Essay on The attractiveness of the Music Industry for Warner Music
Major transformation in the music industry over the last decade has resulted in the three major record labels; The Warner Music Group, Sony Music Entertainment and Universal Music Group finding themselves with rapidly decreasing revenues and company structures which no longer provide profitability. A brief analysis of the external strategic factors affecting the Warner Music Group has revealed the changes in technology and social habits of customers has had the biggest detrimental influence on the company. Further analysis of the competitive environment revealed a major change in industry dynamics and the need for this large companies to …show more content…
In order to use this knowledge to inform future company strategy and assess the attractiveness of the industry, it is helpful to organise the factors influencing or causing this change. The PESTLE framework is a tool for analysing the global environment and organising the factors. The framework considerers 6 factors; Political, Economic, Sociological, Technological, Legal and Environmental. Not all of these are relevant to every organisation and understanding the most significant to an organisation is essential in developing a strategy to deal with them. Analysis of the current situation indicates that the major current influences of change, fall into two categories: Technological and Sociological.
Technological: Since the introduction of the CD in 1983 and the digitization of music the landscape for the music industry changed. Music is easy to buy, store, transport. The internet and online streaming has all but removed the need for tangible goods to be sold. The rate of technological advancement and the emergence of new products – MP3 music players (and subsequent obsolescence of other products – CD’s) has removed many of the traditional music industries opportunities to add value to the product and thus create profit. The digitalisation has also led to the prolific coping and sharing of music.
Sociological: the life styles of customers have changed to