation formats (i.e. Chicago, APA) and include a bibliography at the end of the exam.
You are reminded that plagiarism is a violation of academic integrity and has serious consequences. The University Senate defines plagiarism in the regulations on instructional offenses as: “to use and pass off as one’s own idea or product work of another without expressly giving credit to another.”
When using, and/or summarizing the ideas and words of another, be it from a web site, a written text, lecture or discussion group you must identify the source. Should you choose to use the exact words of another, you must acknowledge these words as such by enclosing them within quotation marks. However, be aware that it is not acceptable to copy large chunks from a source, even if you reference it correctly. Failing to acknowledge sources through the use of proper citations is plagiarism. Any cooperation or collaboration with another person in the completion of this take-home exam will be considered a violation of academic integrity.
This examination has six (6) questions to which you must respond, as follows:
(A) Please keep your response below 4,000 words (excluding references and appendices) in total.
(B) While point form is permitted, please make sure your comments and arguments fully respond in a coherent manner that may be followed by the reader. Respond to each question separately (identifying it by number; responses are required to all questions).
(C) Format using a 12 point font, with at least one inch margins all around and line spacing of at least 1.5. Insert your name and student number as a header on each page, paginate, print double sided (if possible) and staple together.
(D) Submit paper copy at beginning of class on November 12th, 2015, as well as upload to cuLearn (word file (not pdf) with file label of last name, first name, SecAorB).
(E) Late submissions may not be marked. Should you be unable to upload to cuLearn, exceptionally you may e-mail me ([email protected]) your responses prior to the deadline, and then proceed to finalize upload to cuLearn.
This case is available at IVEY PUBLISHING: 9B15D008
(Author(s): Peter Hryniak with support from D. Pupulin and J. Haywood-Farmer)

Additional background information to consider:

Accessible from Library:

Cineplex Audited Annual Reports, Feb. 11, 2015 as at December 31, 2014

Please refer to this report for financial statement information
Please note that you may need to cut and paste this link into web browser to open link.

You may also search for Cineplex’s 2014 annual report through SEDAR (Feb. 11, 2015). SEDAR is found through the Carleton Library (Go to Main Library Page, course guides, STGY5900, company information, SEDAR).

Recent Cineplex and other news reports from Forbes and Fortune – see appendix A that follows


1. Identify key characteristics of the Canadian film exhibition industry utilizing Porter’s five-forces framework to assess the industry attractiveness. Identify the key risk factors and how they apply to Cineplex Inc..
2. What opportunities and threats does Cineplex face and how has it responded to those opportunities and threats?
3a. Considering Porter’s generic business strategies, what business strategy has Cineplex used in the film exhibition industry (explain your rationale behind choice)?
3b. What do you perceive to be Cineplex’s strengths and weaknesses (use Porter’s value chain to analyze strengths and weaknesses)?
4. Considering Porter’s value chain and drawing upon the resource based view, what are Cineplex Inc.’s core competencies that may potentially provide competitive advantage?

5. Based on your analysis of Cineplex’s current operations, including the firm’s current financial situation (Cineplex 2014 Annual report see supplementary information above), what growth priorities would you recommend?

6. If you are advising Cineplex’s Board of Directors on a future direction, what changes to their current business model and/or to their corporate strategy, if any, would you recommend? Consider the current growth strategy as well. Support with your financial as well as strategic analyses, along with the theoretical foundations underlying your arguments.
Note: You may view some of the questions as being vague. They have been worded this way to determine your ability to use the course material and synthesize with it in the absence of specific direction.
Reminder: While there are no right or wrong answers, supporting your responses with strategic frameworks/concepts demonstrates your ability to think strategically.

This is an individual exam which should not be discussed or reviewed with any other person, nor should anyone else write, in whole or in part, any response to this take-home exam.

Appendix A – Cineplex 2015 news items (as per sources identified)
Global ESports revenues to surpass $1.9 billion by 2018
Author Information
By John Gaudiosi. Fortune Magazine. OCTOBER 28, 2015

If cannot open articles with link, search article using article title with Google or cut and paste link into the web browser.

Cineplex invests $15M into eSports gaming plans
Gaming events play to full arenas, stadiums in some countries
Author Information
By Peter Henderson, The Canadian Press Posted: Sep 18, 2015

Fans react during The International Dota 2 Championships at Key Arena in Seattle, Wash. Cineplex is hoping to host a number of competitive gaming events to bring more bodies back to theatres. (Jason Redmond/Reuters)

The operator of Canada’s largest chain of movie theatres is moving further into the world of competitive electronic gaming, announcing some $15 million US in investments on Thursday that will see so-called eSports competitions playing out on Cineplex stages across the country.
Cineplex Entertainment Inc. (TSX:CGX) will pay $10 million US to acquire the assets of WorldGaming, which has a platform used for tournaments and leagues for the competitive gaming community.
It will also invest a further $5 million US to created a new competitive gaming league that will operate and oversee future tournaments at Cineplex theatres across the country, with the first competitions beginning in October.

