XM Satellite Radio Harvard Case Solution & Analysis

Problem Statement

The management of XM Satellite Radio, a new approach in radio, is aiming to select on the market strategy that will enable the company to initiate the launch of the category or the firm successfully. Deciding on the business model is an important question that needs to be addressed and also the source of generating revenue. In this regard, the management has two options according to which the firm can either charge from customers through subscription model or can generate revenue through advertisements by selling time slots.

Some key questions that the management needs to cater while selecting on the strategy is the most effective way of approaching the electronic manufacturers and establishing strong partnerships with them. The competitive landscape is an important concern for the company which will play a vital role in the overall decision making. However, the key areas which the management needs to cover while making the final decision include the decision regarding the business model, the marketing strategy and partnerships with the electronic manufacturers.

Company Overview

XM Satellite Radio started as a subsidiary of the American Mobile Satellite Corp in the year 1992 and initiated operations as a satellite system. The company has been operating in the US and providing satellite radio frequency brands in the majority of the locations across the country. However, the company’s strategy has been quite different and is not threatened by significant competition due to the different approach. The company’s corporate and business level strategies are defined below in order to gain a thorough idea of the company’s strategy.

The company’s business level strategy is translating its corporate level strategy and is not different from each other. In the business level strategy of the company, the corporate aims and objectives are defined. The business level strategy of the firm is to use differentiation effectively in order to create an image that translates the uniqueness of the company. The areas or the factors that the company is leveraging to create differentiation include the product mix which is highly diversified, the target market and the type of music offered by the firm.

External Analysis

This section will conduct the environmental analysis in the first regard in order to elaborate on the key areas to consider before making any final decision. The external environment plays an important role in deciding on the strategy for the firm and to examine the key opportunities and threats.

Political Factors

The political situation has been quite influencing and important for the firm as well as for the industry from the very start. Satellite radio is a new concept, which is very difficult to initiate which is why a mutual effort between the industry players and XM has been conducted to influence the government in order to seek SDARS. The efforts paid off and the players received two frequency bands from the government. The whole scenario indicates that the government or the political condition has provided the opportunity to gain market power and provided high quality service with high entry barriers and less competition. Thus, the political condition is favoring the firm to major extent providing them with ample of opportunities to exploit and strengthen the hold in the newly developed industry.

XM Satellite Radio Case Solution

Legal Factors

The legal environment has been quite stringent but supportive as well to the firm and the other player in the industry to a major extent. The auction conducted for the bands by the FCC, the limits to operate and the launch of the system has been set for the firms including XM. However, the number of stations owned by a signal operator has been increased to a specific limit by the FCC under the Telecommunication Act of 1996. Consolation started to occur and acon sequence or subsequent increase in the debt has been witnessed. This created a high intensity in a low competitive market and increased debt significantly, but also provided opportunities to operate at a low operating cost and increased the ability to obtain license.

Social Factors

The social environment exhibits a change that has occurred in the recent times, especially with regard to the radio listeners. The research shows that a significant increase in the people travelling through cars while going offices has been witnessed. This increase or incline has also increased the number of radio listeners while moving. The whole scenario indicates that a change has occurred and the radio listeners that have been residing at home only are shifting to become travelling listeners.....................

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