Running head: AMC THEATRE CASE 1

AMC Theatre Case

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Case Analysis: AMC Theatre

Section 1: Current Strategic Elements

The first strategic element within the AMC Entertainment Holdings is the adjustments in

sales and marketing as part and parcel of value chain assurance. The company has a series of

customer loyalty reward programs that are rolled out periodically. These programs are integrated

in the company website and mobile apps to avail interesting packages and current offers at the

comfort of the clients. As indicated in the company’s website, there is an active customer

engagement program that rewards loyalty through discounts and belonging to members-only

program (AMC Entertainment Holdings, Inc., 2021). Through ease to use mobile applications

clients are not only able to make orders for food at convenience of home but also book tickets in

advance before the scheduled movie time. There is a button within the mobile app allowing

clients to purchase services through the Apple Store.

The primary competitor, Regal Entertainment, has also integrated technology in its

marketing and sales strategy by using a more or less similar mobile application and company

website to market digital ticket sales while enabling client to maintain an interactive relationship

with other clients and the company to purchase advance movie tickets (Nguyen, 2020). Notably,

Apple PLC is always known for its well-developed sales platform called the Apple Store to reach

customers and offer a series of services and products.

The use of customer loyalty program by AMC called the ‘AMC Stubs Premiere’ enables

the company to reach out to a large audience of clients within different segments. Through this

program, the company is able to identify dedicated clients and tailor services that ensure repeat

purchase. For instance, the AMC Stubs Premiere attracts a “$15 annual membership fee” (AMC

Entertainment Holdings, Inc., 2021, p. 94) for the traditional paid segments while the AMC
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Stubs Insider is exclusive and doesn’t attract an annual fee. This program “allows members to

earn rewards, receive discounts and participate in exclusive members-only…services (AMC

Entertainment Holdings, Inc., 2021, p. 12). Regal Entertainment has a similar program which

also comes with a digital membership card.

AMC Entertainment Holdings Incorporation has also proactively integrated a series of

renovations aimed at meeting the primary and secondary needs of their clients.

For instance, through recliner seating innovation, the company has been able to improve

customer convenience and comfort of their clients. As illustrated in the company website, AMC

has continued to evolve and improve the experience of their clients through holistic deployment

of renovations in the theatres to include “powered recliner seating and launch of…subscription

loyalty tier" (AMC Entertainment Holdings, Inc., 2021, p. 9). At the moment, AMC’s primary

competitor is Regal Entertainment brand, which has similar services such as plus recliner seating

(Nguyen, 2020). Regal is also proactively involved in unique renovations in the service charter

that is relevant to their target market (Regal Entertainment Group, 2017).

Section 2: Current Strategy

Table 1: Resource and Capability table

Tangible Resources

1. Financial resources i. By the end of the 2019/2020 financial year, AMC

Entertainment Holdings had net earnings of $4,589.1

million (AMC Entertainment Holdings, Inc., 2021).

ii. The primary sources of these revenues were box office

sales, beverage and snack sales in the theatres,

advertisement, customer loyalty programs, AMC stub

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charges, rental income from lease of auditorium, and online

tickets.

2. Physical resources i. Headquartered in the US, the company is spread across the

globe in three regions of Middle East, Europe, and Asia

with physical presence fourteen countries.

ii. By the end of the 2019/2020 financial year, the company’s

inventory indicated 7,668 movie screens and 590 theatres in

the local US market. In the international markets, the

company has 10,543 screen and nine fifty theatres (Nhamo,

Dube, & Chikodzi, 2020).

3. Technological i. The company has a well-developed website that is easy to

Resources use to ensure flow of online ticketing services to clients.

Social media platforms have also been integrated alongside

the website to ease marketing and promotion activities.

ii. AMC Entertainment Holdings features an average of 14.7

screens per location in the global market segment. The

screens are further complimented by a series of IMAX

screen ownerships with capacity to provide 3D screening.

iii. The company has also integrated 4K resolution to improve

quality of their screens (Kim, 2021).

4. Organisational i. AMC Entertainment Holdings has a policy of upholding

capabilities customised forward thinking engagement with clients to

address issues as they arise.

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ii. Moreover, the company’s strategic operational approach is

flexible to minimise the impacts of disruptive market events

such as the current COVID-19 pandemic (Kim, 2021). The

strategic operational focus has enabled the company to

timely inject more financing to reduce the impact of such

disruptions.

Intangible Resources

1. Human resources i. The human resource management approach is localised with

respect to regional labour laws on diversity, inclusivity,

gender balance, and continuous employee training to ensure

optimal output for each unit of labour input.

ii. The company’s human resource capacity consists of 3,449

full time workers and 21, 570 part time personnel spread

across the global locations (AMC Entertainment Holdings,

Inc., 2021).

