INTERNAL SITUATION ANALYSIS SWOT ANALYSIS -- Review the information on SWOT anal
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INTERNAL SITUATION ANALYSIS
SWOT ANALYSIS -- Review the information on SWOT analysis in Chapter 4 to help you answer these questions.
A. Strengths: Which of the following accurately characterize SiriusXM’s resource strengths and competitive capabilities?
Select the strengths and capabilities below that are accurate for SiriusXM:
_____
Strong, longstanding partnerships with virtually all major motor vehicle manufacturers and vehicle dealers.
_____
Longstanding partnerships with the retailers of satellite radios.
_____
Minimal long-term debt.
_____
A fleet of orbiting satellites that provided clear reception in most geographic areas of the United States and Canada.
_____
Strong relationships with the manufacturers of satellite radios.
_____
Working relationships with the makers of chipsets and other parts and components used in producing SiriusXM’s satellite radios.
_____
Minimal need for subsidies and incentives to acquire new subscribers, reducing fixed costs.
_____
SiriusXM’s new capability (as a consequence of having acquired Agero, Inc.) to develop a connected vehicle platform and begin delivering connected vehicle services to a host of major automotive manufacturers.
_____
Sufficient financial strength to obtain new content, fund stock buybacks, and refinance debt at lower interest rates
_____
More than sufficient capital investments from General Motors, SiriusXM’s parent company.
_____
Outbound telemarketing capabilities to contact the non-subscribing owners of new and used vehicles equipped with satellite radios and try to convert them into paying subscribers.
B. Weaknesses: Which of the following accurately characterize SiriusXM’s resource weaknesses?
Select the resource weaknesses below that are accurate for SiriusXM:
_____
Sizable annual expenditures for subsidies and incentives needed to win the collaboration of partners in acquiring new subscribers—subsidies paid to radio manufacturers, distributors, and automakers.
_____
Chronically poor customer care and customer service capabilities that have not yet been resolved.
_____
A very limited lineup of channels and programs in overpriced subscription plans.
_____
Poor relationships with the manufacturers of satellite radios—SiriusXM had little control over the specifications for these radios.
_____
Substantial long-term debt.
C. Opportunities: Which of the following are attractive market opportunities for SiriusXM?
Select the opportunities below that are realistic for SiriusXM:
_____
Opportunities to expand the percentage of owners of new and used vehicles equipped with a satellite radio who become SiriusXM subscribers.
_____
Acquire General Motors, Ford, or another major automaker so as to increase control over the vehicle satellite radio market.
_____
Opportunities to develop a connected vehicle platform and begin delivering connected vehicle services to a host of major automotive manufacturers—providing connected car services to vehicle owners is likely to become a major source of revenue growth.
_____
Future expansion into geographic areas outside of the United States and Canada, although unlikely to occur in the near future.
_____
Expand into traditional (FM/AM) radio broadcasting to capture additional market share.
D. Threats: Which of the following represent external threats to SiriusXM’s future well-being and future business prospects?
Select the external threats below that are accurate for SiriusXM:
_____
SiriusXM might lose out to competitors in providing connected car technology/services to motor vehicle manufacturers.
_____
SiriusXM might be acquired by General Motors or Ford.
_____
Growing numbers of vehicle owners may shift their preferences for in-vehicle entertainment away from satellite radio to local radio broadcasts and/or Internet streaming and/or increased use of devices (iPods, smartphones, etc.).
_____
Impending government regulations that will place severe legal constraints on the relationship between SiriusXM and major vehicle manufacturers.
E. Considering all four SWOT lists, which of the following accurately characterizes the attractiveness of SiriusXM’s overall situation?
_____On balance, SiriusXM’s overall situation is currently highly unattractive. SiriusXM has few strengths and numerous weaknesses, and lacks the resources for gaining new subscribers that are producing gains in sales and market share. The company is making poor progress in correcting its weaknesses, has few market opportunities for further growth, and does not seem capable of defending against the external threats to its future well-being. Its future outlook for growth and profitability is quite negative.
_____SiriusXM’s overall situation is only moderately attractive. While they have some notable strengths, they lack the resources for gaining new subscribers. The company correcting its resource weaknesses, but has few market opportunities for growth and it is dubious as to whether they are capable of defending against the external threats to its future well-being. Its future outlook for growth and profitability is uncertain.
_____SiriusXM’s overall situation is currently attractive. SiriusXM has a potent set of resource strengths for gaining new subscribers that are producing gains in sales and market share. The company is correcting its resource weaknesses, has ample market opportunities to sustain its rapid growth, and seems capable of defending against the external threats to its future well-being. Its future outlook for growth and profitability is bright.
