Question: HMV - the case continues

The second strand in the new strategy is to grow revenue from new channels, instead of relying on physical purchases in the stores. HMV Group is therefore investing in both stores' online sites. Customers can purchase music through the hmv.com site, giving the choice of a digital download or a physical album. The company plans to extend the site to offer video downloads as soon as this becomes worthwhile to customers and the company. They are also planning to grow revenue from live music events and ticket sales. On becoming more efficient, the company is changing major parts of the cost base. For example, Waterstone's had invested in a centralised book hub, to which all book suppliers deliver their products. These are then sorted and delivered to each store as a single daily delivery, rather than having several deliveries to a store each day by individual suppliers. They are also centralising their purchasing to reduce costs, and consolidating many back-office functions of the two store chains.

Case questions 8.2

1. What developments in the external environment are reflected in the company's strategy?

2. What internal changes do you think this may have led to in the way the company operates?