| Company Situation Analysis Summary and Conclusions | | | | resources in possession, narrow customer base, |
| The first element of company situation analysis is | | | | presence in only one market segment, comparatively |
| overview of strategic performance indicators on a | | | | low quality of record (digital technology if worse that |
| yearly basis, from 1997 to 2000. | | | | records of analogue equipment), low popularity of |
| [Tabular data omitted] | | | | musicians, weak advertisement and promotion, low |
| The table composed on the basis of income | | | | sales levels. |
| statement and presented above shows constant | | | | Therefore, in the first place, the company should |
| sales growth of the company on a yearly basis, | | | | address such strategic issues as creating a profitable |
| which is good indicator. As for the net profit margin | | | | music recording label with expanded range of artists |
| indicating company's cost control effectiveness, the | | | | and performers; positioning Darren Curtis Skanson |
| table shows that the highest margin was attained in | | | | label to compete with major artists with contracts to |
| 1998 and that it tends to decrease. This informs that | | | | Sony Classical. For this, acquiring traditional distribution |
| the company does not perform very successfully at | | | | methods is necessary. The next issue is creating new |
| converting its revenues into profits. | | | | product line similar to Acoustictherpay which would |
| Since Darren Skanson is the only investor in the | | | | be saleable and provide funds for the previous two |
| company so far, the return on equity figures are | | | | goals. First of all, the company should decide on the |
| somewhat relative, showing relation between the net | | | | major strategy of further development: enhancing |
| income and Darren's investment into the company. | | | | the recording studio or promoting the music by selling |
| However, the figures, as those of net profit margin, | | | | CCM's product lines to recording studio larger then |
| show the trend towards return on equity decreasing. | | | | CCM, independent of major labels with access to |
| This indicates growing expenses of the firm with | | | | traditional outlets. |
| relatively stable income, which along with the sales | | | | Conclusions and Recommendations |
| volume grows, but not in the rate comparable to the | | | | The current work contains the discussion and analysis |
| expenses. To be attractive for potential investors, | | | | of CCM's performance and competitive situation in |
| the company has to leverage its income and | | | | music recording market. From all the information |
| expenses figures. | | | | presented above, following conclusions and |
| The next issue to be regarded in company situation | | | | recommendations can be made. |
| analysis is SWOT analysis. SWOT analysis was carried | | | | The first recommendation concerns the need for |
| out and presented early in the paper; in this section | | | | creating corporate culture within the organization. |
| the most important moments will be emphasized. | | | | Corporate culture acts as a tool for achieving |
| Among strengths, the most serious factor is of | | | | organizational goals and helping CCM adapt to |
| course low cost of recording affordable due to new | | | | challenging external forces. CCM needs to engage HR |
| digital recording technologies. Not only assembly of | | | | and create a separate group to focus on corporate |
| studio with all necessary equipment and hardware is | | | | culture and inform the employees of the benefits of |
| cheaper, but duplication of CDs, storage and shipping | | | | the changes. Corporate culture and instilling vision in |
| are less expensive as well. Low cost of production, | | | | employees is no easy task, small steps will be |
| duplication (duplication of 500 CDs ranges from $1.90 | | | | necessary. First, CCM should begin by creating |
| to 3.63, duplication of 2000 CDs costs about one | | | | cross-functional work teams and offer incentives |
| dollar per CD), shipping and storage makes the final | | | | based on company-wide performance versus |
| product less expensive and more affordable for the | | | | individual performance. Cross-functional work teams |
| customers, thus widening the range and scope of the | | | | will also help to eradicate some of the silo product |
| target market. Second important strength factor is | | | | teams. CCM should also implement a program that |
| constantly growing customer base and developing | | | | rewards managers and employee alike for what they |
| customer loyalty within the narrow market segment. | | | | produce rather than for seniority or specialized |
| Third strength can be regarded at the same time as | | | | knowledge. These will kick-start the move to align |
| strength and weakness. This strength is positioning of | | | | CCM along business unit versus product lines. CCM |
| CCM in a distinctive market niche. For a microlabel | | | | also needs to make an effort to share information |
| company wishing to preserve its positions this is | | | | and support inadvertent changes in the culture. |
| strength, but for company striving to grow into | | | | Additional training will help managers and employees |
| independent label, narrow market focus is weakness | | | | fit into the changing culture and support the |
| hindering to expand the customer base. And the last | | | | organizational vision. CCM needs to make the |
| strength is good customer service of the company. | | | | corporate change successful but also needs to |
| Among weaknesses, the most important one is | | | | recognize that all employees need to be involved in |
| absence of reliable and traditional distribution channels, | | | | the change process. |
| absence of clear strategic vision of the movement | | | | Second, CCM needs to embrace genetic diversity and |
| direction - either towards developing of recording | | | | in response, its organizational culture must be |
| company or towards promotion of the artists' music | | | | sensitive and make provisions to manage it. If CCM |
| by means of other companies' capabilities; low level | | | | continues to promote from within on an ongoing |
| of sales, which is supported by limited customer base | | | | basis, they will have little, if any, genetic variety in |
| (the issue discussed in the strengths section); weak | | | | upper management. All of the managers will have the |
| promotion and limited financial resources to pursue | | | | same or similar traits and possibly the same or similar |
| new goals and possibilities. | | | | backgrounds, education, management practices, |
