busi4701 strategic management
BUSI4701 - 2021W - Comprehensive individual case analysis Instructions for the comprehensive individual case report BUSI4701 – Strategic Management Winter 2021 Semester The "Spotify: Face the Music" case covers a number of very interesting topics. You should rely on the knowledge and skills gained in the course, your case analysis techniques, and critical thinking abilities to answer the exam questions. Recall our extensive class discussions and feedback you have received on previous assignments. You are graded on the following factors: - Appropriate use of course content and frameworks as they were intended. – Using appropriate concepts and case facts to build arguments. – Depth and strength of your arguments. – Your ability to reach conclusions that are logical and relevant. – Ability to convey your ideas to the reader. Format: Single Microsoft word document with your name and student ID in the title page. Maximum 2600 words excluding the title page, Q0 statement, references and any figures/tables. Use size 11 or 12 Times New Roman font with 1.5 line spacing and 1” page margins. Due date: Assignments are due by 9:00 pm on Wednesday March 31st. Please upload your report to Canvas. Late submissions will not be accepted, and extensions cannot be granted as the case is discussed in class on Thursday morning. Please leave enough time to review and edit your writing. Citations from the case text may be a page number [e.g., (p. 3)] since we will be able to determine the source material from our own copy of the text. Any citations from outside materials must include sufficient information for us to find the source material. APA bibliography format will ensure that complete information is provided. For this assignment you are allowed to use course materials for reference. Accepted reference materials are the course text, course articles, course submission or discussion cases, course slides, and your own notes. You cannot use anyone else’s analysis (e.g., your classmate’s or an external source). Using someone else’s analysis may result in a failing grade for this exam and be considered academic misconduct. For this exam you are NOT required or permitted to conduct external research. You are also not permitted to self-plagiarize (i.e., do not copy and paste any arguments from prior cases or your notes into the exam – such an approach is dishonest, may result in a misconduct assessment and automatic failure of the course, and is likely to result in a poor grade regardless since those arguments will likely not fit the exam context). You may NOT submit any previously prepared or submitted content. Please be advised that all assignments will be submitted to Turnitin by your instructor or TA. Page 2 Provide a heading indicating which question you are answering. The majority of your answers should be derived from the material presented in the case. Please be very circumspect in using outside information or personal insights unless these sources corroborate (and are corroborated by) information presented in the case. Please pay attention to the value of each question when determining how much effort to expend on answering it. If you need to make assumptions, state them clearly. Q0. Copy and paste the following statement on the first page of your exam after the title page and type your name at the bottom. Your exam will not be graded without this statement. As a member of the Ontario Tech University community, I share our community’s commitment to the highest standards of academic integrity and excellence in all dimensions of our work. I therefore promise that I will not lie, cheat, or use any unauthorized aids or assistance to complete any of my essays, assignments, and exams. I further promise that I will not offer any unauthorized assistance to any of my fellow students, and I promise that I will not ask any of my fellow students for unauthorized assistance. I promise that the work I submit is my own and that where I have drawn on the work of others, I have included proper attribution for my sources. Name, Student Number, Date, Course 0% Q1. What industry does Spotify operate in? How would you assess the attractiveness of this industry at the time of the case? Clearly identify the industry and the major rivals within it, and then conduct a detailed analysis of the industry. PEST(LE) analysis not required, but may get up to 5 bonus points. [This question should bring to mind a specific framework discussed extensively in class, which you should use when composing your response. Keep in mind that this question requires defining the industry and a complete analysis using the relevant framework with a conclusion supported by that analysis.] 25% Q2. What (generic) competitive strategy does Spotify pursue? Do you think this is the right competitive strategy for this industry? Offer detailed arguments and use case facts to explain your choice. 