Formulating a Feasible Business Strategy to Start the Business in the Home Entertainment Industry. A business opportunity has inspired me to start my own business in the home entertainment industry. The business in the industry will be performed by global

University Degree Business and Administrative studies

Formulating a Feasible Business Strategy to Start the Business in the Home Entertainment Industry

A business opportunity has inspired me to start my own business in the home entertainment industry. The business in the industry will be performed by globally selling DVD and CD products, which can be described as physical containers of entertainment elements from film, music and game studios. For acquiring information of the opportunities and possibilities of the business for me, who acts as an entrepreneur, relevant business strategy will be made as the following assignment.

Definition of the concept of business strategy.

The concept of business strategy will be defined as the points below.

To define the concept of business strategy, initially, the definition of strategy will be given.

Strategy is the determination of long term goals and course of action on achieving these goals. (Business Strategy 2004)

As it has defined, it is a designation of plans for action to achieve a particular goal. Similarly, for a company, it is a particular business goal.

One of the most important elements in the business strategy is their objectives.

However, before making the objectives, the mission should firstly be set. From this point, business mission is to provide information on the character of a company and what business a company is doing.

When the setup of the mission is done, there will be an inspection of the objectives. There are three different kinds of objectives: corporate objectives, functional objectives and individual objectives.

Corporate objectives are the objectives which are related to factors which determine an organization’s success. There are two kinds of it: financial objectives, which are the objectives on the concentration of financial results, and outcomes that management wants the organization to achieve; and strategic objectives, which aim at results that reflect increased competitiveness and a stronger business position.

Functional objectives are the objectives which “relate to a department or section and will include most team objectives as well.” (Business Strategy 2004: 5)

Individual objectives are the objectives “relate to particular people and to their work.” (Business Strategy 2004: 5)

In order to carry out business strategy management, there are five tasks to be done, as a process. It can be illustrated as following.

At first, the task is for developing vision and mission. When it is done, secondly, objectives will be set. Then, from the set objectives, it is necessary to formulate strategy and achieving objectives, as the third task in the process. Afterwards, implementation and execution of the strategy will be made. Finally, the last task of the process is to monitor evaluation and task corrective actions.

From the complete process described above, there is a complete form-up of business strategy management.

As in the business strategy management, there are four different performers which are called: senior corporate executives, managers of subsidiary units, managers of functional areas and operating managers.
The origin of the business strategy is supposed to be searched in order to have better understanding of it.

Strategy is originated from military and it consists of a plan of action designed to achieve a particular goal for the victory of battles in the war. Initially, a book from China, made by Sun Tzu, named The Art of War has introduced military strategies in ancient times. Later, the influence of military strategy spread into business for the purpose of winning business competitions by making plans to complete the objectives.

Setup of the business mission and objectives.

As in the home entertainment industry, we are a firm called “Home Tree”.

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The mission to the business can be shown in the following mission statement.

Mission statement:

“We are to provide entertaining experiences to every household by home media.”

As a company in the home entertainment industry, the objectives to the business can be shown as:

Corporate objectives:

Financial objectives:

Quarterly growth of a realistically stable amount to the revenue from the profits of selling the home entertainment products.
Increasing dividends to our shareholders in the home entertainment industry.

Strategic objectives:

Increasing customer acknowledgements and reputation on the entertainment products we provided, by measuring market share of home entertainment, ...

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The mission to the business can be shown in the following mission statement.

Mission statement:

“We are to provide entertaining experiences to every household by home media.”

As a company in the home entertainment industry, the objectives to the business can be shown as:

Corporate objectives:

Financial objectives:

Quarterly growth of a realistically stable amount to the revenue from the profits of selling the home entertainment products.
Increasing dividends to our shareholders in the home entertainment industry.

Strategic objectives:

Increasing customer acknowledgements and reputation on the entertainment products we provided, by measuring market share of home entertainment, annually.

Functional objectives:

Permanent qualify of DVD and CD products in manufacturing, both in internal contents, which can be enriched; and external appearances, which can be beautified.

Individual objectives:

Reasoned and responded in devoting into providing elements of home entertainment, by happily and heartily serving customer needs.

Identification of the stakeholders of the home entertainment industry and explanation of the significance of stakeholder analysis.

The stakeholders of the home entertainment industry can be shown as internal stakeholders, which are the managers and employees of Home Tree; connected stakeholders, which are bankers, suppliers who manufacturer DVD and CD product or studios of films, music and games; and external stakeholders, which can be identified as government and interest/pressure groups.

The significance of analysis of these stakeholders “is for the development of knowledge and understanding about other organizations in the firm’s environment.” (Business Strategy 2004: 17) Which in our case, it is to develop knowledge and understanding about other organizations in the home entertainment industry.

