Bmg Entertainment Essay Example | Topics and Well Written Essays - 1000 words

Bmg Entertainment - Essay Example There is competition from other major record companies such as: - Sony Music Entertainment Universal Music Group Warner Music Group WEAKNESS Decisions about how to organize and operate the company With BMG Entertainment, three of the 25 units within the division were making losses. High prices charged at the store. PORTER'S FIVE FORCES ANALYSIS The bargaining power of the customer is high. The customers have tendency of switching to another product without incurring high cost of switching. There are so many customers for the music. The customers are responsible for the supplier's revenue realized as they buy a large portion of the industry's output. The bargaining power of the suppliers is not high. Availability of substitute products. There is low switching cost created by suppliers' products. There are few suppliers for the product. A large customer of suppliers comes from individual buyers. The buyers' market place success does not determine the suppliers' goods. The threat of new entrants is not too high. The industry requires high capital to start. There are economies of scale. Product differentiation is moderate. The threat of substitute products is high. The existing product has the same quality and performance to that of the substitute product. The substitute products are offered at lower prices. There is few switching cost incurred by the buyers. The intensity of competitive rivalry among competitors is high. Switching costs incurred are low. The growth in the music industry is high. Diversification is moderate. Fixed costs are too high. Competitors for the industry include: Sony, Universal, EMI, BMG and Warner Music Group. VRIS MODEL Resources/Capability V R I S Performance Good...For this case, BMG Entertainment is supposed to use differentiation strategy, as what the customer need is a variety of music at a low price. The company should not be left behind technology wise; hence in order for them to retain their customers, they should introduce Online retailers to sell music at low prices. BMG Entertainment should develop websites whereby their customers will be able to download music at low prices. By adopting the technological change, BMG Entertainment will be in a position of producing a variety of products and selling at relatively low prices. This is more convenient to customers in term of price as its low and they will prevail in the market against its rivals. BMG Entertainment can prevail in the market if they upgrade their website system. They should invest heavily on digital technology for the sake of handling their digital customers professionally. They should introduce more Online retailer store that will make download of music cheap. BMG should use Joint Venture, Multi domestic and related diversification strategies. Joint Venture will expand rapidly at low cost, shared risks and less competition.