xm satellie radio

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1. Perform an industry analysis on XM Satellite. a. What industry are they in? b. Who are the competitors? XM Satellite Radio was founded in 1992 as American Mobile Radio Corporation to provide a multi-channel audio service. XM radio is apart of the broadcast entertainment industry. XM strives to give their customers a more entertaining and complex way of listening to the radio. Although XM was a new innovation; Internet radio, broadcast cable, traditional AM/FM radio and SIRUS radio all formed a competitive landscape for XM. c. Porter’s 5 Forces Analysis • Threat of Entry-Low The threat of entry into an industry depends on the barriers to entry that are present and the possibilities of others threatening to begin operation into the same industry. Because of Government policies, and the issuance of only two FCC licenses (in which SIRUS was rewarded the other) and the entry of others into the satellite industry would require an FCC license, the threat of new entry would be considered low. o Capital Requirements: There are high capital requirements to enter the industry.(satellite cost=20 billion) o Economics of Scale: Because of the low monthly fees, the o revenues of the industry must be driven by economics of scale • Threat of Substitutes-Moderate The threat of substitute is when the product or service provided by a firm’s competitor meets the same needs as the ones being offered. Substitutes place the ceiling on the prices that an industry can charge and on the profits that can be earned. Because of the limitations of substitutes, the threat of substitutes for XM is moderate. o AM/FM radio: Has a cheaper price but doesn’t allow customers to hear commercial free radio o Internet radio: Has a higher monthly cost and some areas may not have access. o Broadcast cable: Has a larger selection of music but its availability is limited and not
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