Conduct of an internal and external environmental audit of Home Tree’s business in the home entertainment industry.

Internal environmental audit.

It is a position audit which is “the part of the planning process which examines the current state of the entity.” (Business Strategy 2004: 45)

Analysis of SWOT.

It refers to the analysis of strength, weakness, opportunity and threats in the home entertainment industry for Home Tree.

SWOT of the home entertainment industry can be illustrated roughly as the table below:

From the table above, the explanation can be seen as:

Strength:

Cost advantage.

There will be low cost of raw material as the cost of making DVD and CD products are relatively low than buying the original film strips.

Strong advertising.

Advertisements from Home Tree in the home entertainment industry will be influential for matching the needs of owning the films, music or games which are favored by consumers.

Better product quality.

The quality of a product in the home video industry is not only focused on their appearances, like packaging, more importantly, what the product can bring is the adjustment of the quality of the product. For example, Home Tree has a product of home entertainment which is a DVD “container” of an Oscar winning Hollywood movie, customers who purchase the product is to see the high quality film on a DVD disc, rather than the quality of the disc itself. However, the new discs made must have the quality for stability of watching.

Weakness:

It can be too narrow product line. This is because for home entertainment, depending on the ability of customers, there is not much hardware for them commonly. For instance, if Home Tree wants to fulfill the needs for music from its customers, the products can be CDs. However, if Happy House changes the products into the newly invented blu-ray disc, there will be too much cost and customers have nothing to listen to the blu-ray disc. Therefore, there are fewer choices left for product lines.

Potential:

Serving additional customer groups. These additional customer groups are not necessarily had to be those consumers who are appeared in retail stores. With the signed contracts, some DVD and CD products can be specifically distributed to some public areas, such as airplanes, day-care centers, and hospitals and so on, fulfilling entertainment requirements for those people in such places.
Take market share from rivals.

However, the market share can be taken from the rivals by providing high quality products.

Expanding product line.

As previously mentioned, the product line in the home entertainment industry is narrowed; therefore, there are needs to expand it to be competitive in the market. The expansion method can be the different editions of the products. For example, a same movie can be made into several editions of DVD products: the original edition which is the original film, the special edition which includes another bonus DVD with special features and the director’s cut edition which expended the time lengths of the original film with the film scenes the director made and never before seen.

Threats:

It can be the gradually reduced customer needs for product. For instance, when a new music album has just debut to the public, with promotion methods made, there are high expectations from customers. As a result, the initial price for the product could be high. However, when time flows, more and more people already listened to the album and, therefore, enthusiasm for the product decreases. Accordingly, the price of the product will be lower and lower through time.

Analysis of the value chain.

It refers to the analysis of capabilities, costs and resources.

In the home entertainment industry, the value chain can be described as following:

Inbound logistics.

It can be done by signing the contracts with film, music and game studios. The films, music and games they made will be handled and be stored for the next process.

Operations.

The films, music and games made is been released to certain manufactures according to the contracts between the film, music and game studio and the factory. Afterwards, it will be made into Film DVDs, CDs and Game DVDs respectively for the next process.

Outbound logistics.

Distribute the DVDs and CDs made to the wholesaler or agents for their appearance on the shelves in stores.

Marketing and sales.

Promotion activities will be made. For a DVD films, there will be introductions of the DVDs online to attract attentions. For music CD albums, there will preview of the music in the stores and singers or composers of CD may perform various activities on spot or on TV to promote the album. For games, there may already be beta demo versions of the game released online free for playing. This is therefore a kind of promotion to have the game experiences for building up the sense of them in order to decide whether to make a purchase for customers.

Service.

External environmental audit.

Analysis of PESTOL.

It is to analyze social, political, regulatory and community factors.

Political:

In the political-legal environment, the organization operates with in a broad framework of laws. These laws could affect Home Tree in the following ways:

1) The selling and marketing of goods restricted by laws on description of goods. For example, as the film re-released from cinemas to our DVD products, the British Board of Film Classification works to regulate the description on DVDs’ package according to the classification of the films. The film classification scheme by the British Board of Film Classification will be used for the description on the package of our products to be monitored by laws.

2) Legislation on financial matters.

Economic:

As our products are not limited only within domestic areas, the international economic influence has to be considered.

International economic influence “include economic growth rates, inflation, interest and wage rates, protectionism and economic agreements.” (Business Strategy 2004: 27)

As it defined, for Home Tree, our DVD and CD products will be

Social-cultural:

This is the determination of make-up of the population and the lifestyle of society to have understanding of demography, “the study of population and pupation trends” (Business Strategy 2004: 28), which inferences environment in the home entertainment industry.

