1. Company's History and Growth:
American Mobile Radio Corporation was formed in the late 1980s and in 2001 changed its name to XM satellite radio holdings, INC. At the time of the company's formation, there were no I-pods or MP3s. music lovers had to carry compact discs or cassette tapes in order to listen to music while away from home. In March 1997, the company was granted the Satellite Digital Audio Radio License and partnered with Hughes Space to construct and launch two satellites. Over a period of four years that followed the acquisition of the license, the company undertook initial public offering and converted to a public company, contracted various media providers to offer content in the different channels, and made preparations for launching its two satellites, Rock and Roll. The company made its official launch with over 200 channels; however, a majority of these channels offered commercial free content.
2. Strengths and Weaknesses within the Company:
There are a significant number of people who are skipping the installation of satellite and preferring the installation of i-pod adapters; additionally, the two companies are faced with stiff competition from personal music devices and reputable ground stations. Despite the numerous difficulties, XM satellite radio holdings, INC. has numerous strengths:
On the other hand, there are numerous weaknesses faced by the company:
3. External Environment Information:
The external environment of XM satellite radio holdings, INC. is characterized by stiff competition that mainly arises from Sirius; furthermore the competition from the ground based stations and the personal music devices cannot be underestimated. The launch of Sirius services that were overly similar to XM services greatly increased competition for customers between the two companies. The congress prohibition of any form of mergers between the two companies in the original charter agreements that granted satellite frequencies to the two companies acted to avoid the creation of monopolies and to promote competition. Furthermore, the development of i-pod adapters, personal music devices and ground stations has aggravated competition faced by XM holdings. This analysis indicates that though XM satellite radio holdings, INC. incurred numerous costs in the establishment of its satellite services; it is still faced with competition from Sirius, a satellite service station, personal music devices, i-pod adapters and ground based stations.
4. Analysis of Findings:
A critical analysis of the above findings reveals that despite XM holdings investing heavily in the development of its satellite services, the company is faced with unanticipated and increasing competition from both satellite stations, ground based stations and portable pocket devices. The company is forced to continuously incur additional costs in the development of new technologies and products that will ensure that it gains a competitive edge in the market. Furthermore, the company operates in a highly volatile technological environment; an environment that is constantly faced with technological changes. However, the company possesses a great competitive potential since its satellite technology is not restricted to the standard AM and FM radio.
5. Corporate Level Strategy:
XM holdings endeavor to establish itself as the leading satellite service company. The company contracted Boeing Space Systems and launched its two satellite stations, Rock and Roll, signed licensing agreements with various media companies and went public in order to boost its competitive advantage in the market. These were excellent strategies before the launch of Sirius, a competitor satellite company and the ground based stations and portable music devices. Though the onset of these companies increased competition; the company is effectively countering the competition by diversifying into ground based traffic systems and portable device technologies. These measures have ensured that the company keeps afloat of the increased competition.
6. Business Level Strategy:
XM holdings, is faced with increasing competition from both satellite and ground based services. Thus, the company needs to develop and sustain its competitive advantage in the market. This can be achieved through three processes:
XM holdings, has not been effective in the adoption of new technologies and promotion of its products. This has led to the company loosing its competitive advantage to its competitors. However, the company has been successful in undertaking vertical integrations that have effectively promoted its competitive advantage by increasing the client base and developing new products. The company also offers free services to its clients; this strategy is aimed at increasing client base by establishing customer loyalty.
Despite the success that has been made by the company in developing new products; some of the products have received negative reception from the market. This acts to aggravate an already bad situation, the company is making losses and the net subscriber increase has slowed down significantly. This report makes the following recommendations to improve the situation: