This paper aims to describe the industry and operating environment of such a company as TiVo Inc. In particular, it is necessary to focus on such aspects as the intensity of completion, the possibility of new entrants, the bargaining power of customers and suppliers, etc. The analysis may help to single out the major steps which the management of TiVo should take to retain leading positions in the market. Currently, this enterprise finds itself in a very precarious situation as its products are continuously challenged by satellite and cable DVRs (Hoffman et al, n. d). This is why it is critical to identify hypothetical risks and reduce them to a minimum.
While analyzing the industry environment of this firm, we have applied the Model of Five Forces, developed by Michael Porter (2008). According to it, the functioning of private business is shaped by such factors as the threat of new entrants, bargaining power of suppliers and consumers, availability of substitute products, and rivalry among companies (Porter, 2008, p 6). The first aspect that should be examined is the barriers to entry or those obstacles which prevent newcomers from occupying a niche in the market (Pearce & Robinson, 2009). Overall, there are very few barriers that may stop other organizations from contesting with TiVo. Some of them like DirecTV have sufficient resources to organize mass-scale production of digital video recorders and they can develop flexible pricing policies for the buyers. Secondly, we need to mention brand identification. Although TiVo is one of the pioneering manufactures of DVRs. Their product is not strongly associated with the company. Consumers even tend to believe that TiVo is a general name for such devices (Hoffman et al n. d). The only thing that can hinder newcomers is cost disadvantages, enforced by the government. TiVo has 85 patents for DVR devices. So their rivals will have to ask them for the license.
As for the suppliers, we should say that they are represented by satellite and cable companies. Their role is rather complex: on the one hand, they link TiVo with the customers and benefit from it, but at the same time they can be regarded as TiVos major rivals. They develop their DVR systems. In the long term, they may dictate terms to the company because this industry is virtually monopolized by them (Hoffman et al n. d). Overall, they constitute the most danger for TiVo.
The buyers may also produce a sizeable effect on the performance of this firm. To prove this statement, we should first say that DVRs are produced by many corporations like Microsoft, Sony, Apple, Replay TV, Toshiba, and others. The rivalry among them is very severe. To win this struggle, they offer various discounts and bonuses to the buyers, who can choose the product with the most favorable price. Unfortunately, this factor does not play into the hands of TiVo because it cannot possibly get the palm of supremacy in the pricing war. Finally, we need to discuss the availability of substitutes. This factor does not seem to be of great danger to TiVo as its DVRs are unique in terms of their functionality and design. The company always tries to expand the range of its services, for instance, by allowing users to download movies from the Web (Hoffman et al n. d, p 4). TiVo strives to constantly bring its technologies up-to-date so that not to be outpaced by other manufactures.
The next aspect to be described is the operational environment of this organization, which comprises such categories as competitive position in the market the relationships with investors and customers, available workforce, and suppliers (Pearce & Robinson, 2009; Pettigrew et al, 2006). At the present moment, TiVo is believed to cover the entire market in the United States (Hoffman et al, n. d). Nevertheless, the situation is gradually changing because other firms have established their production of digital video recorders. This is why the management cannot be certain about their security status.
Another issue that is of great concern for the management of TiVo is the skepticism of investors. They acknowledge that the company is rightly at the forefront of their industry due to its innovative approach to technologies. But meanwhile, they are troubled by the fact that TiVo is extremely dependent on satellite and cable networks. The management often finds it rather difficult to convince the sponsors that the firm can be profitable for a long period. At this point, their efforts are more or less successful. But it is practically impossible to predict how the investors will act in the future.
We also need to speak about the target audience of the company. We can make only a general overview. In the vast majority of cases, these people live in the United States, Canada, Australia, and Western Europe. They are extremely pressured by time and this is one of the reasons why they purchase digital video recorders. On the whole, the consumers have very diverse characteristics as they may belong to various ethnic, religious, and cultural origins. But all of them pay attention to such criteria as functionality, user-friendliness of the product, its design, and price. Presently, TiVo can satisfy almost all of their demands, except for the pricing.
One of the most vital components of the operating environment is the labor force and human resources in the company. TiVo has employed high-skilled and motivated candidates. Nonetheless, it should be mentioned that the companys name is often associated with massive layoffs of engineers. More than forty percent of employees were made redundant in 2001 (Hoffman et al n. d, p 4). To some extent, this incident created a very unfavorable image for the firm at least from employees point of view. It should be borne in mind that many engineers can from diverse backgrounds. But previously, many of them worked in industries unrelated to the manufacturing of DVRs, and very often they lack experience. Finally, we have to set stress on the idea that TiVo is very dependent on its suppliers. There are two types: the first group includes the manufacturers which provide various parts of digital video recorders. The second group is satellite and cable networks which act as mediators between TiVo and their clients.
This discussion indicates that TiVo can strengthen its positions in American, Australian, and Western-Europeans markets due to such factors as the novelty of their product and its functionality. However, they need to focus on branding because their DVRs are not always connected with the name of the company. Secondly, they need to decrease their dependence on cable and satellite companies. This can be done either by acquiring a supplier or purchasing a part of his shares.
Reference List
Hoffman, A N., Halim, R., Son, R., & Wong, S. (n.d.). Case 48: TiVo, Inc, TiVo vs. cable and satellite DVR: can TiVo survive.
Pearce, John A., and Richard B. Robinson (2009). Strategic management formulation, implementation, and control. Boston: McGraw Hill Irwin.
Pettigrew A, Thomas H. & Whittington R (2006). Handbook of strategy and management. London: SAGE.
Porter M.(2008). On Competition. Cambridge: Harvard Business Press.