Audible Case Audible Case Case Overview Audible Inc. is the most diverse audio content provider (books, magazine, newspapers, etc. ). In 2003, the company faced dilemma of not having sufficient cash for the survival through the third quarter of 2003 as the company has an accumulated deficit of US$ 1139 million (Audible. com, 2004). However, the sales of the audio content were doubled during the period. SWOT Analysis Strength Audible Inc. provided was one of the diverse provides of audio content in the industry that offered books, magazines, newspaper, etc. for its customers.
The company provided one of the fastest downloading platforms for its customers that allowed them to personalize the content either through burning their compact discs or to play it back at their phones or computers. Audible has a strong portfolio among its competitors that significantly increased its customers. Audible library was one of the largest audio libraries that offered more than 34,000 hours and 5000 audio books to its customers belonging from renowned publishers, such as, Random House Audio, Harer Audio, Simon and Schuster Audio, etc. (Audible. com, 2004). In addition, the company offered pricing advantages over the books on cassettes or books on CD purchases.
Weakness One of the major weaknesses of Audible was it did not supported high speed internet connection for the customers that used 15 minutes using a 28 kbps modem. The requirement of the high Pentium processors was the major obstacle that restrained sales of the company. The company did not have a traditional and conventional cost constrain to manage its inventory. Opportunities Audible could have increased its sales revenues by increasing its subscription at cheaper rates. The growing trend of online education serves as an opportunity for the company to expand its business and include more audio books in its library.
Audible has potential to enhance its profitability through reducing its costs and technological advancement. Threat Accumulated previous debts of the company that could have lead the company to shut down. Porter Five 5 Forces Determinants Assessment/ Impacts Rivalry Among Competing Firms Industry Growth - High As the growing trend of purchasing online and audiobooks among the different educational, recreational and other sectors. The trend of radio music has become downwards (Audible. com, 2004); consumers are more inclined towards online purchases due to which the online subscription has also increased throughout the time.
The industry growth is high in the industry that makes it attractive, thus, existing firms in the market are providing competitive prices and different downloading speed to facilitate different customers in the market. Threat of New Entrants Industry Growth Rapid The threat of new entrants in the industry is high which is due to the rising trend of online education has increased and the consumer have diverted from print medium towards digital medium. Therefore, the growing opportunities in the industry make its attractive for the new firms to enter in the market.
The rapid growth in the industry plays a crucial role to provide attraction for the other companies to enter the industry. Bargaining Power of Buyers Switching Cost - High Bargaining power of Buyers is low this is because the particular audio books can only be obtained from particular company; none of the other competitor in the market can provide the same book of those particular publishers, therefore, the switching cost is high. The buyers will face difficulties to purchase the product from the other companies in the market. Threat of Substitutes Substitutes Few Audible pays large amount of loyalty to its publishers due to which the audio books the company offers to its customers cannot be purchased from other companies.
Therefore, the threat of substitution is low because of the few substitutes in the market. Bargaining Power of Suppliers Switching Cost - High Audible offers audio books from the leading publishers in the market due to which it is dependent on its supplier. Thus, pays royalty to its suppliers. This shows that the bargaining power of suppliers is high as suppliers have higher leverage on the buyers.
Five elements of strategies To be the diverse provider of the audiobooks with the largest library in the industry. Leading Internet, subscription based audio content. The company main strategy was to focus on the customers that had higher speed modems to provide download quicker. In order to attract subscription the company offered discounted period and more discounts on the second purchases to retain its customers. Main issues faced The main issue faced by Audible is its lack of cost management due to which its expenses exceeded its revenues due to which market share price of the company has declined over the time.
Microsoft was the major competitor in the market due to which Microsoft held on third of the stock. Further the growing opportunities increased rivalry in the industry. Other firms in the industry offered discounted and more competitive prices to its customers (Audible. com, 2004). Furthermore, the competitors in the market provided advance technological functionality than Audible with the different downloading speeds that facilitated different users to use the digital audio book with the personal assessments.
However, the simple and digital personalization made Audible to control and automate their own audio downloads and selection. The increasing subscription of the firm was the evidence to its progress in the market. Business worth saving Despite the fact that the share prices of the company have declined and the accumulate deficit of the company were exceeding the revenues (Audible. com, 2004). The business is worth saving. The reason for it is that tremendous increase in the subscription of audible is evidence to its popularity.
The company could have improved its technology functionality and increase the discounted period in order to increase its revenues. Analyzing the market condition it can be analyzed that the growing consumer trend in the online market could have generated higher volume of revenues that could have offset the expenditures. However, the current performance of the company was better; it was the pervious debts that were the major cause that has decline the share price of the company. In addition, if Audible concentrates on particular audio books or online audio it could have done better than focusing on diverse libraries.
For the purpose the company should emphasize on its cost management to enhance its revenues. The current performance of the company shows that the business is worth saving. Who is likely to purchase audible outright? There are several other firms in the market that have observed the performance and potential of audible. Microsoft was one of the companies that were more interested to purchase audible outright due to its current performance and popularity in the market. The company has a great potential to yield higher profits in times to come if it could have enhances it technology and cost management.
The deficits of the company were higher and amounted in millions; therefore, bigger companies could have purchased Audible outright. Who would invest in this company? Stakeholders that anticipate the future benefits of the industry and potential of the company were the one that could have invested in the company. This is because the potential of business was growing rapidly, the only drawback were its previous deficits. Therefore, the company that has better strategies could have invested in the firm. How can audible become profitable?
Audible can become profitable through increasing a bit of the prices of its audiobooks. It should focus more on particular audiobooks, academics, newspapers or magazines. Further the company should update its technology in order to attract different customers in the market. Audiobooks should favor different downloading modems; it should not have been concentrated on high-speed modems. Reference Audible. com (2004). Richard Ivey School of Business, 1-8.