The games will take place on theatre stages, in front of a big screen and as an audience watches, while also being streamed to other Cineplex venues. Enthusiasts can also sign up to play.
Big international matches will also be live-streamed into Cineplex movie screens in an effort to utilize infrastructure during slow periods.
Cineplex CEO Ellis Jacob said the investment will help the company reach a younger demographic whose attention is being pulled away from its movie theatres by the wealth of available digital content.
He said the company wants to make its theatres a destination for all kinds of entertainment, and that the social aspects of competitive gaming make it a perfect fit for Cineplex.
“People want to be face to face with each other and compete, and other people want to watch them play,” he said.

Jacob said competitive gaming, also known as eSports, could be a huge market in Canada, pointing to places such as South Korea and Japan where eSports events can sell out stadiums. Cineplex hopes one day that its eSports promotion can sell out the Air Canada Centre.
“It’s very big phenomenon and I think that all that is needed in Canada is for a brand like ours to embrace it and work with other companies on promotion,” he said.
Cineplex spokeswoman Pat Marshall said the gaming league will involve local tournaments, regional qualifiers and national tournaments for a variety of eSports titles. Details are expected to be announced in the coming weeks.

The worldwide eSports industry, buoyed by the popularity of titles such as League of Legends and Counter-Strike: Global Offensive, is worth around $613 million US, according to SuperData Research.
Advertisers salivate over the demographics of the gaming community, with Coca-Cola signing up to be a leading sponsor of Riot Games’ League of Legends tournaments in the United States.
Difference Capital Financial Inc. (TSX:DCF), which is the majority investor in WG Ltd., said it will receive $6.4 million for its stake. Its shares soared more than 27 per cent, or 16 cents, to closed at 75 cents on the Toronto Stock Exchange.
Cineplex shares rose 24 cents, or half a per cent, to $47.38.

Canaccord Genuity analyst Aravinda Galappatthige said Cineplex is smart to diversify, and that its small investment in competitive gaming could have big returns.
“There’s very little money down, very little risk,” he said. “You use your name and brand and reach to leverage in Canada on a trend that seems to be quite a phenomenon across the world.”
Galappatthige said Cineplex has an opportunity to centralize the fragmented world of eSports promotion and fan base in Canada and increase visibility for competitive gaming.
“With a big name like Cineplex taking leadership, setting up a league and approaching it in a more structured way, you’ll probably see more results,” he said.

Sten Dragoti, who co-founded Windsor-based eSport Gaming Events in 2013, said the biggest challenge for the industry is being taken seriously by the large corporate sponsors that dominate traditional sports.
“They didn’t grow up with this but they’re starting to come around,” he said.
Dragoti said he often has to explain to executives the importance and popularity of competitive gaming, using examples such as the $18.5-million US prize pool split between the winners at the International tournament for the game Dota II in August, with a Vancouver man part of a six-person team that took home the top $6.6 million US prize.
“You can’t ignore that kind of money,” he said. “I think eSports isn’t just a fad, it’s here to stay.”

$10 Million Acquisition Will Bring eSports To The Big Screen
Author Information
D Heltner, Forbes, Sept. 17, 2015
Author(s): D. Heitner
Source: 9/17/2015,.

This article reports on Cineplex’s acquisition of Worldgaming’s operational assets to get into e-sports.

Theatrical Release Windows Shrink With New Paramount Deal
Author Information
Bartyzel, M. Jul. 8, 2015 Forbes
Article discusses additional shrinking of release windows by Movie studios.
Please note that if cannot open article with link do a Google search using the title.
Cineplex Plans Entertainment Complex With Live Music, Comedy, Games
Cineplex Plans Entertainment Complex With Live Music, Comedy, Games
Author Information
By David Friend, The Canadian Press, Jan. 26, 2015

