“Beauty & Competitive advantage in Hollywood” [Emphasis: Beauty block I on Big strategies] "They were booing because they thought, 'Well, this moment is sacrosanct and you’re ruining our fantasy with the intrusion of a little reality" Marlon Brando on audience reactions for having Sacheen Littlefeather, activist for Native American rights, to decline his 1973 academy award for best actor in The Godfather (1972). Beautiful strategy 4 Tinseltown 4 Valuation of Film 5 Hollywood's success in an uncertain market 7 Emotions, ethics, and capturing value 8 Road to losing Competitive advantage 11 Reference list 13 Beautiful strategy Business strategy often takes on a perspective of gaining competitive advantage through economic values. Competitive advantage is the goal that organisations reach by striving to reach positions of being big, best, and/or fast. Strategy research has provided us with means of pursuing these goals but have often focused on the supply-side and producer activities. When we discuss value creation consumer perception plays a vital role, something that the supply-side focus has gained critique for neglecting. Value is subjective and it is both determined and created by consumers. In order to capture the value gained by such subjectivity firms should consider a fourth goal in business strategizing: introducing beauty. The acknowledgment of beauty has been determined through various perspectives and means, ranging from design, sensations, value, and ethics. In a broader sense, beauty can be determined as a sensory perception creating aesthetic knowledge (Ladkin, 2015) , which in relation to strategy, becomes aesthetic values. In modern days a shift from economic to aesthetic values has become more apparent. Derived from the greek word “aisthesis”, meaning “perception by feeling” aesthetics becomes a broad term to define, and something that can mean a lot of things risks ending up without any clear meaning at all. To help us understand the implications of strategy through the perception of feeling, we travel to Hollywood to look at the film industry. Tinseltown The reach of Hollywood productions is worldwide and few would want to change this. The aptly nicknamed Tinseltown provides us with experiences of thrills, laughter, romance, sadness, intrigue, and immersion into fantastic worlds. But do we get swept away to the extent that what is shown on the screen can spill into our minds and dictate how we perceive reality? This sparks an internal discussion and urges us to evaluate our perspectives through the glamorous, or perhaps not so glamorous, lens of film production. The following essay will explore an industry in which aesthetics is, and has always been, the essence of value creation. The film industry has been adapting to aesthetic means by conveying messages, portraying emotions, skewing political views, altering perceptions of life, and the list goes on. All of these matters tap into our senses, either beautifully or repulsively. When discussing the control that aesthetics have on our cognition, it is difficult not to wonder about the power that those who successfully put this tool to use hold over us. Valuation of Film If the power of Hollywood can be attributed to the value it creates, we need to consider how the gears of this veritable dream-machine turn to produce said value. Since value is a broad term it can be viewed from different angles. In the economic sense it can be explained by quantifying the labour and capital that goes into production, while value in terms of beauty is created through consumer perception of meaning and experiences (Heskett, 2008; Boztepe, 2007). It is formulated through the valuation process, where consumers, critics, and other intermediaries are experiencing the role of evaluating services or goods which in turn affects individuals' underlying cognition. Valuation processes not only provide boundaries but also build the encounter between consumers' cognition and the industry’s existence which is related to how the film industry produces value for consumers (Kornberger, 2017). During the inception of cinema, comedy dominated the market. Farce was a popular means of providing entertainment through exaggerated and absurd situations. You enter a movie theatre in the first half of the 20th century, you take a seat, and watch the opening credits roll by. The movie starts and what ensues is scenes of a clumsy man, face painted black and the lips accentuated by a large area around the actor's mouth left to reveal his natural, white, skin-tone. You are dumbfounded and appalled by the obvious ridicule of persons of colour. You are even more appalled by the roar of laughter that fills the theatre because surrounding you is an audience whose valuation processes are contemporary to this early 20th-century film. What this scenario highlights is that valuation processes are seldom static, rather organic and subject to change, and the valuation processes of Hollywood are no exception. Valuation of cultural products are commonly determined by exemplars (Dekker & Gradoz, 2020), in the case of cinema these exemplars may be in the form of other films and directors. Dekker and Gradoz (2020) proceed to describe how circa 1967 we can identify a break in the valuation of US directors and film. What caused this break? The increasing import of European film. As interest in European film culture grew, the need for new forms of valuation grew because, while it was still film, it was different enough from domestic-made film that it could not be valued in the same manner. As European movies gained a foothold, consumers and critics began comparing US cinema to European cinema, the valuation