Strategy of the Electric and Musical Industries - Case Study Example

Marketing Management EMI Group Plc is a British music company, is trying to become the largest one in the world. During the initial stages, the Electric and Musical Industries Ltd. Was engaged in the manufacturing of play back and recording equipments. But later on, due to the expanded business programmes and wider marketing opportunities, the EMI turned out to be one of the largest music companies in the world. For expanding its overall business and revenue, EMI’s marketing department is playing an important role. “The responsibility of the EMI Marketing department is to deliver to the company incremental revenue through the commercial exploitation of EMIs recorded assets” (Commercial Marketing section). Environment Scanning Today’s world of marketing is filled with a lot of competitors. For identifying about the competitive strategy, it is essential to depends on the environmental scanning, a concept derived from Business Management itself. For ensuring the competitive advantage, it is necessary to make certain variation in to the strategies and relevant policies maintained by the business concern. Environmental scanning is a perception about the external environment, which provides a considerable idea to the management authority of an entity to take the most appropriate decisions relating to the business in ensuing future. This scanning is beneficial for analyzing various opportunities, attaining the sustainable competitive advantage and also to accomplish various goals of the entity. The prediction of environmental factors is uncertain; then there should be a tendency to undertake more scanning. In addition to the scrutinization of environmental performance, it is necessary to examine the strategies of the organization also; it will lead towards the organizational scanning. While undertaking the scanning of an environment, it is necessary to collect various in formations affecting the marketing areas. But on the other hand, in case of organizational scanning, number of information is available, but stress should be given only for own sources of the entity. Both these in formations or sources so collected are utilizing for developing the strategic plans. In addition to this, as far as the scanning procedure is taken in to consideration, the top level managers are undertaking the scan concept than the operational or bottom level managers. While undertaking strategic planning, it is essential to conduct both internal and external analysis. Environmental scanning is an important external analysis concept, which is necessary to evaluate the changing tendencies and models, and undertake an anticipation of how such changes will create an impact on the organizational undertakings. Whenever taking a managerial decision, the managers should not only rely on the internal features like organizational goals and missions; but also relying on the external features, a combination of both required for an effective strategic decision. Electric and Musical Industries Ltd. (EMI) is looking forward to expand its business operations in an effective manner to become the largest music company in the global market. For accomplishing such mission of EMI, it is necessary to implement various strategic issues and policies. For this, it is significant that to conduct the environmental scanning of EMI, for analyzing about the competitive factors prevailing in the markets of music. At the time of undertaking the environmental scanning and other related strategic decisions, it is crucial for an organization to consider the macro economic or environmental factors, which are external in nature. As far as the EMI is taken into consideration, one of the main environmental factors affecting the business and marketing strategy of the company is that to analyze the competitive advantage. In the organizational pint of view, there are several factors influencing the environmental scanning; those factors are mainly individual factors and organizational factors. If there are opportunities and threats exist in the environment, it is possible to identify it through environmental scanning. Competitive advantage for the business means the advantage over its rivalries in respect of the lower prices, higher quality or any other services being provided by that firm. A firm is said to be competitively advantaged is mainly based on its return making ability. Competitive advantage of a firm is mainly of two types- cost advantage and differentiation advantage. It is possible to achieve competitive advantage, a firm must perform its activities in such a way that which is far away from its competitors. It is an advantage which allows the firm to survive against its competition over a long period. So, it is very clear from the fact that scanning the environment helps to identify the competitive strategy easily. Both environmental scanning and marketing is inter related to each other. If there is any difference takes place in environmental scanning and various other information systems, it will leads to introduce various new products in the market avenues. There is a proper relation is existing between the environmental scanning and organizational culture. “Under environmental scanning, management is constantly identifying strengths and weaknesses in the internal organization, as well as opportunities and threats from the external environment. Collectively, this is often called the “SWOT” list: assessing the strengths, weaknesses, opportunities, and threats of an organization and its environment” (Koontz 2006, p.2). Macro, micro and SWOT analysis Macro analysis: Macro analysis refers to the external factors that affect the company and its strategies. The macro analysis of EMI involves the factors outside the company such as social, political, cultural, economic and environmental factors affecting the organization’s functioning. Music, which is the main product of EMI, has very great relevance in the social perspective as it is an element that reflects culture. Music can often cause a furor in the society when the public relates it to the religion and culture. Therefore, the company can always gather the support through good music. The company operates a reporting process that makes time to time reports about the social performance of the company. “We have a group wide reporting process to gather information on environmental performance, employment and community investment from our operating companies” (We believe in acting responsibility. 