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HMV Group plcs environmental and strategic position

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Introduction This is an informal report addressed to the City Analyst outlining the analysis and evaluation of HMV Group plc's environmental and strategic position, giving suggested new organisational strategies and plans. Environmental and Organisational Audit Environmental and organisational audits are used to discover a company's position in their market and environment, and the company's physical position. Two possible environmental audit techniques that can be done on a company like HMV Group plc are Porter's 5 Forces and PESTEL analysis. Porter's 5 Forces (Source: Franteractive Inc, 2008-2009) Porter's Five Forces model is made up by identification of 5 fundamental competitive forces: Rivalry among the existing players HMV Group plc is one of the world's leading retailers of music and DVD and the leading retailer of books in the UK and Ireland in terms of total sales; with HMV operating through 692 stores in 7 countries and online, and Waterstone's operating through 313 stores in the 4 countries and online (HMV Group plc, 2009a). Even though HMV Group plc is a huge successful company, they still have to keep a close eye on their competition, because it is always possible for one of the competitors to develop in a way that will increase their market share overtaking HMV. Such competitors include, Amazon, Play.com, supermarkets, iTunes, eBay, WH Smiths, Borders and although illegal, piracy. Threat of new entrants Threats of new entrants should always be of worry to any business no matter how big and established they are. It is unlikely that a new entrant will pose an immediate effect on HMV Group plc, because is an extremely difficult task to get high market share as soon as one enters a market; but it will mean more pressure on HMV Group. However if a well establish company moves into HMV Group's market it is likely that they get high market share quickly, and if HMV Group don't have a contingency plan for a situation like that it can be fatal for the business. ...read more.


If HMV are making a profit on the product but the time spent developing the product is much better served on other areas of the business, then HMV Group need to decide whether or not to keep the product. Value Chains The objective of using value chains is to give a bird's eye view of the HMV Group and what it does. It allows HMV Group to see how it organises and performs their activities, which gives competitive advantage (BPP 2004b, page49). (Source: 12Manage, 2009) Inbound Logistics This includes transportation, stock handling and storage, communications, testing and information systems. Operations This includes processes, packaging, maintenance, testing, and customer services. Outbound Logistics This includes packaging, storing of products, testing products, communications and transportation to customers. Marketing and Sales This includes information systems, advertising and promotion and persuading and enabling customers to buy products. Services This includes after and pre sales customer services, in store customer services, guarantees and warrantees, installation and product testing. Support Activities The support activities are there to improve the primary activities. Value is added to the primary activities by improving the support activities. For example, HMV Group acquired a new Chief Executive Officer and MD in 2006 (HMV Group, 2009c) which has had a massive positive impact on the group by improving the primary activities. Strategic Positioning Techniques Ansoff's Matrix Ansoff's matrix is used to indicate the risks and rewards involved when launching new products. Risk Risk Existing Products New Products Existing Market Market Penetration Product Development New Market Market Development Diversification (Source: Wall, Marcouse, Lines, Martin 2003) A new product that HMV are launching is the release of pre-played games. This is the lowest risk tactic, according to this model, because it is an existing product in an existing market. This means in theory there should not be any problems with the launch and success of this product. SWOT Analysis Strengths One of HMV Group's strengths is their buying power. ...read more.


By adapting our products to suit new technology, we hope widen our target market which will set us up for new technological products in the future. Thirdly, we are driving cost efficiency by streamlining the supply chains for HMV and Waterstone's and by reducing stock levels. We hope to do this by exploiting Group synergies in the areas of procurement and consolidating certain back office functions. Resources Changes In order to implement this strategy and complete the objectives, a few additions will need to be made to HMV Group's resources. First of all more staff will need to be hired or contracted to partake in the additional research. Specialist staff may need to be hired who know more about the digital book technology, support both HMV Group and their customers. Additions will need to be made to staff training to ensure they understand the new product. New delivery resources may be needed because the products will be coming from somewhere new. A possible major resource change will be in the purchase/ download system. If HMV Group designs it themselves then the financial resources needed would be vast. Installing the systems in stores is another resource change and hiring/training staff to know how to use it is too. Summary HMV Groups current competitive position is very good, because it has a high market share and still keeps their customers in main focus. Their drive to be innovative puts them at a leading edge next to their competitors. With experienced management all moving in the same direction behind HMV Group, the success of the company will proceed to increase due to the constant forward moving decisions made on a daily basis; and with new strategies in place, HMV Groups future only looks brighter with higher market shares and profit margins. With HMV Group already having a foot in the international market, prospects of gaining a huge variety of market segments are likely, and if managed well HMV Group could become a leading company worldwide, offering all varieties of entertainment. ...read more.

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