HMV Case Study: Strategic Analysis of HMV's Business Operations

This report presents a detailed case study analysis of HMV, a prominent UK-based music and video retailer. It begins with an introduction outlining HMV's history and the challenges it faced, including a decline in revenue and subsequent acquisition. The analysis employs various strategic frameworks, including SWOT analysis to assess internal strengths and weaknesses, and external opportunities and threats. PESTLE analysis examines the political, economic, social, technological, legal, and environmental factors influencing HMV. Porter's Five Forces are used to assess the competitive landscape, while value chain analysis explores the company's primary and support activities. VRIN analysis evaluates the company's resources and capabilities. Ansoff and BCG matrices are applied to analyze market development and strategic positioning. The report concludes by synthesizing the findings, with market development identified as the most viable strategic option for HMV, offering insights into market and product identification, and providing a range of strategies for HMV's future success.

Case study

Table of Contents
INTRODUCTION...........................................................................................................................1
SWOT analysis............................................................................................................................1
PESTLE Analysis........................................................................................................................2
Porter’s Five Forces Analysis......................................................................................................3
Value chain analysis....................................................................................................................3
VRIN analysis..............................................................................................................................4
Ansoff Analysis...........................................................................................................................4
BCG Matrix.................................................................................................................................5
CONCLUSION................................................................................................................................6
REFRENCES...................................................................................................................................7

INTRODUCTION
This project report is based on the case study of HMV which is a leading high street
retailing company in the music and video. Organisation was established in the year of 1921. The
slogan of the company is top dog for music (Xingang, Jiaoli and Bei, 2013). HMV faced
numerous issues while operating their business operations in market as first they were getting a
rapid growth but after it, they faced a huge downfall in business revenue. Hilco UK also
announced that it will acquire HMV in 2013. This report is going to analyse the SWOT, value
chain and VIRN model in order to analysing organisation's internal resources and capabilities. It
also covers PESTEL analysis for external environmental analysis, Porters 5 Forces to identifying
competitive advantages, ANSOFF and BCG matrix of market analysis.
SWOT analysis
swot analysis refers to strengths, weaknesses, opportunities and threats of a company.
This shows the internal and external factors of HMV, opportunities and threats are external
factors but strengths and weaknesses are its internal factors. By the help of SWOT these factors
are analysed in HMV.
Strengths :This is internal factor of HMV, since it has an iconic trademark and its
acceptability all over the united kingdom is high (Şeker and Özgürler, 2012). Some of the
strengths as follows:
1. The quality of HMV products are very high and satisfactory and it is well known for
the company.
2. Prices: product prices in HMV stores for physical outlets are always affordable for the
customers.
3. Market position: even through there has been dropping in recent years but its market
condition well and good in UK.
Weaknesses
1. Failure in following trends: It have lack in adoption of rapid change of today's business
model.
2. It should be done online marketing for reminding people who we are and what the
company is provided to them.
Opportunities
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1. It needs to establish a world beating online shop. Because most of competitors in those
days most of transaction take place online.
2. It should invest more on technology because now people interested in high and advanced
technology.
Threats
1. products sales on online platform is a big threat for HMV.
2. Steaming media are now in these days a big challenge for company. People choose use
of more online modes than the products buying from stores.
PESTLE Analysis
political : Political influence for HMV's external surrounding conditions and the record
industry is in the form of actions towards piracy and unauthorized access to music online
(Srdjevic, Bajcetic and Srdjevic, 2012). Where some politicians ignore the dangerous and
threatening thing, some take actions and this influences sales hugely.
Economic: The whole industry has faced a loss of wealth, power, reputation/something
that ruins something in sales of the major competition given by large entertainment companies
and fun/relaxation companies which are offering substitute products such as i Music.
Social: The decline in sales has forced record companies to think about down sizing
which has raised a lot of social concerns.