Technological:

The influence of technological environment can be illustrated as below:

1) The type of products and services Home Tree makes and sells.

As the recent state of technology, the type of products of Home Tree can be used as DVDs and CDs in consideration of their costs.

2) The way in which products are made.

With recent technology, the DVDs and CDs can be made by machine for a large amount of them.

3) The way in which services are provided.

Telephones and internet will be the major technological methods used for the services provided.

4) The way in which markets are identified.

5) The way in which employees are mobilized.

6) The means and extent of communications with external clients.

It relates mostly to our products that any change of it will affect:

1) The production costs and other costs of sales.

With the recent technology, the products, DVDs and CDs, from Home Tree can be made with machine effectively. Therefore the production costs can be saved if the high technology applied to machines for production.

2) The development of better quality products and services.

As the technology developed, the products of Home Tree can be made in better quality, as well as services.

3) The aids to the development of products and services.

If higher technology has been applied, it will be helpful to the further development to products and services of Home Tree.

4) The time and efficiency of products and services.

Technology assists Home Tree to produce DVDs and CDs more quickly and to have more reliable product quality. Moreover, the services will also be benefited from it to contribute more effective channel for providing them, accordingly its feedbacks, from customers.

5) The convenience of workers from their work.

Analysis of Porter’s five forces.

It is to analyze competitive conditions and industry attractiveness.

1) The threats of new entrants:

The home entertainment industry has a low barrier of entry, because it is an industry which is growing because requirement from customers are high. Nowadays, people have too much pressure and needs to be released from entertainment. Entertainment studios have their abilities to provide “raw materials” like films, music and video games therefore make the raw materials sufficient.

2) The threats of substitute products:

The substitute products in the home entertainment industry are internet video websites, online music websites, TV broadcasts and online downloading. As we are the provider of physical entertainment products, these virtual products in the home entertainment industry will have some threats to us; however, they are not much. The virtual products may be convenient for purchasing, however, depending on the purpose of the customers. For instance, if a customer wants to collect a film which is favored by him or her, the physical products will be chosen.

3) The bargaining power of customers:

It is low. Mainly because of that the elements of entertainment are sometimes considered as essential as sleeping and eating to ordinary people’s lives. As a result, there will be a lot of customer buyers existed in the market. Moreover, as the developed anti-piracy technology has been applied to DVD and CD products, formal standard items, which are seemingly could be easily copied are now specialized under protection of the law. Of the adding of the region code protection, which represents that by releasing DVD and CD products according to segmented world regions, it leaves customer less choice to acquire a truly worthwhile product of their favored entertainment elements.

4) The bargaining power of suppliers:

It is high because in the home entertainment industry, the existed companies, for example, may already signed contracts with major film studios. As a result, it is hard to acquire some high budgeted films from those film studios for making our DVDs. It makes the supplier’s raw materials the critical importance.

5) The rivalry amongst competitors:

There is high rivalry amongst competitors as the home entertainment industry is a competitive market which firms are intensively capturing a slice of the market. It because that the entertainment studios are actually competing from their films, music and games impliedly; influence of this has spread to the whole industry where our entity is in.

Analysis of internal and external environment with strategic positioning techniques and selection of a properly competitive strategy for entering the home entertainment industry.

As the competitive strategy for entering the home entertainment industry is important for Home Tree to create a dependable position in the industry, the differentiation strategy will be selected. The differentiation strategy is “the exploitation of a product or service which the industry as a whole believes to be unique.” (Business Strategy 2004: 75)

By applying the differentiation strategy, initially, the competitors should be monitored.

Having done the analysis of the competitors in the industry, there will be focus on the differentiation strategy.

In the strategy, there are four types of differentiation: quality, design, service and image. Quality is to design the same products but they need to be better. It means that Home Tree could add up more unique elements to its products than its competitors. For example, by releasing DVD products with multiple discs which include the original film disc and the special feature disc to improve the quality. Design is to apply technical differences to the products. Take Home Tree as an example, the package of the DVD products could be different. With technical support, the package could be transferred from plastic to iron. Service is to provide additional services. For instance, in the package of Home Tree’s DVD films products, a paper of bonus services, say, free online downloading of the same film, can be added for providing further customer services. Image is to build brand name. Home Tree could keep providing its high quality products for this purpose.

All in all, from the business strategy formulated for the exploration and exploiting of business opportunities and possibilities, there will be a clear direction as an entrepreneur, who will enter into the home entertainment industry, to make decisions on whether or not putting the ideas generated into practice. It is of assistance in the foreseeable future by the completed analysis of the home entertainment industry for the entrance of the company, Home Tree, as well as the planned competitive strategy.