Development of HMV Music Retailer - Essay Example

HMV music retailer Introduction HMV is a music retailer that operates in the United Kingdom. The retailer was performing superbly in its activitiesand was listed in the London stock exchange. However, the retailer started performing dismally and was affected with serious issues that led to distraught actions. First, HMV in Ireland declared that it had gone under receivership. Owing to this fact, all the retail stores in Ireland were closed. This led to buying of the retailer’s debt by private equity firms. This was a step to save the retailer from collapsing. PESTLE Analysis The retailer must have had several issues that were affecting its performance in the market, which led to the distraught performance. First, there is a need to analyse the politics that govern the retailer (Boddy, 2008:21). The politics of the administration affected the running of the retailer in a number of ways. For example, after entering into administration, there was change in the way the business was being conducted. Since new administration comes in with different performance strategies, these strategies failed. Similarly, the political environment of the new administration was not conducive for business. It brought loss of interests as most of the workers and employees were not contented, which brought dire consequences to the retailer. The retailer’s economic position was adversely affected with introduction of administration. In such an instance, the retailer had to incur other costs that are used in running the businesses of the retailer. In this instance, the retailer’s income was stagnant while the expenses of administration increased. Therefore, the budgets of the retailer were skewed as they had to get more resources to run the business (Boddy, 2008:14). This was a disadvantage to the business. The third aspect that affected the performance of the retailer was the social environment. Previously, the retailer had concrete business bonds with the market. This strengthened its businesses across the competitive market (Johnson and schools, 2008:18). However, when there was introduction of administration, the social bonds were drastically weakened. Technological change is a vital aspect that should be appreciated by any retailer that wants to attract a large market share. With introduction of new and sophisticated technology, the retailer is well prepared to make better and improved products. Similarly, the retailer is able to serve a large number of customers in minimal time (Mennen, 2011:11). However, with the introduction of the administration, there was minimal investment directed toward technological improvement. This ultimately led to dismal performance by the retailer. SWOT Analysis HMV as a retailer was well prepared to tackle the market in making substantial accruals in terms of profits and returns. The most prudent decision the retailer should have taken is relying on the strengths and utilising the opportunities it had (Boddy, 2008:23). Similarly, the retailer should have generated strategies to reduce the effects of its weaknesses and reduce the threats that would drive the retailer out of business. In the first place, the retailer had a strong point in that it was well-established in the market. The retailer had opened numerous branches in many countries across the globe. Similarly, it was a strong retailer in that the demand for its products was escalating. However, the retailer had an internal weakness with the inception of administration. The administration was not apt in executing its tasks. Similarly, the retailer was not keen on extending its market share. This led to murky performance after the threats surpassed its strengths. The retailer had an opportunity in investing in technology and making superb approach to the market. Since it is a music retailer, it had an opportunity to invest in current and sophisticated technology (Pearce, 2009:14). A perfect example is Apple’s iTunes. Apple’s iTunes are appreciating a greater market share due to their compatibility with the new technology. Apple is investing in sophisticated technology to attract a large market share. However, the haphazard execution tasks in HMV were not straight forward. Similarly, the retailer faced several threats in the market. There are a number of music retailers that were extending their products in the market, which includes Apple’s iTunes (Johnson and schools, 2008:19). Had the retailer insisted on spreading its market share to other places, its business would have been sprouting. This would have limited the performance of the other businesses in the market. Apparently, Apple’s iTunes are making superb performance in the market due to continued research and change of its products to perfection. This was not the case in HMV. Porter’s Five Forces HMV’s performance was gradually deteriorating due to a number of constraints and factors in the market. Since it was not a monopoly, there were a number of avenues that would have attributed to its dismal deterioration. First, there is the force of new entrants in the market. The market place is governed by the free entry rule. In this situation, HMV’s performance was shaken by the entrance of other music retailers (Boddy, 2008:18). The new entrants had sophisticated technology and had attractive offers to the customers in the market. As such, HMV was losing their customers to the new entrants. A force to reckon in the market is substitute products and services. HMV was not keen on the substitute products that would have affected its market share. However, the retailer concentrated on its core products and did not mind other substitute products in the market. For example, Apple’s ITunes were making superb entrance in the market. This was a perfect substitute for the products that were offered. As such, they were faced out of the market due to substitute products that were