| In the music industry environment, the opportunities | | | | leadership, and many other similar management |
| of CCM lie in acquiring new channels of distribution to | | | | practices. Although this may be a competitive |
| reach wider customer base exposure, elaborating | | | | advantage in some circumstances, it is actually quite |
| active presence stategy in Internet through | | | | the opposite. CCM is under pressure to increase |
| expanding e-commerce and releasing MP3, gaining | | | | productivity and overall growth. It is this pressure and |
| additional customer groups by expanding co-operation | | | | the ever-changing competitive environment that |
| with other artists and enlarging the Acoustictherapy | | | | should force CCM to throw aside their standard |
| and other product lines with new marketing | | | | management practices and increase the genetic |
| strategies, developing new technologies of recording | | | | variety of the management ranks. New managerial |
| for coping with the rivalry. | | | | beliefs and practices will become a breeding ground |
| Along with the opportunities, music industry | | | | for long-term success. |
| environment contains such threats for the company | | | | Direct sales method in art festivals would be |
| as high number of new entrants and growth of other | | | | profitable for CCM as it promotes good cash flows. |
| smaller labels due to the digital revolution, the | | | | But on the other hand the small business should |
| possibility that major labels or independent labels | | | | strive for instantaneous distribution and effort in its |
| could decide to enter into CCM's domestic markets | | | | served market delays allows the competitors to |
| and try to drive the smaller labels out of the market. | | | | retaliate, especially big ones, and it drained resources, |
| Another threat is possibility to lose sales to substitute | | | | especially limited capital. |
| products like mp3s or internet downloads. From | | | | CCM recognized that global competition was |
| these, the most important threat is difficulty to stand | | | | increasing and that in order for it to maintain its role |
| the competition of large music recording companies | | | | as the industry leader; it must diversify and expand |
| with CCM's limited resources and narrow target | | | | its product line and services into other areas without |
| market. | | | | straying from its core competencies. CCM's |
| The next section of the Company situation analysis is | | | | manufacturing facilities are models of efficiency, |
| Competitive strength assessment which compares | | | | leaner organizational structures, more efficient |
| CCM's assets such as quality/product performance, | | | | factories, and a much-improved management of |
| reputation/image, manufacturing capability, | | | | supply and distribution, but its product lines are too |
| technological skills, dealer network and distribution, | | | | dependent on the industry behavior. CCM needs to |
| new product innovation, financial resources, relative | | | | concentrate on diversifying and growing the company |
| cost position and customer service capability with the | | | | by focusing on the most attractive opportunities that |
| major competitors in the industry. The results of the | | | | make use of the company's key strengths. |
| analysis are presented in the table below: | | | | Therefore, in short-term perspective, the main |
| Competitive Strength Assessment | | | | recommendations on the company's policy include |
| [Tabular data omitted] | | | | opening new promotion and advertisement channels |
| From this analysis it is obvious that competitive | | | | for the artists of Colorado Music Creative, finding |
| strength of CCM compared to major players in music | | | | new distribution channels for the products of the |
| recording industry is not significant, though fairly | | | | studio. This may be made by signing contracts with |
| decent as for the microlabel company. Thus, the | | | | major labels for distribution of the music of CCM's |
| company's strong points are quality and product | | | | performers. But in long-term perspective such |
| performance, technological skills, relative cost position | | | | strategy would prove detrimental for the |
| (due to the cheapness of production) and customer | | | | development of the company since signing the |
| service capability. Along with that, the weaknesses of | | | | contract with other recording company would |
| company's performance are obvious, which include | | | | promote the products but won't contribute to the |
| manufacturing capability, dealer network and | | | | development of the studio itself. |
| distribution, financial resources and new product | | | | That is why, in long-term perspective, the company |
| innovation. | | | | should aim at enhancement due to financial resources |
| From the abovementioned it is possible to conclude | | | | derived either from sales volume increase or from |
| that the company's position in the music recording | | | | investment into the company's funds. On this basis, |
| industry is improving, but not in fast and steady | | | | the company has to expand its repertoire, hire new |
| manner. The leaps in net profit margin and return on | | | | artists and conduct efficient promotion campaign so |
| equity indexes show that the company's | | | | that the artists become known to the wide public. |
| development is not consecutive but rather abrupt. | | | | Also, CCM needs to expand its array of music styles. |
| Along with that, the trend towards growing is | | | | Now, the leading and only style of music recorded is |
| evident, and sales growth and market share serve | | | | classical and traditional acoustic. To become |
| reliable proof for that. | | | | independent label, the company should comprise at |
| The company has such competitive advantages as | | | | least three or four music styles, thus acquiring new |
| high quality of products and performance, distinct | | | | segments of music market. One more thing to be |
| music and performance style, specialized niche on | | | | done for development of the company in the |
| music market, flexibility in the policy and development | | | | long-term perspective is upgrade of hardware and |
| strategies, application of nontraditional distribution | | | | music recording technologies from the cheapest to |
| methods such as internet, catalogs, gift stores and | | | | more quality equipment, which might include tape |
| others. | | | | recording and other means or genuinely quality |
| Competitive disadvantages of CCM include little | | | | analogue sound production. |