Online Music Case (A): Napster Faces the Music - Starting a Revolution in the Music Business SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study SWOT Analysis Solution
Case Study Description of Online Music Case (A): Napster Faces the Music - Starting a Revolution in the Music Business
The set of three cases Online Music (A), (B) and (C) trace the tumultuous developments in the online media sector since the commercialization of the Internet. Heralded by Napster, Internet-based sharing programs revolutionized the consumption and sharing of music in the late 1990s. Music majors struggled to respond to the technology-driven changes around them. The case series traces the responses of players such as Apple, who introduced a new model in the music business, and ends with a discussion in Case (C) on the lessons for the movie sector from the experience of the music industry.
Swot Analysis of "Online Music Case (A): Napster Faces the Music - Starting a Revolution in the Music Business" written by Soumitra Dutta, Patricia Reese includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Music Napster facing as an external strategic factors. Some of the topics covered in Online Music Case (A): Napster Faces the Music - Starting a Revolution in the Music Business case study are - Strategic Management Strategies, and Communication.
Some of the macro environment factors that can be used to understand the Online Music Case (A): Napster Faces the Music - Starting a Revolution in the Music Business casestudy better are - – increasing household debt because of falling income levels, increasing inequality as vast percentage of new income is going to the top 1%, central banks are concerned over increasing inflation, challanges to central banks by blockchain based private currencies, digital marketing is dominated by two big players Facebook and Google, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing government debt because of Covid-19 spendings,
geopolitical disruptions, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of Online Music Case (A): Napster Faces the Music - Starting a Revolution in the Music Business
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Online Music Case (A): Napster Faces the Music - Starting a Revolution in the Music Business case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Music Napster, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Music Napster operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Online Music Case (A): Napster Faces the Music - Starting a Revolution in the Music Business can be done for the following purposes –
1. Strategic planning using facts provided in Online Music Case (A): Napster Faces the Music - Starting a Revolution in the Music Business case study
2. Improving business portfolio management of Music Napster
3. Assessing feasibility of the new initiative in Communication field.
4. Making a Communication topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Music Napster
Strengths Online Music Case (A): Napster Faces the Music - Starting a Revolution in the Music Business | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Music Napster in Online Music Case (A): Napster Faces the Music - Starting a Revolution in the Music Business Harvard Business Review case study are -
Sustainable margins compare to other players in Communication industry
– Online Music Case (A): Napster Faces the Music - Starting a Revolution in the Music Business firm has clearly differentiated products in the market place. This has enabled Music Napster to fetch slight price premium compare to the competitors in the Communication industry. The sustainable margins have also helped Music Napster to invest into research and development (R&D) and innovation.
Innovation driven organization
– Music Napster is one of the most innovative firm in sector. Manager in Online Music Case (A): Napster Faces the Music - Starting a Revolution in the Music Business Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Analytics focus
– Music Napster is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Soumitra Dutta, Patricia Reese can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Learning organization
- Music Napster is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Music Napster is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Online Music Case (A): Napster Faces the Music - Starting a Revolution in the Music Business Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Superior customer experience
– The customer experience strategy of Music Napster in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to recruit top talent
– Music Napster is one of the leading recruiters in the industry. Managers in the Online Music Case (A): Napster Faces the Music - Starting a Revolution in the Music Business are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Cross disciplinary teams
– Horizontal connected teams at the Music Napster are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Operational resilience
– The operational resilience strategy in the Online Music Case (A): Napster Faces the Music - Starting a Revolution in the Music Business Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Effective Research and Development (R&D)
– Music Napster has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Online Music Case (A): Napster Faces the Music - Starting a Revolution in the Music Business - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High switching costs
– The high switching costs that Music Napster has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Strong track record of project management
– Music Napster is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High brand equity
– Music Napster has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Music Napster to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses Online Music Case (A): Napster Faces the Music - Starting a Revolution in the Music Business | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Online Music Case (A): Napster Faces the Music - Starting a Revolution in the Music Business are -
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Music Napster supply chain. Even after few cautionary changes mentioned in the HBR case study - Online Music Case (A): Napster Faces the Music - Starting a Revolution in the Music Business, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Music Napster vulnerable to further global disruptions in South East Asia.
