British Phonographic Industry: Structure and Competition

British Phonographic Industry Structure and CompetitionOlivia BoachieBusiness Economics and Industrial OrganisationThe following analysis attempts to assess the structure and sources of war comparable air pressure in the British Phonographic Industry using porters beers five forces framework model, and how the advent of the net profit has affected the structure and performance of the industry.Michael Porters Five-Forces model of the medicine industryMichael Porters Five-Forces framework model recognises the economic forces that affect industry profits. The five forces argon Internal rivalry, Entry, Substitutes and complements, Supplier exponent and Buyer power. These forces may affect and abolish the revenues of current businesses. The five forces framework is a business study and industry system improvement instrument which lets marketers eventually generate stakeholder place through industry events. The key factors of appeal are the demand and supply of products in the mark et, quantity of entrants presently in the market and their strengths and weaknesses. In response to the set about question, the British Phonographic Industry provide be examined critically through each of the five forces. A graphical representation of Porters Framework is shown down the stairsBritish Phonographic IndustryBPI (British Phonographic Industry) represents the UKs recorded medicament industry, which is whiz of the most exciting and thriving music sectors in the world. British artists account for one in eight albums purchased by fans nigh the globe (http//www.bpi.co.uk/about-bpi.aspx). BPI co-owns the appointed Charts Company in a joint venture with the Entertainment Retails Association (ERA). The Official Charts Company is responsible for the commissioning, distribution, marketing and promotion of the UKs industry standard music and video charts and sales data. BPI similarly maintains the industry standard for certifying Gold, silver-tongued and Platinum sales a wards (http//www.bpi.co.uk/about-bpi.aspx). There are three major record companies within the British Phonographic Industry which are Warner Music UK, Sony Music Entertainment UK and widely distributed Music UK.Internal RivalryInternal Rivalry refers to the jockeying for shares by firms within a market. It is fierce if competition drives costs towards costs. This is more likely when in that respect are numerous firms, products are perceived to be homogeneous, consumers are motivated and able to shop around, prices may be set secretly, sales methodicalnesss are large and received in oftentimes and the industry has excess capacity. The UK music business has been contested for by three big recording studios for years. There is severe rivalry amongst these recording studios their market shares move to be steady for years as new opposition weighed downly went into the market due(p) to grrust entry barriers. The music industry is booming when associating online and offline sales c ollectively.The product distinction attainable in the music business is very low due to all types of music being approximately the same. The diversity could be attained through the setups of music delivered such as CDs and online formats such as MP3s. Downloading is now becoming more common than the constant visits to the music repositions, the music business has unremittingly fall the amount of stores and fixated on emerging an online approach. Through doing this they admit been successful at reducing laid-back frozen costs including store rentals and incomes of a high number of store employees which has assisted with their margins.In terms of competitive pressure, the music industry put forward be thought to be super competitive due to predictions of the music boom which run lowed in the 1990s. Due to more talent coming out through shows such as X-factor, Britains Got giving and the Voice in the UK, potential promoters are now being presented in the music industry.EntryT he threat of entrants is an otherwise force that determines the industrys competitive pressure. If new entrants move into an industry they forget gain market share and rivalry will intensify (http//www.tutor2u.net/business/strategy/porter_five_forces.htm). The position of existent firms is tougher if there are barriers to entering the market. If barriers to entering the industry are low then the threat of new entrants will be high and if the barriers to entry are high then the threat of new entrants will be low. Barriers to entry are very significant in determining the threat of new entrants. An industry can come more than one barrier. The following are thoroughly- hit the sackn examples of effective barriersAccess to suppliers and distribution channelsProduct differentiationEconomies of scale acquirable to existing firmsThe selection of a gifted artist and turning them into a success involves skilled use of advertising, talent supervision and investment. Recognised music labels devote a lot to undertaking appearance improvement campaigns, and experiment with advertising before the artists work is free for the public to see. These particular parts invite professional abilities and involve having money.Substitutes and ComplementsSubstitutes wear down profits in the same way as competitors entering the market by stealing business and increase internal rivalry. Complements boost the demand for the product in question thereby improving profit chances for the industry. In the music business, the alternatives for music purchases or downloads can be recognised to be plagiarised music downloads online and Radio stations that play music 24 hours. Plagiarised music websites which offer music for free are the distinguishable alternatives for the music industry. The consumer having a choice of whether or not to buy music or to download it continues to be a fight in their mind. So the risk of this alternative is very high.Music such as those on Jango or Napster allows consumers to listen to phone calls an unrestricted number of times without the need to purchase them. darn they dont obtain the luxury of downloading music for free and listening to the songs on the move, it can still be seen as an alternative as it permits for the sport of