Technological: E-commerce needs/demands cut-throat new and interesting and fast/on
time success plans/ways of reaching goals on part of the businesses like HMV to stay on top and
offers an unlimited pool of opportunities to do so. Such as the e-marketing tools of emails and
online advertisements that HMV has been making good use of.
Legal: Recent developments in the laws for illegal sale of music online and offline has
given the record stores some relief as the police services businesses/government units take hold
of the matter but still actions are limited (Islam and Mamun, 2017). There are many illegal
sellers available online even though there is the existence of the law.
Environmental: Record stores have minimum influence from the health of the Earth/the
surrounding conditions. Related to environmental conditions or the health of the Earth changes
have influenced the packaging of CDs and now that the selling is done online and the music is
moved from one place to another electronically fewer related to surrounding conditions or the
health of the Earth dangers/risks happen which keeps the record stores off the hook. But
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starting/working at green groups could be an added advantage for HMV as music companies
continue to engage themselves for peace concerts as it creates goodwill for the company and a
positive image in the minds of the people who use a product or service which lasts a long time.
Porter’s Five Forces Analysis
Level of Competition: The record sales have been not very long ago suffering a serious
decline (Burns and Dewhursteds, 2016). The market is mostly occupied with aggressive
competitors who are involved in a price cutting war. The main rivals of HMV are other
entertainment business which is mostly expanding their businesses in many different kinds of
people or things directions such as Virgin Megastores, and other independent shops.
Bargaining Power of Buyers: Bargaining power of buyers is high. The recent
technological advancements and internet revolution which have brought about the information
age to its highest level.
Threat of New Entrants: online music selling portfolio provides a good opportunities to
the record retailers so there will always be threat of new entrants. HMV must be taken into
account these things by which new entrants can come in market.
Bargaining Power of Suppliers: There is low related to arriving at an agreement power
of suppliers as large record stores who lead the market set their own standards and prices and so,
control the cost of suppliers.
Threat of Substitute Products or Services: With the coming of technology and internet
new forms of entertainment in music are gaining internet and attention of the people such as
music in mp3 format available online for free instead of CDs and DVDs which were before
that/before now hit sellers. Music is being made available in more compact forms for the ease of
the people and the stores have to make sure they constantly improve their service offerings to fit
the changing tastes of the people.
Value chain analysis
support activities
Infrastructure: the company have 247 stores and its head office located in London with
eight departments (Kant and Gibelin, 2013). It have three distribution stores.
HRM: In the company nearly 5000 knowledgeable employees and there two way
communication among employees always.
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Technology: Development is done in existing technology and U-mix-in-store digital
kiosk.
Procurement: Direct line is established with manufacturer and distributors.
Primary activities
Inbound logistics: SDI group has provided all outbound logistics.
Operations: all the packaging operations carried out by SDI group.
Outbound logistics: the both of activities performed by the company such as online sale
and store sale.
Marketing and sales: strong brand created over the several years helped in achievement
of new targeted customers. And retain existing customers.
Services: Delivery services and HMV rewards and offers helped a lot in attracting new
customers.
VRIN analysis
Value: In that step it is analysed that if the company resources or customers provide
customer value (deSouza and Márcio, Almeida, 2013). Strategic capabilities are of value when
they provide potential competitive advantages at a cost that allows an organisation to realise
acceptable levels of return. Value chain analysis is done in that step for better understanding of
components.
Rarity: it has no value until it leads to output in form of products/services that meet
customer needs. It may not last for ever.
Inimitably: These capabilities are difficult to obtain. Two conditions must be met for
that such as superior performance and linked competence.
Non-substitutability: The two things consider to survive in competitive market such as
product and service and competence substitution.
Ansoff Analysis
This is a model which is essential for strategic planning of market with growth
opportunities of business revenue by developing new product and services or entering into new
markets. It is also known as 'Product Market Matrix'. Based on the Ansoff Matrix, the below
strategic directions are open for the HMV organisation by considering the current business
situation in the internal and external market and resources of the organisation :
Existing Product and Services New Product and Services
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MARKET DEVELOPMENT
(New Market)
DIVERSIFICATION
(New Market)
MARKET PENETRATION
(Existing Market)
PRODUCT DEVELOPMENT
(Existing Market)
Market Development: The most profitable source of revenue for the HMV organisation
is the online marketing channel by considering market development strategy. The HMV may
enter into new product and geographic markets for the products like DVDs and records via a
online channel.
