The Business Strategy for BPM Distribution Company
Introduction
A business strategy entails an organizational plan that guides the business into the future in light of the market forces, which create a competitive environment for the business. The management considers customer demands, market forces, and the abilities of the firm in developing the business strategy. To gain a competitive advantage and attain organizational efficiency, information technology and information systems strategies are important as they facilitate the implementation of the business strategy. Technological changes including information systems are important in transforming the organization’s performance by providing a competitive advantage over the other firms. Information technology has greatly transformed the distribution of music in the market. Premier internet software such as Napster and Gnutella enable users to share music through the internet. Currently, software such as P2P systems and other internet-based applications such as Free-net facilitate sharing of music and videos among users causing an impact on the sales of music CDs. New business approaches to cope with the technological change are necessary in order to cope with competition and the technological changes.
New Business Strategy
For a company like BPM Distribution Company to achieve its organizational goals and remain competitive in the wake of great technological changes, it is important that management implement a new business strategy that incorporates information technology and information systems strategies. For BPM, the new business strategy should focus on specific approaches to handle competition. BPM can remain competitive in spite of the stiff competition occasioned by the new technological changes including internet-based distribution and music download services. The strategy should also focus on improving the existing systems within BPM’s operations to improve service delivery and retain customers.
The business strategy for BPM Distribution Company that involves focusing on the needs of a specific market segment as opposed to the general market can be improved to enhance its competitive advantage. The company can improve its competitiveness by ensuring services that are quality and satisfying to the needs of the users. Firstly, to serve better its customers and at the same time minimize operational expenses, BPM should consider opening up retail outlets in various points near the customers as opposed to the current centralized storage system involving a single warehouse. Secondly, BPM has distinctive qualities among them the fact that it has been in the market for long compared to the online distribution services or the large retail chain stores. Thus, adopting online marketing would enhance distribution, as the market is aware of the company’s operations.
The ideal business strategy in addition to the current focus strategy employed by BPM, should involve cost-leadership strategy. Under this strategy, a company offers quality products or services at low prices as compared to similar products offered by competitor companies. To achieve this, BPM has to cut down the cost of distribution by adopting information systems and technologies that are internet based to reach out to its customer segment and expand the market. Online distribution of the new music releases from the independent dance labels from various countries to the various record stores “in a compressed soft copy will minimize the cost of operation” (Brae 2003, 67). The record stores will then develop CDs from the soft copy for distribution into the market. Because of the decline in the cost of distribution, the prices of the CDs will also reduce giving BPM a competitive advantage over the other players in the market.
Under the cost-leadership strategy, BPM Distribution Company should develop an alternative competing on-line music service to the web-based download services. The new online service should involve advanced information technologies that provide a complete catalogue of the music including detailed information on artists and songs, lyrics, and links to videos and web sites. In addition, as Liebeskind posits, product differentiation involving “other value-added services not provided by the free online download services can also promote sales” (1996, 34). Services such as soft ware support systems that are compatible with personal computers, which allow users to access the value added services at low prices would allow BPM to remain competitive.
Information System Strategy
To support the business strategy, the information systems strategy for BPM should comprise of a transaction support system, which facilitates the processing of daily records of the business. The customer orders currently involve use of fax, telephone, and email, which are not effective in keeping the customers and BPM’s partner distributors abreast with the new music releases. The information systems strategy should therefore, comprise of a computerized system that records and performs daily routine transactions such as sales entry orders, customer details including addresses, customer requests and shipping details of the customers and the retails stores (Galliers and Newell 2006, 56). Appropriate business information systems such as scheduling systems, emailing system and WP would facilitate communication with the retail stores and customers (Laudon and Laudon 2001, 98). In addition, such systems would promote communication with the independent dance labels.
