Case Study on XM Satellite Radio

Topic: ArtRadio
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Last updated: February 15, 2019

XM Radio Satellite is reported to have been founded by the American Mobile Satellite Corporation and recent research reveals that it has joint together with WorldSpace Corporation. XM basically provides radio services to several people and it is faced with the challenge of providing countrywide coverage of radio programs to all in the society.With the ever growing technology particularly that of satellite it has been a challenge to XM since some Television satellites have been invented thus posing greater competition for market share with radio stations such as XM. XM Radio satellite ability to secure Federal Communication Commission (FCC) License has boosted its image as well as its operations. However, XM has not fully utilized such license because it has not met its ultimate objective of being the market leader in the radio industry (Wallace, 1997)SWOT analysisStrengths and weaknessesStrength can be defined as a particular skill or distinctive competence that XM can do relatively better than other Radio Stations especially its competitors including SIRIUS and which XM have and contributes to the achievements of the stated objectives.

By XM Radio Satellite having access to an FCC license which is difficult to obtain; this implies that it is a strength that the company should utilize to its fullest level. It is evident that with such FCC license a radio station can effectively air its programs by use of advance technology thus reaching to wider market share and at the same time improving its profitability margins (Anthony, 1998).It is evident that XM Company has a strong brand name which helps it to have a competitive advantage over the other stations including SIRIUS. The other strength associated with XM Radio Satellite is that it has the ability to identify the market segments and hence the competitive position of XM and has in the process developed workable marketing strategies.XM Radio Satellite further has technical expertise particularly from world space an advantage which its competitors particularly SIRIUS does not have at its disposal. It is worth noting that human resource is the most important asset in any organization and therefore XM should utilize such strength with regards to production of programs that will ensure that it captures a wide customer base (Brownie, 1997).Further XM Radio Satellite is accredited with good management and expertise which become strength in the long-term. For instance, the presence of Mr.

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Acker is very crucial to XM success since he has been able to formulate a good business plan which it can strive XM to greater levels. It is evident that Acker has great ideas and therefore XM should implement such ideas in order to compete effectively with its competitor i.e.

SIRIUS in the duopoly market.A weakness can be defined as any aspect of XM Radio Station which may hinder the company from attaining its objectives or goals. Usually, it covers the XM’s assets, resources, and capabilities. Latest research indicates that XM Radio Satellite is faced with few weaknesses which if not taken care of it may hinder its success.

The company’s rules, procedures, and policies are said to be weak as in some markets they have started to perform poorly; particularly when considered in terms of competition from SIRIUS. It is for this reason that Acker developed a business plan which will counter the competitive activities of SIRIUS in the market arena.Laxity on the side of the marketing managers has been pointed out and reports suggest that they have not come up with suitable marketing strategies to cope with the ever increasing competition in the duopoly (Anthony, 1998). Further XM Radio Satellite lacks an excellent developed financial base as compared to its rival SIRIUS implying that it has financial problems running its business operations. For example XM plans to make Initial Public Offers to different kind of investors in order to raise more revenues required in order to compete in the radio industry. Another weaknesses associated with XM is that its management has opted to focus only on few segments of the market unlike SIRIUS which has targeted several groups of audiences in the public. XM has failed in designing programs that effectively caters on the needs of all groups such as both the young and the old (Wallace, 1997).

Opportunities and threatsAn opportunity in this aspect can be defined as any event, development, or a feature of the external environment which creates conditions that are favorable or advantageous to XM in relation set of goals to be attained. It is an attractive venture for a XM’s operations which if exploited will lead to a significant upward change with desired results such as increase in profits margins and growth.There are many opportunities that exist for XM Radio Satellite in relation to emerging markets all over the world. The first opportunity for XM is the ever expanding radio market which it can utilize especially with regards to advertisement or what is popularly known as commercials.

There is clear evidence that nowadays people and big multinationals companies prefer airing their commercials or adverts through radio stations than other modes of media. Further research reveals that many people tend to listen to radio stations rather than reading daily newspapers and articles which give XM an excellent opportunity to concentrate on its products.There is also the growth of advance technology which XM can utilize for instance the advancement in satellite power gives the organization an opportunity to expand its transmission. Also under technology there is an opportunity of development of wired networking which XM can utilize to reach more people than ever (Anthony, 1998).

