final submission
TRANSCRIPT
UGB 202; Introduction To Strategic Management; Michael Winship
Table Of Contents;
Introduction Page Three
Section One
Company Background Page Three
Section Two;
The General Environment Page Four
What Is Strategy? Page Five
Why Develop Strategy? Page Six
Pestle Analysis Page Seven
The Competitive Environment Page Ten
Porter’s Five Forces Page Ten
Porter’s Value Chain Page Eleven
Swot Analysis Page Twelve
Competitive Advantage Page Fourteen
Balanced Scorecard Page Fifteen
Section Three;
Formulation Page Sixteen
Business Level Strategy Page Seventeen
Corporate Level Strategy Page Eighteen
International Strategy Page Twenty1
UGB 202; Introduction To Strategic Management; Michael Winship
Section Four
Implementation Page Twenty One
Section Five
Conclusion Page Twenty Four
Product Life Cycle Page Twenty Five
References
Books Page Twenty Five
Websites Page Twenty Six
2
UGB 202; Introduction To Strategic Management; Michael Winship
Introduction
This report will look at the strategic management functions of the flagship music store
HMV, HMV has been chosen to look at due to the current situation of the retailer. The
retailer is is a dire situation in terms of trying to attract customers to use the retailer
rather than online. Over the past few years HMV has found it hard to try and compete
with the rising amount of retailers that are using online as a place to sell. Many more
customers now use online in order to do their shopping as a result of this HMV is
suffering. HMV desperately needs a new structure in order to ensure its safety on the
high street.
The first section to look at is the company background. It is important to look at the
company background as this gives a brief insight as to who and what the company is.
Section One; Company Background
HMV is an online and high street entertainments retailer that sells not only CD’s and
DVD’s but also offers specialist entertainment products. HMV was founded in July 1921
when it launched its now flagship store in London’s Oxford street, and become instantly
symbolic through its trademark of the dog and at the time a wind up phonograph. Today
HMV prides itself in being able to enable its customers to get ‘closer to the music’
wherever they are through the use of its ‘live’ experience. HMV has stores in other
countries other than the UK such as Ireland, Hong Kong and America.
The HMV logo has been rebranded in recent times in order to give the company a more
contemporary feel, HMV said that the rebranding of the famous logo ‘will take the role of
a quality mark in order to gently reassure customers about the heritage and expertise.
(Daily Mail)
HMV also is proud to be able to offer an unrivalled access to ‘today’s popular culture
through a number of complementary channels’. (Hmv.co.uk) Within the UK HMV houses
3
UGB 202; Introduction To Strategic Management; Michael Winship
over 200 high street stores which all offer a complementary range of services designed
with the customer in mind, in recent years the products that HMV offers have diversified.
In the market that HMV is in, the entertainments market it is believed that HMV are one
of the biggest retailers in this market however in recent times new entrants have
entered in to the market such as play.com which have undermined HMV’s position on
the high street and online. Challenging events in this market has lead HMV to announce
that they are planning a strategic over hall to determine which of the many high street
stores that it has are going to close in order for the business to be able to save costs
and be able to continue offering the best choice of service to customers.(BBC Business)
Sales in HMV have dropped over recent years indicating how strongly competitive the
market that HMV operates in is. The operating profit from the balance sheet indicates
that HMV international lost around two million year on year in 2009 whilst overall profit
was up ten million. (HMV Group)
The next section of this report will be to look at is analysis and more particular the
general environment. The general environment is important because this involves
looking at what the market is like at the present point and trying to establish what the
future market might look like.
Section 2; Analysis
The General Environment
Scenario Planning
Possible scenarios for retail in the future include;
Between now and the next five to ten years the retail industry will face it’s most
challenging time of recent years this is due to the economic downturn in the UK and
consumers being more cautious with what they spend and how they spend it. Due to the
severity of the downturn consumers more than ever are looking for the best possible
deal at the best possible price. The result to retail is that increased competition within
some markets e.g the entertainments market will mean that consumers will search for 4
UGB 202; Introduction To Strategic Management; Michael Winship
longer to find the best price and retailers will become more competitive than previously
known.
