HMV

HMV’s troubles are only the end of the beginning

(Guardian)

Context Background

Hmv was first established in 1921 and was the most dominant retailer in the music industry but now Hmv is facing its worst downfall in the music industry market due to crisis with the recession and structural changes in the media business. Hmv was known for its brand and was very popular with its sales and profits, consumers were satisfied with their products and price was something they were not really concerned about. Hmv’s competitors vary from a range of online music retailers as well as supermarket retailers, Woolworths and zavvi were the big threats to Hmv but collapsed due to the same problems which are now affecting Hmv.

Online retailers have also been a big threat to Hmv as it all began in 1999 a software programme named ‘Napster’ had entered the market which enabled music file sharing from peers to peers. Music retailers such as HMV were threatened by this software programme as Napster offered over 700,000 songs for download at the cut price of just 99p. Thousands of high street record stores were affected by this as consumers preferred using Napster for its more efficient use and the price differentiation but napster did not remain a threat for long as it faced multiple law cases against the software and its illegal use of copyright labels.

The market of music became more popular online as limewire; stereo-gum and apple iTunes has entered the music industry. Limewire however was not to last due its illegal file sharing and was forced to liquidation, which allowed iTunes to become the most popular software to purchase music allowing it to be legal and cheap.

Consumers found the many reasons to why iTunes were beating high street stores was simply due the quick and easy access of purchasing songs straight on to the computer other than buying an album from Hmv online and waiting 3-5working days for its delivery. The other strong factors to why consumers had preferred iTunes as it allowed consumers to buy a single rather than a whole album which many consumers would prefer choosing specific singles rather than having to buy a whole album as they will be saving loads of money by just purchasing specific tracks.

Hmv have found it difficult to compete in the market and have been criticised for its high labelled prices compared to online retailers such as Amazon and play.com that also specialise in the same categories selling DVDs, CD’s, games and consoles. This will be quite interesting to observe as Hmv which was once the leading high street retailer now is facing its biggest difficulty to survive in the market.

Research question

This is the investigatable question which will be carried forward

Is there still a chance for Hmv to survive the recession and keep on top of its competitors?

The question above raises many questions in itself to whether Hmv can survive possibly the most worst economic downfall of its time. The question refers to Hmv current position in the market and whether it could make a change from its current status. There could be many ways in which Hmv can survive and there are many reasons to how it can fail so the question asks if there is still a possible chance.

It is quite interesting to see how well Hmv could handle this crisis; many companies face issues such as the recession and as many fail many do succeed depending on how the organization handles the crisis.

The purpose of the question is to gather other people’s opinions and whether they believe Hmv can still maintain their services to how it used to be before online music retailers had merged and the recession had begun.

In order for me to get the right question certain levels of the question were broken down into key elements such as;

• Is hmv in its worst position of all time?

• Can Hmv ever beat its competitors?

• What are the main reasons to why Hmv is behind on its competitors?

• Has the recession affected Hmv’s chances of making sales?

• Is the risk of high prices the reason to why hmv is losing out on sales and profit?

These key questions all questioned hmv’s current crisis and how it will respond to its competitors, the topic of the article made it easy to understand hmv were hit by the recession and loss of sales wee the reason to why it was in such a crisis but my question further more would ask whether hmv has got enough to survive from the recession and beat its competitors.

Research objectives

I expect to receive decent and precise feedback which will help me to understand to why Hmv is in its current position, i believe many people would pick up on where Hmv are going wrong and to why they are not succeeding in the market compared to its competitors.

I don’t expect Hmv to recover from the recession and I believe they have not got the right level of standards to compete with its competitors. Key Reasons to this I believe could be the due to the following;

Online retailers - such as Apple offering cheaper and more efficient way of buying music just by searching for a specific song and downloading it straight on to the computer where as Hmv are offering the same service but with a longer process of delivery and cost.

Consumers prefer to stream free online for movies rather than going to Hmv and buying them for full price, also other retail prices may be cheaper to buy .

Hmv’s high labelled pricing on music and films compared to other retailers puts of potential consumers from shopping their as they prefer to pay for the same quality but at much lower price.

The management style of Hmv to be at fault for their lack of management technique and style which is not enough to push employees to their potential best which causes lack of harmony amongst the staff.

Literature

Looking at the theoretical framework the appropriate literature which will be used is competitive advantage. Competitive advantage is when a firm has the upper hand on its competitors as it keeps making profit and staying on top of its competitors. There are two types of competitive advantage, cost advantage and differentiation advantage.

