Strategy Management Hmv

4101 Words Mar 3rd, 2013 17 Pages
Executive Summary

An Executive Report advising HMV’s Management on competitive strategies. In this analysis we will take a look at the biggest entertainment media seller with physical stores in the UK. The contents of the report are an analysis of the company’s current competitiveness and recommendations on the future strategic direction of the company.

Introduction

With the rise of digital media and broadband capabilities, many brick and mortar sellers are faced with challenges to sustain a competitive advantage. Not more than a decade ago customers who were seeking entertainment media had to walk into high street stores to purchase or rent a CD or DVD. The shift to digital content was fuelled by the Apple iPod and other
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• Gamerbase pay-to-play online gaming. • HMV Tickets online event ticket sales. • HMV Curzon cinema collaboration with Curzon Artificial Eye.

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Figure 1: HMV Group Sales by sector.

Current financial figures for HMV are:

• Sales for 2010 and 2009, respectively £1241.9(m) and £1154.6(m). • Operating profit 2010 and 2009, £73.8(m) and 53.7(m) respectively.

See Figure 1 for the product sales mix for fiscal year 2009, with top product lines being visual, music and games. (HMV, 2011)

In 2007 HMV reported poor profit performance of £21.6m, down from £80.2m in the previous year. This led to a transformation plan (a cost cutting strategy which saw many store closures), which rebuilt its profits. Their current strategies are to continue controlling spending and cost, and to evolve the HMV product mix into related areas of entertainment.

Internal Analysis

The internal analysis of a company is an examination of where value is added in the business process and the strategies used to attain a sustainable competitive advantage. The internal analysis can be broken down into two key areas:

1. The value chain. 2. Resource-based view of the firm.

In 2007 HMV experienced the first real threat of the online market which impacted their bottom line, causing them to adopt a 3 year strategic plan to regain profitability. The plan consisted of managing…