I have been asked to develop an action plan for Anne Ewers as she moves forward with the ongoing merger of the Utah Opera and the Utah Symphony. A balanced scorecard has been provided for both organizations, and this document will include analysis of the strengths and weaknesses of each organization and recommendations that Ms. Ewers can take to address the weaknesses. Additionally, I will analyze the four aspects (including strengths and weaknesses) of the scorecards for each company and finally identify one highly probable issue that could arise during the merger process in the areas of finance, human resources, and customer satisfaction. Recommendations will be made for how the merged company executives can mitigate each of these issues.
A1 - Utah Symphony – Strengths & Weaknesses
Financial Strengths Financial Strengths | 1. No long term facility liability. Facilities | 2. Top Tier of Group II Symphony Orchestras – USO endowment was $10 million in 2002 | 3. Rising Revenue/Contributions (Projected) |

The Utah Symphony has several financial strengths to their credit pre-merger. 1. According to the case study, the Symphony does not own the facility in which they perform. Instead, the facility is owned by Salt Lake County. This can be viewed as a strength because it lessens the Symphony’s long term liability in terms of mortgage/tax costs and other expenses related to the long term ownership of such a facility. 2. Pre-merger, the USO was considered to be in the top tier of Group II Symphony Orchestras, with and endowment of $10 million in 2002 (DeLong, 2005). This notable designation is a financial strength because it can/will make it easier for the Symphony to attract donors and other fundraising opportunities. 3. The operating income statements provided show that the USO revenue is expected to rise by a projected $1,365,126 in the 2001-2002 fiscal year. This is a definite strength, as the USO can use that revenue to pay off expenses and/or stabilize the Symphony’s financial situation. This can also be viewed as a strength because further analysis of the income statements show that the USO’s expenses are expected to rise in 2001-2002. The rising revenue offsets the rising expenses so that the USO still shows a (small) surplus for the 2001-2002 fiscal year.
Financial Weaknesses Financial Weaknesses | Collective Bargaining Agreement with Musicians | Declining Government Grants | Shrinking Surplus |

Financial weaknesses found after analysis of the USO’s situation include: 1. The collective bargaining agreement that the USO currently has with the symphony musicians is a huge drain on the Symphony finances. Currently the orchestra, salary, benefits and payroll taxes represent 60% of total program expenses, and those expenses are expected to increase as per the collective bargaining agreement. Being locked into this agreement is a definite weakness for the USO, as they need to have the flexibility to negotiate a better deal with the musicians. With all other expenses rising, the USO needs to find a way to lessen its Program expenses. 2. The Operating Income Statements show that government grants are projected to decrease by $220,687 in the 2001-2002 fiscal year. This can cause a problem because government grants are an important part of the USO revenue stream. Reduction of grants can cause a serious drain on the profitability of the Symphony. 3. The Operating Income Statement shows that the USO will see their surplus shrink from $116,308 to $2,042 in the 2001-2002 fiscal year. This is a drop of more than $114,000. If there is a financial emergency, the Symphony will not be able to cover any large additional expenses. Further, this shrinking surplus shows that the Symphony is in real financial trouble.
Leadership Strengths Leadership Strengths | Keith Lockhart – Extensive experience as a conductor | Keith Lockhart – strong support from musicians and executive committee |

The Utah Symphony does have a few strengths in the “Leadership” department, namely in the form of their Music Director, Keith Lockhart: 1. Keith Lockhart has extensive experience as a conductor, having served as the USO music director since 1998. Before joining the USO, he served as the conductor of the Boston Pops Orchestra and also the Cincinnati Symphony and Cincinnati Pops Orchestra. He has conducted more than 600 concerts and created 50 television shows in addition to conducting major symphony orchestras around the world. This extensive experience gives him a unique perspective from which to lead the USO and lends him immense respect in the arts community. 2. In addition to (and perhaps because of) his extensive experience, Keith Lockhart has strong support from the Symphony musicians and executive committee. In preparation talks about the merger, the executive committee made it clear that under no circumstances would they compromise their relationship with Mr. Lockhart (DeLong, 2005). Their support is so strong that they communicated to Lockhart that without his support, the merger would not go forward. Additionally, his strong commitment to the well-being of the musicians makes him a strong leader in their eyes and gives him leverage with which to negotiate and advocate on their behalf.

