EMI Group plc Case Study

EMI Group plc is the third strongest competitor in North America. The company, like its competitors, is seeking ways of maintaining its competitive position amidst the challenges facing the industry. The paper considers the strategic response of EMI Group plc following the price cuts in retail price by Universal Music Group, the leading competitor in the market. EMI Group plc The purpose of this paper is to consider the dilemma faced by EMI Group plc in responding to the price cut implemented by UMG, the strategic options available to EMI, and the recommended conditions for selection.

In 2003, the U. S. recorded music industry realized that the decline in sales it experienced in the previous years was likely to continue in the future. The major culprits for the decline in sales were the external factor of file sharing in the Internet, CD burning or piracy, competition from other entertainment formats, and economic downturns (Harmon, 2003). This threatened the competitive position of the top five recording companies operating in the United States.

The need to maintain its leading position was a reason for Universal Music Group (UMG) to lower the retail price of its CDs as a means of turning around the expected continuing slump in sales. The strategic move of UMG required a response from the other recording companies. The industry-reinvigorating scheme of UMG involves a two-stage process. First, UMG commences price cuts on its CDs to a standard retail price of $12. 98. This involves a jumpstart agreement with retailers to purchase CDs at the wholesale price of $9. 09 for regular CDs or $10.

10 for superstar CDs to give them a reasonable profit margin but in exchange for allotment of around one-third of store space to the company’s CDs. This also involves the cancellation of cooperative advertising in favor of direct market advertising. Second, other recording companies such as EMI should follow the price cuts. (Conniff, 2003) Lower prices of CDs from all the recording companies should comprise compelling incentives for customers to purchase CDs. The basic idea of the reinvigoration plan is to influence consumers to purchase CDs because of the lower price.

Even with lower prices, the expected increase in sales should translate into profit for the major recording companies. Consideration of all factors affecting the reinvigorating plan shows that the decrease in price by UMG would increase its sales during the period when other companies have yet to decrease their price. However, this is only in the short-term. This plan assumes that price is the sole determining consideration of the recorded music market in their decision to purchase CDs.

If this were so, then the price cuts would solve the problem. However, this is not so. Taste in music and quality are equally important determinants of consumption decisions (Simon, Bilstein & Luby, 2006). UMG records the music of many popular artists in different genres but so do the other four leading recording companies. The popularity of artists influence the purchase of records and UMG can only provide a limited number of options. The recorded music of an artist is not like other products susceptible to substitution with another artist.

There is no substitute for the Beatles so the recording company with exclusive rights to sell Beatles music gets the Beatles fans as its market. Despite the price decrease, the significant increase in the sales of UMG would only be for the CDs of artists with a wide following. Quality of the CDs is another consideration to create the impression that customers are receiving value worth their money. The problem with file sharing and CD burning is that these almost top the quality of original CDs, which do not provide much support for differentiation.

The impact on UMG of the reinvigoration plan may not be as huge as it expected. The initial impact on EMI of the announcement for low prices is a drop in its stock prices (Brandle, 2003). This led to the serious consideration on whether the company should follow the price cuts. If the impact of the price cuts on sales and market pull is significant, then EMI should follow suit. However, this is not the case. The reinvigoration plan will slightly increase the sales of UMG in the short-term. After this, the wait-and-see move of other recording companies leaves UMG with an uncertain financial prospect.

EMI should consider other competitive options to wither out the strategic move of UMG and provide a platform for a long-term strategy. Differentiation by creating and adding value are likely to improve sales more than price cuts (Simon, Bilstein & Luby, 2006). Active involvement in collaborative strategies with companies engaged in online music distribution (BusinessWire, 2007) such as Apple also comprises a strategic option. In conclusion, the plan of UMG to reinvigorate the record business was a desperate move to increase its market share as a solution to its impending financial problems.

This would not reinvigorate the recorded music industry because it is based on inaccurate or insufficient assumptions on the problem and the factors affecting market behavior.