consumers. When it comes to TV and Radio music stations, the necessities for setting up those services such as TV set boxes and regular subscriptions are fairly costly in comparison to the price of an album. But with other facilities such as the ability to record channels and the choice of other stations on offer, they may set out chosen the better option when compared to a music album.Supplier PowerIf a firms suppliers ware bargaining power they will exercise that power, sell their products at a higher price and squeeze industry profits (http//www.tutor2u.net/business/strategy/porter_five_forces.htm). If the supplier drives up the price paid for inputs, revenues will be condensed. Suppliers strike themselv es in an influential position when there are only a few suppliers, the resource they supply is scarce, there are no or few respite resources, the product is easy to differentiate and faithful consumers are unwilling to switch. The bargaining powers of performers are high as it is believed that the voice and skill of each performer is distinctive and cannot be replaced.Buyer PowerBuyer power is analogous to supplier power. It refers to the ability of individual customers to negotiate purchase prices that extract profits from sellers (Economics of strategy 6th edition, David Besanko). Buyers have in taper power in competitive markets, and the price they pay will depend on the forces of supply and demand. The willingness of consumers to shop for the best price could quite be considered a source of internal rivalry, not indirect buyer power. When buyers are focused, or suppliers have made human relationship-specific investments, buyers may exert direct power (Economics of strategy 6t h edition, David Besanko). Buyers then demand lower prices when suppliers are thriving and accepting higher prices when suppliers are struggling.The consumers for the UK music business can be either individual or corporate. Corporate consumers in the music business contain online and offline traders who buy albums in large quantities from the music label. Stores included could be HMV and feisty and online music stores which include stores such as iTunes and AmazonMP3. The negotiating power of the corporate consumers can be assumed to be low due to prices being settled amongst them and the labels at the time of signing the contract.Advent of the netI will now analyse how the advent of the internet has affected the structure and performance of the music industry.The Internet is a global computer network providing a variety of information and communication facilities, consisting of interconnected networks using standardized communication protocols (http//www.oxforddictionaries.com/d efinition/english/Internet). The geomorphologic attractiveness of the UK music industry is determined by five underlying forces of competition. These include The intensity of rivalry among existing competitors, the barriers to entry for new competitors, the threat of substitute products or service, the bargaining power of suppliers, and the bargaining power of the buyers. Below are points under each of the forces on how the internet influences the music industry which are interpreted from Michael. E Porters Competitive strategy free press, 1980.Rivalry among existing competitorsThe Internet has enlarged the amount of competitors in the music industry and decreased the significance of geographic boundaries. There is increased rivalry because companies have a stake to succeed with use of the Internet. Rivalry increases when there is less(prenominal) differentiation between products. There is highly intense competition due to the Internet becoming an online platform for commercial use (www.ukessays.com).Barriers to entry for new competitorsThe internet has decreased the fixed costs needed for a business to get to their end users. Most record labels find it easier to launch online ventures since they are positive about brand the true and trust.Threat of substitute products or servicesThe internet has assisted in increasing the pressure from alternative products, as it may increase the diversity of products available to consumers. This can be done by customers being able to now purchase CDs online or download songs for free.Bargaining power of the suppliersThe internet offers a channel for suppliers to reach end users, decreasing the power of intervening companies (Michael. E Porters Competitive strategy free press, 1980). Procurement and digital markets tend to give companies equal access to suppliers and to standardised products that decrease variation.Buyers bargaining power of channels and end usersMoves bargaining power to end customers (Michael. E Porters Co mpetitive strategy free press, 1980). The customers have the bargaining power as they have the choice to either purchase CDs from a store or download the songs for free online.From the analysis above, it is assumed that the UK music business is booming. The music industry is conquered by three big companies who have been around for a number of years and who operate great shares of the market. Applying Porters five forces framework is tremendously significant in industry analysis as it allows businesses to understand the overall attractiveness of the industry itself. However, one could say that the advent of the internet has affected the sales of CDs. The need to purchase a CD with one song on it is no longer a necessity as you can just download the song from the internet. Music piracy online is quite widespread, which affects artists and record labels profits. Anybody that has an internet connection can find illegal music downloads anywhere. Unsurprisingly the labels lose more mone y than the artists since the label keeps the majority of the money and the artist only sees a meek percentage. It is now easier for artists to self-promote and self -release nowadays with all the opportunities for advertising and promoting online. Therefore, it could be said that the advent of the internet has decreased the music industrys performance.ReferencesAbout The BPI. (n.d.). Retrieved show 20th, 2014, from The British Recorded Music Industry http//www.bpi.co.uk/about-bpi.aspxAnswers. (n.d.). Retrieved skirt 21st, 2014, from wiki.answers.com wiki.answers.comDavid