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Changing times

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HMV is a major UK music retailer. Shares in retail group fell 17 % in December 2010 after the company reported an accelerating decline in sales and halved its interim dividend.

HMV has been trying to diversify into new products such as iPads, develop live and digital music markets, revitalise its Waterstone's book chain and sell more technology products and entertainment-related clothing in the HMV stores. However, this strategy has not compensated for erosion in its traditional book and music markets. Live music profits of 1.5m fell below expectations, and the company said the 15.3 per cent decline in sales at HMV meant it "must accelerate" the introduction of new products.

Adapted source: FT.com

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Read the article HMV rocked by growing losses and snow storms (you can do this in the window below or follow the previous link to read the article in a separate window) and then consider answers to the questions below.


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Question 1

Define the terms:

  • interim dividend
  • loss leader.

Question 2

Explain the problems associated with a seasonal business model.

Question 3

With reference to an appropriate tool like the Ansoff Matrix, analyse the growth strategy adopted by HMV.

Question 4

Using Porter's Five Forces model, evaluate the principal pressures faced by HMV.