recording a better performance. There is a third force which is defined by the bargaining power of the customers. Customers keep changing and will get a better bargaining power as the market enhances. This was one of the factors that led to dismal performance of HMV. Apparently, the customers noticed that they could get better bargains in the market after the introduction of substitute products. This led to revolution of customers that had a stronger bargaining power. Similarly, there was a disparity in pricing in the market. This led to the failure of HMV. The fourth force to reckon was the bargaining power of suppliers. Suppliers have their own pricing strategy depending on their enhancement in the market. Therefore, it is in the best interests of a firm to ensure the bargaining power of the suppliers is low. The last force is the competition that is existent in the market. The market is instigated by the free entry rule. Therefore, there will be entrance of new retailers that are likely to offer their products. This includes Apple, which is technologically enhanced. Similarly, some of the competitors offer complimentary goods which pose as an added advantage. Market Segmentation Though HMV could have proved a strong retailer in the market, there are several instances where the business was not performing to its best. First, the pricing of a commodity is as vital factor that will be considered by the market. When a market is contented with a particular pricing, it is prudent to respect such. However, increasing the pricing of the products might not be welcome by the market. Consequentially, a retailer should also be vigilant on the pricing strategy used by the competitors (Boddy, 2008:24). The second vital aspect is the product in itself. The product should go through metamorphosis in appealing to the market. For example, a company that has technology that enhances the compatibility of product is savoured. This will lead to enhanced sales in the market. However, sticking to the ancient way of production will be detrimental to the retailer. Thirdly, there is the aspect of promotion. In recent times, it is unequivocally seen that retailers are doing everything to market their products. However, some retailers are not keen on some of these strategies. They end up with dismal performance. Lastly, there is a need to look at the strategic place of establishing a business. Establishing a business in a densely populated area is a positive attribute to a business. This will increase the demand in the market as more people will create a demand for the products. This is one of the aspects that led to the failure of HMV. Presentation As one of the management consultants in HMV, there are a number of aspects that should have been used in ensuring the retailer is sprouting in the business. First, innovation is a prime factor (Pearce, 2009:13). This is done by ensuring the retailer is gathering better ways of running the business. For example, the business should gather different ways of approaching the market. This includes delivering products to the people that need them. For example, waiting in the stores for customers is a thing of the past. In these days, customers would like home delivery of goods. However, this will start with effective marketing of the products. Secondly, there is a need to instil disciplined management in the retailer. Though there is change in administration, this should not change the execution of business (Morris and Pinto, 2010:23). For example, there is a need to avail a constitution that will govern the business. The constitution will be vital in stating the measures, strategies, controls and other vital aspects that would save the retailer. Lastly there was a need to look deeper into the market segments. In recent times, market segments are changing with change in the genre of music. Therefore, there is need for change in the market segments. According to Sull’s strategic loop, the retailer would have continued to make greater performance if it instilled the product metamorphosis. The product is the main attraction to the customer. Therefore, availing an attractive product will please the market. To begin with, the retailer should have made a product that makes sense to the whole market (Boddy, 2008:26). This includes all music genres that please all the age brackets. Secondly, the retailer should have made choices on the market segments for each of the products. This would appeal to a larger market share. Thirdly, the retailer should have focused on ensuring all the activities that are geared towards better performance are executed. Lastly, the retailer should have made revisions to strategies that were failing. For example, introduction of some products that are not performing well in the market should be reviewed. In conclusion, the retailer had to analyse the market and evaluate its performance to make clear improvement. The evaluation should have been directed towards the strengths of the business and look at the various opportunities. Similarly, the retailer should have considered all the setbacks in terms of threats and weaknesses. Reducing such to minimal standards would be the best way forward. However, the retailer did not make serious evacuations and led to dismal performance. References Assenmacher, K. (2012) The BodyShop - an analysis of the company ́s actions towards sustainability, GRIN Verlag, New York. Boddy, D. (2008) management: an introduction, Prentice Hall Higher Education, New York. Johnson, G. & Schools, K. (2008) exploring corporate strategy, Prentice Hall Higher Education, New York. Mennen, M. (2011) The BodyShop: strategic business management, GRIN Verlag, New York. Morris, P. & Pinto, J.K. (2010) The Wiley guide to project, program, and portfolio management, GRIN Verlag, New York. Pearce, J.A. (2009). Strategic management 10E, McGraw-Hill Education (India) PVT Limited, New York. Read More