The way people shop will change from what people normally do now, the rise of the
internet has fuelled the opportunity for the consumer to be able to shop whenever they
want and not just when they have to. Internet shopping means that you can do the
shopping one minute and then have it delivered at a time that is suitable for you
meaning that you can do other things then shop. Shopping on the high street will
change for the worst some signs of this can already be seen in figures showing the rise
in online spending/shopping. Shopping on the internet tells us that consumers and now
wanting ways to try and fit other things in rather than spending time doing the same old
things such as shopping.
Consumers will want to shop at a time that suits them not at a time that suits the
retailers opening hours, this theory is why supermarkets now are open 24 hours a day
and are quite busy at early times of the morning. Consumers want to shop at this time of
the day due to them not having time to do their shopping at other times of the day,
internet shopping allows consumers to be able to do their shopping at a time that suits
them and be able to pick a delivery time that is convenient to them. Internet shopping
also allows the consumer to save time as repeated orders take seconds if they want to
buy the same things that they have previously bought. This also allows customers to not
buy things that they don’t need to buy.
Consumers will want to shop at places that are relevant to them and places that have
the relevant products to them. More retailers are now trying to attract consumers away
from where they currently shop through using special offers and other promotions.
What is Strategy?
‘Strategy is quite simply an outline of how a business intends to achieve its goals. The
goals are the objective, the strategy sets outs the route to that objective. In the early
stages, business objectives are fairly simple; to survive, and to achieve growth targets’
(A. Henry 2009)
5
UGB 202; Introduction To Strategic Management; Michael Winship
Why develop Strategy?
Strategy needs to be developed in order to make sure that the business has a clear
objective and aim for going forward, many businesses heavily rely on a strategy in order
to see them through bad spells and identify where strategy needs to be used to make
them stronger. Strategy can also be used in order to make sure that a business is
different from its competitors by ensuring that the products and services that they offer
are different from key competitors.
The use of strategy also helps business managers and owners to be able to see current
trends within the market that they are operating in and be able to see what they need to
do in order to continue making themselves a viable business. By seeing what the
current market looks like this helps the business to clearly understand the trend that it is
working within. If the current trend is good this will help the retailer to try and offers
products and services that it thinks will work. (http://ezinearticles.com)
The use of strategy means that businesses are able to see particular areas where they
can do well and areas where they can do better, strategy helps a business to be able to
clearly identify aims and objectives for them to work at to make the business a bigger
success. If the owners and leaders of the business plan ahead and make changes to
their strategy when needed this makes them more of a successful business.
6
UGB 202; Introduction To Strategic Management; Michael Winship
Pestle Analysis
Poltical Political factors include what is happening within the country.. Factors surrounding political such as Government also including taxes and laws.
Political factors have affected HMV as in January 2011 the rate in which VAT is paid rose from 17.5% to 20% resulting in HMV having to pass this on to consumers already hard hit by the economic downturn.
Economic Economic factors are all about what it happening with the economy. Whether the country is financially secure and can live within its means. Other factors that play a key part include, exchange rates, interest rates, inflation etc
Economic factors have played a big part in what HMV is today, VAT rose in January 2011 meaning that the business will have to pay more in tax to the government. The tough economic conditions in the UK have prompted HMV to need to close some high street stores in order to remain a financial viable company. Inflation rates have rocketed over recent months indicating that the price customers are paying is higher than it normally should be. Spending on the high street is at its lowest level in over a year at the time of writing (9th March 2011) indicating more people are spending cautiously. (Financemarkets.co.uk)
Social Social factors is all about what Is The spending habits of the
7
UGB 202; Introduction To Strategic Management; Michael Winship
happening within the area in which you are operating. Population growth rates and age rates are big social factors as this shows an organization the type of customers it is attracting.
