1. Analyze Soundbuzz and its business strategy using Porter’s competitive forces model. Traditional CompetitorsThe presence of rivalry from competitors from other companies is another factor that determines the level of competitiveness according to Porter’s competitive forces model. Soundbuzz was able to sustain its competitive advantage through innovation, for instance when it signed a digital deal with an internet provider so as to be able to provide its consumers with its services more effectively (Bartol). Alliances with internet service providers also provided Soundbuzz with the competitive edge that they needed to overcome their competitors and also to be able to come up with an alternative billing system for their customers.
Diverting into the wireless device industry also was a technological innovation that Soundbuzz undertook to get a competitive edge over their rivals (Bartol). The competition between online and offline business is also a factor in the music and MP3 industry that Soundbuzz was trying to thrive in. It was the year 2000 that saw a decline in the overall purchase of Compact disks and MP3s due to the presence of websites offering free music downloads.
It is thus sensible to say that Soundbuzz had competitors who were selling their music in CD format and thus this was also a case of the “Click and mortar versus brick and mortar” according to Porter’s competitive forces model (Jones and Hill, Strategic Management Theory: An Integrated Approach). The competitive strategy that Soundbuzz came up with the ensure that they dealt with the issue of Napster taking up most of their customers, was to link up with Hewlett Packard so as to be able to integrate their services with the products that Hewlett Packard were offering to their customers.
This advertising strategy was aimed at ensuring that the level of competition that Soundbuzz had over their rivals was significantly high. The developing of a strong competitive strategy was one of the aims of Soundbuzz when they decided to sign an agreement with Motorola. This meant that apart from Motorola integrating the services of Soundbuzz with their products, the service could also be launched at an international level, giving them a competitive advantage over their rivals. This utilization of vertical integration served to pile the pressure on the competitors that Soundbuzz had and thus enabling them to charge higher prices while still managing to achieve higher profits (Jones and Hill, Strategic Management Theory: An Integrated Approach).
New Market EntrantThe threat of entry into this market by new competitors according to Porter’s competitive forces model is formed by the presence of attractive profits that Soundbuzz has been making and thus making the business profitable enough for other new entrants to want to venture into it (Jones and Hill, Strategic management: an integrated approach).
The entrance of so many competitors in the market only serves to reduce profits as it was witnessed in Soundbuzz’s case where in 2000 they experienced a drop in profits owing to the technological bubble that made many new entrants enter the online music industry making the profits that the company was making to decrease. This will tend to make the market that this company is operating it to be a more competitive one such as in the perfect competition markets (Jones and Hill, Strategic management: an integrated approach).