A Business Report to the CEO of the EMI Music Group
Introduction
One of the oldest and universal forms of communication, touching every person of every culture in the globe is music. The recorded music industry has grown increasingly with many technological breakthroughs. But for the last few years the recorded music industry is facing problems with the technological breakthroughs of different kind. The global sales of recorded music fell by 7% in value and by 8% in units during the 2002, thanks to the mass downloading from unauthorized file sharing on the internet and the massive proliferation of CD burning also known as “Piracy” ()
EMI is the world’s largest independent music company, operating directly in 50 countries and with licensees in the further 20 and employing over 6,600 people. The company comprises two divisions. The EMI Music, one of the global recorded music companies and the EMI Music Publishing, the world’s largest and most successful music publishers. EMI represents more than 10,000 recording artists worldwide, spanning all music genres and owns one of the finest catalogues ().
EMI strategic approach over the last five years has involved in refocusing EMI on the needs and desires of the modern consumer, aligning their interests more closely with their artists, investing in their people, skills and technological capabilities, and ultimately setting as their guiding principle of selection and development and investment in unique, long-term artists and musical content.
But with the existing music industry, there are also many competitive companies which are also going on the top. Moreover, the continuous threat of mass downloading from unauthorized file sharing on the internet and the massive proliferation of CD burning also known as “Piracy” should be considered and EMI must be alarm and should develop new marketing strategy to be able to cope with the competition and to avoid great loss.
SWOT Analysis
SWOT Analysis is a tool for auditing an organization and its environment. It is the first stage of planning and helps marketers to focus on key issues. It is a general technique which can find suitable applications across diverse management functions and activities. SWOT stands for strengths, weaknesses, opportunities, threats. Strengths and weaknesses are internal factors while opportunities and strength are external. Performing a SWOT analysis involves the generation of strengths, weaknesses, opportunities, and threats concerning a task, individual, department, or organization.
SWOT analysis can provide a framework for identifying and analyzing strengths, weaknesses, opportunities, and threat. This can also provide an impetus to analyze a situation and develop suitable strategies and tactics, a basis for assessing core capabilities and competences. Moreover, this can provide the evidence for, and cultural key to change and a stimulus to participation in a group experience.
Strengths
EMI Music group has an advantage because they compose of the top selling artists, best songwriters, and extensive catalogues of recordings. Moreover, EMI has also a wide range of musical genres.
Financial confidence for EMI Music as reported that the company has significantly outperformed the industry. Co-CEO EMI Publishing (2006) represent that the business has a remarkable track record, consistently outperforming the industry for the past several years. Revenues increase by a 3.9%, operating margin has improved by 12%, profit before tax increased by 12.9%, and earnings per share improved by 19.8%
Weakness
EMI music industry is poor in retailing their products. There is a problem on low sales on the retailing of the products.
Opportunity
The advent of digital music is an opportunity of the music industry because it will actually propel to higher profit. Another is internationalization, expanding through penetrating to other countries.
Threat
Competition with the parallel industry is one of the greatest threats to any business venture and EMI music group is not an exception to that, with the presence of the Universal Music Group, Sony Music Entertainment, Warner Brothers Group, and BMG Entertainment.
In addition to that, with the revolution of the new technology of internet, it does bring many forms of threat to the music industry. With the MP3 which is the compression technique which allows music to be recorded into small files which are downloaded from the internet. Another form to this technology is the Napster which lets users share MP3 files over the internet, in other words, it makes music available free-of-charge over the internet. This makes the new evolution of music piracy.
Fig. 1 SWOT Analysis of EMI Music Group
Industry Analysis
Porter’s 5 Forces Model
Porter’s 5 forces model is a concept that involves a relationship between competitors, suppliers, buyers and alternative solutions to the problem being addressed ()
From the figure 1 (Porter’s Five Forces Model) below, five forces are considered. These are the threat of new entrants, threat of substitutes, the bargaining power of buyers and suppliers and the industry rivalry.
The threat of new entrants is considered as rather weak because it is hard to enter an international business in any form to establish internationally and with the EMI Music Group standing in the industry it is not easy for a new comer to turn out the company.
Next, the power of buyers is assessed as strong because buyers are the life of business and in the music industry competition relatively high and music is a fad that when it is not already in sales would go down.
After that, the power of supplier is being assessed as strong because in the music industry having good talents and good facilities will facilitate a better competitive advantage.
And finally, the threat of substitutes is assessed as relatively strong as the problem of the music industry today is piracy. Piracy cost lower than the original that buyers would rather buy that pirated CD’s and with the free downloading in the internet. This had really cause trouble to the music industry as a whole.
Fig. 2 Porter’s 5 Forces Model
Marketing Mix
Product
EMI Music Group is one of the largest independent music companies. They produce the most popular music CD’s. Their product has no problem for these have been saleable to different types of people. Their packing will depend on the artist. The company should also provide after sale services to make the product more attractive to buyers.
Promotion
Promotion is the most important aspect to make your products make sales. Promotion should be done more on television such as MTV, and to other music television and radios to promote the songs and the artist and make it known to everyone. Popularity of the artist also has a great deal to sales. Concerts also are one way of promotion.
Pricing
Price has additional component of value in consumer’s mind. Prices should be appropriate to the intended target market. Volume discounts should also be given.
Place of Distribution
In the recent days, music industry has been transformed by the emergence of the digital technology. There are new ways to purchase, store and enjoy music. EMI should also go into exploiting the digital technology in response to the changing preferences of the consumers. EMI should make 100% of their music available throughout all legal and commercially viable digital channels, to enable people to find and consume any music in any form at any time and place. The online and mobile offer music fans unlimited choice of selection of music and it would help to extend degree of interaction to customer.
Digital technology should not be considered a threat by the EMI but instead an opportunity to go further on the distribution and increase sales.
Conclusion
EMI Music Group has always been competitive with its products and talents. There are sometimes fluctuations in their sales but they always cope up with it.
In the SWOT analysis, it shows that EMI has greater strengths than weaknesses. That would mean that the company is strong enough. And the opportunities should be exploited for any way of its expansion. And the threat should not always be considered threat but an opportunity to be better.
With the industry analysis, Porter’s 5 forces model has been used. Threats on the new entrants, substitution, the bargaining power of buyer and supplier, and competition should always be considered in every industry for it will affect the company in any way.
Bibliography
Credit:ivythesis.typepad.com
0 comments:
Post a Comment