UK have affected HMV because of the products that it sells. The rise of internet shopping can be considered to be one of the downfalls of HMV. Although HMV has an online website that offers all of the products that it does in the high street, other players have came into the market such as play.com that have undercut HMV. Illegal downloading has also hit HMV as more people chose to buy their must illegally then rather paying for it. Socially HMV has lost its way from a few years ago when it was considered to be a big player in society, however now it is considered that HMV is not in tune socially with its key competitors.
Technological Technological factors are things that are happening within the technical world that your business is trying to use in order to make sure that they are continuing to offer customers the best type of products possible. Some of the major technological factors include the likes of Mobile phones, social networking, blogs.
Technological advances have meant that HMV is always trying to keep up with the competition a recent major restructure saw them upgrade to selling Ipods and Mac’s. You can now even buy an ipad from HMV a sign of the times that HMV is now trying more than ever to offer its customers want they want, however with increased online presence this still remains a challenge for HMV.
Legal Legal factors are all about what is Under the new coalition
8
UGB 202; Introduction To Strategic Management; Michael Winship
happening within the law, Such examples may be legislation which has an impact on jobs.
Government there has been talk about scrapping the national minimum wage this would impact on HMV as it would have to pay workers a different rate of pay which may influence the company’s financial position. The increase in the minimum wage in October 2011 will also impact on the financial position of the company.
Environmental Most environmental factors will link in with social and economic. Although ecological and environmental factors will also be considered.
Some of the major environmental factors for HMV include the economic downturn which has seen the major loss of many jobs within certain sectors of the economy. Social factors are saying that more people tend to be not buying on the high street and instead choosing to buy online.
Competitive Environment9
UGB 202; Introduction To Strategic Management; Michael Winship
Porter’s Five Forces
Source; www.notesdesk.com
Industry Competitors Many competitors in the market that HMV serves, such as play.com, Zavvi, Amazon, Itunes means increased choice for the customer but more competition for the retailer.
Potential Entrants Major new entrants could enter the market at any time as all they need to do is to set up a website that is offering the same products and services as HMV and offer them cheaper. This will impact on the prices that HMV charges for customers.
Substitute Services In the sector that HMV serves there are many substitute services, supermarkets are now more competitive with HMV then
10
Porter’s five forces is a key tool in business strategy as it allows businesses to be able to see where the bargaining power lies, one of the main advantages of using porter’s five forces model is that it helps a business to be able to identify the strength of the position within the market and determine whether they need to do anything in order to maintain their strength in the market. Porter’s five forces model also demonstrates the ability to be able to see what needs to be done when they are focusing their efforts on attacking a new market.
UGB 202; Introduction To Strategic Management; Michael Winship
ever before as they tend to be offering most of the products that HMV offer. Sometimes when a new product emerges on the market supermarkets tend to undercut their high street rivals in order to attract business.
Suppliers Suppliers within the entertainments industry that HMV serve are not just supplying to HMV but also their key competitors it is up to HMV how much they decide to charge in order to attract customers to the high street or online. Some people once argued that HMV was one of the cheapest places to go in order to get music, however these days have long gone with the emergence of online shopping and retailing.
The Value Chain
Source; http://enduragement.wordpress.com
11
UGB 202; Introduction To Strategic Management; Michael Winship
Swot Analysis
Strengths; HMV has its own brand which lets customers ‘get closer to the music’ some of its key competitors such as play.com do not have their own branding and rely heavily on the fact that they offer free delivery and tend to be cheaper then HMV on the high street. Although HMV do tend to have more advertisements on television then play.com making potential customers aware of some of the current prices for most wanted items.
Weaknesses; HMV in is a market that is currently too big. New entrants over the past five years have meant that there is now even more pressure on HMV to perform on the high street as it is considered one of the key players in determining how good or bad the high street is performing. With the news on 8th March 2011 that the high street is in a worse state then previously thought this just emphasis once more the need for HMV to have a radical overhaul in order for it to continue a viable business on the high street.