Besanko, D. D. (n.d.). Economics of Strategy. John Wiley.Illangakoon, S. (2010, November 5th). Porters Five Forces analysis for music industry. Retrieved March 17th, 2014, from Assignment help series http//assignmenthelpseries9.blogspot.co.uk/Internet. (n.d.). Retrieved March 21st, 2014, from Oxford Dictionaries Language Matters http//www.oxforddictionaries.com/definition/english/InternetOur Work. (n.d.). Retriev ed March 20th, 2014, from British Phonographic Industry http//www.bpi.co.uk/our-work.aspxPorter, M. (1980). Competitive Strategy.Riley, J. (2012, September 23rd). Overview of the five forces model. Retrieved March 18th, 2014, from tutor2u http//www.tutor2u.net/business/strategy/porter_five_forces.htmThe UK expert supplier of custom essays. (n.d.). Retrieved March 15th, 2014, from ukessays.com http//www.ukessays.com/essays/information-technology/the-internet-on-the-macro- environment-information-technology-essay.phpBusiness Organisation And Environment McdonaldsBusiness Organisation And Environment McdonaldsThere are 2 types of business environment, namely internal environment and external environment. Internal environment is as well known as controllable environment. The internal environment of McDonalds includes the followingAimThe aim of McDonalds is to be the best disruptive service restaurant experience.MarketingThe marketing of McDonalds is very large. McDonalds was one of t he eight corporate sponsors of Millennium Dome Experience. It invested 8 million in the Domes community create mentally and learning experience. Besides that, McDonalds is withal a major sponsor of the World Cup since 1994 and the Champions fusion from 1996 to 2000. McDonalds also sponsors British athletics since 1993 and formed the McDonalds Young Athletes League to train 11 to 17 years old teenagers. Moreover, McDonalds sponsors Child Safety Week since 1994.ManagementMcDonalds also has a good management for their business. Such as, they have high recruitment standards. They consider about the skills, talents and performance of their staffs. They also consider gender, marital status, disability, race and nationality when recruiting. McDonalds also provides a safe and secure working environment. each(prenominal) staffs will have opportunities for training and development. Moreover, McDonalds provides education of staff matters for their staffs. They have a good communication wi th their staffs. The pay of the staffs at McDonalds reflects their working performance. Besides that, over 40% of McDonalds managing directors started as hourly-paid staff members in the restaurant. McDonalds motivates their staffs by giving them free meals. They will also have paid holidays. The staffs will get free life authorization and the value is dependent upon their service. Those employees that are 19 years old or older with 3 years service with get private health care from McDonalds. Besides that, McDonalds has a sponsorship programme for their staffs. The employees of McDonalds will also get an employee discount card. There are also service awards for those employees with 3, 5,10,15,20 and 25 years of service. in all employees will also get a stakeholder pension from McDonalds.ProductionMcDonalds has their production of foods. There are five main ingredients for food, like beef, chicken, bread, potatoes and milk. The Big Mac is one the staple fiber food offered by McDo nalds. Moreover, McChicken is also known as chicken sandwich and McNuggets is also known as chicken nuggets which are products of McDonalds. McDonalds also serves desserts such as the McFlurry ice-cream.Moving on, the following shows the external environment (uncontrollable environment) of McDonaldsPoliticalMcDonalds is highly influenced by the policies set by the government of the various countries it operates in. For example, in the country of India, the local unearthly law restricts its residents from eating beef, thus it is considered an insult to have beef in the local McDonalds menu. In order to obtain the license to open a unfluctuating food restaurant, McDonalds has to obey the business regulations implemented by the local government. To succeed in the foreign market, McDonalds has to act according to the markets rules and regulations, and create a good relationship with the government by obeying the markets tax obligations and any environmental laws.EconomicThe markets ec onomy has an impact on the branches and franchises of McDonalds. A weak economy would influence the customers buying power which would in turn affect the general sales of McDonalds. McDonalds imports most of its material as the local market cannot provide materials in abundance to meet the demands of the market. pretentiousness or changes in the exchange rate of the market would affect the operations of the company. A rise in the exchange rate of currencies would increase the cost of purchasing.Socio-Cultural either country has a unique culture. McDonalds has to create a menu that is suitable to the local taste and culture. For example, the Hindu residents of India do not take beef, Muslim countries do not take pork and only consume halal food, Asian countries like to eat rice, Chinese likes to associate their meals with good fortune such as prosperity, and Americans eat big-sized meals. Additionally, the development of technology creates the need for better services and convenienc e for customers. For instance, McDonalds should provide wireless internet services and allow credit card payments at their stores.TechnologicalMcDonalds uses technological means for a variety of things. For example, television advertisements are used for marketing. Customers can order by phone for a delivery to be made. Besides that, in Singapore, McDonalds accepts EZ-link card payments as a means of convenience for customers. Moreover, the advancement in internet technologies allows McDonalds to implement web-based ordering and online payment.LegalMcDonalds has to follow many regulations in order to be legally allowed to operate its business, for example, business registration, tax requirements, and employment laws. Besides that, McDonalds also has to acquire a halal certification in order to get Muslim customers.EnvironmentAs McDonalds serves millions of customers per day, it needs a large