BMG Entertainment Case Analysis (Havard) - Research Paper Example

BMG Entertainment Case Analysis SWOT Analysis of BMG Entertainment Strengths Its brand trademark and associations The fact that it is the top most record labels in the world Ranked amongst the top five (at the 4th position) in the world when the heading is of biggest media corporations Has signed up on its roll a host of celebrities and artists who are categorized according to the gold and platinum rankings Always welcomes the role of new and fresh technology within the ranks Its usage of branded websites for different genres of music to attract different customer segments The initial company to make use of downloads in order to boost up sales of already recorded CDs and cassettes Brought forward 5 of the 10 best selling CDs in the year 1999 alone It has the largest collection of clubs connected with the music world Weaknesses Its problems related with internal money matters and decision making processes 3 of the 25 units within the business development category were failing to deliver goods hence had to be closed down, resulting in immense loss to the company Retailers (at the store level) charging exorbitant prices Opportunities The change in music technology can bring a diversified set of digital customers no matter where they are located in the world Online retailers who can sell and ship the CDs to offshore clients and music lovers Online operations can be boosted which will eventually double or even triple the sales for BMG Entertainment A website that can interact with its customers and potential ones from time to time and take down their orders, track them and ship the relevant stuff as and when demanded on the part of the clients Websites can be created to appeal to different customer segments and those who prefer different genres of music Make use of more and more music sales through the Internet Maintaining a status quo and a cordial relationship with big players like Microsoft, IBM, Apple so that there is a sense of understanding for each other and the distribution of music is made in an easy manner Threats Big and small competitors Mushroom companies coming up on the Internet and offering all sorts of music which is basically unregistered and illegal Universal Music Group can pose as a huge problem for BMG Entertainment since it has a vast collection of world music at its disposal Also other companies are seen as threat like Sony Music Entertainment, Warner Music Group and EMI Compression protocols like mp3 formats, reduced file sizes which compromise file size for quality Up and coming music playing software like RealJukeBox, Winamp, Media Player by Microsoft and so on Apple’s Ipod and other upcoming mp3 devices Peer to peer software like Imesh, Napster, Morpheus Clients might end up downloading music as a substitute for buying CDs and cassettes Porter’s Five Forces Model of BMG Entertainment The threat of new entrants is pretty high since any company can just jump on the bandwagon and start selling music. There are issues related with economies of scale on the part of the mushroom companies which can arise out of the blue. The high capital requirements are also something that needs to be understood properly by BMG Entertainment in relation to the new companies. The threat of substitute products is high since the customers do not have to pay anything when they think of subscribing to any other company in their quest for getting good quality music as the competitors are aplenty. At times, the prices offered by the substitute companies is much lesser which raises the question related with the threat that is posed after all. More important than anything else, we need to understand the fact that at certain instances the quality and performance offered by the rivals is equal to what BMG Entertainment is offering. The intensity of rivalry amongst the competitors thrives the market big time and the customer is the sole party which benefits in the tussle, not to forget the overall quality of service which is improved on the part of the companies offering music, one such being BMG Entertainment. As discussed before, the competitors line up in the form of EMI, Sony, Universal, Warner, Napster, Morpheus, Imesh to merge them all up. This competition increases the growth rate of the whole industry as a result. The suppliers are few in number so bargaining power is not that much. Supplier’s music sales are something that creates a low cost when it comes to switching on the part of a customer of music. The bargaining power of buyers is an interesting thing to delve into since these are the customers who have a number of companies from where they can buy music. Recommendations The recommendations which are available to BMG Entertainment in this whole case are that they should continue to sell good quality music and must not compromise on quality for price. The most die hard fans of different genres of music would go an extra yard to buy what is considered as authentic music and the company must make use of the relevant research which shows that the music fanatics, though scattered all over the globe are ranging in millions. The authentic nature of this music selling exercise is something on which BMG Entertainment can play upon which would reduce the customers going away from the BMG Entertainment’s outlets (online) to any other company which compromises on quality of music for a low price nonetheless. In the end, an extra endeavor shall be made on the part of the company to introduce bulk deals for the customers who come back and forth for ordering CDs and cassettes and do not buy pirated stuff which is available from just about anywhere in the music world of present times. All said and done, BMG Entertainment must know how to make it even bigger when the going gets tough. Word Count: 1,016 Read More