Opportunities As previously mentioned in this assignment HMV plans to close some stores. In terms of strategy this is a good opportunity for HMV to be able to focus all of its efforts into the stores that are doing well or that are doing better than others. HMV should ensure that they continue to
12
The value chain helps the business to be able to see how they are in relation to key competitors if they have all of the areas in the value chain correct then the products should be difficult to imitate and mean the business will have a competitive advantage against their competitors.
UGB 202; Introduction To Strategic Management; Michael Winship
offer customers the chance to ‘get closer to the music’ through its live experience as this is offering customers a shopping experience when they do visit HMV. In terms of an opportunity the opportunity that HMV has from closing stores is that it can make its balance sheet more sustainable and use the spare funds to try and offer new products that will differentiate themselves from their key competitors such as play.com. The importance of an online presence should be interfered with, this continues to be one of HMV’s main area for generating income (HMV Global) this is why the money that is saved from closing stores should be reinvested into either online or the existing stores.
Threats HMV closing stores is a major threat to the survival of the brand, if the stores that remain open do not perform as well as they should be this could be a sign that HMV intends to close all high street stores and solely remain a online business. This threat is one that undermines the core stability of the high street since HMV has had a presence on it since the early 1920’s.(HMV.co.uk)
Competitive Advantage13
Opportunities Continued
UGB 202; Introduction To Strategic Management; Michael Winship
Source; Henry A (2009)
Obtained From; www.12manage.co.uk
Balanced Scorecard
14
The competitive advantage diagram from Porter shows four key stages in trying to
maintain a difference from competitors. What it also shows is the stage in which a
competitor would like to be at from their competitors. Applying this to HMV. HMV would be
in the cost focus section of competitive advantage this is due to the company trying to
save money where they can in order for them to try and remain financially competitive.
Although being In the cost focus section is not good for HMV because other competitors
will be trying to focus on cost leadership and differentiation focus to try and ensure that
they are different from what HMV is trying to do.
UGB 202; Introduction To Strategic Management; Michael Winship
Source; Henry A (2009)
Obtained From; www.12manage.co.uk
The next section is all about formulation. Formulation is essentially how you formulate a
strategy; this is one of the most important parts in strategy if not the most important.
Section Three; Formulation
15
Balanced scorecard is about looking at the day to day running of the business and
seeing what it needs to be done in order to create a vision and strategy for the
business to grow. If the balanced scorecard strategy is used it will allow the
business to know that they have a difference from key competitors as they will
have clear vision for what the business is wanting to do in terms of going forward.
All staff and senior management will need to contribute towards the balanced
scorecard strategy In order for it to work. If the strategy works it will results in
customers wanting to come back to use the business again.
UGB 202; Introduction To Strategic Management; Michael Winship
Strategy Formulation can be defined as a careful analysis of the firm’s internal
environment and the needs of the external environment will allow the firm to be assess
where it can best achieve a strategic fit between the two. (Henry A, 2009)
Strategy formulation is all about trying to devise a strategy in order to ensure that the
business can operate successfully and can try and take customers away from their
competitors. If all areas within a strategy have been considered then the business
should be able to ensure that competitors find it hard to imitate them in the same way.
In terms of the chosen retailer that I am looking at HMV, it can be said that they are in
desperate need of a strategy formulation plan due to the current severity of the market
that they are operating in. As have previously been mentioned HMV is now the only
major entertainments retailer on the high street as other retailers have disappeared and
are now only trading on the high street. This shows clearly that the strategy HMV has is
not working as customers would rather go somewhere else to purchase their CD’S,
DVD’S and downloads HMV needs to develop a strategy that will allow them to be able
to resurrect what they once had on the high street which was a constant flow of
customers and market dominance.