Moreover, to promote sales, the company needs a strategic sales and marketing system that would allow the firm to identify customers for the products and services. The system could also serve to rate the music according to customer demand (Evens and Wurster 2001, 342). By evaluation of the customer orders, the sales and marketing system can rate music and videos according to the sales made over a particular duration or according to the popularity of the artiste or dance group. In addition, the sales and marketing information system could also serve to promote the music videos sold through BPM by being interlinked with the emailing system that sends email alerts to the customers informing them of new album launch or music releases.
The new cost-leadership strategy can be enhanced by an information systems strategy involving distribution via the internet. BPM would use the internet to establish e-link distribution system, which would result to lower transaction and coordination costs as it would lead to a reduction in the number of retail stores. Alternatively, BPM can opt for e-distribution of the digital content including music and videos directly to the customers bypassing the retail stores (Kourdi 2009, 76). In this case, the physical distribution costs involving the distribution of recorded versions of the music in form of CDs will go down. The reduction in distribution costs would result to lower prices that would boost the sales and increase profits in line with the new business strategy Mathur, and Kenyon1997, 69). Under the information systems strategy, digital distribution of music and videos would be more advantageous than the current physical distribution for it would allow BPM to increase value-added information on the digital products for the benefit of the customer.
Information Technology Strategy
An information technology strategy is useful to a business as it enables cost reduction leading to increased profits. BPM requires an information technology infrastructure that would promote service delivery at a lower cost. The IT infrastructure should be “secure to avoid illegal access to music and video files through piracy” (Castells 1996, 152). It should also be centered on customer needs. The software needed when implementing the IT strategy should include customer relations management program, which would establish contact with the customers (Probst, Raub, and Romhardt 1999, 64). The customer feedback, orders as well as the personal details of each customer can be managed by this program, which should work with the sales and marketing information system. It can also be used to manage customer details including orders and address details.
The broadband networks program integrated with personal computers of the employees would allow coordination and communication between employees and facilitate the processing and dispatch of customer orders (Shapiro and Varian1999, 113). Important software that BPM can use to implement the new business strategy is the e-Portal application. This software allows the company to establish channels and new markets through the internet and mobile web services. It can also be extended to reach new independent dance labels and new retail stores thus allowing the market to expand. The e-Portal application would allow customers to register, access, and download music videos at a fee, which would cut down the distribution costs and generate more revenue.
Conclusion
A business strategy allows a company to improve its performance in the current competitive business environment. For BPM Distribution Company, the information system strategy involving the use of a sales and marketing system would play a significant role in allowing the company to outdo its main competitors including the free online music downloads. A customer relations management program compatible with the sales and marketing information system would facilitate processing of orders and improve customer loyalty, while cutting down the cost of distribution. I would recommend that BPM Distribution Company employ a cost-leadership business strategy on top of the current strategy. In addition, the sales and marketing soft system together with the customer management program gives BPM a competitive advantage.
Reference List
Brae, M. 2003. Music Distribution: Selling Music in the New Entertainment Marketplace. New York: Routledge.
Castells, M. 1996. The Rise of the Networked Society: The Information Age. Cambridge: Blackwell Publishers.
Evens, P., and Wurster, T. 2001. Strategy and New Economics of Information. Harvard Business Review, 43 (6), pp. 342-344.
Galliers, D., and Newell, S. 2006. Exploring Information Systems Research Approaches. New York: Routledge.
Kourdi, J. 2009. Business strategy: A guide to effective Decision-making. London: Profile books Ltd.
Laudon, K., and Laudon, J. 2001. Management Information Systems. London: Prentice Hall.
Liebeskind, J. 1996. Knowledge, Strategy, and the Theory of the Firm. Strategic Management Journal, 17 (2), pp. 34-35
Mathur, S., and Kenyon, A. 1997. Creating Value: Shaping tomorrow’s Business. Oxford: Butterworth Heinemann
Probst, G., et al. 1999. Managing Knowledge. London: Wiley.
Shapiro, C., and Varian, H. 1999. Information Rules. Boston: Harvard Business School.