HMV or ‘His Master’s Voice’ as it is commonly known, is a British company engaged in the entertainment (music and movies) business. The company was started by Sir Edward Elgar in 1921 when the first HMV store was started at 363, Oxford Street, London (BBC News 2013).
The logo of the company, featuring Nipper – the dog – and a gramophone became very popular with the masses. The logo was actually acquired from a work of art of Francis Barraud (HMV par. 6). By the year 1986, HMV had 25 outlets throughout the United Kingdom.
Now the company thought of starting its operations out of the United Kingdom namely, Ireland and Canada. HMV is accredited for opening the biggest record outlet of that time – the Oxford Circus shop. HMV also had the opportunity to host several celebrity appearances in its store each year – the figure of such events is said to be 200 annually. (“HMV history: 90 years on, the music and DVD retailer goes into administration” par. 9).
In January 2012 the company, in an attempt to recoup the financial losses, entered into an agreement with Universal Music. The same year, the company sold away Hammersmith (the venue) thereby bringing to an end HMV’s live music business.
The company experienced further downtrends in its sales to an extent that there was a warning signal that the company might not be able to honor its agreements with the banks. BBC reported that HMV’s sales for December 2010 were down 10.2% as compared to the sales in the same month the previous year (BBC 2011). Considering all such circumstances, the company (HMV) publicized its decision to opt for administration.
Should HMV venture into the yet untouched market of Saudi Arabia and start new franchises?
The rationale for the study:
Since childhood, we all have been hearing about the music company called HMV. The first name on everyone’s mouth, whenever there is any reference of a music company, is undoubtedly HMV. We all truly hold very high esteem of the company. But the recent reports on the developments at the company front have startled one and all.
What happened to such a popular and strong company? Why is it being reported that the company is not performing well? In such circumstances, should the company think of venturing into new markets such as Saudi Arabia? All such questions suggested me to do this study.
Areas to be covered
My study will be based on the following:
- The opportunities in Saudi Arabia.
- The strengths of HMV might prove to be helpful if it plans to open franchises in Saudi Arabia.
- Other music companies that are already established in the region and how they might have a negative impact on HMV’s plans.
- The drawbacks of the company that might hinder the franchising plans.
I will look at all these aspects to come to a conclusion whether it will be feasible for HMV to open franchises in Saudi Arabia or not.
In order to collect information that will help me in this study, I plan to adopt the following sources of information:
- I plan to get the required details or figures from trustworthy websites. Such information will help me to evaluate my results. Since the websites that I plan to refer will be trustworthy, I can rely on the information. But a disadvantage in referring to the internet is that sometimes, despite being careful, we come across websites that seem to be good but the information provided is not accurate. So in order to avoid such possible wrong information, I will desist from referring websites such as Wikipedia.com, about.com, etc.
- I have details of the music companies that are presently having outlets in Saudi Arabia. I propose to talk to some employees in such outlets. This will provide me with the actual position of the market.
- I also plan to conduct a survey that will include an audience from all walks of life. I will conduct the survey with at least one hundred people. I have made a questionnaire that includes all possible questions to get the required information. I even plan to interview customers who visit such outlets. I understand that it will be a tough job to persuade them for the interview but I am sure that with my kind of PR, I will be able to manage the situation.
- I also plan to do some analysis such as the SWOT analysis and the PEST analysis. Such analyses will provide me with some answers that will help me evaluate the feasibility.
SWOT Analysis of HMV
SWOT analysis is a popular analysis done by organizations in order to know their Strengths, Weaknesses, Opportunities, and Threats in the global competitive market. In the following paragraphs, we shall do the SWOT analysis of HMV, with particular emphasis on the Saudi Arabian market.
HMV is a very popular brand name in the music industry and needs no introduction. Music lovers know that the company is well reputed and delivers quality products at reasonable prices. HMV already has an online existence, so customers can make their dealings via the internet.
If an HMV franchise is opened in Saudi Arabia, HMV can further benefit from its popularity. HMV sells DVDs, games, music CDs, etc., so there is no need for the customers to have any sort of direct arrangement with the company; the same can be had online or from the proposed franchise.
The major drawback with HMV is that it was unable to sell selected items, like for example any particular song or any particular TV episode. The customer has to buy the complete CD or DVD. Relating the weaknesses to Saudi Arabia, the country is an Islamic state and there are certain restrictions that people and businesses have to follow.
HMV will have to be very careful while advertising on the national TV channels or on billboards. Also, Saudi Arabia being an Arabic speaking country, HMV will have to develop or record more of Arabic language products.
There was a news article where it was reported that some employees of HMV hijacked the company’s Twitter account and posted negative remarks (“Music retailer HMV sacked 190 staff, but left Twitter in their control” par. 1). Such information may hamper the prospects of HMV in Saudi Arabia.
