Ministry of Sound
The Ministry of Sound went from start-up to maturity in little over a decade. The case raises issues concerning both business strategy, particularly regarding sustainable competitive advantage and resources, and corporate strategy, particularly regarding diversification and internationalisation. There are also issues of ownership and organisation. In the end, the fundamental question is: what future for the Ministry?
In 1991, 28-year-old James Palumbo invested £225,000 (≈ 1340,000) of his own capital into a new dance club located in an old South London bus depot. As an old Etonian (the UK’s most elitist private school), a graduate of Oxford University and a former merchant banker, Palumbo was an unlikely entrant into a dance culture that was still raw and far from respectable. He actually preferred classical music. The club’s name, the Ministry of Sound, ironically recalled Palumbo’s father, a former Minister in the Conservative government of the day. Yet within just 10 years, Palumbo built the Ministry of Sound into a music and media empire worth nearly £150m. Two years later, Palumbo had quit as chief executive and the Ministry of Sound was looking for a new strategic direction. The Ministry of Sound’s start had been difficult. Dance music had its origins in ‘acid house’, itself with its roots in the futuristic, electronic music of the gay clubs of Chicago and New York. The new style had been picked up by British DJs in Ibiza, who combined it with the drug Ecstasy to create a new ‘blissed-out’ sound. Dance music arrived in the UK during 1988, the so-called ‘Second Summer of Love’, strongly associated with recreational drugs. By the early 1990s, drug-dealing in its most ugly sense had become part of the dance culture. Palumbo recalled: When I came into this business, with my bonuses and my nice City suits, I was completely naïve. Just a joke. I found that every Friday and Saturday night my door was...
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