Audible Company - Term Paper Example

Sur Audible Company The audible company is an online company that provides audio content to its users. It largely depends on the use of the internet to provide books, magazines, novels, and associated educational materials in audio format. Audible’s customers can download content online and burn it on their discs or play the audio on computers or mobile phones. The company taps on the digital media to take advantage of the internet and make content accessible to people easily. It has enjoyed massive customer base over the years and formed an alliance with big companies such as Microsoft and Random House. However, the company faces a dilemma as it is running out of cash as the costs are quickly outweighing its revenue. The paper focuses on SWOT analysis of the company as well as giving an overview of its strategies and how best it can use the existing opportunities to come out of the dilemma. A SWOT analysis is a management tool used in developing business strategies. It focuses on the strengths, weaknesses, opportunities and threat that the company faces in the business environment (Valentin, 2001:57). The business environment is defined by both external and internal factors. The external factors are beyond the business control, but they impact on the organization’s operations. The analysis of the external factors enables an organization to recognize opportunities that it can easily tap into and the threat that are restricting its operations. The Porter’s five analysis- competition, entry barriers, and buyer-supplier behavior- are very crucial when identifying the (OT) strategies (David). Conversely, the internal business environment includes all those activities that the firm can control. These factors include products produced, market share and segmentation, revenue versus cost analysis among others. The value chain identifies the factors that are used commonly used by firms in their operational activities especially the internal factors to deliver a quality product. The analysis of internal factors and value chain is thus important in establishing the strengths and weakness (SW) a firm possess in a given industry. The following is a SWOT analysis of the Audible Company. Strengths Weaknesses Increasing Inventory turnover and market base Audio content does not address the current time issues such as newspapers and daily magazines High-quality audio content Copyright infringements concerns Ability to post content online where customers can download it Incurring costs such as royalties to authors before their products could sell Flexible software and a user-friendly web interface for the customers who visited their site. Low levels of revenue Promotional activities such as rewarding customers through referrals Weak product differentiation strategies such as ‘select titles or authors. Opportunities Threats Demand for audio content by commuters and fitness individuals Over inflated expectation and media hype that witnessed a bubble burst Technological advancement in the digital media and the internet Competition from rival companies such as Media Bay and retail stores Financial support by strong companies such as Microsoft as well as business alliance with other companies Presence of libraries that had more access to content resources and much cheaper Preferences of access to educational materials and other content in audio form as compared to spending many hours in the library by most people. Exclusive control of content by owners making it hard for diversification Audible’s 5 Elements of Strategy A firm’s elements of strategy involve an integrated set of choice that addresses how it will achieve its set objectives and goals. The key elements commonly referred to as five elements of strategy include arenas, differentiators, vehicles, staging and economic logic. The following are the Audible’s company 5 elements of strategy: The company identified the digital platform and the use of the internet to provide content in audio format as its strategic arena. To achieve higher returns and a larger market share the company integrated the use of technology and charged lower subscription prices. It also developed a strong portfolio for its product. The relied on alliances and shareholder capital to drive their operations. Microsoft company was the largest shareholder. They also formed alliances with Random House, mobile manufacturers, and Amazon The company stresses on ‘quality and not quantity’ to ensure that they gain a better customer reputation for their products. By converting content to audio format, they could lower operational costs as it could be easily stored online ad viewed any time thus forming a strong economic logic. Findings and Results Basing the argument on the SWOT analysis performed earlier the company faces a decline in revenue to finance its activities. The decline can be attributed to the competition levels from their rivals, inability to cut on excessive operational cost and the burst bubble of the hyped internet revolution. It is also faced with infringement of privacy concerns thus limiting the amount of content online through ‘select books and authors’. However, there are options that the company can consider to overcome its revenue crises. First, it should expand on product differentiation by providing a wide variety of content to choose from. Second, it should cut excessive cost on operational activities. Finally, it should tap on the increasing preference of people to view content online by providing a wider variety to choose from as well as reduce the subscription prices. The business is still worth saving basing on its performance in the previous years. If the company were to be sold, it would be acquired by the rival competitors such as media bay so that they can expand their market base. The Microsoft company who also have some interest in it since it helped promote their products such as the Windows player. Companies such as the Microsoft that eye on technology revolution, in the long run, would invest more in the Audible Company. The audible company has a better chance of thriving well in the long run due to technological advancement and the use of the internet. Microsoft Company will benefit more since most of its products tap on technology, and thus more investment in the company would result in greater returns for both companies in future. The audible company can become a profitable if it adopts strategic measures that will reduce the operational costs. These measures will include tapping into the opportunities in the business environment as well as product diversification. They also need to establish better policies on royalties to ensure that authors and content owners are paid with the sales trend. Moreover, they should focus on immediate content to ensure that they gain a larger market segment. Conclusion The audible company, therefore, stands a better chance of survival if it will adopt policies that will be geared towards cutting on excessive operations costs. They need to ensure that they tap on the various opportunities such as meeting the customer’s demand as well as product differentiation strategies. They also need to restructure their objectives and identify the key areas that need much focus such as how to tackle competition and manage royalties. Works Cited David, Fred R. Strategic Management Concepts And Cases. Boston: Pearson, 2013. Print Mitchell, I., and II Kent Mark III. "Audible. Com." (2004). Teece, David J. "Business models, business strategy and innovation." Long range planning 43.2 (2010): 172-194. Valentin, E. K. "SWOT analysis from a resource-based view." Journal of Marketing theory and Practice (2001): 54-69. Read More