Leadership Weaknesses Leadership Weaknesses | CEO and Chairman Leaving in 2002 | Keith Lockhart – resistant to change | Keith Lockhart – no actual business experience? |

1. One of the leadership weaknesses for the USO prior to the merger is the fact that both their Chairman and CEO, plan to leave the Symphony in 2002. This type of shakeup at the top can cause significant chaos for any organization, and one that is in dire financial straits could feel the strain even worse. This is a definite weakness for the USO. 2. In interviews related to the merger, Keith Lockhart admitted that he was resistant to the idea of change. He asserted that his main reason for initially rejecting the idea of the merger was because it was different. Though he eventually supported the idea of the merger, this resistance to change can be seen as a weakness in leadership. Any leader of a progressive organization must be open to change and should champion the idea to his/her followers if they want the organization to move forward. 3. Though Keith Lockhart has extensive experience as a conductor, he has no real business experience. In an interview, he explained that he is the person with the “artistic vision” and “sensitivity to the real world”, while other people seek, secure and manage the financial resources. (Delong, 2005) While this may make him extremely valuable to the USO musicians and some others in the arts community, it can be seen as a potential weakness because business acumen is extremely important when leading an organization such as the USO. Additionally, Lockhart’s lack of business experience could be a big part of why he supports the musicians’ collective bargaining agreement and is so adamant that neither the length of the season nor the number of players be reduced. If Lockhart had more business experience, he would likely understand how the salaries, etc. of the musicians were causing a drain on the USO finances and might have a different opinion.
A1a – Steps for Utah Symphony
Though there are significant financial and leadership weaknesses present in the Utah Symphony pre-merger, there are steps that Anne Ewers can take to address these weaknesses and ensure a successful start of the merger. Financial Weaknesses | Collective Bargaining Agreement with Musicians | Declining Government Grants | Shrinking Surplus |

Collective Bargaining Agreement with Musicians
To mitigate potential issues surrounding the collective bargaining agreement with the musicians, Anne must come up with a plan to neutralize the issue. To do this effectively, she must put herself in the shoes of the musicians in order to see how they view the potential harm of a new agreement. Anne will need to rely on her listening skills to facilitate productive conversations with the musicians in order to come to a mutually beneficial agreement. Perhaps the best way to approach this issue is through third party intervention and the use of a mediator. Mediation would be a good solution to explore, since it uses faster, more friendly methods of dispute resolution instead of adversarial approaches that could lead to lawsuits or a strike by the musicians. Successful resolution of this issue will go a long way towards cementing Anne’s place as a leader of the newly merged organization, and put the merged organization on a solid financial footing.
Declining Government Grants
The issue of declining government grants is one which Anne may be uniquely suited to tackle, since she already has extensive experience with fundraising. This is a place where Anne can use her considerable charisma, energy and fundraising background to find additional grants for the organization and raise its national profile. Anne will need to activate and reach out to her contacts and use her considerable personal and positional power to solicit new government grants that will reverse the decline and raise more money for the organization.
Shrinking Surplus
Similar to the issue of the declining government grants, this is a weakness that Anne Ewers can solve by drawing on her previously stated energy and fundraising ability. Having already proved her skill in this area, Anne will need to draw on those skills and contacts to launch a huge fundraising initiative in order to grow contribution revenues. Additionally, if she is able to successfully renegotiate the collective bargaining agreement with the musicians, this will decrease the Program expenses, which will in turn increase the operating surplus. Anne will need to use her extensive management and business experience to analyze the organization’s finances and find ways to trim the budget and make the organization profitable again. Leadership Weaknesses | CEO and Chairman Leaving in 2002 | Keith Lockhart – resistant to change | Keith Lockhart – no actual business experience? |

