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