Company Situation Analysis Summary and Conclusions
The first element of a company’s situational analysis is a review of strategic performance indicators on an annual basis from 1997 to 2000.
[Tabular data omitted]
The table compiled on the basis of the income statement and presented above shows the constant growth of the company’s sales on an annualized basis, which is a good indicator. As for the net profit, which demonstrates the effectiveness of control over the company’s expenses, the table shows that the highest margin was achieved in 1998 and is on a downward trend. This suggests that the company is not very successful at converting its earnings into profits.
Since Darren Skanson is still the sole investor in the company, the return on equity is somewhat relative, showing the link between bottom line and Darren’s investment in the company. However, the numbers, like the profitability indicators, show a downward trend in the return on equity. This indicates the growing costs of a firm with relatively stable profits, which grow with sales, but not at a rate comparable to costs. To be attractive to potential investors, a company must use revenue and expense data.
The next issue that must be taken into account when analyzing the situation in the company is the SWOT analysis. A SWOT analysis was carried out and presented at the beginning of the article; this section will highlight the most important points.
Among the strengths, the most significant factor is, of course, the low cost of recording available thanks to new digital recording technologies. Not only is the assembly of the studio with all the necessary equipment and equipment cheaper, but also the duplication of CDs, storage and delivery. Low cost of production, replication (replication of 500 CDs ranges from $ 1.90 to $ 3.63, copying 2,000 CDs costs about $ 1 per CD), transportation and storage make the final product less expensive and more affordable for buyers, which expands the range of the target market. The second important strength factor is the continuous growth of the customer base and the increase in customer loyalty in a narrow segment of the market. The third strength can be viewed as both strength and weakness. This strength lies in positioning CCMs in a distinctive niche market. For a micro-labeling company that wants to maintain its position, this is a strength, but for a company aspiring to become an independent label, a narrow market orientation is a weakness preventing expansion of its customer base. And the last strength is the company’s good customer service.
Among the weaknesses, the most important are the lack of reliable and traditional distribution channels, the lack of a clear strategic vision of the direction of movement – either towards the development of the record company, or towards the promotion of artists’ music with the help of the opportunities of other companies; low sales, supported by a limited customer base (discussed in the strengths section); weak promotion and limited financial resources to achieve new goals and opportunities.
In the music industry, CCM’s capabilities include acquiring new distribution channels to reach a broader customer base, developing an online presence strategy by expanding e-commerce and MP3 production, and attracting additional customer groups by expanding partnerships with other artists and expanding the Acoustictherapy product line and other products with new marketing strategies, are developing new recording technologies to cope with the competition.
In addition to opportunities, the music industry environment contains threats to the company such as the large number of new entrants and the growth of other smaller labels due to the digital revolution, the possibility that large or independent labels may decide to enter CCM’s domestic markets and try to squeeze out from market for smaller labels. Another threat is the possibility of losing sales due to product replacements such as mp3s or Internet downloads. Based on this, the most serious threat is the difficulty to compete with the big music record companies with limited CCM resources and a narrow target market.
The next section of a company’s situational analysis is a competitiveness assessment that compares CCM assets such as product quality / performance, reputation / image, manufacturing capability, technological skills, dealer network and distribution, new product innovation, financial resources, relative cost, and client. service capability with major competitors in the industry. The analysis results are presented in the table below:
Assessment of competitiveness
[Tabular data omitted]
It is clear from this analysis that CCM’s competitiveness vis-à-vis the major players in the recording industry is not significant, although quite decent for a micro-labeled company. Thus, the strengths of the company are the quality and productivity of the product, the technological skills, the relative cost (due to the low cost of production) and the ability to serve the customers. The weaknesses of the company are also evident, including production capacity, dealer network and distribution, financial resources and innovation in new products.
From the above, we can conclude that the position of the company in the recording industry is improving, but not so quickly and stable. The leaps in the profitability and return on equity indicators show that the company’s development is not consistent, but rather abrupt. At the same time, the upward trend is evident, and the growth in sales and market share is a reliable confirmation of this.
The company has such competitive advantages as high quality products and performance, individual style of music and performance, a specialized niche in the music market, flexibility in policy and development strategies, the use of non-traditional distribution methods such as the Internet, catalogs, gift shops and others.
