Strategic Analysis of E-Sonic - Essay Example

? About E-Sonic: E-Sonic was created by Sonic Records as a subsidiary company. It’s core responsibility was to churn out an online music store that could compete with other established players in the industry. Many Key executives who were a part of Sonic Records were moved to E-Sonic after the subsidiary was established. E-Sonic started with the core of mission or creating the leading online music store while ensuring that Sonic Records continues to be the market leader. STRATEGIC ANALYSIS Executive Summary E-Sonic’s primary objective as mentioned before was to churn out a leading online music portal. It’s success critierion was to be determined from the amount of market share It could extract from its competitor. At the moment, there are two key players who dominate the online music industry. They firms command atleast 85% of the over all market share in downloads. E-Sonic had to target these customers while fetching for new customers to the world of online music. While the idea of targeting a million customers and attracting them to digital music, seems like a far fetched one, the formula for its success is not that complex. All it needs is some simple marketing, sound selection of artists and a nice user friendly web interface that will assist it in establishing its position as the market leader. The paper will conduct a strategy analysis of E-sonic. External Market Analysis: Industry Profile The online music industry is a very competitive one. In the last couple of years it has churned up a huge array of competitors. Some of these include the likes of iTunes, Napster and AmazonMP3. Their overall revenues in the market exceed 4.2 billion dollars as of 2009. At the moment, the online digital music industry comprises of 400 legal music services that have been engaged in delivery some 260 types of products belonging to different genres such as music, ringtones, audiotracks and video. The competition in the industry is intense and a threat of potential new entrants looms. Their entry is supported by the looming trends in the market. This includes higher consumer purchases of online music, bigger and faster access to the internet round the globe and the increased ability to download and listen to music on-the-go with developments in the mobile industry and mobile connection. The online music market has shown improvement and growth compared to last year. According to statistics published by the Billboard numbers, approximately 1 billion tracks were sold in the United States in 2010. This was only a 0.3% increase from 2009. Similarly, sales of online albums has also peaked, increasing to 13%. This is particularly true of the North American region of the industry. E-Sonic:. Opportunities: E-sonic has the opportunity to further develop music player into a more mobile phone friendly format. Something on the lines of Rokr mobile phone device by Motorola should greatly benefit the company. E-sonic can also capitalize on revenues that can be generated from podcasts and radio shows. They can be downloaded from the internet and then played back on iPod. Threats: Competition in this industry is very intense. E-sonic has to work very hard on its marketing and R & D to stay on the top of the rung. Competitor Analysis ITunes is the market leader in this industry despite stiff competition from various online music vendors such as Amazon. It has managed to increase its market share manifold. The music service now churns out around 66.3% of the online music market according to a research. Amazon runs second in the competitor list having a share of 13.3 % as of third quarter of 2010. The competition between Amazon and Apple is intense. In 2010 Apple was seen pressurizing artists in its bid to obstruct Amazon’s music promotions. They warned them of loosing all support from iTunes if they were seen supporting Amazon music. However, it cant be said that Apple’s growth has come at the cost of Amazon. Amazon’s online music share steadily increased to 11% in the first quarter of 2010. Both music stores are marching ahead trying to out do each other. Foreign Demand: Long term Industry Prospects: The direction on which the music industry is heading is a very mysterious one. Today the computers have taken over our society and the digital age is the latest version of technology. While MP3 music has been around for a while, technology could make MP3 music obsolete next year. However, one thing is for sure that the music industry will continuing going changes that it has witnessed in the last year. It is with hindsight that one can claim that they never know if in the next twenty years, the MP3 technology would become obsolete. For instance, the Internet makes direct selling to the consumer possible. Record companies become obsolete in the process. Today the artist can post his own music and publish it on you tube. Over time it is expected that the necessity to record company and their contracts will diminish. However that wont be completely eliminated but will have to play a major role in making major adjustments. More new and innovative products are in the pipeline that are expected to change the way music is going to function, forever. The faculty at University of Berkeley is constantly developing new technologies