CEO and Chairman Leaving in 2002
With both the CEO and Chairman planning to leave the USO in 2002, Anne faces a potential power vacuum and lack of leadership at the organization leading into the merger. As stated, this could be a significant problem in light of the financial difficulties that the USO currently faces. Additionally, Anne will need someone in place who has a firm grasp of the financial history of the USO in order to put things right. As the likelihood of either man staying is slim, Anne will need to first spend as much time with them as possible prior to their departure so that she can get as much historical information and insight from them as she can. Though this is not a substitute for having the men there physically, the knowledge gained will help Anne as she moves forward in her leadership of the merged organization. Additionally, Anne will need to communicate to the larger USO and Arts community that the organization will continue to function smoothly during the transition.
Keith Lockhart – Resistance to Change
To mitigate Keith Lockhart’s resistance to change, Anne will need to use her personal power and charisma to convince him that the merger is a positive thing for the USO. This should include a sit-down meeting (or several) where she explicitly clarifies her plans for the new organization and what she expects Keith’s role to be. She should take pains to explain for him what the expected changes will be as well as what things are expected to remain the same. Often, those who are resistant to change are merely frightened about what that change may bring. In order to reduce this anxiety, Anne will need to allay Keith’s fears about the future of the organization and get his support and buy-in for the expected changes.
Keith Lockhart – No Business Experience
Anne can mitigate the issue of Keith Lockhart’s lack of business experience by delegating non-business related functions to him. Because he has extensive experience as a conductor and enjoys a positive relationship with the musicians, he is well suited to manage that side of the organization at a high level. Additionally, Anne can work closely with Keith so that he gains more insight into the business side of the organization and is able to see the business side of the decisions he might make when dealing with the musicians. Helping Keith to gain this additional experience will make him a valuable asset in coming years as the merged organization grows.
A2 – Utah Opera – Strengths & Weaknesses
Financial Strengths Financial Strengths | Endowment grew to $5 million in January 2002 | Owned production studios and other assets valued at $4.8 million | Large Surplus |

1. The endowment for the UOC grew to $5 million dollars in January 2002. This is a definite financial strength, as it means more revenue for the Opera, and signifies the strength of the Opera’s business model. 2. The fact that the Opera owns its own production studios and other assets valued at $4.8 million is a definite financial strength, as those assets can be sold to relieve any financial difficulty that might arise. Having extensive assets is one sign of a financially stable and strong organization. 3. The business model of the UOC that allows it to be flexible and adjust the size of the opera or eliminate projects that do not meet fundraising goals is a definite strength as it allows the Opera to operate with a yearly surplus of nearly half a million dollars. This surplus means that the Opera is financially stable and able to meet its obligations with a significant amount of cash left over. The UOC can use this surplus in a number of ways, either reinvesting it in new programs, saving it, or increasing the salary/benefits of its employees.
Financial Weaknesses Financial Weaknesses | Declining ticket sales | “Other Expenses” - Rising | Rising Overall Expenses | 1. The Operating Income Statement provided shows that ticket sales at the opera are expected to decline by nearly $300,000 in the 2001-2002 fiscal year. This is a problem because ticket sales are very important revenue stream for the Opera, and declining performance revenues can place a significant strain on profitability for the organization. 2. The Opera’s practice of renting its sets, props, costumes, and wigs to other companies results in a yearly expense in excess of $300,000. Though this is partially allayed by the revenues gained from renting those items to other companies, analysis of the income statement show that the expenses are significantly outweighing the revenues on rentals, so the UOC is actually losing money with this practice. 3. The Income statement shows that the UOC’s overall expenses are expected to climb by nearly $500,000 in fiscal year 2001-2002. Though the organization’s revenues are expected to increase as well (by $374,843), it will not be enough to offset the large expense increase. This is a weakness because continued increases in expenses will decrease the organization’s surplus and its financial flexibility.
Leadership Strengths Leadership Strengths | 1. Anne Ewer – great history leading the UOC - Fundraising | 2. Anne Ewer – Experience directing operas |