Competitive disadvantages of CCM include small resources, a narrow client base, presence in only one market segment, relatively low recording quality (digital technology, if worse than recording analog equipment), low popularity of musicians, weak advertising and promotion, low sales. levels.
Therefore, first and foremost, the company should address such strategic issues as the creation of a profitable record label with an expanded range of artists and performers; positioning Darren Curtis Skanson’s label to compete with major artists who have signed contracts with Sony Classical. This requires mastering traditional distribution methods. The next challenge is creating a new line of products similar to Acoustictherpay that will market and provide the means to achieve the previous two goals. First of all, the company must decide on the main strategy for further development: expanding the recording studio or promoting music by selling a product line of CCM recording studio, larger than CCM, regardless of major labels that have access to traditional retail outlets.
conclusion and recommendations
The current work contains a discussion and analysis of CCM activities and the competitive situation in the recording market. From all the information presented above, the following conclusions and recommendations can be drawn.
The first recommendation concerns the need to create a corporate culture within the organization. The corporate culture acts as a tool for achieving the goals of the organization and helps the CCM to adapt to the challenges of external forces. CCM needs to engage HR and create a separate team to focus on the culture and educate employees about the benefits of change. The corporate culture and instilling a vision of employees is not an easy task, it will take small steps. First, CCM should start by creating cross-functional teams and offer incentives based on the performance of the entire company versus the individual. Cross-functional teams can also help eliminate some of the disparate product groups. The CCM should also implement a program that rewards managers and employees for what they produce, not for seniority or expertise. This will initiate a movement to align CCM with the business unit and product lines. The CCM should also strive to share information and support unintended cultural changes. Additional training will help managers and employees fit into a changing culture and support the organisation’s vision. CCM needs to make corporate change successful, but it also needs to recognize that all employees need to be involved in the change process.
Second, the CCM must take genetic diversity into account, and in response, its organizational culture must be sensitive and include measures to manage it. If the CCM continues to advance from the inside on an ongoing basis, they will have little genetic diversity in senior management. All managers will have the same or similar traits and perhaps the same or similar experience, education, management techniques, leadership, and many other similar management practices. While this may be a competitive advantage in some cases, the reality is the opposite. The CCM is under pressure to improve productivity and overall growth. It is this pressure and the ever-changing competitive environment that must force CCMs to abandon their standard management practices and increase the genetic diversity of management titles. New management beliefs and practices will be the breeding ground for long-term success.
Direct selling at art festivals would be beneficial for CCMs as it promotes good cash flow. But on the other hand, small businesses must strive for instant expansion, and efforts to eliminate delays in the market they serve allow competitors to respond, especially large ones, and this is a drain on resources, especially limited capital.
CCM recognized that global competition is increasing and that in order to maintain its role as an industry leader; he must diversify and expand his line of products and services in other areas without deviating from his core competence. CCM’s manufacturing facilities are models of efficiency, leaner organizational structures, more efficient factories, and vastly improved supply and distribution management, but its product lines are too dependent on industry behavior. CCM needs to focus on the diversification and growth of the company, focusing on the most attractive opportunities that leverage the company’s key strengths.
Therefore, in the short term, the main recommendations for the company’s policy include opening new promotion and advertising channels for Colorado Music Creative artists, looking for new distribution channels for the studio’s products. This can be achieved by signing contracts with major labels to distribute the music of CCM artists. But in the long term, such a strategy would have a detrimental effect on the development of the company, since signing a contract with another record company would promote the product, but it would not contribute to the development of the studio itself.
Therefore, in the long term, the company should strive to expand at the expense of financial resources obtained either from increased sales or from investments in the company’s funds. Based on this, the company must expand its repertoire, recruit new artists and conduct an effective advertising campaign to make the artists known to the general public. In addition, CCM needs to expand the range of musical styles. Now the leading and only style of recorded music is classical and traditional acoustics. To become an independent label, a company must include at least three or four music styles, thereby conquering new segments of the music market. Another thing that needs to be done to grow the company in the long term is to upgrade the equipment and technology for recording music from the cheapest to higher quality equipment, which may include tape recording and other means, or really high quality analog sound production.
Read the other parts of this series in the Marketing section [http://www.personal-writer.com/maketing] section.