HMV PESTLE and SWOT Analysis

HMV PESTLE and SWOT Analysis1.0 Executive summaryHMV pigeonholing a U.K giant delight friendship is one of the struggling firms that at last succumbed to closure of its profession operation in 2013.This delineate will seek the HMV comp some(prenominal) profile, current financial, positioning in the grocery store take aim, current transaction model, belligerent positioning and HMV bottom commercialise.Why the companys sales approach pattern bewilder dropped and how the company got into financial crisis that led to its closure in 2013. This report draws attention to the fact that in 1960s, HMV has a strong shop HMV is a major(ip) retail merchant that specialises in medicament, film, games and technology products, the validation has been a efflorescence dog in the entertainment application for many years immediately, earlier to the rapidly evolution of technology advancement, which had affected and is still affecting the wider consumer demeanour in regarding to ho w medicament, film, games and technology products be macrocosm purchased by the consumers.With the rapid duty period of consumers onto online medicament / movie streaming diffusion sites much(prenominal) as iTunes, amazon, Netflix and so on, where does HMV fit in or how does HMV sustain in the current entertainment or medical specialty distribution commercialise which is upliftedly technological pass on and hyper agonistic. It is therefore recommend that HMV needs to invest to a greater extent in technologies to grapple in the industry.2.0 Company profileHMV Retail limited is U.K spark advance music and diversion Company, founded in 1921 on the street of Oxford in London. The success stays with the b modestup and creation of the retail branch of the business from 1960s with over 239 stores in UK and Ireland and employing over 5000 staff before the closure of its business operation in 2013.Since HMV is been in operation it has made music and entertainment availabl e to its guests in every format imaginable from sheet music and the earliest gramophone 78s to like a shots digital d professloads http//www.hmv.ie/about-usIn 1986 HMV Group is formed and the retailer looks to expand and open stores in Ireland and In 1999 HMV media launched an an e-commerce site.In 2002 HMV media went public on London Stock Exchange and changed its chance on to HMV Group.HMV experience competition from raw(prenominal) competitors in the industry much(prenominal) as iTunes, Amazon supermarkets and others in the industry and with profit in il efficacious download it was necessary to invest in online business.In 2008 HMV launched its social network Get closer which allowed users to import their own music library in a bid to rival online music stores iTunes and Napster www.retail-week.com/hmv-timeline but prove unsuccessful and was closed in September 2009.. The business in like manner piloted its call back Pure Play loyalty scheme. HMV fail to respond quickly and compete against online music stores and the increase in extralegal downloads the company suspend its shares in January 2012 and months later in April HMV is bought by Hilco for 50 trillion and takes over the remaining 141 storesIn January 2013 HMV went into administration with over 230 stores closed in UK and Ireland and over 4,000 jobs staff losing their job two months later a new HMV emerge under the new ownership of Hilco.Today HMV trades from over one hundred twenty stores in the UK and fast rebuilding its presence in Ireland, an updated product mix, refreshed stores and new digital services together with a commitment to arrive guests much exclusive in-stores and experience than ever seen HMV regain its rightful place at the home of entertainment. www.independent.co.uk/news/business/news/hmv-closes-historic-oxford-street-store-9056780.htmlThe current signalize executives of HMV are Trevor Moore (CEO) and Ian P Kenyon (Finance Director) http//www.bloomberg.com/quote/HM VLN/profile2.1 HMV financial side eliminate Financial Status of HMVAccording to Whetten (1980a) financial decline happen as a result of companys mismanagement or issues think to internal and external factors. The data below shows how HMVs financial status started to nosedive from 2006 till 2012 which eventually be HMV and the company went to administration 2013.3.0 Competitors AnalysesIn recent years, thus with the massive influx of online music / audio distribution sites such as iTunes, Amazon, Hulkshare, Soundcloud, Torrent, Mixcloud and many more plus recently ill-famed Netflix, an online video/ network streaming subscription services that enables customers / subscribers to rent and watch movies online in the comfort of their own home. In a style Netflix is more or less(prenominal) a movie rental provider, thus all the minutes between Netflix and the customers take place online.HMV introduces a colossal challenge in sustaining in the current entertainment market industry in the foreseeable future, as the rafts look of doing things are drastically changing as a result of technology advancement, accordingly social media networks such as Facebook, Twitter, Instagram, Blackberry Messenger, Linkedn, Snapchat and many more social networks are ontogeny and emerging on a daily basis.HMV is a visible entity which soon relies severely on consumer consumption based on how many customers scold its shops and how large the customers purchases are, thus vast majority of people in todays world actually live in a practical(prenominal) world, they shop online, interact with friends or make new friends online, study online, brim online, gamble online, game online and more importantly people tend to batch the online community as their main source of getting new music e.g. if Lady GaGa intends to release a new mavin, the quickest centering to learn about this is on her Twitter page or Facebook page.Beyonce released her ordinal studio album overnight and online on December 13th 2013 without no prior promotional fiasco or press releases, the album is solo available to be purchased on iTunes.AmazonAmazon.co.uk, a subsidiary of Amazon.com, was launched in 1998. Today, the site provides fast, convenient service for customers in the UK and Ireland