Below is my essay , please review and comment which part is needed for improvement, also, please suggest a better strategy objective of HMV and its strategy with source and what are the recommendations of avoid HMV’s strategy failure should be written

Below is my essay , please review and comment which part is needed for improvement, also, please suggest a better strategy objective of HMV and its strategy with source and what are the recommendations of avoid HMV’s strategy failure should be written.

 

 

Introduction
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The music and entertainment retail industry has experienced significant disruption due to the rapid digitization of media and the rise of online streaming services. A prominent example of a company struggling to adapt to these changes is the historic retailer HMV. As reported in the Financial Times article published on February 6, 2019, the company has entered administration for the second time and was eventually sold to the Canadian Group Sunrise Records. Despite the acquisition, 27 stores, including the iconic Oxford Street flagship location, were closed, resulting in 455 redundancies. Many saw the acquisition as a relief, preserving the legacy of the historic retailer. However, Patrick O’Brien, the CEO of GlobalData, pointed out that the underlying issues facing HMV were not resolved, and the company still needs to develop strategies to foster market growth.

 

In this essay, an in-depth analysis of HMV’s strategic failures and the mistakes that contributed to the company’s decline will be conducted. By examining the challenges faced by HMV and exploring potential strategies to address these issues, insights into the future of the iconic brand in the context of a rapidly changing market landscape are provided.

Company Background & Strategy

 

HMV, a British entertainment retail company established in 1921, built a strong reputation as a leading provider of CDs, DVDs, and video games. (Anon., 2021). However, the digital revolution and declining physical media sales led to significant challenges. Forced into administration in 2013, restructuring firm Hilco acquired HMV (Anon., n.d.), saving over half of its chain. In December 2018, HMV entered administration again due to weak sales and market changes. Canadian entrepreneur Doug Putman, owner of Sunrise Records, acquired HMV in February 2019, saving 100 stores and nearly 1,500 jobs in the UK, with the intent to revitalize the retailer and adapt it to the changing market conditions  (Eley, 2019).

 

According to interviews with HMV Chair, Paul McGowan (Wood, 2016), (Gee, 2016), the company established the main strategic objectives: relaunching its online presence and expanding product offerings through increased vinyl sales to bring positive profit. Strategy, as defined by Johnson et al. (2017), is “the long-term direction and scope of an organization, which achieves advantage in a changing environment through its configuration of resources and competences with the aim of fulfilling stakeholder expectations” (Exploring Strategy: Text and Cases, 11th ed., p. 4). In line with this definition, HMV sought to strengthen its online presence by relaunching its website in June 2016, aiming to provide customers with a seamless online shopping experience. Furthermore, the company capitalized on the resurgence of vinyl records, identifying it as a potential growth opportunity. By catering to a niche market and differentiating itself from competitors, HMV experienced a surge in vinyl sales at its established stores.

 

HMV’s strategy failure ?

 

In order to have a deep analysis of the strategy failure of HMV, its critical to define what’s strategy failure. Strategy failure or decline typically signifies an organization’s incapacity to attain its target goals and objectives, even with a comprehensive plan in place. Various elements can contribute to this predicament, such as ineffective planning, insufficient resources, external influences, or improper execution (Mintzberg, 1994). Ultimately, strategy failure can result in the deterioration of an organization’s performance, competitive standing, and long-term viability (Teece, p. 1997). In the HMV’s case uptill February 2019, could be considered as strategy failure as its inability to adapt to digital transformation of the music and film, which leading to a continues decline in sales and revenue that by the BRC report, HMV sales down by 8.5% and online sales drop by 0.7% in 2018/19. (Anon., 2019)

 

Argues by  (Greiner, 1998) that many organizations fail to execute their strategies, not because they have the wrong objectives, but because they have difficulties in translating those objectives into actionable initiatives. This well explained the reasons of resulting HMV’s strategy failure, as actually the fore-mentioned main strategy objective is in-line with the market trend. According to the Recording Industry Association, it’s found the resurgence in vinyl and its sales has been kept increased since 2010, and in early 2014 there was already a significant of sales jump, however HMV only till 2016 to reveal the strategy to grasp the vinyl resurgence to be more focus on the vinyl sales. In addition, the rise of streaming services began to significantly in late 2000 and early 2010. The growing popularity of digital music and video streaming, such as Netflix, Spotify, Youtube etc , led to a decline in the demand for physical media, including CDs and DVDs, which were HMV core products in that period. Hence, its apparently the HMV’s strategy failure can be categorized as following :

 

 

 

Improper execution:

 

Delayed digital transformation – HMV’s slow response to the digital revolution in the music and film industry left them at a significant competitive disadvantage (Brynjolfsson & E.&McAfee, 2014). Their late entry into the digital market allowed established players like Amazon and iTunes to gain significant market share and customer loyalty, making it difficult for HMV to compete effectively. Additionally, HMV’s digital offerings lacked differentiation and failed to provide a compelling value proposition to attract customers from rival platforms (Laudon & K.C., 2018)

 

 

Unsuccessful diversification – HMV’s attempts to diversify its product offerings and invest in live music venues and festivals did not generate the expected returns, as they strayed from the company’s core competencies and failed to address the fundamental challenges posed by the digital transformation (Grant, 2016). The introduction of consumer electronics, books, and clothing may have diluted the company’s brand identity and confused customers, while the investments in live music venues and festivals proved to be financially unsustainable (Johnson, 2017).

 

 

Inadequate cost control –  As HMV’s revenues declined due to the shift in consumer preferences and the growth of digital competitors, the company faced increasing financial pressure and struggled to manage its costs effectively (Slack et al., 2016). The high fixed costs associated with HMV’s extensive network of physical stores, coupled with rising rent and labor expenses, further eroded the company’s profitability and hampered its ability to invest in new initiatives and adapt to the changing market conditions (Besanko et al., 2019).