Sirius XM belongs to a broadcasting company. The original companies were XM Satellite Radio and Sirius Satellite Radio. However, regardless of the situation/fact, only both companies were provided the Satellite Radio services. Therefore, both companies decided to merge with the hope of overwhelming economic challenges. In order to maintain the strength and influence of competitive pressure as well as profitability, the company of Sirius XM uses five forces analysis in order to analyze and evaluate the competitive position and strength of the business organization.
Sirius XM Company follows the framework of Porter’s five forces in order to build a strong strategic position in the field of broadcasting as well as discover moneymaking opportunities. According to the Sirius XM thought that the theory of Porter’s five forces determines the attractiveness of the market as well as the competition intensity. The company revolves around the five forces competitive method for industry services as well.
- Threat of New Entrants
- Threat of Alternative Services
- Bargaining Power of Suppliers
- Bargaining Power of Buyers
- Rivalry among the Existing Competitors
We discussed Sirius’s five forces step by step in order to develop a strong strategic position in the field of broadcasting are as follows.
- Threat of New Entrants
Sirius XM faces minimum challenges from new entrants due to monopolistic features. This company may give a big target to upcoming firms to progress in the market and industry. Besides, the radio satellite firm is distinguished by intense obstacles to entry due to the challenges and additional cost of maintaining all the requirements related to infrastructure [reference]. So Sirius XM has to cope with all the problems and develop effective obstacles to protect its competitive edge.
- Threat of Alternative Services
When a new firms build any new service that satisfies the needs of the customers in an attractive manner, then the probability of the industry suffers, e.g., Google Drive and Dropbox are the alternatives to storage disk drives. The threat of an alternative product is huge if it offers unique products from the current offering products of the market and industry.
Suppose there are a lot of music applications like Apple Music, Pandora and Spotify. These applications can be retrieved through Bluetooth or export. These applications do not have sufficient verities and capabilities that Sirius XM has. So, if any customer wants to listen only to music, then he would be more likely to download other applications than he would be to use Sirius XM.
- Bargaining Power of Suppliers
Sirius XM offers a lot of services like talk and entertainment, sports, music, news, information and programming. Companies must have authorization/approval from what and who they program, and that plays an important role in their bargaining powers. The talent of top stations like Martha Stewart is very costly. Furthermore, they have more leverage than Sirius XM.
- Bargaining Power of Buyers
Buyers are often demanding a lot. They want to buy the best product at the minimum price possible. Sirius XM builds a large base of customers because buyers can readily switch between sellers who sell the same products. So, it is easy for the buyers to switch from one seller to another, e.g., if a customer is unsatisfied with the services of Sirius XM, then either they could easily switch to Pandora or Spotify for the lowest price, or they just withdraw their association and listen to FM radio for no price.
- Rivalry among the Existing Competitors
Sirius XM is the only one that offers satellite radio services within the industry. So, it means that there is a minimum competition or, we say, no competition in the firm that would rival the Sirius XM Company [refernces].
The biggest source of competition is from the songs-related applications, e.g., Pandora and Spotify, for the least charge, and even more they feel more comfortable and even more they feel more comfortable paying nothing for talk shows and radio stations.
Q2: Construct the strategic group map of the industry. Is Sirius well positioned on the map? Why or Why not? (25 pts)
Strategic group map of the industry
The Sirius XM Company has maintained a good place in the strategic group industrial map. In the market and the industry, there are only a few competitors who threaten the company of Sirius XM in the upcoming period but not in the present period [reference].
In the strategic industrial map, we have considered the different competitors, including Westwood One, iHeart Communication and Cumulus Media. The company of Sirius XM maintains a top-level position in the strategic industrial map, as shown in figure 2.
When we see the strategic industrial map, it is visible that the company of Sirius XM maintained an excellent place due to the highest geographical coverage as well as the best quality of service at a significantly good amount. iHeart Communication maintained a below place over Sirius XM Company because of covering few geographical places as well as lags in both prices and quality of service.
Is Sirius well positioned on the map? Why or Why not?
In my opinion, Sirius XM has maintained a good position on the strategic map, especially in the broadcasting field. The industry is appropriate to fascinate the capable new entrants because of the toughest competition that exists among the current industrial sellers. However, there is a huge amount of obtainable alternatives to the potential buyers, which encourages the development of a strong alternative market in other industries. The broadcasting industry has been verified to possess a profitable, great, and strong/durable industry for joining.
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