www.amazon.co.uk/About-AmazonAmazon operates online business interchange CDs DVDs games and books. Amazon adopts the cost leading strategy their aim is to sell their product at a set about charge differentiate to others in the industry. They have been able to main the cost leadership strategy due to selling purely online hereby thriftiness money to maintain a physical store. Due to lack of physical presence where customer hindquarters go into the store and purchase their products Amazon continue to invest heavily in technology to make the obtain easier for their customers. except Amazon is losing a lot of customer e particularly the sure-enough(a) generation who will rather go to st ore and purchase their goods. However they have been able to maintain their share in the market with their low cost leadership strategy and ease online shopping which has contributed to the massive increase in their sales.ITunesIn 2004 iTunes store was launched in the UK serving UK and Ireland due to its considerable success in the U.S. iTunes sold over 70 million stresss in its first year in the U.S.Apples online store is too more than righteous an online music service there are other sub-stores too which phonograph recordo biscuit music videos, audiobooks, movies, free, apps, and more http//mp3.about.com/od/digitalmusicdelivery/tp/topmusicstores.htm.Apples iTunes account for 67% of TV downloads, 65% of movies Kevin Bostic. ITunes success has been attributed to online presence where customers are able to download a single track rather than depraveing an album or physic disk. ITunes target younger generation than any other in the industry devising it easier for them to downl oad musicHowever it is not available for everyone which has greatly trim its market share its only available to Apple trick users i.e. iPhone, iPod and iPad. ITunes continue to face threats from Amazon, illegal music downloads and online free music downloads websites.NetflixNetflix was founded in 1997, started its subscription based digital distribution service in 1999 and has been very powerful in the United States since then, thus after embarking on the Irish edge and The UK about two years ago, business has not been as general for the DVD seller and rental stores such as HMV and thus also the likes of Xtra-Vison.Digital claims over 50% of all UK music sales appraise in second quarter of 2013 Fiona Keenan.HMVs recent store closures have hit the high street retailer hard, with its number of shoppers almost halving in the latest 12 weeks compared with the same quarter last year and its market share dropping by 8.4 percentage points(Fiona Keenan)HMV slipped from its position as Britains second largest entertainment retailer to fifth in second billet as Tesco replaced it as the second largest entertainment retailer in 2013. share share of the entertainment market (includes physical sales of videos, games and music and digital sales of music)12 wks to 30 Sep 1212 wks to 29 Sep 13% changeAmazon18.3201.7Tesco11.917.15.2Asda9.812.12.3HMV1810.6-7.4iTunes symphony9.18.8-0.3Sainsburys6.86.90.1Game Group5.66.20.6Morrisons2.92.90Play31.9-1.1 early(a)14.513.6-0.9http//www.levidepoches.fr/contagiousideas/2013/07/digital-claims-over-50-of-all-uk-music-sales-value-in-q2-2013-kantar-the-research-firm-based-the-sta.htmlMarketing surround of HMVAn organisation must understand its environment if it is to sour changing market conditions and target its market successfully. BPP (201087) this consists of two Macro and small environment, within the marketing environment an organisation needs to consider both macro and micro factors.PESTELPoliticalGovernment enforces law on how organisation run and responds to competition. Any changes in government policies surroundal protection laws revenue enhancement policy and Employment laws will influence how HMV makes its decisions. In the UK the increase in VAT to 20% has led to decrease in sales of music and putting HMV under pressure unlawful download is a major problem and still continues till today. It is therefore a problem in the music and movie industry.EconomicsThe current economic situation has huge impact on household, HMV decisions will be influenced by economic factors i.e. Unemployment has gone(p) up in the past years people have less money to spend on non-essential items leaving them with little or no money to spend on entertainment. Customers now prefer to shop approximately for better deal therefore not loyal to a brand anymore. Customers now go online to see what HMV is offering and most go for cheaper options from competitors or even download illegally .HMV needs to find a office to be c ompetitive in the market kindly/culturalSocial /cultural affects peoples values, perceptions and behaviours. Younger generations are more interested in media and social groups compare to older generation. Entertainment and music is worthy very important in our everyday life most specially the younger generations spending more on games and music. Market for DVD and CD is falling as customers are now turning to alternative such as MP3 players with more people storing music on their phones and laptops. Sales of CD and DVD have fallen massively as people now turn to downloads or streaming sites. HMV needs to understand what is going on in this constantly changing environment and try to market their product to meet the needs of this people.TechnologyTechnology is very important in todays market environment. Technology has given HMV competitive payoff in 2007HMV launch get closer which was launched via the media and in UK stores. The idea was for fans to fail content by the site and buy more music as a result. HMV also launch a download service through iOS and apps to tempt mobile users to purchase music objet dart on the go. HMV also strike a deal with APPLE to allow users download song from the apps straight into their iPhone gaining competitive vantage over iTunes. Survey conducted by Entertainment Retailers Association (ERA) in 2012-2013 shows that digital download increase by 40%.Expanding into digital market gives HMV completive advantage to compete in the market with ripening consumer demand. In 2009 HMV partner with Curzon artificial to bring the cinema experience to HMV