1. Anne Ewers has an illustrious history of leading the UOC. She has built a reputation for being energetic, enthusiastic, and capable. She has proven successful at fundraising, and since her tenure as General Director began, she has grown the organization’s budget from $1.5 million to $5 million. This history and experience make Anne a definite strength for the UOC. 2. The fact that Anne Ewers has experience directing operas, and has in fact served as stage director for over 60 operas across the US and abroad (DeLong, 2005) definitely gives her leadership credibility at the UOC. Because Anne has musical and production experience in addition to her extensive business expertise, she is in a unique position to head the UOC as well as the new merged organization.
Leadership Weaknesses Leadership Weaknesses | 1. Director of Operations resigned | 2. Anne Ewers – Good leader? Concern about her management style | 1. Leslie Peterson, the Director of Operations for the UOC recently resigned, citing disagreement about the “direction of management”. This leaves her position vacant, and could potentially create management problems for the UOC. Because Leslie’s position had oversight over numerous other departments and reported solely to Anne Ewers, a vacancy in that position could result in organizational disorder and confusion as department heads work out the new arrangement. Additionally, with her departure, Leslie takes with her the knowledge she gained of the ins and outs of the organization, which would have been useful moving forward. 2. Though Anne Ewers is respected for her business acumen and fundraising abilities, there is some concern about her management style. As mentioned, the Director of Operations quit because of her disagreement with Ewers’ management style, and others have also commented on her “autocratic” ways and her tendency to make unilateral decisions without consulting those who will be performing the work. This perception of Anne is a definite weakness, as it will hinder her ability to lead the organization if people do not respond well to her management style.

A2a – Steps for Utah Opera Financial Weaknesses | Declining ticket sales | “Other Expenses” - Rising | Rising Overall Expenses |
Declining Ticket Sales
One thing that Anne can do to mitigate the issue of declining ticket sales is to hire a marketing firm to embark on an advertising blitz to draw more patrons to the Opera. Initially of course, the novelty of the newly merged organization will help to draw in new customers. Anne will need to capitalize on this and devise a strategy to increase ticket sales. One way she could do this is to offer package deals and/or special performances for VIP patrons. This strategy would increase ticket sales and also perhaps increase the “cache” of the Opera for certain patrons.
“Other” Expenses Rising
To mitigate the issue of the Opera spending more money than it earns on renting out sets, props, etc., Anne can simply suspend the practice. This need not be a permanent suspension, but in order to stabilize the UOC finances, it is a good idea to suspend those activities that are a drain on the finances of the organization. During the suspension, Anne can review the details of the rental operation and perhaps come up with a way to continue the practice in a way that actually makes money for the Opera.
Rising Overall Expenses
Analysis of the Income Statement shows that expenses are expected to rise in every category in the 2001-2002 fiscal year. By far the largest increase is in Program expenses, which are expected to rise by over $320,000. Because this expense category is related to production costs and varies according to the performance schedule, the way to mitigate this issue is to formalize and stabilize the performance schedule of the Opera. In addition to reducing Program expenses generally, this move will stabilize the finances of the organization and allow management to plan with some degree of insight into the future.
A3 – Scorecard Aspects
I have been asked to analyze the four aspects of the business scorecard for each organization with regard to whether the goals/critical success factors make sense in light of previously identified strengths and weaknesses.
Utah Symphony Balanced Scorecard
Financial
Financial | • Strategic Goal: Being financially stable with sufficient annual profitability• Critical Success Factor: Having fundraising sufficient to allow ticket prices to stay same as last year• Measure: Having profitability increase in coming years (from $116K to $500K a year) |

While being financial stable with sufficient annual profitability is a worthy goal for the USO, it is my opinion that focusing on fundraising is perhaps not the right way to achieve this goal. At the time of the merger, the USO suffered from several financial weaknesses, many of which have been detailed in this analysis. As such, instead of focusing solely on increasing the organization’s fundraising, executives at the USO should first focus on renegotiating the collective bargaining agreement with the musicians. This is likely to decrease program expenses exponentially, and free up much more money that could then be focused on fundraising efforts and other things. While fundraising is definitely an important revenue stream, the USO should not be so narrow in its thinking and planning that it ignores other finance related opportunities that could also lead to enhanced stability and increased profits.
Customer
Customer | • Strategic Goal: Being attuned to their desires for world-class performances• Critical Success Factor: Hiring top quality talent• Measure: Receiving feedback from exiting patrons |