A threat on the other hand can be defined as an environmental development or event which will present problems or challenges likely to hinder the achievement of XM objectives, for example, competition, high interest rates, government legislations, declining real income among others. XM is now facing stiff competition from its main rival i.e. SIRIUS, thus there has been a drop in the market share thus a reduction of its profits.

The business plan and particularly marketing strategies of XM need to be reviewed in order to cope with the increasing competition from its main rival SIRIUS.There are times when government regulations may hinder the operation of the organization. This can also be termed as a threat.

Under this, XM operations are closely monitored by the Umbrella body which gave it the FCC license. Further over the past many people have viewed the content aired in radio broadcasts as secondary which taints the image of all radio stations including XM Radio Satellite.XM further faces a threat of its types of products that it offers to the market; this is in relation to SIRIUS offering what it refers to as Commercial Free Broadcasts. Under this we find that many people particularly the youth does not like commercial breaks and therefore may opt to tune to SIRIUS since it offers such broadcasts.

  Such broadcast is indeed a threat to XM Radio Satellite since it has to look for innovative ways that will result too many people tuning to its broadcasts.  Further a threat of satellite TV offered by other stations poses a threat to XM Radio Satellite in that several people tend to opt to acquiring such sets of televisions than radio satellite.Alternatives available for XM Radio SatelliteXM is relatively a big radio station and therefore can strategize on the best alternatives before venturing in the market; it has competent personnel like Acker who can clearly draft the way forward of the company. There are several alternatives available for XM in order to match the competition posed by SIRIUS and include the following: XM company can opt to enter into joint ventures with other radio stations in order to supports its efforts of countering the stiff competition offered by SIRIUS and in the process enhance its market products i.e.

the radio broadcasts that will reach to a wider market. Even though other radio stations do enjoy opportunities of having FCC license it can be prudent for XM to join together with one radio station with substantial resource that will enable the organizations to effectively compete in the market.XM further should adopt market follower strategy by aping SIRIUS provision of broadcasts i.e. by targeting wider population such as truck drivers, residents in rural areas which form large percentage of people in the society.

It is evident that SIRIUS has succeeded because of such target market and therefore XM should reach them by modifying and designing new programs that will capture their attention more than what SIRIUS has been offering. In my own view point XM should fully concentrate on targeting wider population just like SIRIUS has been doing in order to augment its operations. With such strategy XM can retain its FCC license for a longer period and thus may not be deprived because it will operate to full expectations not only of members of the public but of concerned authorities and particularly those who grant the FCC license (Steven, 2002).RecommendationsSince XM is faced with a lot of milestones in the radio industry it will be prudent for management to consider several factors that will enhance its operations and particularly quality and attractive radio broadcasts. Therefore XM will be required to make some changes that will enable it to meet the challenges of the intended market as well as thriving when compared to its competitor SIRIUS.

Therefore, it also goes in line with the issue of how approaches can affect XM performance.  XM should come up with a clear structure that will comprise of a confident management team, market force, technical team and the company directors. The use of a scorecard to control and monitor the XM’s performance is very important. The scorecard concept is very simple; all factors that influence the organization’s overall performance are taken into account and analyzed mathematically.

Typically, a scorecard measures across four key areas; financial perspective- this will explain how XM’s shareholders perceive the company. Secondly, customer perspective i.e. customer’s view towards the company, Thirdly, the internal process perspective which is the efficiency and effectiveness of the processes in XM i.e. in relations with radio broadcasts that it intends to air.

The fourth scorecard concept is that of learning and growth perspective which is the XM’s agility level (Thomson and Rampton, 2006).XM can also venture into Satellite television business since it is has the capability and resources to do so. Further it has the technical expertise as well as advanced technology that will boost its provision of broadcasts to wider market. Further XM has a strong brand name in that it is well known and can easily market its programs to a large market share.Further XM has the duty to carry out continuous market research that will aid it in knowing its competitor SIRIUS well.

This is because such market research will result to formation of marketing strategies that will effectively counter SIRIUS marketing techniques and thus boosting XM prosperity in the market place.

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