TORONTO — Cineplex Entertainment is looking beyond Hollywood with a new concept that combines arcade games and live performances. The country’s biggest movie theatre chain said Monday it plans to launch The Rec Room later this year in Edmonton as part of a pilot project that will ramp up to a bigger expansion.
Each location will have space for a restaurant and bar, as well as an array of entertainment options, like an arcade and an auditorium for live music and comedians. The company is also considering other games like bowling, billiards and ping pong. The idea is in the vein of restaurant and arcade chains in the United States like Latitude 360 and Dave and Buster’s.
“When you look at Canada we really don’t have a location-based social environment where people can game, have a meal, watch (sports), all of those kinds of things that create a destination,” chief executive Ellis Jacob said in an interview. “It allows us to capitalize on our strength, from our infrastructure to the assets we’ve built up.”
The first Rec Room will open late this year adjacent to an existing Cineplex theatre at the South Edmonton Common shopping centre.
Another 10 to 15 locations will follow in major cities across the country over the next several years, though they won’t necessarily be next to a movie theatre, Jacob said.
Cineplex already operates 18 Xscape Entertainment Centres with popular arcade games and billiards. Some of the locations also have lounges with liquor licences. What makes the Rec Room different is the broader game and food selection, and the large digital screens, Jacob said. He hopes Cineplex can tap into the rising popularity of video game tournaments on the big screen, where audiences gather to battle each other playing Xbox 360 and PlayStation 4 games.
Cineplex also owns an advertising business and premium-priced movie theatres. The company has been focused on diversifying its business to lessen the impact of the volatile movie industry, which thrives on blockbuster hits but falters when a big movie tanks.
Last month, Cineplex backed out of screening the controversial Seth Rogen movie “The Interview” when hackers threatened terrorist attacks at theatres showing the comedy. While Cineplex said it only planned to postpone screenings, the company decided against showing it at all when Sony Pictures made “The Interview” available to rent and buy online.

Empire to Focus Sobeys, sells Theatres to Cineplex, Landmark
Author: Bertrand Marotte
The Globe and Mail
Published Jun. 27, 2013

“Empire Co. Ltd. is exiting the movie-theatre business as it narrows its focus on its grocery business after the recent deal to buy Safeway Inc.’s Canadian stores.
Stellarton, N.S.-based Empire said it has struck two separate deals to sell 46 movie theatres in Atlantic and Western Canada as well as Ontario.
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In a $200-million transaction, Cineplex Inc. will acquire 24 Empire theatres in Atlantic Canada – 13 in Nova Scotia, six in New Brunswick, three in Newfoundland and Labrador and two on Prince Edward Island – and two in Ontario.
Meanwhile, Western Canada theatre operator Landmark Cinemas Inc. plans to buy 20 Empire locations in Ontario and Western Canada in an agreement valued at $55-million.
For Toronto-based Cineplex, the agreement broadens its national presence, with a foothold in Atlantic Canada.
Empire president and chief executive officer Paul Sobey said in a news release Thursday the decision to sell the movie-theatre division “aligns with the strategic direction of the company to focus our resources on our food retail business through our 100 per cent interest in Sobeys Inc. and on our related real estate investment through our 42.8 per cent ownership interest in Crombie REIT.”
Empire, the country’s No. 2 grocery chain, said it intends to use proceeds of about $216-million for debt repayment.
Ellis Jacob, president and CEO of Cineplex, said in a statement: “This is a significant event for Cineplex, as the acquisition will provide our company with a truly national, coast-to-coast presence.

“This acquisition is an excellent strategic fit for Cineplex. It provides us with a presence in Atlantic Canada and it will enable us to leverage our existing businesses to maximize shareholder value.”
Empire will have four theatres left, and two of those will be sold in real estate transactions, while a decision on what to do with the remaining two will be made when their leases expire later this year, Sobeys said.
Empire also said on Thursday that it posted fourth-quarter profit of $98.6-million, or $1.45 per share of adjusted earnings, up from $89.6-million, or $1.32, in the year-earlier period.
Sales reached $4.31-billion, up $235.1-million, or 5.8 per cent.
Empire said this month that Sobeys has struck an agreement with Safeway to buy all of its Canadian assets for $5.8-billion.
The deal includes 213 full-service grocery stores in Western Canada and 199 in-store pharmacies.
“Fiscal 2013 was a solid year,” Mr. Sobey said on a conference call Thursday.
Marc Poulin, president and CEO of Sobeys, said the current pricing environment is tough.
“We have to adjust prices to remain competitive in the marketplace,” he said” on the call.
“Overall, we’re seeing a very competitive market where people are playing their promotional cards real hard,” he said.
Retailers are “trying to bring a surprise to market every week” in hopes of luring shoppers, said Mr. Poulin, adding that the environment is one of “fickle consumers and lots of square footage being added to the marketplace.”
Among the increasing competition are more food merchandising at Wal-Mart Stores Inc. and the arrival of Target Corp. in Canada.”

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