B392F T1 Jan15 student

MKT B392F
International Business
Management II

Tutorial Week 1

Warm-up Exercise
• Article: “HMV launches new mobile app to kickstart digital strategy”
 Plot the position of HMV on a Cost– Responsiveness Grid and indicate the direction in which HMV is likely to move in the future on the Grid.
 Recommend a strategy to HMV in viewing to the above position. Think about:
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What are the cost reduction pressures of HMV? Is its pressure high / increasing?
What are the local responsiveness pressures of HMV?
IS its pressure high / increasing?

Warm-up Exercise
• Sources of cost reduction pressures:
– Competition landscapes? (e.g. Do the major competitors compete on cost?)
– Technological changes? (e.g. E-music? Mobile app? Blu-ray?)
 Investment intensity?
 Product standardization?

– Strategic aims of HMV after bankruptcy?

• Sources of local responsiveness pressures:
– Appeals of music artists (e.g. global vs local?)
– Technological standards? (e.g. cassette type vs MP3?)
– Economic trends or levels across countries? (e.g. spending on lifestyle products like music?)
– Distribution structures?

Four Basic International Business Strategies

Warm-up Exercise
• Possible arguments - high vs low pressure for cost reduction:

Pressure for Cost Reduction

High

Low

 Cost-cutting as core aim after bankruptcy and restructuring
 Selling standardized music products which is hard to differentiate  Major competitors like Wal-mart, Best Buy, Amazon.com are competing on cost (price)
 Technological advancements require higher investment intensity  E-music are standardized in format and its selling is a business with higher fixed cost (lower marginal cost)  favor mass production  Record companies (manufacturers) promote their products on a global scale  followed by retailers
 Music products & services are not necessities  lower price sensitivity  Young consumers are willing pay more on innovation and unique offers

Warm-up Exercise
• Possible arguments - high vs