In this section on strategy formulation there are three key areas which need to be
looked at these are;
Business Level Strategy
16
Business Level Strategy
Corporate Level Strategy
International Strategy
UGB 202; Introduction To Strategic Management; Michael Winship
Business level strategy is a means of separating out and formulating a competitive
strategy at the level of the individual business unit. This is sometimes referred to a
strategic business unit. (Henry A, 2009)
A business level strategy is what HMV is lacking at this moment in time due to the
increased competition in the market place. The current strategy that HMV has is based
on its ‘get closer’ branding which allows customers to be able to get themselves closer
to the products that HMV sells however current economic conditions would stipulate that
customers today are now more price conscious then ever and would rather pay less
than get themselves closer to a brand.
Obtained From; www. http://www.valuebasedmanagement.net
This diagram shows the 7-s framework devised by Mckinsey, what it shows is the seven
main ways in which an organization operates, all seven of the s’s are important to the
organization as if one of the seven s’s is ignored then this can have an effect on the rest
of the s’s. What is important from this diagram is strategy links to not only all of the s’s
but more to staff highlighting the need for a dynamic and working strategy, If an
organization does not have a working strategy this may mean that they are not making
17
UGB 202; Introduction To Strategic Management; Michael Winship
as much money as they would like to. An organization not making as much money as
they would like to means customers will go elsewhere and will result in staff losing jobs.
A business level strategy can work for HMV but it needs to be tailored to what the
current market conditions are and also what customers are looking for, customers are
looking for that bargain somewhere where they can go to get a product where they
know they will be paying the cheapest for it. HMV for years has been known as the most
expensive around and this may be why it is facing major problems in the current
economic climate. The business level strategy that needs to be used could be to try and
restructure the organization, what does HMV need to sell and what does HMV not need
to sell, such examples of this include books. Diversification maybe but HMV does not
need to sell books when other are already specialists in this area. My suggestion would
be for HMV to stop selling books as there is no market for them to do so.
Corporate Level Strategy
Corporate level strategy focuses on the fundamental question of what business (or
businesses) do we want to be in? it is the task of most senior executive to formulate a
coherent corporate strategy. (Henry A, 2009)
The corporate level strategy for HMV at the moment in my opinion is fine this is based
upon some of the markets that HMV serves although the overall picture for HMV is not
good as customers are not there in terms of trying to attract them HMV is doing all it can
to make them want to shop there. Over the past few years HMV has diversified itself
from what they normally sold, this included the likes of just DVD’S, CD’S and console
games to now selling books, t shirts, headphones, ipods and even drinks amongst other
products. HMV selling new products is a sign of the corporate strategy that was
implemented which must have been to try and offer products that you would not
normally associate with HMV. The problem with HMV offering these products is that
everything you can buy at HMV you can buy somewhere else cheaper. CD’S and
DVD’S you can buy cheaper on the internet, books already have two major retailers
which lead the market in selling them. However HMV is now thinking of a major
18
UGB 202; Introduction To Strategic Management; Michael Winship
strategy overhaul, it has been reported that HMV now plans to allow customers to trade
used games online as a way of trying to draw customers back to the business. Allowing
customer to trade used games on the website is a good idea for HMV as there are not
many people who are currently doing this, PLAY.com offers a similar service where
users can sell unwanted games although do not offer a trade in service.
Furthermore to this it has also been reported that major music labels within the UK are
keen tio try and help the recovery of HMV through a scheme where they do not have to
pay upfront for back catalogue music. Many music labels see HMV as a way of trying to
tackle the online giant Amazon and are considered a way of trying to allow HMV to use
a sale or return scheme in order to try and cut around 10-15 million from their capital
requirements. If this scheme worked for HMV this cut be one of a number of ways of
HMV trying to rejuvenate what is a declining market and help them to be able to draw
up a new corporate strategy (Daily Telegraph)
Obtained From; http://courseware.finntrack.eu
International Strategy
19
This diagram above shows the corporate level strategy against the business level
strategy, it clearly shows how each of the strategies are classed as the way they
are. Corporate level strategy is looking for the industry attractiveness whereas
business level strategy is looking for a competitive advantage against its
competitors.
