In 2014, On Track to Succeed After a Near-Death Experience Harvard Case Solution & Analysis

In 2014, On Track to Succeed After a Near-Death Experience Case Solution 

1.    Industry Analysis

XM and satellite both achieved high growth in the satellite industry. Both the companies implemented the multiple strategies in order to win the market battles. The companies established the attractive programming lineup which is more innovative and different from its competitors. Moreover, both the competitors’ procedures are totally different from each other. On the other hand, the companies provide convenience to the factory owners to install their brands of satellite radio through that the companies spread the awareness of its product to multiple customers which would help the company to achieve its competitive advantage over its rivalry. However, the companies also enjoy the retail distribution for their variety of products, which is used by the household and vehicles owners.

The companies followed the differentiation strategy for theirproduct as they know that the best way to achieve competitive advantage from the market is to offer the differentiate products which directly attract the customers and bring maximum profitability in the organization. On the other hand, the companies also observed that through differentiated programming contents, the companies easily attract the customers as well as retained the maximum number of subscribers. Moreover, inorder to gain the board distribution of their satellite radios, both the companies agreed upon the merger and after the merger the companies make partnership with the automobile dealers and convenience them to install its products in its vehicle.

The market position of Sirius XM satellite radio was so harsh in February 2009. During the period of 2008, the company has earned total revenue of $1.7 billion and has approximately 19 million subscribers. Moreover, the stock prices of the Sirius XM products have dropped to $0.05 per share due to the financial crisis, with debt totaling more than $3 billion. Due to the heavy spending on the installment of new satellite products, the company faced financial losses which depleted the ability of the company to pay its credit bills. In addition to this, the company has lack of availability of cash to make further debt payment of $171.6 million. In order to avoid the defaulting of the payment of debt, Sirius XM used its lifeline from liberty media, which financed the company of $2 billion in order to starts its new operations.

Liberty is a company that provides financing facilities to the companies in order to minimize the risks and hazards. In return to this financial aid, the liberty chairman, John Malone and liberty CEO Greg Maffei, occupied the seats of Sirius XM. The liberty provide $530 million loan to Sirius and in return Sirius hadto hand over its $12.5 million shares of preferred stock to the liberty which is convertible to the 40% of Sirius common stock. Secondly, seats on the Sirius board of directors proportional to its equity tenure.  Most of the market experts evaluated that this deal is most beneficial for the liberty media.

After this deal, in 2013, Sirius XM earned revenue of $ 3.8 billion, net profit $377 million, operating income of $1 billion and cash flow from processes of $1.1 billion. The company also maintains its stock prices as well as earned a market capitalization of $21 billion to $24 billion.

SIRIUS XM’s STRATEGY

The Sirius strategy is to maintain the market position of the company by hiring the new subscribers as well as achieve the steady business growth. The strategy of the company is to eliminate the use of duplicative programming and after reducing the duplicative programming, the company immediately reduced the cost of its combine programming of the two farmer companies. Moreover, the company also believed that the streamlining operations are the best way to achieve the profitability of the two merger companies within a few years......................

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