Hifi Case Study Swot

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Industry dynamics in the hi-fi sector

Q1. Perform a SWOT analysis and use this to help think through the industry dynamics in the hi-fi sector. i. What are the opportunities and threats facing these specialist hi-fi firms?

* Internal diagnotic
Marketing criteria|
Product| Sound system at highest quality| |
Price| Prenium prices can be a proof of quality| Premium prices are only dedicated to a small segment of customers | Promotion| | High costs of advertising|
Place| Prime location: factories are in UK which has a potential appeal compared to other countries.| | Functional criteria|
Functionning | One factory with access to a chain of retailers.| Few good suppliers with specialist materials.HRM has to recruit skilled staff what is difficult.| Resources|
Financial | | Low turnover (million vs billion for Phillips: £20bn) and profitability (less than 2 million)| Human | Highly skilled workforce.Ability to recruit key talent.| | Technological | Patents of previous technology.High R&D| | Which is a value perceived by the customers| High brand value= High pricesCustomers are faithful to one brand.| Their reputation is not enough developped| Competencies|

| Expertise :Produce sound system of the highest qualityKnowledge of high quality production and equipments| Provide an excellent customer service before and after salesExamples: * Naim: Not for profit repairs * Linn: Audition product before purchase|

* External diagnostic

Political| | |
Economical| | CD sales and older technologies are declining (23%) whereas Ipod (207%) and MP3 are booming| Social| This kind of product can be classified as a esteem need* in the Maslow's hierarchy of needs.| It’s a market hit by fashion trends.Affordable technology is in demand.People focus more on quantity and fashion than quality.| Technological| | Internet : online music sales increaseInnovation: digital (Mp3, Mp4) vs. CD’s | Ecological| | |

Legal| Illegal downloading of music andIntellectual property rights-patents generate opportunities for this market.| | |
Micro-environment (Porter’s 5 forces)| Competitive rivalry(HIGH)| The 3 competitors for the same niche called audiophiles are Meridian, Linn and Naim. They are very similar in terms of structure, missions, capital (£10 to £35m of turnover) and they use a strategy of differentiation (high quality product).| They are (under consideration) small compared competitors of the market for audio and video products as Apple, Phillips, Sony (many billions pounds of turnover).| Supplier power(HIGH)| | A low number of suppliers, a strong brand, and differentiated products increase the switching cost and the bargaining power of suppliers.| Substitutes(LOW)| There is a lot of substitutes but it doesn’t deal with the same quality of product:-Products from Apple, Sony, Phillips-MP3 market -Docking stations as Bose (able to turn portable products into the basis for a home hi-fi system)-Online retailing of music (Apple with iTunes)| | Buyer power(LOW)| As specialists sell high quality products at high prices (from £1000 to £50 000) and they are only 3 on the audiophile market compared to their extensive retailers network, customers influence is low.| | New entrants(MODERATE)| Audio and video products is a saturated market by Apple, Phillips, Sony, Samsung, Thomson,…And the barriers for high brands as Meridian, Linn and Naim are higher because of a need of notoriety, links with good suppliers, patents, a large investment in R&D/advertising…| As factories have low capital requirements they are susceptible to new entrants especially if Apple decides to produce...
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