UGB 202; Introduction To Strategic Management; Michael Winship
International strategy within HMV could be considered as being good this is because
the accounts for HMV indicate that internationally HMV is doing better than it is in the
UK this may be due to the fact that the UK has a high rate of illegal downloading and
also the high amount of competitors.
The international strategy that HMV has should be looked upon and considered why it is
doing better internationally then it is in the UK. If HMV were to do this they be able to
pull some of the good things about that strategy and try and use them in the UK. Any
strategy that HMV can use that would help the business would be considered good due
to the current strategy not working and could also be classed as not fit for purpose.
Although trends can be different from what they are in other countries, clearly HMV’s
expertise is internationally where on its accounts it was showing that it had more money
internationally then it had a year before a sign maybe of the underlying problems of
being in the entertainments market within the UK.
The next section is implementation, this will look at how the strategy should be
incorporated into the business.
Section Four; Implementation
Implementation is all about how a strategy is used and worked into the day to day
running of the business. The implementation stage of a strategy should be linked
closely with the Formulation of a strategy this is due to the strategy that is being worked
into the business being the strategy that was decided upon in the formulation section.
Organization Structure and Systems
‘Organization’s exist because they are more efficient at undertaking economic activities
than individuals are on their own. Therefore organizations are a means by which human
economic activities can be coordinated’ (Henry A, 2009) HMV operates in the market
that it does because it is far effective then other retailers have been in this market,
although in 2011 this dominance of the UK market has been overturned by the
presence of major online retailers.
20
UGB 202; Introduction To Strategic Management; Michael Winship
Strategic Leadership
‘A key factor in effective strategic implementation is the quality of strategic leadership at
the top of the organization. The ability of leaders to communicate organizational goals
clearly and guide employees to focus their attention on achieving these goals is crucial
to success’ (Henry A, 2009) The leadership of HMV could be considered as being bad
this is because they didn’t react to change in social trends to try and make the business
more viable to customers.
Corporate Governance
Corporate Governance is inextricably bound up with one’s view of the purpose of
corporations and indeed, how one defines a corporation or business. Although different
definitions of corporate governance exist, these only really make sense when we place
them in context of the purpose of the organization. (Henry A, 2009)
Throughout this report into the strategy of HMV it has been made clear the HMV is in
trouble in terms of the current strategy that it is using due to many of it’s customers that
it has had in previous years finding cheaper ways to shop and alternatives to the
products that they are selling.
In the formulation strategy section of this report it was mentioned how HMV are selling
products that in theory they do not need to be selling such as books and IPad’s this is
due to other retailers selling these products so why would HMV want to be challenging
itself with other competitors when it is struggling in its own market.
The strategy that was decided that HMV should consider using was to try and look at
some of the products that are popular with current customers such as the most popular
albums of the week and try and capitalize on this. The majority of HMV’s customers are
using the store because they know exactly what they are wanting when they go into the
store and therefore are not interested in any of the other products in the store. HMV
should try and ensure that the product range that they are offering to customers is
specific to what they want, would a customer who is going in just for the latest number
one album really want to buy a book or an I pad? Probably not.21
UGB 202; Introduction To Strategic Management; Michael Winship
In terms of HMV trying to implement the strategy that was decided upon it might be a
good idea if HMV was to not implement all of this straight away and decided upon
implementing little parts at a time so that customers don’t see that big of a change. If
customers see a big change in the way HMV is selling products to them this may be off
putting to them. To start with HMV should alter the way in which it sells the current most
popular albums, if you were to walk into any branch of HMV today you would see that
HMV mainly has the most popular albums at the front of the store. HMV should change
this so that they are in more than one place in order to emphasis the importance of
these. This will also benefit customers too as this will mean that if they are looking for
something that they cannot find then they will be able to find it more quickly if it is in
more places then one.
