Page 8 - SCS May 2018 - Day 2 Suggested Solutions

CIMA MAY 2018 – STRATEGIC CASE STUDY

Music streaming

The proposal to start offering music streaming services will be evaluated using the
suitability/feasibility/acceptability framework, before an overall conclusion is formed.

Suitability

A strategy is suitable when it is aligned with the objectives of the organisation. It looks at whether
the strategy addresses the circumstances in which the organisation is operating.

Couchweb is a streaming company that is enjoying good growth in a competitive market. Its
expertise is in making content available to subscribers who wish to stream to devices, but its sole
focus is on TV programmes and movies. To some extent, this leads to increased business risk; the
company is wholly dependent on demand for such content from subscribers.

Enhancing the product offering to include music would reduce this risk to a degree. Music is also a
growth industry; the article mentions a significant number of subscribers for both Spotify and
Apple, and much of the content is global in its appeal. Unlike TV or movies, which may need
dubbing or subtitles when viewed in a foreign language, the work of popular global artists has no
such requirements; the content should therefore be much easier to manage.

Additionally, confidence can be taken from Spotify’s flotation that the market considers there to
be good growth potential in the industry, suggesting good returns for shareholders.

Overall, the strategy would appear to be suitable.

Feasibility

Feasibility is concerned with whether the strategy could be made to work in practice, and as such
looks at more detailed practicalities of strategic capability.

In terms of competences, there is little doubt that Couchweb has the skills necessary to make
streaming music work. Although I am not an expert in such matters, it would seem that having
developed the necessary technological skills to design a catalogue of content and then make that
available to viewers, it is not that different to offering the same service but using music content
instead of TV/movies.

The question becomes more one of whether Couchweb can compete successfully against
established operators in the music streaming industry. The newspaper article mentions 3 large
organisations; Spotify, newly-quoted and the market leader; Apple, the biggest company by
market value in the world; and Amazon, another global business with huge value. There are
undoubtedly other, smaller operators in the industry too. Does Couchweb have the necessary
resources to compete effectively against the established operators?

It is difficult to believe that the large players will not react in some way should they learn that
Couchweb is to enter their market; they will not just sit back and allow a new entrant to take
market share from them. Each of the companies mentioned has the resources to make life
extremely difficult for a new rival, and Couchweb should pick its battles carefully.

Furthermore, any move to enter the music market is likely to require significant cash investment,
in terms of marketing, getting agreement from production companies and artists to put music on
the Couchweb platform, developing the necessary web pages etc. Couchweb already has

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