2. Innovation and i. The online ticketing, online food/drink ordering, loyalty

Creativity subscription, and active social media engagement is

periodically updated and modified to align to the latest best

practices in the industry.

ii. The company pioneered the powered recliner seats,

Megaplex and Multiplex theatres that are plush and

receptive to ensure optimal customer comfort.

3. Reputation i. AMC Entertainment Holdings has prioritised customer

convenience, comfort, and optimal entertainment through

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the plush and powered recliner seating and Multi/Megaplex

theatres (AMC Entertainment Holdings, Inc., 2021).

Table 2: VRIN Chart

Resource Valuable Rare Inimitable Nonsubstitutabl Implications for

e competitiveness

Tangible Resources

Financial Yes Yes No Yes Sustainable

competitive advantage

Physical Yes Yes Yes No Sustainable

competitive advantage

Technological Yes Yes No Yes Competitive advantage

Organisationa Yes Yes No Yes Competitive advantage

Intangible Resources

Human Yes No Yes No Competitive parity

Innovation Yes Yes No Yes Sustainable

and Creativity competitive advantage

Reputation Yes Yes No No Competitive advantage

As captured in the above VRIN chart, AMC Entertainment Holdings have stable tangible

and intangible resource mix for sustainable competitive business functionality. Apparently, the

innovative business model consisting of the powered and plush recliner seating, integration of

technological applications such as ultra-modern theatres, online ticketing, and social media, and
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engagement of a comprehensive service module are responsible for the strong VRIN score for

the company.

Current Generic Business of AMC

AMC Entertainment Holdings is currently one of the leading global brands in film

exhibition, especially within the screen sector. As an innovative theatre entertainment service

provider, the company has been consistent in setting the trend as other competitors follow with

services that are appealing to different segments of clients (Williams, 2021). The company is

currently more than a century old and is renowned for its Megaplex and Multiplex theatres from

the late 1960s in the US. Through the revolutionary service charter, AMC has brought a

paradigm shift in customer service charter for the entire theatre industry. For instance, AMC

introduced renovations that feature “plush, powered recliner seating” (AMC Entertainment

Holdings, Inc., 2021, p. 9).

As an instrument for stable business operations, AMC has proactively deployed

sustainable business development through expansion of investments through mergers and

acquisitions via the complex organic growth model. As illustrated the company website, AMC

business “is operated in two Theatrical Exhibition reportable segments, U.S. markets and

international markets (AMC Entertainment Holdings, Inc., 2021, p. 9). Apparently, the

company’s business operation is segmented into local market (the US) and global market (other

parts of the world). The internationalisation strategic beyond the local market was catalysed by

acquisitions of the UCI, Nordic, and Odeon Cinemas. At the moment, the company has 1,440

theatres and 17, 321 screens spread “in European markets and Saudi Arabia” (AMC

Entertainment Holdings, Inc., 2021, p. 9).

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Corporate Strategies

Through a liberalised forward thinking business approach, AMC Entertainment has been

able to closely guard its business operations while ensuring sustainable customer satisfaction.

For instance, through innovative marketing and technological integration, the company has been

able to offer the best services in the theatre industry (Kim, 2021). The most notable corporate

strategies are creative customer engagement, continuously product design to penetrate new

market segments, exhibition marketing, and timely adjustments in unprofitable markets. This

innovative approach has created an environment of sustainable business operations.

Global Strategies

Through a focused and continuous internationalisation business approach, the company

has been able to expand quickly and capture competitive international markets using strategies

that ensured local market dominance. For instance, to address the disruption caused by the

COVID pandemic, AMC adopted a campaign dubbed “We Are Safer Cinema” (AMC

Entertainment Holdings, Inc., 2021, p. 10) aimed at restoring operations while assuring clients of

their safety within the theatres. The same campaign has been rolled out in the international

markets including safe distancing in the seating arrangement and mandatory mask policy.

Section 3: Current Issues

In the midst of a prolonged disruption as result of the global COVID pandemic, the

company has had to make adjustments and had to close down for almost a whole year. As safety

concerns grew, AMC experienced record low ticket sales (Aaron, 2020). Moreover, most of the

scheduled exhibitions had to be cancelled due to low ticket sales. As a result of these challenges,

AMC’s board “waived attainment of the 2020 tranche year performance targets” (AMC

Entertainment Holdings, Inc., 2021, p. 131). As a remedy to overcome this shortcoming, the
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company’s ‘We are Safer Cinema’ campaign via the safety and clean procedures such as social

distancing and restricting customer numbers has catalysed a further decline in ticket sales, thus,

reduced revenues.