in this domain of the music industry. The Naam Show is a music technology conference conducted every year. In this conference all genres of music are discussed. These include print music, musical instrument , and new portable music technologies that were present in the conference. Some of the new technologies that were introduced in the conference include Beyerdynamic, and Headzone. The latter is a different type of a headphone in which a consumer can hear different musical instruments. Another product is coming out that is expect to completely take over the home entertainment center. This product enables the consumer to replace their home audio center with wireless capabilities. Also any audio compact disc they put into this product will automatically copy and save in its memory. It is similar to a jukebox. What is unique with this product is that it can be hooked up to a network with other people who have the same product and it enables you to share music. Analysis of Internal Capabilities a) Functional Capabilities b) Human Resource Capabilities Functional Capabilities: E-sonic is backed by Sonic Records which is the recording industry mogul. E-sonic comprises of the resources and the reputation it needs to churn out a world class company. The market has only recently recognized this. Last month only, E-Sonic did a very small scale IPO. It’s owners retain the majority of the shares of the company and these could be later used as incentives for employees who are critical to an organization’s long term success. .Human Resource Capabilities: E-sonic executives come with immense experience in the recording industry. They have had established relationships with major record label. They have a clear cut edge in the music industry where human resources are concerned. However while the recording industry had immense experience in their forte, E-sonic’s management had little or no experience in software development. Even on the marketing front in online music industry business, they have little expertise to offer. Employee engagement with the company would thus be necessary for the success of the company. According to Gallup and other researchers employee engagement is a force that drives performance outcomes. His research shows that engaged employees are more productive, profitable, more customer-focused, safer, and more likely to withstand temptations to leave (Gallup, 2010). Most of the companies now adhere to the fact that maximum productivity comes not from a ‘satisfied’ or ‘happy’ employee, rather it comes from one who is the most loyal and most productive, both at the same time. Hence these two factors present in an employee make him the engaged employee. An engaged employee gives his 100 percent, is intellectually and emotionally attached to the organization, is well informed about his goals and feels strong about his values. Robinson Perryman and Hayday believe that employ engagement is the positive attitude which is held by the employee towards the organization and its values. An engaged employee is well aware of the context of the business and they maintain a good relationship with their colleagues so that it will prove to be a benefit for the organization (Theoretical Perspectives of Employee Engagement & Organisational Performance). John Purcell further focuses on the fact that it’s the relationships and behaviors of the colleagues in an organization which binds everyone and makes them engaged and more intending to stay and work for the organization. Therefore we need to work hard to build organizations and cultivate a sense of community in them (Purcell). In order for employee engagement to take place, the organization too plays a major role in respecting the personal aspirations and ambitions of the employees. It is located in Los Angeles wherein E-Sonic longed to summon up the best and the brightest of music and software development industries. Moreover, they hoped to come up with a performance oriented culture in which the employees would be rewarded for their contributions. Given the task in front of them, E-Sonic executives always had the foresight and vision to move forward. However they will have to recruit employees in all other business disciplines as their resources in them are limited. The management at E-Sonic realizes the importance of conjuring a sound compensation system right from the starting of the company. They are aware of the obstacles in front of them and have come up with the correct strategy to counter them. Bibliography: Chartered Management Institue. "HIGH PERFORMANCE WORKPLACES THE ROLE OF EMPLOYEE INVOLVEMENT." 2002. CIPD. "Learning and the Line." Learning and the line The role of line managers in training, learning and development (n.d.): 3-5. "Why the Interest in Employee Engagament." Theoretical Perspective of Employee Engagement & Organisational Performance (n.d.). Gallup. 20 12 2010. 21 12 2010 . Gatenby, Mark. "Research Insight." (n.d.): 2. Kirkman, Bradley L. and Kevin B. Lowe. MEEOP. "The Changing Nature Of Performance Management And Its Importance In The Current Economic Climate." OPC. 20 12 2010 . Purcell, John. "Building better Organizations." Reflections on Employee Engagement (n.d.): 3-4. "Theoretical Perspectives of Employee Engagement & Organisational Performance." Read More