The Customer aspect of the USO’s balanced scorecard corresponds well to the stated vision of being a world-class symphony. This part of the scorecard seems to acknowledge and take into account that the main thing that makes a world-class symphony is the level of talent hired and the performances that are delivered. The measure of receiving feedback from patrons is an excellent one, as it will provide the necessary evaluation of the organization’s progress on this strategic goal.
The stated goals and critical success factors included in this section of the scorecard make sense in light of the stated weaknesses of the organization, because even though Keith Lockhart has no real business experience and is resistant to change, he has extensive experience in conducting symphonies. Additionally, his strong support of the USO musicians tends to make one believe that he will be a strong advocate for quality talent and make every effort to enhance the profile and quality of the musicians employed by the organization. In this light, the stated goals and actions in this section can succeed in spite of other weaknesses identified.
Internal Process Internal Process | • Strategic Goal: Having flexibility in decreasing expenses due to fundraising gaps • Critical Success Factor: Renegotiating contracts with musicians• Measure: Improving profitability |

The goals and actions suggested in this section make perfect sense in light of the previously identified strengths and weaknesses. The collective bargaining contract with the musicians is a big reason that the USO is having such financial difficulty. As has been noted, the orchestra salary, benefits and payroll taxes currently represent 60% of total program expenses, and are expected to increase according to the collective bargaining agreement with the orchestra’s union. As such, this contract places a heavy burden on the organization’s finances, and renegotiating the contract will definitely lead to increased profitability and flexibility.

Learning and Growth | • Strategic Goal: Including a wider variety of symphonies offered to appeal to a more varied audience• Critical Success Factor: Having a successful marketing campaign that advertises different symphonies to younger audience• Measure: Having improved ticket sales and returning audience |
Learning and Growth
Though this section is not explicitly related to the finances of the organization, this section of the balanced scorecard definitely speaks to previously identified financial weaknesses at the USO, namely the issue of the shrinking surplus and declining government grants. Because of this, diligent pursuit of this goal will likely help in other areas of the organization. One of the previously stated possible steps for Anne Ewers was to make a concerted fundraising push to combat the shrinking surplus and decreased grants. To “kill two birds with one stone”, the fundraising push could be geared toward including a wider number of symphonies and marketing the diversity of the performances. This enhancement of the performance schedule could lead to increased fundraising opportunities such as discounted tickets to bring in younger audiences. This would result in improved ticket sales, a returning audience, and a healthier bottom line.
Utah Opera Balanced Scorecard
Financial
Financial | • Strategic Goal: Being financially stable with an increasing reserve fund• Critical Success Factor: Raising additional funds and having endowments realized• Measure: Improving reserve fund amount |

In light of the stated weaknesses found at the Utah Opera, the goals and actions listed in the Financial section of the business scorecard don’t make much sense. While it is important for an organization to maintain a reserve fund, I am not sure that this should be the main priority for the USO, nor that the strategy of focusing on raising funds and realizing endowments is the best one for the organization’s circumstances. Because the organization already has a healthy reserve fund, it would make more sense for them to focus on the issue of declining ticket sales and rising expenses. The organization is already financial stable, but it is currently losing money because of practices like renting out props, costumes, etc. In light of this, the organization should perhaps focus on cutting expenses first. A positive consequence of that strategy would be that even if all other factors remained the same, the reserve fund would grow anyway.
Customer
Customer | • Strategic Goal: Having regionally and nationally acclaimed opera performances• Critical Success Factor: Excelling in quality performances• Measure: Having sold-out or near sold-out performances |

This section of the balanced scorecard makes sense for the UOC because the declining ticket sales can be viewed as direct evidence that the current customer base for the organization is not satisfied with the current quality of performances. To mitigate this and reverse the tide of declining ticket sales, it is a good idea to focus on the quality of performances and work toward a goal of increasing ticket sales to the level of sold out or near sold out performances.
Internal Process Internal Process | • Strategic Goal: Maintaining financial stability and attracting top talent• Critical Success Factor: Having successful negotiations with selected performers• Measure: Measuring profitability and having reviews noting quality of performances |

