Situation Appraisal and
SWOT Analysis
Ghaarith ChotaID: 4916913
Global music industry New Zealand music retail market Position appraisal of
Real Groovy SWOT analysis of
Real Groovy Conclusions Recommendations
Music is a significant industry in OECD countries US, Japan and UK largest markets Norway and UK largest in terms of per capita
spending
Overall revenues down by 20% (1999 – 2003) in US, France, the Netherlands, Germany and Japan as a result of online piracy and music downloads
Steady or growing sales in UK, Australia and NZ
NZ music industry worth $146 million with annual exports of NZ$5 million
2005 domestic music retail sales NZ$173 million
Sales in music retail market up by 5.7% in 2005 from
5.8% in 2000
Products and services: Wide range of new and second-hand music CDs
and LPs, movie DVDs, books and games
Products and services: Complementary goods:
clothing and accessories
Products and services: Magazine
Loyalty club and reward and incentive scheme
Ticket box office operation
Marketing and distribution: Web-based sales channel In-store sales retailing
(4 stores) 55,000 club members
and loyalty scheme Free delivery in NZ
Finance: Sales – ± NZ$20 million per annum (March 2006) Partnership – limited
availability of funds Large inventory investment
Management and staff: Partners – Chris Hart and Marty O’Donnell Magazine editorial and publishing staff 135 personnel
Operations and Systems: Online and offline sales operations Ticket box office
Inventory and financial management systems
Website administration
and maintenance
Strengths: Reputable brand name 25 years in music retailing
Annual sales of NZ$20 million per year
Strengths: Wide range of products (huge catalogue) Online and offline sales channels Club membership of 55,000 members
Strengths: Competent and knowledgeable staff Good financial & operations management systems
Weaknesses: Niche market orientation (music lover/enthusiasts)
Non-pricing strategy
Weaknesses:
Limited availability of funding Huge stock holding National distribution network limited to 4 stores
Threats: Competition from major general and music retail
rivals
Retail music industry has low entry barrier
Threats: Ever increasing piracy
and music downloads
Threats: Increasing petrol prices impacting on product prices Global economic pressures
on domestic music market
Opportunities: Expand local market share Enter global markets – China and US markets
Strengths: growth in sales as a result of increasing market share
Weaknesses: excessive reliance on a niche market and limited store distribution network
Threats: piracy and Internet downloading, and competitive rivalry and higher transport cost
Opportunities: grow local market share and explore possible entry into China and US markets
Company has a good sales growth track record but needs to develop long-term business strategies to exploit identified opportunities
Real Groovy must explore entry into global markets in the longer term
In the short term, current strengths must be exploited to continue to increase market share in existing markets (e.g. reward and incentives)
Change website from brochure to become an environment – a place where people gather and connect with Real Groovy and with each other.
Sell relationship – ongoing economic relationship with customers and community of music lovers