Another one HMV should try and implement the strategy relating to books that they sell
is rather then get rid of all of the books they sell at once they should prioritize the books
that they do sell in order to work out which type of books are selling and which books
aren’t. HMV prioritizing which books are selling and which aint will mean that they can
enhance their product ranges in specific areas and not sell books that they don’t sell.
The way HMV should go about this is to first leave things as they are and over the
course of two month carry out research into which books would be best not to sell and
which books to continue to sell. In the formulation section of this report it was mentioned
how HMV should not sell books and it should be left to its other company Waterstones
to sell
The reason in which HMV is in so much trouble is because of the overall strategy that is
uses, it can be argued that although HMV sells the products that customers are wanting
they are not offering customers a reason to want to go back to the retailer. Over recent
times HMV have started to use a rewards based system called pureHMV in which
customers can claim points for their purchases either in store or online once customers
have enough points they can redeem them for money can’t buy gifts at HMV online, this
is one way in which HMV have tried to make sure that customers come back to the
retailer.
22
UGB 202; Introduction To Strategic Management; Michael Winship
Another way in which HMV could try and implement some of the issues that have been
raised during this report is through pricing, some customers who used to shop at HMV
have identified price as being one of the main reasons for why they now no longer shop
at HMV, whilst HMV can’t do much about price it could introduce special promotion such
as buy this and get this for a specific amount or highlight in its pricing how it is cheaper
than some of it’s competitors this would allow customers to see that it is wanting them to
shop there rather then somewhere else. The way in which HMV would implement this
would be to first implement the special offer promotions in which customers can buy one
item and get another item cheaper this would be by using a major sale campaign this
could be done around summer time which could be a great time to highlight the
importance of the high street chain. Benefits of doing a major campaign around summer
time would mean that whilst some people would use the retailer just for the special
offers some customers might see what has changed and start using the retailer again.
Recent reports have suggested that HMV might be trying to negotiate a sale or return
contract in which if products don’t sell then they can return them without having to pay
for them this is a good way for HMV to try and change from the current strategy that it is
currently using. This would allow HMV to free up space for products that are selling and
for products that customers are wanting.
Overall what needs to happen to HMV in terms of implementation is it needs to
implement some serious and radical changes in order for them to keep up to date in this
constantly changing environment. If HMV were to use some of the changes that have
been highlighted this may result in customers wanting to use the store in order to buy
the products that they are offering however if HMV don’t use this then they may find that
they continue to struggle.
Conclusion
In conclusion to the strategic report into HMV some major problems have been
highlighted that HMV need to address in order for them to remain a financially and
23
UGB 202; Introduction To Strategic Management; Michael Winship
competitively viable business. One of the most serious threats to have been identified
from this report is the fact that HMV is struggling to retain the market share that it once
had due to the emergence of major online retailers such as play.com and Itunes. HMV
has lost its way over the past five years due to the rapid decline in the entertainment
sector and the rise of downloading and illegal downloading music. It could be claimed
that the demise of HMV started way back in 2004 when downloads were first allowed to
be entered into the weekly singles chart but HMV failed to see this until they started
allowing downloads to be bought from their website. Although HMV was one of the few
who said that they would be introducing their own chart rather than having it based on
the official chart indicated that they thought that they could no longer compete with what
was being downloaded.
Other factors have played a part in the demise of HMV as have been previously been
mentioned in this report such as the emergence also of streaming websites and video
sharing websites such as Youtube. In 2011 you now do not need a record deal of for
your music to be being sold at your local HMV in order for you to be heard hence the
rise of the video site Youtube which allows users to be able to upload their own videos
to the site and let viewers watch them. Music streaming websites such as Spotify allow
users to listen to a limited amount of free music each week without the need for paying
which has not helped HMV’s cause.
The overall opinion of HMV at the minute is why would you go to HMV to buy a music
CD or a film when you can buy it from the comfort of your home and watch it straight
away without waiting for it to be delivered to your home. HMV closing stores in the UK is
a real highlight as to how bad things are.
