Strategic Analysis for the Sonic Records System of Compensation - Example

Executive summary

The evaluations that proceeds granted the strategic analysis for the Sonic Records system of compensation coupled with the recently developed online and subsidiary E-Sonic music store. Strategic analysis development guides the decisions that regard the systems of compensation. The analysis plan depicts the challenges that are specifically faced by the firm, the initiatives and the objectives that called for the alignment of the compensation of the effective system’s challenges, strategies and objectives. Strategic analysis enabled a more enhanced comprehension of the business environment vis-à-vis the challenges of the market externally faced as a result of the firm’s internal capabilities which aimed for better strategies within the competitive system design.

The evaluation of the firms’ external challenges and the profile of the organization, the foreign demand, the labor market assessment, coupled with the internal roles of the human resource would poise E-Sonic to be a leader in the online music industry. The industry would thus determine the overall influence of the online music distribution as the company embarks into one that is constantly changing within the market tactics and the revolutionary software. It is, therefore, significant to give the consumers a product that is highly innovative based on an outstanding service for the customer in an easy-to-use fashion.

The business researches on the wants and needs of the enlightened customers would also play a significant role. The room remained for both the online music distributors and the added products within the industry like the e-books and movie streaming despite competition. The diminishing music CD’s demand opened new avenues for a new venture on music online store. Innovative online products are significant in the new technological era thus benefiting the understanding of E-Sonic in meeting the foreign demand needs. The digital sales comprise of more than fifty percent of the total global music revenue.

Introduction

Strategic analysis

Investment analysis involves a trade of a different kind. If trading has costs, the optimum shifts another allocation becomes optimal as fees eat part of the return. Investing a small amount in an asset becomes less attractive, so costs favor investing in fewer assets assuming fixed fees (Goodale, 2013). The current business management lacks the required expertise in online marketing and software development. The industry thus capitalizes on the offerings via the exceptional services that stretch across the business market to a wider customer base. Other key components in the industry are the skilled market developers and researchers and he highly qualified and talented friends (Broner, 2008). It is thus significant for the online marketers to offer competitive incentives to the consumers for the purpose of recruitment and retention.

Identification of E-Sonic industry based on the North American Industry Classification System (NAICS)

The identification of industry of E-Sonic according to the North American Classification System (NAICS) fell under two distinct codes, which was, 512220 and 334614. The latter, according to the US Census Bureau fell under the classification of tapes, Prerecorded Compact Discs, and record reproduction (Goodale, 2013). The other coda applied to the Integrated Record Distribution and Production that were engaged in the promotion, release, and distribution of sound records. The establishments produced master recordings in other integrated record firms.

Internal competitiveness

The compensation consulting team of the E-Sonic suggested the application of a competitive market compensation that recognized the achievements of all contributors. Each business organization has its unique way of doing things and it is upon the human resource manager to promote the organizational behavior, eliminate, or modify them (Goodale, 2013). Most organizational cultures are deeply inculcated into the employees making the process of change a challenge to most human resource managers and business analysts.

Industry profile

The company is a leader in the recording and production studio industry making more than fifteen billion US dollars in revenues. The Sonic Record experienced a sharp drop in the music CDs demand in the last half a decade. The advancements in the media access and technological innovations offered the required alternatives that challenged the industry. The government came up with strict regulations in attempts to control music pirating, consumer preference and the burning of CDs (Broner, 2008).

The Sonic Records are, however, constrained to the extent that the diminishing sales exceeded the thirty percent mark. The regulation of the incessant enforcement by the Recording Accusation Industry of America together with the litigation fears on the part of the law offenders’ deterred the illegal activities. In addition, the high consumer demand was evidenced by the increasing online music stores. The Sonic Records is thus inspired to comply with the new music delivery method that is revolutionary and thus, rapidly adjust to the market response and shifts.

Labor market assessment

The labor market assessment describes the current labor supply, primary characteristics of a market, and the future trends that influence the recruitment of qualified personnel for E-Sonic. No infinite divisibility results in an almost unsolvable problem many local optima. Solve for every optimum but when the number of assets increases the number of points increases and becomes unsolvable (Gaunta, 2010). Furthermore, optimization might result for example in a weight of 0.734; this has to be 0 or 1 with no infinite divisibility, which results in both cases in a worse risk/return tradeoff. The momentum anomaly states that based on middle-long term autocorrelation, assets that have performed well in the recent past will outperform the losses for another year.

Benchmark jobs

The most significant positions for the firm are comprised of the software developers and engineers, market research analysts and the Customer Service Representatives, besides the typical occupations (Goodale, 2013). The Customer Service Representatives handled the complaints of the consumers, provided organizational information on the services and products and process orders. Strategic planning as a function of the human resource is a process by which the senior management of a firm sits down and determines the fundamental goals of an organization and ensures that means of achieving them are explored in the long term while still providing other adaptive short-terms.

Compensation surveys

In 2012, the median wage was 11.7 US dollars hourly, a figure that was projected to rise by up to 13 percent by 2022. Computer skills spelt the best job prospects for the firm. Customer service was significant as it enabled the firm to distinguish its competitors (Broner, 2008). Professional development programs should be put in place to enhance the hands-on skills of the employees. This will be implemented through periodic workshops and mentorship programs

Functional capabilities

The functional capabilities of a firm would determine the success of its operations. The E-Sonic through the evaluation of the operations such as research and development, engineering, management information systems, marketing, and the human resource provide a comprehensive compensation strategy that is expected to function within the confines of the organizational business objectives (Goodale, 2013). The E-Sonic was compelled to maintain its functional capabilities due to the competitive nature of the online music stores. The acquisition and retention of appropriate talents is expected to successfully align to the firm’s compensation strategy.

