Arista Records: Analysis, Five Forces at Work
In an industry or competitive analysis, there are five forces at work. These help a company to determine whether its strengths are sufficient to mitigate its weaknesses, and concomitantly, whether the business is sufficiently competitive to survive in the industry. The company Arista Records has a longstanding reputation for excellence in the industry. The main factor that sets it apart from other companies is a tradition begun by Clive Davis, the founder of the company. This factor is also one of the key elements playing a role in the success of the company, regardless of fluctuations such as the Milli Vanilli scandal an a high turnover in managers. At the center of industry analysis is the competition factor. Competition, or rivalry, is offered by both existing companies within the industry, as well as new entrants.The first of the five elements of industry analysis is the threat of entry by new competitors. The music record industry is highl
While this is a threat, it is also an opportunity for Arista and other companies to increase the variety of its products. With elements and threats such as the Internet, buyers have an increased amount of power as far as music purchases are concerned. These Web sites offer illegal music downloads either for a fraction of the industry price or for free. The threat not only for Arista, but for all record companies is the many pirate sites on the Internet. The same is true in terms of the second element of analysis, which is the intensity of rivalry among existing competitors. The fifth element is the bargaining power of suppliers. The third element is pressure from substitute products. The decision to change leadership of the company from Davis to Reid in the year 2000 emerged from the conglomerate rather than the company itself. Furthermore, Arista's focus on quality in terms of artists and music provides the company with an important competitive edge. This, together with a relatively low threat of new entrants, provides Arista with a strong position in the industry. y competitive, but also extremely voluminous. However, competition among smaller companies is also high. With the exception of Milli Vanilli, Arista's history with artists has been extremely favorable. And indeed, many legitimate Web sites do offer music downloads at very competitive prices.
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