Report for HMV Retail Ltd from A Consultancy Perspective
Jul 01, 2016

This organisation is offering musical products or services in Australia and other regions by adopting branding strategy (branding) and IS/IT strategy. In order to find the impacts of these policies within the region, an exploratory method has been followed to support the arguments.

The results (generated from SWOT analysis) show that both the selected strategies of HMV organisation have led the firm towards positive competitive advantage and organisational transformation into the digitalisation.

Conversely, it has the issues of huge investment and inconsistent method used for the evaluation of IS/IT investments. It has been concluded that IS/IT is the substantial financial investment for this organisations. Thus, the recommendations made in this report as consultancy perspective indicate that the company must follow rational decisions of focused planning and investment appraisal to implement the advanced methods in order to manage risks

Introduction

Information systems and information technology (IS/IT) has become one of the most significant factors for business success over the last few decades (Lin et al., 2005). Based on this advanced strategy, businesses are expanding their operations in the world and internationalisation is taking place. Conversely, this is also known as the technique associated with the huge investment since average organisations are needed to spend more than 4.2% per year on IS/IT strategy  (Lin et al., 2005). Additionally, in order to justify the rising expenditure on IS/IT, the need for rational decision-making process is also essential for the integration and alignment of IS as well as business strategy. Inconsistent decision-making accelerates the likelihood of business issues that cannot be ignored in the organisational failures (Counihan et al., 2002).

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Recently, some of IS/IT related issues have been found in the HMV Retail Ltd working in different regions including the United Kingdom and Australia. Thus, this consultancy report aims of analysing the organisation’ business operations in which different issues and investment associated with the IS/IT strategy have been identified. Furthermore, the recommendations have been made for the organisation based on its business and IT strategies. All the current strategies of the HMV organisation have been assessed based on consultancy services that further helped in proposing effective strategies to the respected firm.

HMV Retail Ltd and its Strategies

HMV Retail Ltd

HMV Retail Ltd is providing its musical products and/or services across the world increasingly and it is known as one of the most consistent retail company (Kunze & Mai, 2007). More than 250 stores of this organisation have been established in different regions in order to make a huge national as well as international network. Conversely, this success of HMV’ business operations has been diminishing over the last few years due to the ineffective use of online services (Bach et al., 2006). At the same time, some complexities that cannot be underestimated here are associated with the disappointing sales of its video game. In order to achieve the targeted goals, management of HMV organisation is acquiring consultancy services that assist in evaluating the strengths and weaknesses of an organisation.

Business Strategy and IS Strategy

            HMV retail Ltd is the company focussing on the goals of raising the growth level through huge profitability and improved customer services. With the help of huge profitability, the company can run its profitable operations for positive revenues. Conversely, customer services improvement is vital for creating high demand for HMV’ products r services, including DVD, CD, and Computer Games (brick-and-mortar). At this stage, selection of poor strategies is risky for business growth.  The case of Avesta Company of UK is the significant example here, which focused on the cost leader strategy, which reduced the demand for its IT products. This loss was occurred due to the ignorance of product differentiation to improve the quality.

Subsequently, HMV Retail Ltd has been adopted different business strategies to be internationalised. The most common business strategy used by this company is the branding, in which logo and the name of the brand are being considered as the key tools of attracting domestic and global consumers. At the same time, the company has adopted the IS/IT strategy as well in order to offer online services to the customers. The major reason behind the selection of these strategies was to experience the competitive advantage and organisation transformation in a positive manner.

Strategic decisions of the firm towards implementing branding and IS/IT strategies can be analysed through SWOT analysis that identifies the competitive advantage and organisational transformation. For instance, appendix illustrates that the HMV organisation has the competitive advantage of being a leading music firm due to the use of effective branding. Similarly, its branding strategy has led the firm towards the establishment of stores. IS/IT strategy has also contributed in its increased competitive advantage in terms of its online business operations in different best countries of the world. From the analysis, it has been evaluated that both the strategies adopted by the firm may contribute to the organisational transformation in the form of collectively using the activities of redesigning the business system to make online services provision.

