Business Strategies of Undergroundhihop.com

1. Underground Hip-Hop’s proprietor, Walder, is focused on creating an independent, privately owned business entity that combines online marketing and traditional retailing. The owner’s aversion to external funding reflects the unwillingness to enter into a merger with venture capitalists, who can significantly influence the company’s management style. However, the reluctance to allow venture capital into the company fails to recognize the dynamics of global marketing. Considering that its physical presence is limited to a section of the U.S. market, it will be difficult for UGHH to gain a significant market share in foreign markets without involving well established local players. The idea of franchising is a good one, but only in expanding the local market. Entry into foreign markets will definitely require the advantages of local managerial talent and investors already established in those markets (Rohn, 2009, P. 51). This is especially important in overcoming cultural barriers to the acceptance of foreign media content by local consumers. Secondly, UGHH is about exploiting upcoming talent, and there is no way the company can reach underground artists in foreign markets without having a physical presence there. This obstacle explains why the company has not fulfilled its vision of establishing itself as a global online store for Hip-hop fans. In positioning the company for future expansion, focusing on a vibrant online presence is Walder’s best option since it is cheaper and avoids the risk of running into debt. However, he might consider selling shares to small-scale investors so that he raises funds for expansion without surrendering his control over the business’s management.

2. Walder’s desire to have total control presents a big obstacle to the company’s expansion strategies. This is because as long as he does not have immediate access to more funds, the company’s pace of growth will be minimal. Thus, he risks being overtaken by his competitors. He needs to take strategic risks by venturing into foreign markets, and he cannot do this without involving outside talent, people who understand the market better than he does. In that case, he will need to let his local partners make strategic decisions without his intervention.

3. Walder has relied on personal savings and business revenues to finance UGHH. He chose this approach partly because he did not want to get into debt by borrowing, and partly because he did not wish to involve venture capitalists and lose his control over the business. The advantage of this approach is that it gives him the freedom to decide the company’s growth strategy, such as integrating online and traditional retailing. At the same time, it is convenient for decision making purposes since he does not have to deal with opposing views, or getting the approval of a directors’ board before implementing desired policies. However, this conservative approach denies him the opportunity to expand the business at a faster rate. The advent of technology means that the market has become a global niche, whereby local and foreign markets are connected by the Internet. Accordingly, he needs to develop a strategy for managing across borders, and a human resource base with a global presence to help him penetrate into foreign markets (Quelch & Deshpande, 2004). This requires substantial funding, which he could get by engaging interested investors, and forge joint ventures with locals companies to help him penetrate local markets I foreign territories.

4. Expansion of a business’s operations and market reach requires, as a matter of necessity, a corresponding expansion of its human resources and labor force. However, UGHH’s proprietor values the total control he has over the business more than meeting his labor demand. As he admits himself, moving to the next level in the business demands that he expands his labor force by hiring more programmers. In addition to the added advantage of getting more talent, he’ll free his time which he can dedicate to other important managerial roles. Thus, his satisfaction that he’s content with the current state of affairs that “right now everything is kind of fine, things are getting done, and the site looks good” (Wesley, 2007, p. 72) reflects his lack of ambition and vision. He needs a visionary strategy by anticipating future growth and positioning his business to meet the needs of an expanding client base. In any case, as the business grows, he’ll need to delegate roles in managing the online and storefront stores, which by their nature are clearly different entities. So perhaps UGHH might think of separating the two into distinct departments without severing their relationship. While the online store still retains its revenue generation function through online sales, it would be a good strategy to use it as a promotional platform and shopping portal, especially for its international clients. The storefront can concentrate in direct sales and engaging with artists to promote its brand name in the local music industry. Given his programming passion and technical experience, he can handle the technical aspects of the business like online promotions and delegate duties like direct sales, purchases, and public relations to other employees. His wife’s experience with chain retails could also come in handy in managing the storefronts.