system changed and US cinema had to fall in line. American-made film began to take influence and became remodelled after the European exemplars. So the introduction of an external culture to the US market for film brought about not only the change in how films were produced, but also how the value was received. The valuation process in practice involves critics and consumers who apply their input such as feedback on how they emotionally felt, or what they think of the cinematic experience. For the strategist this carries important implications as the realm of valuation has been argued as the arena where market rivalry acts to construct worth. Valuation determines value for film productions through public opinion, reviews, and discourse. The strategists can also use experience of valuation to understand the environment and try to pinpoint what the audience seeks. Hollywood's success in an uncertain market The film industry is risky and uncertain, and largely this uncertainty can be attributed to changes in valuation. So, how have organisations within the film industry in Hollywood been able to maintain their competitive advantage? According to Teti (2013), major film companies have refined their strategy to deal with these issues and the answer is quantity. There is a relationship between big investments and likelihood of box-office success. By investing large amounts of capital in many projects they can produce a variety of products (films) to appeal to many tastes. However, these projects are not managed as individual projects as this would expose film companies financially when large amounts of capital are invested over many separate productions. Instead an economy of scope approach is taken where projects coexist and resources are shared (MacKay, et al., 2020). This means that the loss from x projects are mostly offset by profits gained from other projects. This strategy seems to have successfully allowed major film companies in Hollywood to navigate around the risks of new consumer tastes and valuation systems. With good brand reputation and the ability to navigate changes in consumer tastes, film companies manage to produce movies that provide a variety of sensation and emotional triggers for the audience watching. More established film companies that are able to invest more in production costs also gain access to renowned directors. An established brand reputation and esteemed directors, exemplars, make consumers more willing to give the movie a chance. Emotions, ethics, and capturing value When analysing how film productions produce these sensory captive movies we detect the usage of aesthetic epistemology. There is an element of amplified aesthetic knowledge on sensibility that film productions practise through the ways they formulate perception to harmonise with viewers to create relatability. When individuals gain the ability to relate, it may urge them to become more imaginative thus prompting them to put themselves into different scenarios which increase emotional connectivity. Thereby, films are able to tap into viewers' emotions by making them feel seen and incorporated and giving them a sense of what it’s like to stand in other people's shoes (Ladkin, 2015). Since movies display various forms of life situations, it plays upon viewers' morality and perspectives. When viewers are exposed to the portrayal of aesthetics, they gain a sense of reflex which separates them from their everyday dimensions thus viewing certain situations less commonly and more dynamically. It introduces fresh ways to view their world, making them more sensitive to matters (Ladkin, 2015). The beauty of this is that the film industry is able to produce movies that display topics that contribute to social issues and raise awareness among watchers. It is an opportunity for film producers to use aesthetic knowledge to do good, thus creating beautiful art which contributes to society and awakens ethics among consumers. In return, this aesthetic knowledge could potentially create aesthetic value that is produced with genuine intentions of doing good. Therefore receiving value for consumers ends due to the ability to capture their senses and emotions in an authentic way. The ugly side of this is that aesthetic knowledge certain Hollywood companies practise have tendencies of fostering malicious intent. When too much basis is focused on senses, an individual may easily lose power over their senses and desire which may lead to skewed perspectives and unethical behaviour(Ladkin, 2015). This is seen when film productions are aware of viewers' sensibility and use aesthetics to manipulate viewers' perspectives. They do this by incorporating unethical, false, or biassed storylines which grab attention due to appealing controversy. However, these movies may falsify or generalise huge topics thus making serious matters seem insignificant. This has a dangerous effect on viewers' morale since these movies have the power to alter their perspectives thus damaging their ethics. Let us reflect upon our visit to the early 20th century movie theatre. Racism was prevalent in early cinema and many times in the form of farce. Waterman (2019) describes how violent and humiliating depictions of african men, women, and children were meant to evoke laughter. White actors made into stereotypical caricatures by way of “black-face” not only responded to the existing valuations and surrounding culture, but perpetuated these stereotypes. In the years 1894-1915 there was arguably little desire for positive representation of different races in film, the lack of comedy that positively portrays african americans during this period testify to this. Furthermore, film