Interest costs
– Compare to the competition, Music Napster has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Products dominated business model
– Even though Music Napster has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Online Music Case (A): Napster Faces the Music - Starting a Revolution in the Music Business should strive to include more intangible value offerings along with its core products and services.
Low market penetration in new markets
– Outside its home market of Music Napster, firm in the HBR case study Online Music Case (A): Napster Faces the Music - Starting a Revolution in the Music Business needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Music Napster is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Online Music Case (A): Napster Faces the Music - Starting a Revolution in the Music Business can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Capital Spending Reduction
– Even during the low interest decade, Music Napster has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
No frontier risks strategy
– After analyzing the HBR case study Online Music Case (A): Napster Faces the Music - Starting a Revolution in the Music Business, it seems that company is thinking about the frontier risks that can impact Communication strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
High cash cycle compare to competitors
Music Napster has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Online Music Case (A): Napster Faces the Music - Starting a Revolution in the Music Business HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Music Napster has relatively successful track record of launching new products.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Online Music Case (A): Napster Faces the Music - Starting a Revolution in the Music Business, is just above the industry average. Music Napster needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
High bargaining power of channel partners
– Because of the regulatory requirements, Soumitra Dutta, Patricia Reese suggests that, Music Napster is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Opportunities Online Music Case (A): Napster Faces the Music - Starting a Revolution in the Music Business | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Online Music Case (A): Napster Faces the Music - Starting a Revolution in the Music Business are -
Using analytics as competitive advantage
– Music Napster has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Online Music Case (A): Napster Faces the Music - Starting a Revolution in the Music Business - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Music Napster to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Manufacturing automation
– Music Napster can use the latest technology developments to improve its manufacturing and designing process in Communication segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Building a culture of innovation
– managers at Music Napster can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Communication segment.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Music Napster in the consumer business. Now Music Napster can target international markets with far fewer capital restrictions requirements than the existing system.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Music Napster can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Low interest rates
– Even though inflation is raising its head in most developed economies, Music Napster can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Better consumer reach
– The expansion of the 5G network will help Music Napster to increase its market reach. Music Napster will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Loyalty marketing
– Music Napster has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Communication industry, but it has also influenced the consumer preferences. Music Napster can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Buying journey improvements
– Music Napster can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Online Music Case (A): Napster Faces the Music - Starting a Revolution in the Music Business suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Leveraging digital technologies
– Music Napster can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Music Napster can use these opportunities to build new business models that can help the communities that Music Napster operates in. Secondly it can use opportunities from government spending in Communication sector.
Learning at scale
– Online learning technologies has now opened space for Music Napster to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Threats Online Music Case (A): Napster Faces the Music - Starting a Revolution in the Music Business External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Online Music Case (A): Napster Faces the Music - Starting a Revolution in the Music Business are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Music Napster with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Technology acceleration in Forth Industrial Revolution
– Music Napster has witnessed rapid integration of technology during Covid-19 in the Communication industry. As one of the leading players in the industry, Music Napster needs to keep up with the evolution of technology in the Communication sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Environmental challenges
– Music Napster needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Music Napster can take advantage of this fund but it will also bring new competitors in the Communication industry.
Regulatory challenges
– Music Napster needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Communication industry regulations.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Music Napster can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Online Music Case (A): Napster Faces the Music - Starting a Revolution in the Music Business .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Music Napster in the Communication industry. The Communication industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Music Napster needs to understand the core reasons impacting the Communication industry. This will help it in building a better workplace.
Easy access to finance
– Easy access to finance in Communication field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Music Napster can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High dependence on third party suppliers
– Music Napster high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Music Napster.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Online Music Case (A): Napster Faces the Music - Starting a Revolution in the Music Business, Music Napster may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Communication .
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Music Napster business can come under increasing regulations regarding data privacy, data security, etc.
Stagnating economy with rate increase
– Music Napster can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Weighted SWOT Analysis of Online Music Case (A): Napster Faces the Music - Starting a Revolution in the Music Business Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Online Music Case (A): Napster Faces the Music - Starting a Revolution in the Music Business needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Online Music Case (A): Napster Faces the Music - Starting a Revolution in the Music Business is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Online Music Case (A): Napster Faces the Music - Starting a Revolution in the Music Business is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Online Music Case (A): Napster Faces the Music - Starting a Revolution in the Music Business is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Music Napster needs to make to build a sustainable competitive advantage.
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