Brandle, L. (2003). EMI stock drops on UMG price-cut news. AllBusiness. Retrieved February 5, 2009, from http://www. allbusiness. com/retail-trade/miscellaneous-retail-retail-stores-not/4381346-1. html BusinessWire. (2007). Warner Music Group and imeem announce strategic digital partnership. Retrieved February 5, 2009, from http://www. businesswire. com/portal/site/google/? ndmViewId=news_view&newsId=20070712005366&newsLang=en

Conniff, T. (2003). UMG cutting prices on its top-line CDs. AllBusiness. Retrieved February 5, 2009, from http://www. allbusiness. com/services/motion-pictures/4886492-1. html Harmon, A. (2003, September 4). Universal to cut prices of its CD’s. The New York Times. Retrieved February 5, 2009, from http://query. nytimes. com/gst/fullpage. html? res=940CE6DC1038F937A3575AC0A9659C8B63 Simon, H. , Bilstein, F. , ; Luby, F. (2006). Low prices = more customers? Not always. Harvard Business School. Retrieved February 5, 2009, from http://hbswk. hbs. edu/archive/5314. html

Calculate the price
Make an order in advance and get the best price
Pages (550 words)
*Price with a welcome 15% discount applied.
Pro tip: If you want to save more money and pay the lowest price, you need to set a more extended deadline.
We know how difficult it is to be a student these days. That's why our prices are one of the most affordable on the market, and there are no hidden fees.

Instead, we offer bonuses, discounts, and free services to make your experience outstanding.
How it works
Receive a 100% original paper that will pass Turnitin from a top essay writing service
step 1
Upload your instructions
Fill out the order form and provide paper details. You can even attach screenshots or add additional instructions later. If something is not clear or missing, the writer will contact you for clarification.
Pro service tips
How to get the most out of your experience with MyhomeworkGeeks
One writer throughout the entire course
If you like the writer, you can hire them again. Just copy & paste their ID on the order form ("Preferred Writer's ID" field). This way, your vocabulary will be uniform, and the writer will be aware of your needs.
The same paper from different writers
You can order essay or any other work from two different writers to choose the best one or give another version to a friend. This can be done through the add-on "Same paper from another writer."
Copy of sources used by the writer
Our college essay writers work with ScienceDirect and other databases. They can send you articles or materials used in PDF or through screenshots. Just tick the "Copy of sources" field on the order form.
See why 20k+ students have chosen us as their sole writing assistance provider
Check out the latest reviews and opinions submitted by real customers worldwide and make an informed decision.
I just need some minor alterations. Thanks.
Customer 452547, February 10th, 2021
Business and administrative studies
Thank you for your hard work and effort. Made a 96 out of 125 points Lacked information from the rubic
Customer 452773, October 27th, 2023
Thank youuuu
Customer 452729, May 30th, 2021
Thank you for your hard work and help.
Customer 452773, February 13th, 2023
Human Resources Management (HRM)
excellent job
Customer 452773, June 25th, 2023
Leadership Studies
excellent job
Customer 452773, August 26th, 2023
Leadership Studies
excellent job as always
Customer 452773, September 2nd, 2023
Criminal Justice
The paper was not accused of plagiarism and was written very well. I will let you know the grade once it is graded. Thank you
Customer 452671, April 26th, 2021
Leadership Studies
awesome work as always
Customer 452773, August 19th, 2023
Human Resources Management (HRM)
excellent, great job
Customer 452773, June 19th, 2023
Business and administrative studies
excellent, got a 100
Customer 452773, May 17th, 2023
ACC/543: Managerial Accounting & Legal Aspects Of Business
Customer 452773, January 10th, 2024
Customer reviews in total
Current satisfaction rate
3 pages
Average paper length
Customers referred by a friend
15% OFF your first order
Use a coupon FIRST15 and enjoy expert help with any task at the most affordable price.
Claim my 15% OFF Order in Chat

Sometimes it is hard to do all the work on your own

Let us help you get a good grade on your paper. Get professional help and free up your time for more important courses. Let us handle your;

  • Dissertations and Thesis
  • Essays
  • All Assignments

  • Research papers
  • Terms Papers
  • Online Classes
Live ChatWhatsApp