was (and still is) accessible to a diverse market. Books and newspapers reached a narrow audience in comparison, film was available to all layers of society, which established the messages conveyed in racist farce as status quo, and the films as the exemplar for valuation. Even in African American-made films stereotypical imagery was prevalent. Once these exemplars were established their influence over racism in cinema continued for many decades. Snead (1994) highlights how even in more contemporary film it is common that historical references of people of color is limited to depictions of former slaves or savages. More difficult to spot is frequent racial bias in the form of omitting certain races from specific roles (or films altogether). But what do these examples stemming from early 20th century racial bias in farce production mean with regards to Hollywood strategy today? Well, what we see is that the film industry has gained control over valuation processes in the past which has then carried over for decades later. Today, major Hollywood film companies have refined a strategy where they are able to capture value by investing large amounts of capital, create strong brands, and gain access to esteemed directors who are exemplars for valuation. If Hollywood’s perpetual film releases are capable of capturing the same audience who critique and provide input, and those inputs are successfully manipulated by Hollywood's ability to capture value from, and control, the aesthetic craving of individuals, the valuation process could to a large extent become a function of those same film companies. What this then means for Hollywood, is without a doubt, remaining competitive advantage. This carries ethical implications. For one, it puts major Hollywood film companies in a position where they can control what narratives reach their audience. Hollywood is not a world without agendas, quite the contrary. As an example, Secker and Alford (2017) say there are programmes between institutions of the US government and Hollywood studios that influence the content of film production. The CIA and the US department of defence are involved with the explicit purpose of films accurately showing the activities of military and intelligence operations. Implicitly however, traces of ensuring positive images of government agencies have been identified where military agencies identify movies with the opportunity to show the competence of the pentagon and the CIA focuses on emphasising the value they bring in protecting the nation from threats, even in films where their means of doing so are less moral. So if Hollywood studios are already deliberately used as a means of influencing perceptions, there is cause to consider other ways in which this is done. Perhaps not all examples of this are equally deliberate but rather the result of pleasing audiences by dramatising events, exaggerating real-life stories, or not excluding important pieces from the narrative. As stated previously, films are a media that is consumed by many and could form a simplified or skewed perspective of reality for those consumers. Road to losing Competitive advantage However, within our ever-changing world, we have established that the valuation process is not a constant unchangeable phenomenon. As the example from 1967’s entry of European influence to the US film market highlights, valuation can unexpectedly be disrupted and strategists should be prepared for such events. Humans are a part of the process, and the capacity to take control of every individual or put a sense of guarantee that one's perception will forever be manipulated can be an expensive gamble. Critical reflexivity provides a space where individuals wander outside of their current situation to reflect on matters (Ladkin, 2015). In this state of mind, aesthetics are being processed which leads to the potential realisation that what is being portrayed on the big screens are exaggeration and inauthentic use of aesthetics. Further, if financial and managerial decisions take precedence over artistic and cultural messages that directors wish to convey, there is a risk that artists prioritise their artistic integrity and opt for studios that allow them this liberty. As this is happening, the ability of individuals to connect emotionally with the movies produced by major studios may reduce, which in turn affects the quality. Viewers may also start to question the ethics behind Hollywood’s processes and start to hold them more accountable by collectively increasing boycotts. In this way, the iterative cycle of valuation processes that influence Hollywood could face a new break. Viewers who critique and add value are now deciding to hit the brakes and drive in another direction. This majorly affects Hollywood studios capability to maintain their competitive advantage due to a decrease in value. The decrease in film quality and lack of ethical practices with using aesthetics has a big impact on their growth. Why? Well, producing low quality films and having a reputation tied to ugly practices may force changes in stakeholders' interest in supporting them since they refrain from working with an entity that has such controversy attached to it. This affects Hollywood studios macro environment since stakeholders involved in their political, social, and economical scenes may choose to withdraw from providing them benefits. Therefore, jeopardising their market share and eventually, the rate of growth. As a result, the sustainability of Hollywood’s competitive advantage is at risk of instability and isn’t a one-time-all-time success. Reference list Boztepe, S. 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