2007). EMI has donated £0.8 m for charitable purpose in the current year. In the social perspective the company is focusing more on the development of education in the country and majority of its activities are focused on youth. EMI gives more importance for fostering music education in the country. The company has a ten year old music foundation that has contributed £2.7 m for music education in schools till now. EMI’s environmental strategy is focusing greatly on reusing of wastage for suitable purposes. The company has also reduced the energy usage and carbon dioxide emissions through its strategies. The company has changed its many activities into electronic form inorder to reduce the paper usage. The company also has good contribution towards the economy of the country. EMI has its presence in more than 50 countries. In this way the company is able to direct many external funds towards the country thereby boosting up the economy. The annual risk review process in the company makes proper analysis of the possible social risk that might affect the company. This activity has helped the company to identify any probable risk and that has helped the company to prevent those in future. Overall the company has taken extreme care towards its obligation towards the society, economy and other macro factors. Micro analysis: The micro analysis of EMI refers to the factors that are internal to the organization. These include the customers, shareholders, public, middleman, creditors and other internal factors related to the company. EMI delivers product strictly on the basis of the needs and taste of the customers. This is evident from the recent launch of Premium DRM-free higher sound quality downloads by the company. The company has a policy of ‘Standards of business conduct’ introduced for the employees. EMI being a music company, the singers are one of the most important internal elements. EMI ensures the growth of musicians and writers along with its growth. “Since signing to EMI is 2005 Corinne Bailey Rae has developed into one of the UK’s leading female artists” (we believe in nurturing talent). EMI has constituted a remuneration committee in order to look into the remuneration policies of their employees. The committee conducts meeting at regular intervals in order to discuss and frame best policies regarding the remuneration of the employees. Shareholders’ interest is also a primary factor for concern for EMI and the company has distributed a total dividend of 8.0p per share which includes 2.0p interim dividend and 6.0p final dividend for the year 2006. Thus the company is keen on protecting the interest of its shareholders. EMI also has a very effective distribution channel. The middlemen of the company are also properly rewarded so that the sales are motivated by them. The creditors of the company are also balanced so that the liquidity of the company is not affected in any way. Therefore, this analysis shows that the micro factors of the company are also satisfactory and beneficial to the organization as a whole. SWOT Analysis: SWOT analysis refers to the analysis of the Strength, Weakness, Opportunities and Threat of the company. The SWOT analysis of the company can be seen as follows. Strength: One of the major strengths of the company is that the product of the company is music. This is strength for the company because music will never loss its charm in the world. There will always be demand for music. There won’t be a situation where the public is not at all interested in music. The demand will only grow higher and higher. The company will never reach at a situation where it faces less demand for the products unlike other products. Strength of the company is that it is the world’s strongest music company. Therefore, EMI has got a good brand value in the market. There is less chance for any decline in the brand value of EMI. “EMI is the world’s leading independent music company” (Company overview. 2007). Weakness: Even though EMI is world’s largest music company the company also has exposure to certain weaknesses. The weakness is related to the demand of the product itself. The demand of music will never decline. But the taste of the customers or the general public for music changes very fast. Due to this EMI is always burdened with changing the pattern and style of the music according to the taste of the customer. Another weakness of the company is that sometimes the taste of the market changes by the time the music is launched in the market. Opportunities: One of the main opportunities of the company is that since it has presence in almost 50 countries and very wide market share it has an opportunity for further expansion. It can very easily enter the countries where it has no branches or subsidiaries. The company has the opportunity to capture the market share of the changing music taste of the customers. The company is also the world’s largest music publisher. EMI has also got opportunity to grab the nurturing new generation singers who are in abundant. “The company builds its music publishing business throughout the world by signing new songwriters, renewing existing contracts with songwriters and acquiring catalogues of existing compositions” (EMI Group Plc. 2007). Threat: The primary threat of EMI like any other company is the competitors. The company has very strong competitors who are Sony Corporation, Viacom Inc, DreamWorks SKG, Edel Music AG, Universal Music Group, Bertelsmann AG, Chrysalis Group PLC, Capitol Broadcasting Company and Viacom Inc. Among them Sony Corporation is the strongest competitor for EMI. Sony Corporation has presence in electronics segment too. Another possible threat for the company is that some music might lead to any controversy when it is related to any particular religion, race or culture. Such controversy occurs when the lyrics or the video is related to the culture or religion. Occurrence of any such incident can harm the image of the company among the satisfied customers. Marketing plan for EMI for Indian operations EMI group has already got presence in more than 50 countries. The company has got very good opportunity in the Indian music market. EMI has presence in the Indian market but the potential in the market is still not utilized completely by EMI. As mentioned earlier there is no country where the demand for music is lower. The scenario in India is that it has more number of audiences for English songs and the rate grows at a very higher momentum. EMI can skim the profits from this market through a better market concentration. The strategies for Indian operations for EMI are as follows. 1) Expansion of subsidiaries: EMI operates in India through its subsidiary Virgin Records India Pvt Ltd. At present the company is Mumbai based and is focused more on marketing ‘Bollywood’ (Hindi film industry) songs. The company should expand towards the regional songs too. The country has got a very good film industry in the states of Tamil Nadu and Andhra Pradesh. 2) Cautious about social factors: The Company should always note that the chances of controversy are higher in India. The main reason for this is that India comprises a mixed culture. It has got population from many religions. There are more chances for political controversies too. The furore on any controversy is always taken, discussed and associated at political level in India. Bibliography Commercial Marketing section. [online]. B TO B. Last accessed 5 December 2007 at: http://www.emimusic.co.uk/04/comm_markets.htm Company overview. (2007). EMI group. [online]. EMI. Last accessed 5 December 2007 at: http://www.emigroup.com/About/Overview/Default.htm EMI Group Plc. (2007). Business description. [online]. CBR. Last accessed 5 December 2007 at: http://www.cbronline.com/companyprofile.asp?guid=066FF8EB-F5F0-4142-9A9E-00C6F430AEDC&CType=Background Koontz, Christie (2006). Environmental scanning: Discover what is happening out side of the library doors. Enter Tool#1: Environmental scanning. [online]. IFLA. P.2. Last accessed 5 December 2007 at: http://www.ifla.org/IV/ifla72/papers/133-Koontz-en.pdf We believe in acting responsibility. (2007). our approach to responsibility. Policy and reporting. Last accessed 5 December 2007 at: http://www.emigroup.com/NR/rdonlyres/D4F94730-99CD-4086-91E5-3A96129DA2E8/1436/EMI_CSR_2007.pdf We believe in nurturing talent. EMI annual report 2007. [online]. EMI. P.4. Last accessed 5 December 2007 at: http://www.shareholder.com/visitors/dynamicdoc/document.cfm?CompanyID=EMIL&DocumentID=1798&PIN=&Page=6&Zoom=1x&Section=43986#43986 Read More