Furthermore, the strategies are enabling the organisation to be transformed into the information and technology environment. Conversely, these approaches also have some weakness as well as threats that may hinder the process of organisational transformation and competitive advantage. For instance, technological advancement may reduce the need for a human resource that slows the reaction of managing internal or external changes. Similarly, digitalisation requires effective leadership, which remains a key problem while talking about the HMV’ leadership (Nwagbara, 2010).

Issues of Integration and Alignment of IS and Business Strategy

Although, it is evident that alignment and integration of IS and business strategy allow organisations to improve their competitive advantages by creating barriers for new entrants, increasing efficiencies, and development of novel innovative products, however, the issues in the integration and alignment of IS and Business strategies makes it difficult to achieve these advantages (Joseph & Anderson, 2004). The primary issue encountered during alignment of the strategy with IT for the concerned organisation was whether the organisational culture embraces technology and considers it as part of the company’s long-term process.

Following thus, the major issues faced in the integration and alignment of Branding and ISIT by HMV Retail Ltd was expenses because of the involvement of billions of dollars that are spent in the process of their integration. In addition, the investment does not guarantee that the contribution of this alignment would be positive for the business performance. This results in the addition of ways that are reliable for ensuring that the business would be beneficial after the integration, which includes more investment (Elmorshidy, 2013). Therefore, it is necessary that the company build a system, which is the representation of the goals set by the organisation for effectiveness.

In addition to the concerns related to IS/IT investment for the organisation, it is also evident that their maintenance and evaluation requires multi-dimensional measures, which would culminate indulgence of complex labyrinth between organisational, financial, technical, and social procedures most of which are generally ignored or ineffectively handled. Following this, provided the complexity of the combination of IS/IT and branding, it is necessary that organisation comprehend the fundamentals of the practice along with the techniques used for evaluation since the complexities faced in the evaluation of the process is considered as one of the serious concerns in the alignment of the two aspects. This is because the formal application of the alignment and integration is dependent on the evaluation and assessment of the processes (Issa-Salwe et al., 2010 ). 

Evaluation Of IS/IT Investment

In Australia, UK and other states of the world, current investment in IS/IT strategy has become one of the most critical as well as difficult management issue (Lin et al., 2005). Similarly, in the case of HMV Retail Ltd, IS/IT strategy is seen as the best competitive weapon. Conversely, there is a situation of ambiguity while its impacts are noticed by evaluating the IT investment and benefits. For instance, the costs and benefits analysis indicates the uncertainty for the firm about the expected advantages of IT investment. This has become the key constraint to IS/IT investments.

According to Tallon et, al (2000) investment in IS/IT is known as the fundamental factor in determining business success or failure. Therefore, it is vital for the respected organisation to be aware of the fact that IS/IT spending should be increased as a share of corporate capital budgets. This trend further refers to the recognition of IS/IT transformation within the workplace, which must be from the overhead expense to strategic enterprise assets due to the positive outcomes in long-term, such as business internationalisation (Lin et al., 2005).  Different researchers have investigated in the relevant area and identified that the total investment on IS/IT system would be increased in the near future. This may reach to the $2.53 trillion.

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Conversely, Australian Federal Government is investing heavily on the IS/IT through the introduction of IT programs including Networking the Nation, Building on IT Strengths, and Backing Ability. Therefore, globally IS/IT spending by different organisations is relatively huge. By contrast, senior manager of HMV Corporation not only required to evaluate the IS/IT investments at the workplace in order to gain the productivity and profitability but also need to find the ways to value this strategy similar to the business strategy (branding). There are different methods of evaluating IS/IT investments (Return on Management, Information Economics Approach, and Multi-object etc), but these are relatively expensive (Bowman-Amuah & K, 2003).

HMV organisation is more towards the use of Value Analysis for this kind of evaluation, but the inability to assimilate as well as apply IT is resulting in a lack of business value (Evans et al., 2000). Thus, the difficulties in determining the cost and benefits analysis of IT have become the major constraint to investment justification. Furthermore, the evaluation is being ignored by this organisation. From company analysis, it has been evaluated that a considerable amount of IS/IT projects produce no net benefits, as a potential of the systems has not been utilised in order to meet the competitive challenges. The major reason behind this failure is the use of inappropriate appraisals of the proposed IS/IT investment projects, which may have detrimental consequences on its performance. Furthermore, business value assessment of IS/IT investment has been the matter of considerable debate, as, despite large investments in the area over many years, the company is no longer to enjoy the benefits.

