Sirius XM belongs to a broadcasting company. The original companies were the XM satellite Radio and Sirius Satellite Radio. However, regardless 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, strength and influence of competitive pressure as well as profitability the company of Sirius XM use five forces analysis in order to analyze and evaluate the competitive position and strength of business organization.
Sirius XM Company follow 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 as shown in the Figure 1 are.
- Threat of New Entrants
- Threat of Alternative Services
- Bargaining Power of Suppliers
- Bargaining Power of Buyers
- Rivalry among the Existing Competitors
Figure 1 Sirius XM Five Forces Analysis
We discussed Sirius 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 feature. This company may give a big target to an upcoming firms to progress in the market and industry. Besides, the radio satellite firm is distinguish by intense obstacles to entry due to the challenges and additional cost of maintaining up all the requirements related to infrastructure [reference]. So Sirius XM has to cope all the problems and develop effective obstacles to protect its competitive edge.
- Threat of Alternative Services
When a new firms build any new service which satisfy a needs of customer in an attractive manner, then the probability of industry suffers e.g., Google Drive and Dropbox are the alternative to storage disk drives. The threat of an alternative product is huge, if it offers a unique products from current offering products of the market and industry.
Suppose there are a lot music applications like Apple Music, Pandora and Spotify. These applications can be retrieved through Bluetooth or auxport. These application do not have sufficient verities and capabilities that Sirius XM has. So, if any customer wants to listen only music then he would be likely to download others application 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. Company must have an authorization/approval from what and who they program and that shows an important role in their bargaining powers. The talent of top stations like Martha Stewant are very costly. Furthermore, they have more leverage than Sirius XM.
- Bargaining Power of Buyers
Buyers are often demanding a lot. They want to buy a best product in the minimum price as possible. Sirius XM builds a large base of customers because if buyers can readily switch between sellers who sells the same products. So, it is easy for the buyers to switch from one seller to another, e.g., if a customer was unsatisfied with the services of a Sirius XM then either they could easily switch to Pandora or Spotify for a least price or they just withdraw their association and listen to FM radio for no price.
- Rivalry among the Existing Competitors
Sirius XM is only once who 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 from the songs related applications e.g., Pandora, Spotify for a least charges and even more they feels more comfortable and even more they feels more comfortable to pay 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 is maintained a good place in the strategic group industrial map. In the market and the industry there are only few competitors who threatens 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 the Sirius XM maintain a top level position in the strategic industrial map as shown in the figure 2.
When we see the strategic industrial map, it is visible that the company of the Sirius XM maintained an excellent place due to the highest geographical coverage as well as 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 is maintained a well position on the strategic map especially in the broadcasting field. The industry is appropriately to fascinate to the capable new entrants because of the toughest competition which exist among the current industrial sellers. However, there are a huge amount of the obtainable alternative to the potential buyers, which encourages the development of a strong alternative market in the other industries. The broadcasting industry has verified to possess a profitable great and strong’/durable industry for joining.
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