The internet globally has transformed the music industry, and the discussion started in August 1999 when the music scene experienced a myriad of drawbacks. The internet was a game changer in that it brought a new dimension whereby the consumers purchased the music online rather than purchasing from the stores. The internet made it easy for the fans in the music industry to easily access and to download new music when it was released. This paper shall provide substantial information on the structure, environment and strategy of the music industry a case study of BMG Entertainment organized using Porters Five models; competitive rivalry, the risk of new entrants, the risk of substitutes, buyers bargaining power and suppliers bargaining power model.
The environment was characterized by competitive rivalry model among the key players in a bid adopt to the change in trends, for instance, Sony Music Entertainment in an attempt to be competitive was among the first to incorporate the use of new technology to distribute new music. The competition that arose due to a new frontier established by the online platform meant that the companies had to shape in to keep up with the new music downloading trends (Daft, Murphy & Willmott 2014). The suppliers bargaining power models brings forth the concept that they will enjoy more power when there are less well known as organizational ambidexterity
In 1999 BMG Entertainment took advantage of the online opportunity because of the risk of substitutes model which foresees replacement by other key players and made a tremendous step by announcing that it would henceforth sell its music online directly to the consumers in the year (Porter & Heppelmann 2014, pg 64). BMG Entertainment in collaboration with other players in the music business played a vital role to set the technological standard in the attempt to develop a platform to enhance downloading music to be able to cope with competition from the risk of new entrants as postulated by the new entrant model (Nandakumar, Ghobadian & O'Regan 2010, pg 907). They partnered with companies such as Microsoft by making deals that were short term to ensure that it made decisions it would change.
Organization ambidexterity will play a crucial role to ensure that the senior managers will grab the opportunity through the integration of the available assets to overcome dependence which is an essential dynamic capability (O'Reilly & Tushman 2011, pg 5). In organizational design, BMG should organize its digital business and establish a posture that is embracing to other technology partners to create more extensive coverage.
In conclusion, the terms of structure, the distribution division in BMG Entertainment carried the responsibility to manage the accounts successfully, to generate and oversee orders be able to report sales and finally to deliver the products for the consumers according to the buyers bargaining power model.
Daft, R. L., Murphy, J. & Willmott, H.,(2014).Organization Theory and Design: An International Perspective'. 2nd ed. s.l.:Cengage Learning EMEA.
Nandakumar, M.K., Ghobadian, A. and O'Regan, N. (2010) Business-level strategy and performance: the moderating effects of environment and structure, Management Decision, 48(6), pp. 907939
O'Reilly, C.A. and Tushman, M.L. (2011) Organizational ambidexterity in action: How managers explore and exploit, California Management Review, 53(4), pp. 522.
Porter, M.E. and Heppelmann, J.E. (2014) How smart, connected products are transforming competition, Harvard Business Review, 92(11), pp. 6488.
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