Recommendations

Since IS alignment is a crucial issue, it is recommended that the company to follow a proper method of communication, illustration, and supporting the results and outcomes for the alignment with the help of market and information effects, which would assist in deciding if the company requires more involvement in the IS/IT investment. Another method recommended for HMV Retail Ltd as projected by Issa-Salwe et al., (2010) is the use of three techniques. These include the rise of the function of IT/IS to a strategic level within the organisation, complete integration of IT/IS strategic planning in the business strategy which in this case is branding, and providing support for alignment of corporate vision in strategic IT/IS initiatives for none to less financial loss.

Besides this, Elmorshidy (2013) indicates that a five-step process allows organisations to unlock their strength of aligning and implementing IS/IT and business strategy. These are defining the essentials of the business along with the aspects that provide them with the capacity of supporting, identifying the capabilities for IS/IT that could support plug gaps and business capabilities, follow the technology designed architecture, IS/IT strategy roadmap development for aligning it with business strategy, and reallocation of spending to analyse the cost-benefit.

Conclusion

HMV Retail Ltd is working effectively in Australia and other regions. Conversely, reduction in demand due to the use if insignificant online services and business strategies, it is following the branding and IS/IT strategies. These strategies have led the organisation towards positive competitive advantage and organisational transformation in the digitalisation process. Conversely, it has become the commodity due to the huge investment required to implement such kinds of approaches. As a consultant it can be suggested that to adopt this innovative idea, HMV is required to select the best option of evaluation of IS/IT investment, invest more and make focused planning in order to mitigate the risks of the internet or investment bubble. This would further lead the organisation to a better IS/IT alignment and integration.

Reference

Bach, S., Haynes, P. & Smith, J.L., 2006. Online learning and teaching in higher education. McGraw-Hill Education (UK).

Bowman-Amuah & K, M., 2003. U.S. Patent No. 6,539,396, pp.Multi-object identifier system and method for information service pattern environment.

Counihan, A., Finnegan, P. & Sammon, D., 2002. Towards a framework for evaluating investments in data warehousing. Information Systems Journal, 12(4), pp. 321-338.

Evans, J., Treadgold, A. & T, F., 2000. Mavondo. "Psychic distance and the performance of international retailers-A suggested a theoretical framework. International Marketing Review, 17(4/5), pp.373-91.

HMV Group plc Fundamental Company Report Including Financial, SWOT, Competitors and Industry Analysis, 2015. HMV Group plc Fundamental Company Report Including Financial, SWOT, Competitors and Industry Analysis. Market Publisher.

Kunze, O. & Mai, L.-W., 2007. Consumer adoption of online music services: The influence of perceived risks and risk-relief strategies. International Journal of Retail & Distribution Management, 35(11), pp.862-77.

Lin, C., Pervan, G. & McDermid, D., 2005. IS/IT Investment Evaluation and Benefits Realization. Journal of Research and Practice in Information Technology, 37(3), pp.235-51.

Nwagbara, U., 2010. Waterstone’s and the Changing Bookselling Environment in the UK: the Journey so far and Prospects. Economic Sciences, 63(3), pp.14-26. Available at: http://www.upg-bulletin-se.ro/archive/2011-3/2.%20Nwagbara.pdf.

Tallon, P.P., Kraemer, K.L. & Gurbaxani, V., 2000. Executives’ perceptions of the business value of information technology: a process-oriented approach. Journal of Management Information Systems, 16(4), pp.145-73.

Appendix

Strengths

Weaknesses

Leading organisation in the world with respect to  music, DVD, and books due to branding

Slow reaction for huge change

Wide range of stores on high street due to the branding

Low leadership quality in order to manage structure change

Operating in seven best countries through IS/IT services

High reliance on promotion and pricing strategy

Opportunities

Threats

Online networking

Reduction in the physical demand

Digital products

Low need of human resource

Digitalisation in Mobile phone media link

Low control over illegal downloads

Table 1: SWOT analysis (2015)

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