There are several ways to why the company is doing so well than the other such as; high quality products being sold at a much lower cost (cost advantage), deliver benefits that beat those of competing goods and products (differentiation advantage), offering consumers loyalty by providing them with a reward card and wise decisions and smart choices made by the company and organization.

Once a company becomes very successful to its consumers it establishes a brand image and competes at the top of the market along with other rivals. Competitive advantage gives a company an edge over its rivals and the more successful the company becomes than the more difficult it becomes for the rivals to maintain or even compete with that company. It is interesting to see how organisations deal with competitors who have a competitive advantage and what measures they would go through in order to compete.

Resources and timescale

Gantt chart |WEEK 1 |WEEK2 |WEEK 3 |WEEK 4 |WEEK 5 | | | | | | | | | | | | |Aims and objectives: | | | | | | | | | | | | | | | | | |Indentify chosen question from report | | | | | | | | |Send emails of chosen question from report | | | | | | | | |Compile all emails received and observe answers | | | | | | | | |Present results and findings | | | | | | | | |Conclude project | | | | | | | | |This Gantt chart shows the aims and objectives for over the period of weeks, it is important to follow this plan so it gives me guidance to when I will need to fulfil those requirements.

Methodology

It is important to carry out the appropriate research without having a bias view; the research philosophy will be positivism and will be deductive. The information which I will receive back will help me to understand the question and other peoples perspectives about Hmv and to whether it has still got a chance to survive and compete or if it is too late for Hmv to compete and could be facing liquidation sooner than we know. Once I have gathered the information, this will give me an insight to what people perceive about Hmv and the status of its current position.

For my research methods I will be using qualitative data which will help me get an answer with an in depth review from people. It will be interesting to see if my theories were right about this question and the research methods I will use to carry out my question will be by email allowing peers to answer the question providing a detailed amount of response and their opinions. The emails of those who are participated will be optional to remain anonymous and there will be specific dates and times to when the email was sent and when it was received.

References

Most useful academic journals needed in the project will be of the following;

Curwin,J and Slater,R. (2008). Quantitative methods for business decisions. London: Geraldine Lyons. 13-16, 45-56.
Hicks,M. (2004). Problem solving and decision making. 2nd ed. Cornwall: Thompson and learning 2004. 24, 42, 69-77.
J,Ronald and L,Cooper (2000). The organisation in crisis. Oxford: Ronald J. Burke and Carey L. Cooper. 3-20.
Hussey, D. and Jenster, P. (1999). Competitor Intelligence. West Sussex: John Wiley. 1, 21, 77,113.

Useful data sources;
Recent articles from newspapers such as the guardian will look closer on the problem/issue;

Sabbagh, D. (2010). HMV's troubles are only the end of the beginning. Available: http://www.guardian.co.uk/business/organgrinder/2010/dec/09/the-day-the-music-died-again. Last accessed 10th December.

The book which contains relevant information on the potential market and level of competitors will be the book on competitor intelligence;

Hussey, D. and Jenster, P. (1999). Competitor Intelligence. West Sussex: John Wiley. 1, 21, 77,113.

I also intend to use book on ‘problem solving and decision making’ so it gives me clear view to how companies can tackles their problems;

Hicks,M. (2004). Problem solving and decision making. 2nd ed. Cornwall: Thompson and learning 2004. 24, 42, 69-77.

Reference used in Research proposal;

Background information

http://www.guardian.co.uk/business/organgrinder/2010/dec/09/the-day-the-music-died-again. Last accessed 10th December.

Hmv background

Smith.A. (2002). Hmv background information. Available: http://hmv.com/hmvweb/navigate.do?pPageID=1083. Last accessed 8th Dec 2010

Napster killing hmv and other stores

Waters, D. (2004). Will Napster kill High Street record stores? Available: http://news.bbc.co.uk/1/hi/entertainment/3734993.stm. Last accessed 11th Dec 2010.

Hmv struggling in sales;

Wood, Z. (2010). HMV struggles to survive amid tumbling sales. Available: http://www.guardian.co.uk/business/2010/dec/09/hmv-struggles-survive-tumbling-sales. Last accessed 10th Dec 2010.

Competitive advantage

Hussey, D. and Jenster, P. (1999). Competitor Intelligence. West Sussex: John Wiley. 1, 21, 77,113.