Music World - the Strategic Planning Process

THE STRATEGIC PLANNING PROCESS

CASE: MUSIC WORLD

BRIEF INTRODUCTION:

* Ram Prasad Goenka formed RPG group of companies whose business consists of Power business, tyres, IT and communication, life sciences, retail, financial services, chemicals and speciality

* In the years that followed, RPG bought Spencer's, one of the successful chains of retail outlets, due to its undervalued real estate, distribution infrastructure, and a profitable travel agency

* The company finalised three formats of his stores:

* Food World (grocery and food items)

* Health and Glow (drugs, cosmetics and health products)

* Music World (music)

* Music world had operated through a joint venture between Spencer and Saregama (RPG's flagship). Spencer's has 57% and Saregama has 43% stake in the organisation.

NOW LETS ANALYZE THE STRATEGIC PLANNING INVOLVED IN THE MAKING OF MUSIC WORLD...

BCG MATRIX

The BCG matrix is primarily developed to classify the strategic business unit into a certain category as per the relative market share and market growth rate. It thus enables the firm in determining its position within these two determinants. The four categories include STARS, QUESTION MARKS, CASH COWS and DOGS.

After analysing the position of HMV, it can be said that it is in the dog stage as initially it enjoyed a good market share with a high market growth but after a period of time, its relative market share started declining. Since its market growth and the relative market share are low, HMV was in a stage where it needed make the right decision. Being a business unit of RPG, it is thus necessary for RPG to adopt strategies to be competitive in the market.

SWOT ANALYSIS OF SAREGAMA

STRENGTHS

* Good base in the market as belongs to the RPG group which enjoys a good brand equity

* Saregama is currently in a good financial position

* Wide range of music that is it had different genres of music.

* They had their stores having unique designs and logos which attracted good crowd.

* It had tie up with 116 companies.

WEAKNESSES

* There existed some problems in setting up of pricing strategies of their products that is it was priced higher.

* Could not capture the whole of India and had only 13 stores all over the country.

* Its brand HMV was suffering through a stage of decline

OPPORTUNITIES

* Increasing rate of the retail industry. It had the potential to develop into a $300 billion industry by the year 2010

* Customer convenience and preferences formed the basis of creating a demand for music and this was known through surveys and market research

THREATS

* Competition from various music companies such as T-Series, Tips etc.

* Music privacy existed in the society with regard to distribution, which was the most profitable part of the music business.

STRATEGIC PLANNING

Strategic planning is the core of the work of an organisation. Without a strategic framework you don't know where you are going or why you are going there. Thus, strategic planning gives clarity about what to actually achieve and how to go about achieving it, rather than a plan of action for day-to-day operations. Strategic planning is the overall planning that facilitates the good management of a process.

Before establishing a strategy, there is certain direction setting tasks that needs to be undertaken...

ESTABLISHING OBJECTIVES:

Objectives are managerial commitments to achieve specific outcomes and results. Objectives are required at all levels. Setting up of objectives enables organisations to plan out its strategies effectively. The objectives of music world can be:

* A bigger market share

* Broader or more attractive product line than its rivals

* Wider geographic coverage than its rivals

* Better presentation of the outlet than its rivals

Objectives should be high enough to produce outcomes at every stage. It should be able to enhance the performance of the company.

CRAFTING AND IMPLEMENTING THE STRATEGY:

After the objectives are established, the question now is how to achieve these objectives and pursue the organisation's mission and vision.

The SWOT analysis and the BCG matrix have enabled RPG in establishing Music World as a part of vertical diversification, to promote its brand Saregama and to phase out HMV. The analysis done also enables RPG to know and understand how it fits in and interacts with the surrounding environment on both an internal and external view. Music World has adopted several strategies to create a competitive edge among its competitors through analysing its internal and external environment and moulding as per the needs and convenience of the consumers. There is thus a stream of decisions and actions undertaken by Music World which has led to effective strategies which has helped them to achieve its growth objectives

The decision of vertical diversification has been undertaken mainly