supply of materials. The large amount of animals slaughtered to create a supply for McDonald s is frequently criticised by world environmentalists. In addition, forests have been lost due to large scale plantation. Before using paper packaging, McDonalds used Styrofoam based packaging for its products, which is hard to recycle.Organisation structureMcDonalds is a fast food franchising company and its success comes from its various franchisees all over the world. About 70% of McDonalds worldwide restaurants are puff by independent businessmen and businesswomen. A franchise is a business licensed to use the name, logo and expertise of an existing, well-known business (123helpme.com n.d.). McDonalds provides licenses to the markets local operators to start a McDonalds restaurant. McDonalds may take away the license if the franchisee fails to meet the franchise agreement or requirement.All of McDonalds restaurants have a flat structure. A manager controls all the employees and makes all the decisions. This allows the staffs to only carry out their simple routine works such as selling and serving customers. On the other hand, the McDonalds stack has a tall and complex structure. The corporation is highly formalized, has a limited information network, is centralised and has extensive subdivisionalisation. The departmentalisation of McDonalds is structured along functional lines. The various departments in McDonalds are operations, development, finance, marketing, and human resource.OperationsThe operations department of McDonalds controls the equipment and franchising of restaurants. They ensure that the franchisees are following the agreements set by the McDonalds corporation. They provide support for the franchisees in all aspects of the business. All in all, they make certain that the business of McDonalds runs smoothly.DevelopmentThe development department plans and manufactures products. They ensure that the products made are up to the qualities set by the corporation. Besides that, they also develop new products for McDonalds.FinanceThe finance dep artment keeps record of the profits of the company. They keep account on all the transactions done by the company. They also pay the salaries of the employees. They keep track of how the business is doing.MarketingThe main role of the marketing department is to attract new customers. They organise advertisements and promotions. Moreover, they cooperate with the development department to ensure that the design, quality and price of a product are what the consumer wants.Human ResourceThe human resource department recruits and appoints all new staffs. They handle the personal matters of all employees which include retirement, dismissal and etc. They employ quality staffs and motivate them to do their best.Culture in SocietyCultures in societies are affecting the organic law. An organization will change its way or structure to adapt to the culture in the society. It might also change the communication style with its customers in order to stay in business. In other words, McDonalds mus t understand that they must make their organization structure compatible with the various cultures in societies. Otherwise, the amount of customers will reduce when the organization does not adapt to the markets culture, or goes against it. When there are less customers, McDonalds will not have enough income and motivation to continue running their business.Culture of ReligionHalal is a term designating any object or an action which is permissible to use or engage in, according to Muslim law.(wikipedia)When someone wants to operate a McDonalds restaurant, they have to consider about religion issues such as Halal in certain countries, for example Islamic countries like Malaysia, Pakistan, Iran, Sri Langka and so on. McDonalds have to comply with the regulations given by the government and the culture of the residents. Therefore in these Islamic countries, McDonalds have to provide Halal food due to the large population of Muslim and Arab people to run the business successfully. Howe ver, Halal issues are not only applicable in Islamic countries, there is also an exceptionally large number of Muslims and Arabs in non-Muslim countries like in Dearborn (Michigan, United States). McDonalds have introduced Halal chicken nuggets there.Culture of FoodDifferent countries might have different food cultures. It will affect the food menu of McDonalds as well. In order to expand the business, or to increase the income, McDonalds has to do research on the food culture of the markets residents. Only foods that adhere to their food culture are able to attract more local customers. For example, at German, McDonalds serves beer. In India, there is no Big Mac because Indians do not consume beef. However, they do have a Maharaja Mac which contains lamb or chicken meat instead of beef. They also provide a vegetarian burger named McAloo Tikki, since a certain amount of Indians are vegetarians. Besides that, for rice-loving Chinese in countries like Hong Kong, Taiwan and Singapore, McDonalds introduced rice burger. In other words, McDonalds will modify their menu according to the food culture of the local customers so that they would be able to earn more customers as well as income.Culture of SocialWomen are also affecting the income of McDonalds. As there are more and more women that work nowadays, most of them will have less time to spend in the kitchen to cook for their family. The job of preparing a meal will fall onto their parents or even their husband, but they often choose to eat fast food. Therefore, McDonalds has become one of the places for these families to have their meal. This has directly increased the income of McDonalds.There are many more cultures in societies that affect McDonalds, it must clearly know the change of the culture in order to keep its business updated. If there are no customers due to the structure of the organization which is against the customers culture, McDonalds will not have the motivation to run its business in that mark et.The reason McDonalds run successfully is because it able to adapt with the local culture of the market. It also structures its internal environment well and has a good reaction to the external environments.