FINANCIAL PERFORMANCE
A. Complete the exercise below to evaluate SiriusXM’s financial performance during the 2010-2013 period, as shown in case Exhibit 2. If needed, use the key financial ratios in Chapter 4, Exhibit 4.1, to assist you in performing calculations:
2010 2011 2012 2013
Royalty & revenue-sharing payments as a % of total revenues
Programming & content expenses as a % of total revenues
Customer service & billing expenses as a % of total revenues
Satellite & transmission expenses as a % of total revenues
Cost of equipment as a % of total revenues
Subscriber acquisition costs as a % of total revenues
Sales & marketing expenses as a % of total revenues
Engineering, design, & development expenses as a % of total revenues
General & admin expenses as a % of total revenues
Operating profit margin (operating income as a % of total revenues)
Net profit margin (net income as a % of total revenues)
Return on equity (net income as a % of total shareholders’ equity)
Return on assets (net income as a % of total assets)
Debt-to-assets ratio (debt is defined here as long-term debt plus related party debt
Based on your financial calculations, select the following statements that are true for SiriusXM:
_____
Subscriber revenue has climbed from $2.41 billion in 2010 to $3.28 billion in 2013
_____
Total revenue has grown from $2.82 million in 2010 to $3.80 million in 2013
_____
Income from operations has jumped from $465.4 million in 2010 to $1.04 billion in 2013
_____
Net income has increased from $43.1 million in 2010 to $377.2 million in 2013
_____
Net cash provided from company operations has climbed significantly every year since 2010
_____
The company has done a very poor job of refinancing and restructuring its long-term debt.
_____
SiriusXM’s operating profit margin has declined from 27.5% in 2010 to 16.5% in 2013.
_____
SiriusXM’s net profit margin has increased from 1.5% in 2010 to 9.9% in 2013.
_____
SiriusXM’s return on equity has increased from 13.7% in 2010 to 20.7% in 2013.
_____
SiriusXM’s return on assets equity has increased from 0.6% in 2010 to 4.3% in 2013.
_____
Royalty and revenue-sharing costs are rising as a % of total revenues.
_____
Programming and content expenses are rising as a % of total revenues.
_____
Subscriber acquisition costs as a % of total revenues are rising.
_____
General and administrative expenses as a % of total revenues are declining.
_____
Sales and marketing expenses as a % of total revenues are declining.
B. List 5 pertinent conclusions that can be drawn from the above financial calculations:
STRATEGIC ISSUES & PROBLEMS
A. What strategic issues and problems merit front-burner managerial attention? (Hint: Look back at all of your analysis, and try to pinpoint the problems that should be addressed in order for this firm to be successful in the future).
B. What recommendations would you make to the senior management of SiriusXM to improve the company’s competitive position and financial performance over the next 5 years? (Hint: your recommendations should address how to deal with the strategic issues and problems that you listed).
A. Strengths: Which of the following accurately characterize SiriusXM’s resource strengths and competitive capabilities?
Select the strengths and capabilities below that are accurate for SiriusXM:
_____
Strong, longstanding partnerships with virtually all major motor vehicle manufacturers and vehicle dealers.
_____
Longstanding partnerships with the retailers of satellite radios.
_____
Minimal long-term debt.
_____
A fleet of orbiting satellites that provided clear reception in most geographic areas of the United States and Canada.
_____
Strong relationships with the manufacturers of satellite radios.
_____
Working relationships with the makers of chipsets and other parts and components used in producing SiriusXM’s satellite radios.
_____
Minimal need for subsidies and incentives to acquire new subscribers, reducing fixed costs.
_____
SiriusXM’s new capability (as a consequence of having acquired Agero, Inc.) to develop a connected vehicle platform and begin delivering connected vehicle services to a host of major automotive manufacturers.
_____
Sufficient financial strength to obtain new content, fund stock buybacks, and refinance debt at lower interest rates
_____
More than sufficient capital investments from General Motors, SiriusXM’s parent company.
_____
Outbound telemarketing capabilities to contact the non-subscribing owners of new and used vehicles equipped with satellite radios and try to convert them into paying subscribers.
Explanation / Answer
A ) The strengths and capabilities below that are accurate for SiriusXM:
B ) The resource weaknesses below that are accurate for SiriusXM :
C ) The opportunities below that are realistic for SiriusXM
D ) The external threats below that are accurate for SiriusXM :
- Sizable annual expenditures for subsidies and incentives needed to win the collaboration of partners in acquiring new subscribers—subsidies paid to radio manufacturers, distributors, and automakers.
C ) The opportunities below that are realistic for SiriusXM
- Opportunities to expand the percentage of owners of new and used vehicles equipped with a satellite radio who become SiriusXM subscribers.
D ) The external threats below that are accurate for SiriusXM :
- Growing numbers of vehicle owners may shift their preferences for in-vehicle entertainment away from satellite radio to local radio broadcasts and/or Internet streaming and/or increased use of devices (iPods, smartphones, etc.).
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