Saudi Arabia is yet untouched country by HMV. But due to the popularity of the company and ease of access to world news, the citizens are aware of the name HMV. This is a plus point for HMV. By opening an outlet in Saudi Arabia, HMV can further enhance its image. When customers visit the outlet, they will definitely be enticed to purchase the products.
The main threat that HMV has in Saudi Arabia is from Apple’s iTunes. Apple’s iTunes is already an accepted means of getting music for the Saudi people (Bhatia 2012). It is very easy as well to download music from iTunes.
Apple’s iTunes has the upper edge because customers can download music or videos sitting at home whereas, in order to purchase music or video CDs and/or DVDs from HMV, the customers will have to walk down to the store; this will incur some costs of traveling on the customers.
HMV will have to tread a rough path in overcoming this threat. Another threat for HMV in Saudi Arabia is that the laws governing each and everything are based on Shariah (“Sharia Law in Saudi Arabia” par. 1). There is no other reasoning that is entertained. HMV will have to compromise to some extent if it wants to establish itself in Saudi Arabia.
PEST Analysis of HMV
The word ‘PEST’ stands for the political, economic, social, and technological aspects that may have an impact on the performance of any organization. This kind of analysis is generally done by organizations in order to get information on the aforementioned aspects prevailing in a specific country or area where they want to launch their products.
The analysis can also be done to have the latest trends and current information about the aspects. This analysis helps the organizations to understand the market (current or future) and the external factors that may have an impact on their performance.
Saudi Arabia is an Islamic nation and has a king ruling the country. The laws are framed as per the Shariah guidelines and as such, there are certain restrictions pertaining to every action, including the businesses. The judgment or ruling of the Shariah court is final and has to be abided.
There is limited freedom of advertising products. Islamic culture has to be considered while designing advertisements. Even the kind of stuff that is being marketed has to be according to the Shariah principles. Considering all such aspects, HMV will be able to market only a limited variety of its products in the country.
Apart from this aspect, Saudi Arabia is a very safe country with rare instances of cheatings and frauds. So the businesses are safe in the country. Adding to the advantages is the fact that since the country is ruled by a king, there are no chances or very rare chances of any political imbalance.
Saudi Arabia is an oil-rich country and the GDP of the country was US$576.82 billion in 2011 (“Saudi Arabia GDP” par. 1). The growth in the GDP has been 0.1%, 4.6%, 6.8%, and 6% for the years 2009, 2010, 2011, and 2012 respectively (“Data on GDP and economic information” par. 1). Considering the encouraging figures, it is a good sign for the future growth of businesses in the country. So HMV has a bright future in Saudi Arabia.
As mentioned earlier, Saudi Arabia is an Islamic country, and the citizens are bound to follow the Shariah laws. But due to the advancements in science and technology, the younger generation has been able to connect to the world of entertainment in a manner that would not have been possible without the internet. SO HMV can benefit from its online promotions to reach millions of hearts.
The current population of Saudi Arabia is 28.84 million (“Saudi Arabia population clock” par. 1). Apart from this, Saudi Arabia is considered to be a hub of expatriate workers. These workers are from all over the world. Such an expatriate workforce of Saudi Arabia – since they are well aware of the HMV brand – will add to the advantages of HMV. Some of the music or videos that might be inappropriate face the risk of being banned by the government.
Technology has changed the face of businesses all around the world. The music industry has also experienced great upgrades due to the incessant inventions being made. As far as HMV is concerned, it can adopt new technologies to prevent unauthorized copying of its music or videos. Saudi Arabia is a country where new inventions reach without delay.
Questionnaire and results of the survey
For this survey, I contacted over 100 people of all age groups. Following are the results of the survey in tabular form:
Following are the graphical representations of all the answers:
Analysis and discussion
After all the description that we have written above, it is now time for the analysis. The two analyses that we have done show that there no such hindrance for HMV to open a franchise in Saudi Arabia. There are minor issues that can be taken care of with proper planning.
The survey results also show that the people of Saudi Arabia are interested in having a retail store from where they can buy their favorite music and video CDs and DVDs. The main issue that seems a little complicated is the prevalence of Islamic law in the country.
People are more inclined towards Islamic culture. And obviously, they would prefer to listen to Arabic music and watch Arabic videos. If we consider the number of Arabic singers and performers, we will understand that there is no dearth of Arabic artists. So HMV can produce more CDs and DVDs featuring such artists. The superior quality of HMV will guarantee excellent results.
BBC 2011, HMV to close 60 stores as sales and shares slump. Web.
BBC News 2013. HMV: A visual history. Web.
Bhatia, Kapil 2012, iTunes store launched in Middle East. Web.
HMV n.d. About HMV. Web.
HMV history: 90 years on, the music and DVD retailer goes into administration 2013. Web.
Saudi Arabia GDP. Web.