Hmv Strategic Analysis

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strategy analysis 33⅓ R.P.M. SUBJECT TO CLASS PEER EVALUATION, SEE PROFESSOR TAN’S INSTRUCTIONS HMV GROUP © 2012 1 SGMT 6000 1 FORMERLY THE LOBLAW GROUP 1. KIRAN CHADARAM 2. NIANJIU LI 3. VI NGO 4. SEBASTIEN ROSNER 5. VARUN SHARMA 6. JEREMY WONG company background • First store opened in 1921 (London, England) • Public company; headquartered in England • 252 stores (UK, Ireland, Singapore, and Hong Kong) • Entertainment retail: music, film, games, and music accessories/technologies • HMV Live: owns venues, organizes concerts and festivals • HMV Digital: online music sale strategic issue • Industry structural changes: online delivery (Apple iTunes) • Price competition against supermarkets (Tesco) and online retailers (Amazon) • Seasonal; 1/3 of sales in December • Declining sales, negative net income, financial distress • Divesting Live business; sold HMV Canada and Waterstone (book retail chain) Re-focus on in-store experience and bank on technology sales OR change strategic direction? external environment • Consumers shunning high street retail • Online piracy + streaming vs. owning • Online downloads and streaming (e.g. Spotify, Songza, Pandora) increasingly popular • Proliferation of mobile and social media • Poor economy and tight access to cash • iDevices + accessories, headphones, etc. growth market industry analysis • Industry: Entertainment retail • Last 5 years: revenue fell at 6.0% per year • Next 5 years: market will shrink by 1.7% per year • Key success factors: adoption of technology, online presence, relationship with suppliers, copyright protection • Life cycle: CD/DVD à decline, video games à maturity • Highly-concentrated: Tesco, Amazon, Apple, HMV • Products are “made for the internet” main competitors • Tesco: • Supermarket • Sells CDs and DVDs as loss leaders • Price

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