The second current issue is the increasing and changing customer preference

characterised by focused consumption of movie content from the comfort of home due to fear of

the pandemic (Kim, 2021). Since the beginning of the COVID pandemic, many customers have

switched their allegiance from traditional theatres to online streaming, which is also less costly

and more convenient (Goldsmith & Hayes, 2021). Moreover, as more streaming services enter

the movie industry, the traditional players such as AMC have to contend with reduced periods of

exhibition or releases. Consequently, AMC and other traditional players are facing a serious

threat, especially if the COVID pandemic disruption will be prolonged.

The last threat is stringent competition especially from companies offering streaming

services as opposed to the traditional theatre model used by AMC. The company has had to deal

with “intense competition in geographical areas” (AMC Entertainment, Inc., 2021, p. 2) of their

operations. For instance, Regal Entertainment and Cinemark Holdings have posed the greatest

competition threat. In addition, other online based business holdings have also been steadily

eating into AMC’s market as customers continue to shy away from traditional theatres (Easton &

Owram, 2021).

Section 4: New Strategic Elements Recommendations

AMC should introduce a new pricing strategy such as Dynamic Pricing to arrest COVID

pandemic threat. This strategy will expand the current customer reach. For instance, through a

participatory loyalty campaigns, AMC may consider using social media, website, and mobile

apps to push for increasing the current discounts to push for recruitment of more customers. The
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same pricing strategy should also be expanded to private booking to ensure that the company’s

internationalisation strategy is protected. If properly implemented, dynamic pricing strategy will

reinforce client loyalty while expanding the revenues to guarantee the current competitive

advantage sustainability.

The challenge of changing customer preference from traditional to online streaming

content could be handled by AMC through designing a system that can offer customers with the

latest update on real-time basis. As a result, the clients will be empowered to pre plan for ideal

visiting time. This strategy is aimed at promoting the company’s innovative module and assuring

creativity. If properly implemented, the company may be empowered to outperform online

streaming business segment, thus, increased revenues which translates to sustainable financial

standing.

As a counter strategy for tackling rising competition at the local and global markets, the

company should proactively adopt a systematic sustainable differentiation to make its services

unique. At the same time, mutually beneficially partnerships with digital-based competitors

could be instrumental in protecting the current market while also expanding to other segments

(Moore, 2021). If properly implemented, this proposed strategy has a potential of further

reinforcing the current market leadership position, thus, improved competitive advantage.
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References

Aaron, A. (2020). AMC’s second-quarter revenue falls almost 99%. Retrieved from,

https://www.bizjournals.com/kansascity/news/2020/08/07/amc-entertainment-holdings-

revenue-pandemic.html.

AMC Entertainment Holdings, Inc. (2021). Form 10‐K. (pp. 3-176). Retrieved from

http://www.sec.gov/edgar.shtml.

Easton, J ., & Owram, K. (J2021). AMC erases 2020’s pandemic loss amid retail trading

stampede. Retrieved from https://www.bloomberg.com/news/articles/2021-01-27/amc-

set-to-wipe-pandemic-plunge-after-shares-double-in-premarket.

Goldsmith, J., & Hayes, D. (2021). AMC Entertainment stock returns to pre-pandemic highs on

wild Wall Street day; markets drop on fed inaction- update. Retrieved from

https://deadline.com/2021/01/amc-entertainment-stock-recovers-all-pandemic-losses-

nearly-tripling-1234681362/.

Kim, I. K. (2021). The impact of social distancing on box-office revenue: Evidence from the

COVID-19 pandemic. Quantitative Marketing and Economics, 19(1), 93-125.

Moore, C. (2021). AMC aims to sell $125M in stock due to coronavirus pandemic, says SEC

filings. https://www.foxbusiness.com/lifestyle/amc-sell-125m-stock-coronavirus-

pandemic-sec- filings.

Nguyen, A. (2020). AMC vs Regal: Who is leading the cinema business? Retrieved from

https://www.envzone.com/amc-vs-regal-who-is-leading-the-cinema-business/.
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Nhamo, G., Dube, K., & Chikodzi, D. (2020). Implications of COVID-19 on gaming, leisure and

entertainment industry. In Counting the Cost of COVID-19 on the Global Tourism

Industry, pp. 273-295.

Regal Entertainment Group (2017). Form 10‐K. Retrieved from http://getfilings.com/sec-

filings/180322/REGAL-ENTERTAINMENT-GROUP_10-K.A/.

Williams, J. (2021). AMC execs optimistic after brutal 2020, streaming negotiations. Retrieved

16 June 2021, from

https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/

amc-execs-optimistic-after-brutal-2020-streaming-negotiations-63110970.