15% Q3. How do complements impact the attractiveness of Spotify’s main product/service? Discuss two complements. How is Spotify managing (or should manage) the relationship with these complementors? Explain your answer. 15% Q4. What specific resources or capabilities (you should offer in-depth analysis of two separate resources/capabilities) are critical for Spotify? Are these resources or capabilities sources of competitive advantage? Sustainable competitive advantage? How does Spotify utilize these (and other) resources/ capabilities (i.e. is Spotify organized to leverage its resources and achieve a sustained competitive advantage; how do they fit together)? For this assignment, do NOT use capital as one of your two main resources. Page 3 [Each resource/capability analysis should cover the first three elements of the framework in detail, as appropriate. The last part of this question should be addressed in part with reference to the fourth element of Barney’s framework. You may approach this by discussing complementary resources/capabilities as discussed in class or using Barney’s structure.] 30% Q5. Is Spotify attempting a blue ocean strategy with its products/services (at any time during the period covered in the case)? If so, explain this blue ocean strategy in terms of (non)customers and value innovation, including factors eliminated/reduced and factors raised/created (ERRC). If not, explain why the offering does not attract non- customers of the industry and discuss if any factors are eliminated/reduced and factors raised/created (ERRC). [Be sure to address both parts of the explanation of the blue ocean strategy – customers and competitive strategy/ERRC. Any factors/elements eliminated/reduced or raised/created should be discussed regardless of whether you see a blue ocean strategy or not.] 15% Spotify: Face the Music (Update 2019) This case was prepared by Professor Govert Vroom and Isaac Sastre Boquet, case writer. July 2019. IESE cases are designed to promote class discussion rather than to illustrate effective or ineffective management of a given situation. Copyright © 2019 IESE. To order copies contact IESE Publishing via www.iesepublishing.com. Alternatively, write to
[email protected] or call +34 932 536 558. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means - electronic, mechanical, photocopying, recording, or otherwise - without the permission of IESE. Last edited: 31/7/19 Spotify: Face the Music (Update 2019) Govert Vroom Isaac Sastre Boquet By March 2019, Ariana Grande’s new album Thank U, Next had been streamed 2 billion times on Spotify,1 not even two months after it had been released. Such figures were becoming increasingly less bewildering. After all, it was Grande’s third album to reach 2 billion streams on the platform, and she was not alone. Global superstars such as Ed Sheeran, Drake and Justin Bieber routinely accrued hundreds of millions or even billions of streams of their hit songs. Indeed, for many music fans, streaming had become the way to consume music, revitalizing an industry that was seeing growth rates in double digits for the first time since the 1990s. With its 96 million paid subscribers and 200 million total users, Spotify was at the top of the pile. Moreover, after a decade of Spotify struggling to find a path to profitability, operating losses had shrunk to $48 million in 2018, down from $378 million in 2017, while revenue had shot up to $5.26 billion.2 Despite the encouraging data, Spotify’s stock had been on a downward slope. Spotify was engaged in a bitter rivalry with Apple Music, which had become a success on its own and had reached 56 million subscribers by the end of 2018.3 Apple CEO Tim Cook claimed that Apple Music was already the top streaming service in the US music market, which was the largest in the world by revenue. Apple had announced plans to create a cultural one-stop shop that would include music, video, books and even video games. Likewise, the retail giant Amazon was already bundling music streaming with its own retail and video-streaming services. Direct competitive threats were not the only issue for Spotify. Artists were criticizing it more for the low royalties Spotify paid since the rates were now even lower thanks to the new deals signed with the major music publishers in 2017. While those low rates were helping Spotify’s quest for profitability, they risked alienating artists. Spotify’s bottom line remained vulnerable. The company had just filed an appeal to the Copyright Royalty Board in the United States, hoping to prevent an increase in those royalties it paid that were independent of its deals with the majors.4 IES739 SM-1685-E July 2019 F or u se o nl y in th e co ur se S tr at eg ic M an ag em en t W 20 21 a t U ni ve rs ity o f O nt ar io In st itu te o f T ec hn ol og y ta ug ht b y M eh di H os se