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THEATRE ORGANIZATION AND

MANAGEMENT
ECONOMIC SECTORS
January 20, 2012
Three Economic Sectors
• For Profit (also known as “private” or
“commercial”)

• Public (also known as “government”)

• Nonprofit (also known as “not-for-profit” or


“charitable”)
Free Market / Capitalist
A “free market” economy is an economy in
which the allocation for resources is determined
only by their supply and the demand for them.

This is mainly a theoretical concept as every


country, even capitalist ones, place some
restrictions on the ownership and exchange of
commodities.
Free Market / Capitalist
• cap·i·tal·ism: an economic system in
which investment in and ownership of the
means of production, distribution, and
exchange of wealth is made and maintained
chiefly by private individuals or corporations,
especially as contrasted to cooperatively or
state-owned means of wealth.
Characteristics of “For Profit”
• The ultimate goal is to make a financial profit
in selling or making goods and services.
• Companies owned privately or by
shareholders.
• The "market" (supply, demand, buyers,
sellers) influences decision-making, including
pricing.
• Customers voluntarily pay to purchase their
goods or services.
• They will not intentionally take on
unprofitable activities without an ultimate
profit motive.
Characteristics of Public
• Provides public goods or services that are needed
by the public (national defense, parks, roads and
transportation, etc.).
• Government can regulate firms (e.g., Sarbanes-
Oxley, Securities and Exchange Commission,
environmental requirements, etc.).
• Government can control areas of society through
taxes/fees (e.g., public schools receive funding
through taxes).
• The focus should be on serving the needs of the
nation, states, municipalities, and the people.
Characteristics of Nonprofit
• THE PRIMARY PURPOSE IS A MISSION / CAUSE.
• Governed by volunteer boards representing the
community.
• Volunteers are part of the labor pool.
• Funding comes from gift or grant funding as well
as fee for service.
• Financial surpluses are retained by the company
and used to fulfill the mission of the
organization.
• Exempt from taxes.
Nonprofit Sector Statistics
• 1,574,674 tax-exempt organizations,
including:
– 959,689 public charities

– 100,337 private foundations

– 514,639 other types such as chambers of


commerce / civic leagues
Nonprofit Sector Statistics
• 9 % of all wages and salaries

• 5.4% of 2009 Gross domestic product (GDP)


(the market value of all final goods and
services produced within a country in a given
period)

• 278,772 congregations in the United States as


of 2010
Nonprofit Sector Statistics
• $1.41 trillion in total revenue
– 22% from “contributed” income
– 76% from program service revenue (including
government contracts
– 2% from other sources (dues, rental income,
special events, retail)
Economic Sector Exercise
State Department of Education Municipal Golf Course
National Education Association Food Stamps/WIC
Sylvan Learning Center Olive Garden Restaurant
Churches Consumers Energy
Doctors Jackson Prison
Interfaith Shelter Shelters
Hospital Red Cross
Lawyers High School
Courthouse Library
ACLU (American Civil Liberties Union) Police
City Park Department of Transportation
Peace Corps Cleveland State University
Economic Sector Exercise
• Cleveland Play House
• Broadway Producers
• Chagrin Valley Little Theatre
• Great Lakes Theater
• American College Theatre Festival
• CSU Department of Theatre
• USO
• PlayhouseSquare
• Parks & Recreation Summer Programs for Youth
Mission Statements
• A mission statement is a statement of the
purpose of a company or organization. The
mission statement should guide the actions of
the organization, spell out its overall goal,
provide a path, and guide decision-making. It
provides "the framework or context within
which the company's strategies are
formulated.“
Hill, Ch., Jones, G. Strategic Management. Houghton Mifflin Company: New York, 2008. ISBN 978-0-618-89469-7, page
11
Mission Statements
From Drucker:

• It has to be operational.

• It has to be simple and clear.


Mission Statements
Peter Drucker’s
THREE MUSTS OF A SUCCESSFUL MISSION

Opportunities / Needs
Competence
Commitment
Cleveland Play House
• Mission: To inspire, stimulate and entertain
diverse audiences in Northeast Ohio by
producing plays and theatre education
programs of the highest professional
standards.

• Vision: To be a top-tier theatre that is


contemporary in style and substance.
Woolly Mammoth Theatre Company
Mission Statement: To ignite an explosive
engagement between theatre artists and the
community by producing plays which explore
the edges of theatrical style and human
experience.

Vision Statement: To be the epicenter for


challenging new theatre in America.
Why found a nonprofit?

“Organizational form affects the ability to


survive in the marketplace.”
S. Oster