Executive Summary
In this consultancy report, the whole work has been discussed in parts starting with the introduction that explains the topic statement about the video games industry. The report also covers the history and the development of the video games industry with a case example of a British company HMV Retail Ltd. Through carrying out of a PESTLE analysis, the report focuses on the external factors surrounding the video games companies. Also, the report has put forth some of the major areas that any business in this industry should focus on to experience growth and formulate change strategies. The report winds up with a recommendation regarding the best way to improve business strategies and realize profits.
Consultancy Services Report
1.0 Introduction
For any struggling business, some changes must take place, failure to which greater challenges may lead to poor performance and eventually to the collapse of the business. The manager of Brick & Mortar Retailer, however, has seen the need for consultation with an aim of bringing change in his company and be one of the main competitors in the DVD/CD/Computer Games industry. As the consultant, I have included some important strategies that the manager should follow to grow in the gaming industry. Firstly, the director should consider revising the overall objectives of the company and the need to have a clear outline of the strategies to be used in the process of making massive growth in the market. Secondly, there is the need to analyze the development of the video games industry; while third is the need to conduct a PESTLE analysis of the competitors in the industry. Fourthly, it is essential to adapt to the changing technological advancements and lastly is the need to understand the market wants and preferences. Besides, it will be important to have a case study of a company in this industry. HMV Retail Ltd qualifies as the case study involving evaluation of the strategies it used to penetrate the market (Yu and Ramanathan, 2008). Also, the report will have an overall recommendation that should give a head start to the manager towards transforming the company.
2.0 Development of the video games industry
Zackariasson and Wilson (2012) argue that the video games industry engages in some activities which include developing and manufacturing of devices as well as marketing and selling them to the members of the public. Kafai, Heeter, Denner and Sun (2008) mention that in the history of video games, Ralph Baer has been an outstanding pioneer dating back in the year 1951 when he proposed that games could be connected to televisions. In 1967, Ralph came up with the first game that was to be played on television. In 1972, a home video game console, the Magnavox Odyssey, was released.
In 1973, a start-up company founded by Atari was established. Four years later, the video games industry was growing very first. Egenfeldt, Smith and Tosca(2013) outlines that with developing technology, the industry has seen a gradual improvement of games from (1976, Atari) (1986, NES) (1996, PlayStation) (2006, Xbox 360). To the current year, the gaming industry has been dominated by three main companies which include Microsoft, Sony, and Nintendo (Bergeron, 2006). Other software publishers like the Electronics Arts’ have achieved their goals through enormous inventions and innovations not forgetting the world’s popular FIFA Video game. This industry has had a cutting edge to the human race with all kind of video games being installed in mobile phones, computers, and others being stored in DVDs to be played in televisions.
3.0 PESTLE Analysis
PESTLE Analysis is quite prominent amongst organizations as it focuses on the external factors that are likely to influence the progress of the company. It is the most appropriate environmental analysis technique as it concentrates on the long-term planning. PESTLE stands for, Political, Economic, Social, Technological and Legal Environment factors that help the organization understand any developments in the industry. In the video game industry, it is important to know how each and every factor under PESTLE affects the business performance. Political factors include government influence on tax, trade policies, incentives, subsidies, and how they affect the business. Brick & Mortar Retailer should be aware of the government decisions on certain rules and policies e.g. tax. The act maintains tax rates at a significant level that is easier to comply. Economic factors such as employment/unemployment and inflation determine the success of any business. Merchandand Hennig (2013) says that economic factors differ from country to country depending on the economic growth of the country.
Currently, the most established video games industries originate from the United States and Japan. These two nations are economic powerhouses and hence they have managed to have a well-established industry. They have maintained high rates of employment and controlled inflation, and this has greatly favored the video game industry. Social factor merrily focuses on the social life of individuals and their culture. Consequently, this will have an impact on how well the products will be received by the people hence contributing to the overall performance of the business. Prensky (2006) argues that in the U.S.A, video games are a popular event for children who are yet to reach the school going age. This culture has been carried over the years and hence creating a wider market for the products. Technological factors have significantly improved communication which is the most important thing in the industry. Technology has enabled advertisements with an aim of trying to reach a wider target market. The game industry has used technology as its main stronghold especially with the growth of Broadband, and Internet Access. Legal factors include complying with the set rules and regulations within the industry and also government at large. It ensures product safety to the consumers. Legal factors if complied to will allow the company to conduct business at its place of choice as long as there is a ready market. Finally, the environmental factors are important in that the output should be environmental friendly.