Diversification: It means entering into the new markets with the new product or services
(Şeker and Özgürler, 2012). HMV may introduce e-books as a new product to its online store by
allowing the retailer to diversify into e-tailing of e-books.
Product Development: It is a strategic direction and HMV may make its service more
enhanced by using internet by allowing downloadable TV and film selling online.
Market Penetration: It means the HMV existing product and service operated in the
existing market of HMV.
BCG Matrix
BCG matrix is created by Boston Consulting Group for evaluating the strategic position
of the brand portfolio of business and its potential (Ivanovich and et.al., 2014).
There are four quadrants into which HMV brand are classified:
QUESTION MARK
STAR
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POOR DOGS CASH COWS
Dogs: It means low market share of the HMV as compared to its competitors and it
operates in a market that grow slowly. It include strategic choices like retrenchment, divestiture,
liquidation etc.
Cash Cows: These are those brands of HMV that are most profitable and should be
“milked” to provide as much cash as possible. It includes product development, diversification,
divestiture, retrenchment etc.
Stars: Stars operates in the industry which has a high growth and which maintain high
market share. Stars are the both cash users and cash generators (Kant and Gibelin, 2013). All
stars can't become cash flows. Strategic choices of stars are vertical integration, horizontal
integration, market penetration, market development and product development.
Question Marks: These are those brands that require much nearer consideration. They
have low market share in fast growing markets and consuming large amount of cash. Strategic
choices of question marks are market penetration, market development and divestiture.
CONCLUSION
From the above report, it is concluded that HMV is UK's based company which is
engaged in selling CDs, DVDs and other forms of music products. Various analysis like SWOT,
Ansoff, BCM, Porter's Five Force Analysis etc. is done for various product and services offered
by HMV. Taking into account the findings of the analysis, the most viable strategic option is
market development. These analysis consist of market and product identification and making its
market strategies. HMV's Existing and new market and its existing and new products are
analysed to know whether it is preferable for the organisation or not and various strategies for the
same are also analysed.
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REFRENCES
Books & journals
Xingang, Z., Jiaoli, K. and Bei, L., 2013. Focus on the development of shale gas in China—
Based on SWOT analysis.Renewable and Sustainable Energy Reviews.21. pp.603-613.
Şeker, Ş. and Özgürler, M., 2012. Analysis of the Turkish consumer electronics firm using
SWOT-AHP method. Procedia-social and behavioral sciences. 58. pp.1544-1554.
Srdjevic, Z., Bajcetic, R. and Srdjevic, B., 2012. Identifying the criteria set for multicriteria
decision making based on SWOT/PESTLE analysis: a case study of reconstructing a
water intake structure. Water resources management. 26(12). pp.3379-3393.
Islam, F.R. and Mamun, K.A., 2017. Possibilities and Challenges of Implementing Renewable
Energy in the Light of PESTLE & SWOT Analyses for Island Countries. In Smart
Energy Grid Design for Island Countries (pp. 1-19). Springer, Cham.
Burns, P. and Dewhurst, J. eds., 2016. Small business and entrepreneurship. Macmillan
International Higher Education.
Kant, I. and Gibelin, J., 2013. Premiers principes métaphysiques de la science de la nature. Vrin.
de Souza, C.D.R. and Márcio de Almeida, D.A., 2013. Value chain analysis applied to the scrap
tire reverse logistics chain: an applied study of co-processing in the cement industry.
Resources, Conservation and Recycling.78. pp.15-25.
Ivanovich, T.V., and et.al., 2014. Analysis of the market for agricultural products in South
Russia. American-Eurasian journal of sustainable agriculture. pp.52-60.
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