The Product Life Cycle
24
UGB 202; Introduction To Strategic Management; Michael Winship
The product life cycle is used to determine where a certain product is in the market.
New products will be at the beginning of the cycle and products nearing the end of their
life will be at the end of the cycle.
Obtained From; www.12manage.co.uk
References
Books;
Henry A, 2009, Understanding Strategic Management, Oxford University Press
Page Six
Henry A, 2009, Understanding Strategic Management, Oxford University Press,
Page Number Nine
Henry A, 2009, Understanding Strategic Management, Oxford University Press
Page Seventy One
25
If HMV was to refer to the product life cycle it would state the company and the products
that it sells are in decline, this is due to the overall market being in decline and HMV not
really addressing the issue. Customers are now wanting a better service and price than
ever before another sign of what HMV needs to do in trying to cut prices to attract
customers back to HMV.
UGB 202; Introduction To Strategic Management; Michael Winship
Henry A, 2009, Understanding Strategic Management, Oxford University Press
Page One Hundred and Five
Henry A, 2009, Understanding Strategic Management, Oxford University Press
Page One Hundred and Six
Henry A, 2009, Understanding Strategic Management, Oxford University Press
Page One Hundred and Sixty Four
Henry A, 2009, Understanding Strategic Management, Oxford University Press
Page One Hundred and Eighty Four
Henry A, 2009, Understanding Strategic Management, Oxford University Press,
Page Number One Hundred and Eighty Five
Henry A, 2009, Understanding Strategic Management, Oxford University Press,
Page Number Three Hundred And Four
Henry A, 2009, Understanding Strategic Management, Oxford University Press,
Page Number Three Hundred And Thirty Eight
Henry A, 2009, Understanding Strategic Management, Oxford University Press,
Page Number Three Hundred And Seventy Eight
Websites
http://2009.hmvgroup.ry.com/pdfs/hmv_ara09.pdf- Date Accessed 10th April
2011
http://hmv.com/hmvweb/navigate.do?pPageID=1083 - Date Accessed 10th April
2011
http://www.dailymail.co.uk/news/article-476041/HMV-listen-marketing-revamp-
famous-logo.html - Date Accessed 10th April 2011
http://www.bbc.co.uk/news/business-12117510 - Date Accessed 10th April 2011
http://citizenl.net/2010/06/why-mckinsey-nielsen-jv-is-an-expected-trend-in-
social-media/ Date Accessed 10th April 201126
UGB 202; Introduction To Strategic Management; Michael Winship
http://ezinearticles.com/?The-Importance-of-Corporate-Strategy&id=127898 –
Date Accessed 9th March 2011
http://2009.hmvgroup.ry.com/pdfs/hmv_ara09.pdf - Date Accessed 9th March
2011
http://hmv.com/hmvweb/navigate.do?pPageID=1083- Date Accessed 9th March
2011
http://www.soopertutorials.com/business/strategic-management/3028-porter-
fiveforces-model.html - Date Accessed 10th April 2011
http://www.12manage.com/methods_balancedscorecard.html Date Accessed
10th April 2011
http://www.valuebasedmanagement.net/methods_7S.html - Date Accessed 10th
April 2011
http://www.12manage.com/methods_porter_competitive_advantage.html - Date
Accessed 10th April 2011
http://www.emeraldinsight.com/journals.htm?articleid=1571616&show=html –
Date Accessed 10th April 2011
http://www.12manage.com/methods_product_life_cycle.html - Date Accessed
14th April 2011
http://www.valuebasedmanagement.net/methods_7S.html - Date Accessed 14th
April 2011
http://courseware.finntrack.eu/learners/mbacorpstrat.htm - Date Accessed 14th
April 2011
http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/8441565/
Music-labels-to-help-HMV-with-CD-supplies.html - Date Accessed 14th April
2011
27
UGB 202; Introduction To Strategic Management; Michael Winship
Total Word Count (Excluding tables, charts, diagrams, table of contents and references)
= 4398
28