PESTLE analysis is applied where an organization intends to reach a particular target market. This analysis will assist in knowing how the external activities are happening outside the firm. All information obtained from outside the organization is considered crucial whether from books, articles, industrial analysts, reports from organizations, etc.
4.0 HMV Retail Ltd
HMV Retail Ltd is an entertainment retailing company headquartered in London, United Kingdom. Dyer-Witheford and De Peuter (2009) says that HMV Retail Ltd traces its roots since the 1890s when gramophone emerged. In 1902 commencement of the Gramophone Company and five years later a record, the factory was being established in Middlesex. In 1921, in Oxford Street, the first HMV shop was put up. In the 1930s, HMV engaged in radio and television manufacturing. In the year 1998, Electric and Musical Industries Ltd (EMI) entered into a joint venture with Advent International to form HMV media group. Hull, Hutchison and Strasser (2011) believes that currently, HMV remains as the top retailer of music and entertainment. HMV Retail Ltd through the use of disruptive innovation has managed to use a supply chain strategy that aims at establishing national distribution centers with a goal of taking products closer to the consumers as well as ensuring that bulk deliveries are accessed in a strategic point.
Another strategy that has led to the immense growth of HMV Retail Ltd is the acquisition strategy. In the year 2006, HMV acquired Ottakar’s bookshop and merged it with Waters tones (Tennent, 2013). The above contributed to the growth of the company. As the director of Brick & Mortar Retailer, it will be important to have strategies that will lead to growth and development of the enterprise. Disruptive innovation strategies should also be encouraged to disrupt the already established market by creating new markets that are competitive. Strategies such as acquisition significantly improve the growth of any business as compared to putting up new structures right from the ground. This approach ensures the taking over of employees and even the customers of the acquired company.
5.0 Revision of objectives and other company considerations
As the director, some necessary steps must be considered if you want to realize any positive change in the enterprise. For example, the company objectives need to be revised. By reviewing the company objectives, there is a high possibility of setting goals that go hand in hand with those of the competitors to have a common target. This keeps the heads of the workers raised high and focused on the new set goals.
Another consideration can be motivating the employees either through incentives and bonuses. As a result, the morale of the workers will be enhanced. Through this motivation, the employees will give their best towards making the company achieve its goals. Another consideration can be through application of a flat form of organizational structure. The flat organizational structure encourages delegation of powers regarding decision making. The employees are involved in decision-making practices, and their views and ideas are accepted at all times. Flat organization structure also encourages teamwork. Collaboration reduces elements of competition within the company, and hence the employees work together with an aim of outdoing their competitors in the same industry.
6.0 Business strategies
As the director of Brick & Mortar Retailer, some business strategies will need to be reconsidered to fuel the turn-around of performance in the company. These strategies as Bland, De Van and Boschma (2013) puts them include considerations that may earn them a competitive advantage both internally and externally. Some of these considerations include; the level at which their product line should extend to, the segments to be considered, and the geographical boundary to cover. The company should also identify a brand of its own that should be the cutting edge towards market penetration, adapting technology and innovating things that can make them stand a chance in the powerhouse technology ranking. Lastly, they should consider their cost of production. The high cost of production should be followed by high-quality products whereas low-quality products will follow the low cost of production.
The director should identify some of the strategies that have been used by the market leaders and use them as the benchmark for their intended growth. In this case, by going through the policies adopted by Electronic Arts’, the director should note that the corporation has concentrated on the software part of the gaming industry, and this has made it the largest software publishing company. They have embraced technological advancement and have used it to their advantage. They have embraced creativity amongst themselves hence being able to win people with their excellent work. As the director, benchmarking is crucial. You should be able to follow a step by step procedure of executing your activities similar to that of your benchmarking company.
7.0 Technological advancements
Berger (2002) indicates the video games industry has experienced changes in the fast changing technology of the 21st century. The trio of Microsoft, Sony and Nintendo has had their strategy focus brand identification whereby Provenzo (2007) explains how Nintendo focuses on Wii, which is their brand identification. On the other hand, Microsoft has come up with their brand hit of Xbox 360 and finally Sony has kept it going with their talk of the town PS4. Juul (2010) tries to explain some of the common things with these three companies in that they have embraced technology and hence they have been the video games powerhouses. Brick & Mortar Retailer directors should have their brand that runs simultaneously with the current technology. This calls for quite a costly deal with the technology experts but since Brick & Mortar Retailer has to grow then it is necessary to adopt it immediately. The brand identified should be able to remain in the market for the next five to ten years to give the people time to perfect in it (Anneta, 2005).
