1.0Introduction 2
2.0Contemporary issue 2
3.0 Porter’s Five Forces 4
3.0.1Bargaining power of suppliers 4
3.0.2 Bargaining power of buyers 5
3.0.3 Threat of New Entrants 5
3.0.4 Substitute 6
3.0.5 Rivalry 6
4.0 Personal reflection 7
4.0.1 Unresponsive 7
4.0.3 New market- subscription model 8
5.0 Summary 9
6.0 Reference 9
1.0 Introduction
In the environment of the economic crisis, many industries have to face the problems of the operator’s need to change both strategy and practice, especially the record industry. Speaking of the record industry, the HMV Company has caused great concern since, as the world’s largest entertainment products sales chain enterprise, it has announced officially entering bankruptcy protection due to the inability to attract investment (16/1/2013). In the context of the global economic crisis, this article will introduce the background of HMV and discuss HMV’s main operational issues, then analyse key concepts in different perspectives. Lastly, it will critically debate, and make predictions on, the future of the music market.
2.0 Contemporary issue
HMV was the king of the global music industry, its predecessor can be traced back to the origins of the recording industry. The full name of HMV is “His Master’s Voice” which comes from the logo puppy Nipper listening to gramophone. In 1921, HMV opened the first store on London’s Oxford Street. Since then, HMV record store opened almost everywhere in the UK. In 1996, HMV operated around the world with more than 300 record stores and become the world’s most famous music and entertainment sales enterprises.
But at the beginning of 2013, the world record industry has undergone a big “earthquake”. The veteran record retailers in the United Kingdom, the world’s largest entertainment product sales chain enterprises HMV, announced it entered bankruptcy proceedings. After that, HMV Company commissioned renowned accounting firm Deloitte & Touche for the asset managers in the bankruptcy proceedings until a new buyer could found at 16/1/2013. During the bankruptcy, HMV ensure there is normal operations in UK and Ireland (more than 200 stores), but the shut down of the company’s operations, leaving more than 4,000 employees facing unemployment, is an indisputable fact. When this news just was released there was also great upset from its many fans in the international record industry. After years of development, evolution, mergers and acquisition, restructuring, as the king of the global recording industry, HMV had finally gone .
Under the information society, HMV lack the awareness of globalization and sustainable development. In fact, HMV has a competitive price, good service, good knowledge and excellent store content was HMV’s core competitiveness, but when facing the digitization of music market, HMV had thought about self- help to broaden the product category to achieve sustainable development, for example, sale books, sale Video games and even clothing. But still can not maintain market. Consider of the economic crisis, HMV did not realized the government austerity policies makes people have to reduce expenditure on non-essentials, which means if HMV company reduced the number of the store and carry out the online retail business in time, the future may not be too bad.
In traditional music industry, HMV did not realized if there is no fundamental change in industry model and value chain, the road of sales will only become narrower. ITunes music store in 2003 is a good example to prove that, Jobs built a complete production chain from product iPod to establish an online music store gives the traditional record industry a fatal blow.
Unlike HMV, 2012 April 3, Warner Music, Sony BMG and Universal Music set up a company named “MySpace Music” with MySpace, this company launched free music and video, paid MP3 downloads, mobile phone ringtones and concert tickets and so on.