Every aspect of this section of the UOC’s balanced scorecard is relevant to previously stated strengths and weaknesses at the organization. Notably, the surplus enjoyed by the organization is a definite strength, and internal processes should definitely be put in place to maintain that. Maintaining financial stability should not be a problem for the organization as long as they work to mitigate the issue of declining ticket sales and rising expenses as noted above. If they can maintain successful negotiations with the performers and avoid the problem that the USO has with their collective bargaining agreement, maintaining profitability should be no problem. Additionally, if the measure of having reviews noting quality of performance is realized, it is likely that it will be reflected in rising ticket sales, which would offset the rising expenses.
Learning and Growth Learning and Growth | • Strategic Goal: Ensuring production of high-quality performances, perhaps five a year• Critical Success Factor: Measuring endowment fund growth and increased ticket sales• Measure: Having capital need covered by revenue from ticket sales |

The strategic goal of ensuring high quality performances coupled with the success factor of fund growth and increased ticket sales would seem to directly speak to the aforementioned weaknesses of declining ticket sales and rising expenses. In that sense, this section of the balanced scorecard definitely makes sense in light of other circumstances surrounding the UOC operations. Further, this section speaks to a particular strength of the UOC, in that they have considerable flexibility to adjust the size of the operation and number of performances they produce during the year. The goal of five high quality performances per year seems to be an achievable one, and with the UOC’s flexibility, they have the capacity to increase ticket sales by having more performances.
B – Merged Company Balanced Scorecard
Vision: To become a world-renowned music and cultural center.
Business Model: To diversify the performances to attract a broader audience base and increase ticket sales and endowments. Financial | * Strategic Goal: Reduce overall expenses as a percentage of profit * Critical Success Factor: Renegotiate the collective bargaining agreement with USO musicians; reevaluate practice of renting costumes, props, etc. * Measure: Reduction in overall expenses; financial stability of the organization | Customer | * Strategic Goal: Diversify the audience base for both the opera and the symphony * Critical Success Factor: Having a performance schedule that appeals to the customer base of both the opera and the symphony * Measure: Ticket sales that reflect no reduction in the overall customer base; | Internal Process | * Strategic Goal: Integrate the business process of the two companies * Critical Success Factor: Realizing economies of scale and reworking the org chart to eliminate redundancies. * Measure: Realization of a slimmed-down, flexible organization that is able to meet the challenges of the future. | Learning & Growth | * Strategic Goal: Capitalize on synergistic opportunities between the two companies * Critical Success Factor: All units of the organization benefit from sharing knowledge, skills, resources, and negotiating power * Measure: Richer, more diverse organizational knowledge; Stronger negotiating position in future bargaining. |

C – Merged Company Strengths & Weaknesses Financial Strengths | * Reduction in overall expenses * Financial situation should stabilize after renegotiation of collective bargaining agreement |

* The strategic goal of reducing overall expenses is an absolute strength for the merged organization’s Business Scorecard. In addition to just being good business practice, achieving financial stability through reduction of expenses will help the merged organization achieve its vision of being a world renowned music and cultural center. * By making it a priority to renegotiate the collective bargaining agreement, the merged organization makes an important first step to stabilize the finances of the organization. Once the musician’s contracts are negotiated to a more manageable level, executives will be able to reevaluate the overall situation of the organization with a view to a future that does not include the draining financial responsibility of spending nearly 60% of program expenses on the musicians.

Financial Weaknesses | * Declining ticket sales will continue to put a drain on revenues * Does not address Government grants issue |

* Even though the reduction of overall expenses will put the organization on much more stable footing financially, this section of the balanced scorecard does not address the issue of declining ticket sales. If ticket sales continue to decline, the “breathing room” gained by decreasing expenses will quickly be eaten away by the diminishing revenues. * In addition to the issue of ticket sales, there is no mention of the decline in government grants. These grants are an important part of the financial health of the organization, and as such, a formal push should be made to shore up this funding source and actively pursue other forms of outside funding. Anne Ewel’s fundraising experience should come in handy here.

Customer Strengths | * More diverse audience * Stable ticket sales |

* Diversifying the audience base is an important first step in achieving the stated vision of becoming a world renowned music and cultural center. It will be important for the executives to do some community outreach and research in order to find out what types of performances the audience wants. More diverse performances will likely attract a broader audience from different parts of the country and the world. * By having a performance schedule that appeals to the customer base of both the opera and the symphony, the organization can nearly guarantee that ticket sales will stabilize. If they cater to both demographics, they can assure that they will have an audience for a steady schedule of performances without any “slow” periods or seasons.