retail outlets across the UK a move which could deliver earnings of 3m www.theguardian.com. HMV needs to continue to invest heavily in online business and find a way to compete in the market as online market is continually developing driven by advanced internet technologies and secure payments. Online stores such as Amazon are offering customers competitive scathe due to cost saved running a physical store.EnvironmentGovernment are putting pressure on organisations to become more responsible to the society by finding ways to reduce pollution and cut down their waste by introducing laws regulating environmental pollution to reduce environment damage and act in a way which benefits the society .People are becoming more conscious about the environmentMillions of media disc are thrown away yearly with burning them leading to the release of harmful toxins leading to drive to recycle them.Larger faculty storage CD (album rather than singles) and DVD that can hold a larger amount of media are encouraged to reduce number of disc being made.Amazon is offering cloud drive and cloud reckon which can be used to store music eliminating the need for ironware and storage device this is any(prenominal)thing HMV can do as well.Legal extralegal downloading and Piracy are important issues that have constrained the growth of legal digital channel and severely affected the sales of physical entertainment. on that point is mass distribution of illegal download product which undercuts the retail cost that HMV and others are charging for their product. Until government measures and controls to reduce and eliminate copyright infringement are successful issues such as illegal downloading and piracy will continue.In 2010 the Digital Economy Act was made into law. It was introduced to regulate digital media in the UK, and to protect intellectual property and curb illegal file sharing. The vent of the Act into law was important for HMV, however its effect has been minimal as offenders of music and film piracy are rarely caught or face penalties.SWOT ANALYSISStrengthHMV has a well-known brand name with extensive market presence, since its opening in 1921 with Physical presence across UK, Ireland, Asia, Canada and USA.HMV has vast amount of experience in the music industry hence their relationship with music and film providers because they have been most fo r a while famous artiste/bands has recorded with HMV. HMV has both physical and digital presence in the market therefore sell to a broader market giving them competitive advantage over their competitorsWeaknessHMV lack direction and leadership in the past and during market structure change leaving HMV in debt. HMV was let up to react to change with low barriers to entry in terms of online sales. HMV is competing in an industry where physical sales are falling and profit is being reduced by intense competition in the industry, If HMV lower its price and break its stores appearance they will have competitive advantage over others who are just present onlineOpportunitiesHMV need to invest more money on digital market to develop a world overcome online presence as few people now go to stores to buy goods and competitors such as Amazon are ahead of HMV in online market if HMV wants to get back their market share they need to invest heavily in online market. HMV will need to improve on advertising to improve brand awareness and save its brand.HMV could also expanded further into world-wide markets as there might be less competition compare to UK and Ireland market this could be more profitable. HMV could open more physical outlets around Ireland and UK currently they only focus on prime shopping soil causing them to lose market in other areas on that points opportunity for HMV in cloud digital storage to keep up with competitors like Amazon. Joint ventures with other market i.e. supermarkets for market share growth. prospect in e-book and social network, in 2012 Sainsburys acquired HMV Groups shareholding in AnobiiThreatsThe continued growth of technology, internet, and illegal downloads is a threat to HMV. Its becoming more evident that customers wants goods provided from large numbers of services and it is complicated for HMV to meet these needs. There is also impact of recession on music industry people have less money to spend on entertainment and some are finding cheaper way to get their music hence downloading illegally. Illegal download is affecting the purchase of both physical media and online digital. According to Philip Beeching He explained, The three biggest threats to HMV are online retailers, downloadable music, and supermarkets discounting loss leader product. His warnings were ignored www.stratile.comCompetition has been growing and continues to impact on HMV profits thisCompetition threatens to diminish HMV sales and market share as well as their profit. Competitors like Amazon, iTunes and Napster are victorious over HMVs market easily. Supermarkets continue to providing more service in a location that is usually far away from HMV stores to reduce this threats HMV can go into joint ventures with supermarkets. HMV failed to adapt quickly to todays business model where more than 70% of music and video is bought onlineTechnology is advancing at an exceptional rate and opening new paths of opportunities by aid organisatio n to compete in the market place and gaining the attention of their customers. E business is the new trend in the music industry, HMV has been slow to pet the opportunity and competitors such as iTunes and Amazon were the first to set up online music market and took the lead in the market.HMV stores are under high pressure from music and DVD downloading, both legal and illegal. With stores across the UK Ireland, it reaches the more physical customers in the market. This multi-channel distribution would be a strong advantage for HMV if managed well. Security is an issue with online market HMV need to constantly monitor their website against internet threats customers wants to know that their details are protected when shipping on their website if customer know their website is secure this will generate more sales and any issue with security will be a disaster for the organisation.