Human resource capabilities

The capabilities of the human resource team are evaluated and assessed through the analysis of the presenting weaknesses and strengths of the labor force of E-Sonic in efforts to establish an approach of talent procurement and retention activities (Merkey & Steven, 2009). The comprehension of the enhanced productivity of the workers is significant in steering the core of competitiveness within the music industry. The establishment of merit programs would enhance the customer service experience by giving incentives to employees with predetermined performances.

External competitiveness

External competitiveness is an important concept for most firms and often calls for time and investment analysis. Time analysis data is often used but faces diverse challenges in advanced investment analysis and could defy the assumptions of linear regression. One of the assumption states that residual errors are correlated leading to errors in coefficient estimates (Goodale, 2013). Restrictions on portfolio weights are used to limit exposure to specific sectors, but they limit diversification and lead to an increase in variance instead of decreasing the risk as it was supposed to do.

Competition

The E-Sonic have a strong determination not to lag behind on the establishment of an online music store that would effectively compete with the players that are already established in the industry. Some of its key competitors are the Rhapsody and Amazon, ITunes, the customizable radio stations like the Pandora and the free online stores. The firm must, therefore, have effective strategies and appropriate digital business model to remain competitive despite the increasing lure of online piracy (Goodale, 2013).

The firm must maintain their competitiveness in the development of user-friendly software as well as music branding the mission being to establish a global leader in the online music stores and prominence of the firm within the recording industry. Investors are faced with immense challenges. There are limits on short selling and it is not that easy to get a bank loan for it, but the restriction will limit the possibilities in portfolio optimization which depends on long and short positions.

Foreign demand

The figures on the foreign demands as reported by the New York Times article showed that the reports by the International Federation on Phonographic Industry granted relevant encouragement. The music industry may have declined generally but the digital sales and the new online sources of revenue continued to grow significantly to an extent that offset the diminishing CD sales. The digital revolution was once thought to kill the music industry but the opposite is true as the innovation has revamped the sector remarkably. The overhead record companies were lowered by the digital delivery of music (Broner, 2008).

E-Sonic could, therefore, take full advantage of the experience and the demand robust profitability in the foreseeable future. In countries such as the US, India, Sweden and Norway, digital sales already comprise more than half of the total music revenues bringing back the executive skills and knowledge on demand (Goodale, 2013). For instance, New York and London book publishers began hiring digital experts and not just the record companies. In addition, countries such as China and Russia where the digital sales are still emerging, the legitimate digital services are strained while piracy remains a major challenge.

Industry long-term prospects

The Price Water Coopers showed that the general outlook for the E-Sonic was positive and encouraging as two thirds of the growth revenue from the advertising and customers will be in digital form (Gaunta, 2010). It was suspected that 241 billion US dollars growth in the total media consumer and total entertainment and advertising revenue between 2013 and 2018 will be from the digital stores, comprising of about 65%. The establishment of new models and the creation of new markets caused the industry to grow and evolve from the classical form. The growth and revolution amasses the consumers and caused an expansion of the international audience for most artists.

Point value for E-Sonic

Digital downloads accounted for approximately 65% of the digital revenues that served to escalate digital growth in the developing countries like Hong Kong, Slovakia, Philippines, and South Africa, making the digital downloads to remain a significant revenue stream (Goodale, 2013). Reports by the International Federation on Phonographic Industry showed that the revenues for the online industry grew by 4.3% in 2013 for about 6 billion US dollars. Subscription and streaming revenues grew by 50% in the past year to reach a ceiling of 1.1 billion US dollars thus precipitating the overall growth of the music industry in Europe.

The external market environment

The strategic analysis of the E-Sonic will decipher through the five external environment elements that include competition, the industry profile, the industry long-term prospects, foreign demand, and the labor market comprising the E-Sonic business. The external market of the firm was faced by a diminishing demand for music CD’s. It was in the interest of the firm, therefore, to gear towards the evolving business model. The internal management lacked the online management and software development expertise (Goodale, 2013).

Pay policies

The positions in the company will have prescribed compensation package depending on their competencies and level of operation. The employees will also be subjected to allowances that will vary based on their geographical locations. The allowances will not exceed the monthly net salary and should not be below 30% of the prescribed net compensations (Broner, 2008). The employees will also enjoy an annual leave allowance equivalent to their one month pay. Recruiting talent would enhance the catapulting of the organization in to a greater scale. Developing an inviting and competitive structure of compensation would attract and retain more skilled workforce.

Reference

Broner, S. (2008). Employees' perceptions of leaders' attitudes and employee retention: A quantitative study on perceived attitudes. Phoenix: University of Phoenix.

Gaunta, C. E. N. (2010). A focus on self-marketing and value creation: An analysis of human resource management executives' perception of business competencies. Minneapolis: Capella University.

Goodale, G. (2013). Sonic persuasion: Reading sound in the recorded age. Urbana: University of Illinois Press.

Merkley, R. J., & Steven, A. (2009). Describing Human Resource Development in Illinois Social Service Organizations.