Customer Weaknesses | * May lose traditional customers (some already complained about opera losing identity and traditions) * May be difficult to satisfy both customer bases within a normal performance schedule |

* In order for the new organization to reach its goal of becoming a world-renowned music and cultural center, they must first start with the audience in their immediate area. Thus, it is important not to alienate traditional customers with a radical departure from the opera/symphony’s regular performances. * It is noted in the case study material that prior to the merger, “the USO was one of the most involved orchestras in the country, performing to a year-round schedule” (DeLong, 2005). It is therefore hard to understand how the merged organization will be able to accommodate the performance and scheduling expectations of both customer bases while also attempting to diversify the audience by performing a more varied range of music.

Internal Process Strengths | * Standardized SOPs * Flatter, more efficient organization |

* By integrating the business practices of the two organizations, Ms. Ewel will be able to formulate a set of standards and processes that will be implemented across the entire merged organization. Standardizing the processes across the organization is the first step in joining the two organizations and fostering a sense of community and identity among the employees. Additionally, having a standard process will help the new organization to be more efficient and productive. * By redrafting the org chart, to eliminate redundancies, the newly formed organization will eliminate in the form of salaries, while also forming a tighter, more efficient chain of command. Though unpleasant, it will absolutely be necessary to get rid of a significant percentage of the staff, particularly in administrative areas (there will be no need for two Directors of Human Resources, for instance). This slimmed down organization will definitely be more flexible and efficient. Internal Process Weaknesses | * Sharing bad practices? * Staff cuts may affect morale |

* One thing to consider is that prior to the merger, the Utah Opera was in a much better financial position than the Utah Symphony. One could surmise that some of the business practices and processes employed at the USO are to be blamed for the dire financial situation of the USO, described as “very close to a deficit situation” by Chairman of the Board, Scott Parker (DeLong, 2005). It would surely be a weakness in the new organization if they were to continue the practices that led to the USO’s financial problems. As such, the decision to integrate the business process of the two companies must be approached with extreme caution, being sure to only take on those processes from both organizations that are beneficial to the overall health and future of the merged organization. * Though financially and administratively necessary, the decision to rework the org chart and eliminate a percentage of the staff will likely have a negative effect on the morale of the staff left behind. Staff is likely to be resistant to the change and resentful of those who they see as “taking” the jobs of former colleagues. It will be important for executive staff to communicate extensively with employees about the need for and reasons behind the staff cuts and also to reinforce the sense of community and vision for a new future for the new organization. This may help to ease the discomfort felt by many of the employees and get them on board and excited about the new organization.

Learning & Growth Strengths | * Synergistic approach will likely bring balance to decision making. Will lead to a smoother transition with less resentment among employees. * Combined resources will result in improved utilization and reduced or eliminated expenses |

* In any merger, it is important that the opinions, needs and motivations of all stakeholders are taken into account during the decision making process. By effecting a synergistic approach at the start, executives will ensure that all angles are considered and that different perspectives are taken into account. Pursuit of this type of synergistic approach will likely lessen certain resentments felt by employees and thus make the transition easier on all involved. * By combining resources, the newly formed organization will be able to realize economies of scale and greatly improve efficiency in operations that surpass any that would otherwise have been possible by either of the two organizations alone. By using this approach, the organization will be able to reduce or eliminate many expenses, thereby improving the financial situation of the organization.

Learning and Growth Weaknesses | * Organizations too different? * New Executive staff inexperienced with mergers |

