Strategic Analysis of E-Sonic’s industry
The Strategic Analysis
The development of a strategic analysis guides all decisions made regarding your compensation systems throughout the project. The strategic analysis reveals firm-specific challenges, objectives, and initiatives that allow you to align the goals of a compensation system effectively with those of the company strategy.
The strategic analysis allows you to better understand the external market challenges e-sonic faces in addition to its internal capabilities. As a consultant, a thorough understanding of e-sonic’s business environment allows you to better align your competitive system design with e-sonic’s goals, challenges, and objectives. Follow the outline below when completing this portion of the project.
Strategic Analysis Outline:
- Executive Summary (Concisely conveys the project objectives and main findings. The executive summary is completed last, but included first in the strategic analysis.)
- Strategic Analysis
- Identification of e-sonic’s industry based on the North American Industry Classification System (NAICS)
- Analysis of e-sonic’s external market environment
- Industry Profile
- Foreign Demand
- Long-Term Industry Prospects
- Labor-Market Assessment
- Analysis of Internal Capabilities
- Functional Capabilities
- Human Resource Capabilities
The Strategic Analysis section is fully described in the MyManagementLab Building Strategic Compensation Systems casebook for faculty and students, linked in the MyLab course menu. Follow the explanations and outline to complete this milestone. The Strategic Analysis section is due at the end of Module Three.
Strategic Analysis of E-Sonic’s industry
Identification of E-Sonic’s industry
E-Sonics is a subsidiary of Sonic Records and provides an online platform for downloading music. Based on the North American Industry Classification System (NAICS), the industry is categorized into two different codes: 334614 and 512220 (Moore & Domingo, 2014). The United States Census Bureau puts 334614 under the classification of ‘Software and other prerecorded compact disc, tape and Record Producing’ composed mainly of facilities chiefly involved with the large-scale production and reproduction of software or prerecorded audio and magnetic or optical media such as DVDs, CDs, Tapes or cartridges. Therefore, these facilities are engaged only in reproduction and do not produce any software, audio or video content.
The other code, 512220, is designated for “Integrated Record Distribution/Production”. Such an industry is involved with promoting, releasing, and distributing audio recordings. They manufacture or arrange for manufacturing sound recordings like audio cassettes/tapes and compact disks, distribute, and promote these products to retailers, wholesalers or the public. The facilities within this industry produce the master recordings themselves or obtain the rights to distribution from other integrated record companies or the associated record companies.
Analysis of e-Sonic’s external market environment
An analysis of the E-Sonic’s eternal environment will analyse the company’s industry profile, the present competition, foreign demand, long-term industry prospects, and an assessment of its labor-market. Since the industry’s labor market has faced a decline in demand for its audio CDs in the past five years, it is in its best interest to adopt other business models through a shift in focus. An internal analysis reveals that management has no experience in online management or software development. Nevertheless, inviting a compensation structure and establishing a competitive advantage would help to attract and retaining the necessary talent required in the industry.
Over the past five years, Sonic Record has experienced a decline in its revenues, having previously boasted of more than $15 billion in revenues. Technological advancements and alternatives to CDs pose a serious challenge to the industry. Moreover, despite the attempts by the government to clamp down on Cd burning, pirating, and other consumer preferences, the company has still lost revenues in sales to an excess of 30 percent. Encouragingly, the efforts by the Record Industry Association of America and the fear of litigation has minimized illegal activities within the industry (Pfanner, 2013). Further, the increase in the number of line music stores shows improved demand, therefore, encouraging Sonic Record to employ new delivery methods which may also inspire the form of E-sonic.
E-sonic faces fierce competition but has established online music stores able to compete adequately with other players in the industry. Developing a competitive strategy is essential to the company’s plans of competing with already established actors such as Amazon, ITunes and Rhapsody, as well as free Online and Customizable radio stations such as IHeart and Pandora. The firm’s mission is to “create the world’s leading online music store; ensuring Sonic Records’ prominence in the record industry’s future” (Martocchio, 2015), hence the need for distinguishing competition through user-friendly user platforms.
According to the International Phonographic Industry, digital sales and other revenue sources grew significantly to the point of offsetting the low demand for CDs. Digital sales make up more th.an half of the revenues from countries such as the United States, Norway, Sweden, and India while the skills and knowledge of executives are back in demand. However, while the industry is still emerging in countries like China and Russia, legitimate digital servicing, and piracy remain a big problem (Global data insights).
Long-Term Industry Prospects
The long-term look of the industry is promising. According to PriceWaterhouseCoopers (PwC), about two third of the growth of revenue from advertising and consumers will be digital. Further, they posit that $157 billion of the total $241 billion revenue growth projected for the entertainment industry will come from digital content (Moore & Domingo, 2014).
The most important positions in the company consist of Software Engineers/Developers, Market Research Analysts, and Customer Service Representatives. The average hourly remuneration for Customer Service Representatives is $14.70 with a 13% growth expected by 2022 (“U.S. Bureau of Labor Statistics.”). Possessing computer skills offer the greatest chance of employment with the overall job opportunities looking good.
Analysis of Internal Capabilities
Strategies to assess the functional capabilities of the organization are critical since its will help to develop a comprehensive strategy for operations such as management information systems, engineering, research and development, marketing and human resource. Intense competition in the industry makes it necessary for E-Sonics to develop and maintain appropriate functional operations that give the company the appropriate competitive edge.
Human Resource Capabilities
To design an appropriate
compensation package matching the company’s labor force, an assessment of the
human resource capabilities is necessary and should be in line with the
retention and procurement initiatives (Martocchio, 2015). The knowledge of the
core competencies of the workers makes a very
important ingredient to the competitiveness of the industry.
Global data insights. (n.d.). title of article? Retrieved from http://www.pwc.com/gx/en/global-entertainment-media-outlook/data-insights.jhtml
Martocchio, J. J. (2015). Strategic compensation: A human resource management approach (8th ed.). Retrieved from https://view.ebookplus.pearsoncmg.com
Moore, F., & Domingo, P. (2014). IFPI Digital Music Report 2014. Retrieved from http://www.ifpi.org/
Pfanner, E. (2013, February 26). Music Industry Sales Rise, and Digital Revenue Gets the Credit. Retrieved from http://www.nytimes.com/2013/02/27/technology/music-industry-records-first-revenue-increase-since-1999.html
Shuttle, R. (n.d.). Why Is Customer Service Important to an Organization? Retrieved from http://smallbusiness.chron.com/customer-service-important-organization-2050.html
“U.S. Bureau of Labor Statistics.” www.bls.gov. U.S. Bureau of Labor Statistics, n.d. Web