8.0 The Market
Lin (2010) postulates that one crucial factor that any company cannot do without is the market that is, the customers who are the possible consumers of the product. As a director, the first thing to do before producing any product is by analyzing the customer needs and wants. This helps the administrators in knowing the taste and preference of the consumers and hence adjusts their products to meet these needs, wants and preferences. As the director in Brick & Mortar Retailer, you should aim at manufacturing a video game that captures the minds of all people from both genders whether young or old. With the drastic improvement in the Android mobile phones, Brick & Mortar Retailer should come up with video games that are compatible with the Android phones with an aim of reaching a wider market and making it possible to play the games at any time on the basis that you have your smart phone with you. The company should also ensure that it feeds the games into the DVDs and CDs to allow children and the old people to play the games in desktops and televisions.
9.0 Recommendations
As a consultant, I would recommend that for Brick & Mortar Retailer to have a turn-around of performance they must change their strategies after analyzing their current ones and verifying where they need to be changed. Some key steps should be followed during the changing of these strategies. First, you have to view performance indicators such as cost and sales and see whether they can accommodate the change of policy. Secondly, employees ideas should be considered e.g. working hours can change to favor particular utilization of opportunities. Thirdly, a market research is advisable to have the latest information on the industry leaders, getting more information on employees packages of other companies can as well be a strategy towards transformation. Finally, the directors should be updated on any development of new strategies and train the employees on the same. All in all, it is always important to have a benchmarking company that will be your guide towards the transformation era. Benchmarking has always ended up making companies realize profits similar to those of the benchmarking company.
1.0 Bibliography
Annetta, L.A., 2008. Video games in education: Why they should be used and how they are being used. Theory into practice, 47(3), pp.229-239.
Berger, A. A. (2002). Video games: a popular culture phenomenon. New Brunswick, N.J., Transaction.
Bergeron, B., 2006. Developing serious games (game development series).
Bland, P.A., De Vaan, M. and Boschma, R., 2013. The dynamics of interfirm networks along the industry lifecycle: The case of the global video game industry, 1987–2007. Journal of Economic Geography, 13(5), pp.741-765.
Dyer-Witheford, N. and De Peuter, G., 2009. Games of empire: Global capitalism and video games (Vol. 29). U of Minnesota Press.
Egenfeldt-Nielsen, S., Smith, J.H., and Tosca, S.P., 2013. Understanding video games: The essential introduction. Routledge.
Hull, G.P., Hutchison, T.W. and Strasser, R., 2011. The Music business and recording industry: Delivering music in the 21st century. Taylor & Francis.
Juul, J., 2010. A casual revolution: Reinventing video games and their players. MIT press.
Kafai, Y.B., Heeter, C., Denner, J. and Sun, J.Y., 2008. Beyond Barbie [R] and Mortal Kombat: New Perspectives on Gender and Gaming. MIT Press (BK).
Lin, L.Y., 2010. The relationship of consumer personality trait, brand personality, and brand loyalty: an empirical study of toys and video games buyers. Journal of Product & Brand Management, 19(1), pp.4-17.
Marchand, A. and Hennig-Thurau, T., 2013. Value creation in the video game industry: Industry economics, consumer benefits, and research opportunities. Journal of Interactive Marketing, 27(3), pp.141-157.
Provenzo Jr, E.F., 2007. Video kids: Making sense of Nintendo. Harvard University Press.
Tennent, K.D., 2013. A distribution revolution: Changes in music distribution in the UK 1950–76. Business History, 55(3), pp.327-347.
Yu, W. and Ramanathan, R., 2008. An assessment of operational efficiencies in the UK retails sector. International Journal of Retail & Distribution Management, 36(11), pp.861-882.
Zackariasson, P. and Wilson, T.L., 2012. The video game industry: Formation, present state, and future (Vol. 24). Routledge.
Prensky, M., 2006. Don't bother me, Mom, I'm learning!: How computer and video games are preparing your kids for 21st century success and how you can help!. St. Paul, MN: Paragon house.