* Though there are many advantages to pursuing synergy when involved in the merging of two organizations, synergy is not always possible or desirable. In situations where the two organizations are vastly different, achieving synergy can be much more difficult, if not impossible. This is definitely a concern, and could be considered a weakness for the newly merged organization. Prior to the merger, this concern had already been voiced by members of the community, along with the fear that one or both organizations would lose its “identify” in pursuit of this synergy. It will be important to be very careful when attempting to merge the cultures and business practices of the two organizations, as there will likely be very strong opinions on both sides about what is proper. * Another issue to consider with regard to pursuing synergy and the merger in general is that no one on the executive board has any experience with mergers. We know that while Scott Parker does have experience overseeing mergers in the healthcare industry, he does not have such experience in the arts community. At any rate, even if he did have such experience, he plans to step down in early 2002, anyway. More importantly, it would be hard to find anyone with experience in merging an opera with a symphony, as the case study points out that such mergers are extremely rare. Mergers are complicated and intricate affairs even under the best of circumstances. The fact that the newly formed organization will be facing this merger with no one at the helm who has previous experience with the scenario is a definite weakness for the organization’s business scorecard.
D – Issues
In addition to the foregoing analysis, I have been asked to identify one issue that might arise during the merger in the areas of finance, human resources and customer satisfaction.
Finance – Increasing fundraising may be difficult
As the case study notes, most major arts organizations in the US operate on a financial model that relies on ticket sales and fundraising (individual contributions, endowments, etc.). The newly merged organization will be no exception, and this is something that may definitely cause an issue going forward. Decreases in endowments, investment income and public funding have made fundraising increasingly important for arts organizations. This will mean that fundraising will be increasingly competitive going forward, and that there will need to be a concerted effort to secure a portion of the dwindling funds for the new organization.
Human Resources – Contract Negotiations are Unsuccessful
One of Anne Ewel’s first priorities as CEO of the new organization should be to finalize a new collective bargaining agreement with the musicians. However, there is no guarantee that the negotiations will be successful. The musicians have already voiced opposition to the merger and accused the Symphony of entering merger discussions only so that they could reopen and renegotiate the terms of the collective bargaining agreement. Because the musicians are accustomed to bargaining from a relatively strong position and coming away with a fairly attractive compensation package, they may be unwilling to capitulate to the demands of the new organization, in which case talks will break down and the threat of a strike becomes very real.
Customer Satisfaction – Patrons disapprove of the merger; ticket sales decline
In addition to the internal issues that might arise at the onset of the merger, one important factor to consider is the feelings and “temperature” of the organization’s audience. It has been noted that the idea of the merger faced strong opposition from both symphony and orchestra patrons. As such, it is important to note that one issue that may arise is that some patrons simply never “come around” to the idea. It is possible that a good deal of the more traditional patrons will refuse to patronize the new theater, and ticket sales will decline as a result.
D1 – Mitigating Actions
Finance – Concerted Fundraising Push
To get a jumpstart on the fundraising for the new organization and to mitigate the issue of increased fundraising difficulties, Anne Ewel will need to call on her considerable fundraising experience and implement a concerted effort to increase fundraising for the new organization. This effort will of course need to include employees from all levels of the organization and can include incentives for new ideas as well as weekly brainstorming meetings to foster creativity. Anne will need to reach out to her contacts and could perhaps also hire a new marketing firm to do some outreach that could also enhance the organizations reputation and recognition, and thus increase fundraising opportunities.
Human Resources – Hire a Mediator
To lessen the possibility that the collective bargaining negotiations will break down and result in a strike by the musicians, Anne must hire a third party to engage in a form of alternative dispute resolution. This form of dispute resolution is much faster and friendlier, and could resolve the conflict in a much less adversarial manner. By engaging the services of a mediator who is experienced in collective bargaining, Anne is much more likely to reach an acceptable agreement than if she attempted to solve the issue alone, especially since there is already some concern about her people skills. A skilled mediator will be able to come to an agreement that is acceptable to both parties, and there will be no danger of a strike.
Customer Satisfaction – Active Community Participation
Though there may be no way to satisfy *everyone* with the merger, one way that Anne could mitigate customer dissatisfaction is to keep her finger of the pulse of customer needs. A taskforce should be implemented that focuses on the needs and desires of the organization’s audience. Feedback should be solicited on what types of performances the audience wants, and ways that they believe the organization could improve and better serve the community. Board members and other executives should pay close attention to this feedback and build this information into the overall strategy of the organization if they want to keep their “home” audience happy.

Works Cited

DeLong, T. J. (2005). "Utah Symphony and Utah Opera: A merger proposal."
Harvard Business Review. Boston, MA: Harvard Business Publishing.