Compass Records

Now, let me write all “Treats” and “Weaknesses” in accordance with the case to analyze SWOT matrix (W – T) as follows:

Treats

T1: “The $32 – billion music recording industry was dominated by a handful of large, multinational corporations, which accounted for 86 percent of the market for global recorded music”

T2: “The global market for recorded music had stagnated ever since”

T3: “According to the Recording Industry Association of America (RIAA), the industry had registered no growth in any single year since 1995.”

T4: “By 2003, the recorded music sector had shrunk to 1993 levels ($32 billion), and annual dollar sales were estimated to have declined at a compound annual growth rate of 5 percent.”

T5: “And yet something like 98 percent of all records sell fewer than 5,000 copies, so if your benchmark is a million, or even 100,000, you’re obviously overlooking a lot of good music that sells well enough to deserve being out there.”

Weaknesses

W1: “Within the context of the global music business, Compass Records was tiny (very low market share).”

W2: “Brown estimated that 40 percent of Compass Records’ albums sold 5,000 units or more.”

Regarding to W –T analysis, we can mix all above mentioned to find out a new strategy as follows:

(T1, T2, T3, T4, T5, W1, W2)

New Strategy: Compass Record should focus on target sales of 5,000 copies and follow up the variety of albums. In fact, the new strategy is to increase the number of albums and target sales of 5,000 copies instead of going up the sales for an individual album.

This strategy can be translated to a combination strategy included all Intensive strategy in which we have Product development + Market penetration + Market development. It is clear, this is Corporate Level Strategy (C.L.S) of company as the strategy in action. For Business Level Strategy (B.L.S), Compass Records can gain competitive advantage from Focus strategy – Type 4 or 5 (Michael Porter’s Five Generic strategies) in which strategies...