History, Development and Growth
David Margolese, born in Canada, is the pioneer of satellite radio enterprises (Jones and Hill, 2010). At the age of around twenty years, Margolese discontinued his studies and started a paging company.
David would later turn his concentration to cellular phone enterprise but failed to obtain funding from venture capitalists who failed to see any chance of growth in the cellular phone business (Jones and Hill, 2010). According to them, the cellular phones would remain a preserve of the rich, especially the Chief Executive Officers of large corporations and ambassadors.
Margolese fought on until 1980 when his efforts bore fruits. He brought in Ameritech who agreed to invest funds in Cantel, a company owned by Margolese. Later on, he joined hands with among others, Ted Rodgers of Rodgers Communications to start Rogers Wireless, the biggest telephony firm by 2001 in Canada. Margolese became a venture capitalist at the age of 31 when he traded his interest for $2 billion (Jones and Hill, 2010).
As a venture capitalist, Margolese met Robert Briskman, a former technician with NASA and the chief of operations at a fallen satellite-messaging firm called Geostar. Briskman and some of his former workmates at Geostar had started a company, Satellite Radio CD, but were short of funds required to commercialize the invention (Jones and Hill, 2010).
Initially, Margolese invested a paltry one million US dollars before making up his mind that his future lay in the satellite radio enterprise. He changed its name to CD Radio. As much as he liked the idea of satellite radio, he had to overcome several hardships.
It would be costly to set up a profitable radio enterprise, the Federal Communications Commission had to be persuaded to grant airwaves to satellite radio and it would be costly to purchase special receivers and the difficulty of converting potential clients to buy satellite radios yet they has the terrestrial radios. Advertising would be costly and risky too (Jones and Hill, 2010).
As earlier envisaged, it took long for the Federal Communications Commission to accede to CD Radio’s request. The delay resulted from the opposition from National Association of Broadcasters (NAB), which viewed satellite radio as a potential killer to local radio services. Overall, Federal Communications Commission agreed to auction the spectrum in 1997 and sold them to CD Radio and XM Radio (Jones and Hill, 2010). CD Radio changed its name to Sirius Radio.
Both firms planned to offer over close to a hundred channels. Sirius Radio intended to dedicate 50 channels to commercial free music while the rest would offer advertising space on the rest of the channels. XM intended to offer between fifteen and twenty channels free of commercials and seven minutes per hour space for advertisements on the rest of the channels. In addition to commercials, the two stations introduced a subscription fee of between ten and twenty US dollars (Jones and Hill, 2010).
Sirius and XM Radios intended to put satellites in elliptical orbits at over 20,000 miles above the earth. The satellites would have a useful life of around fifteen years and with that in mind, both stations kept spare satellite in case of any failure by the existing ones. On 16 February 2000, the two companies signed a pact to design a unified standard for satellite that would enable customers to tune in to both stations from one radio. Such unified services kicked off in 2004 (Jones and Hill, 2010).
The two companies would later install repeaters in various cities and establish recording studios. XM established three such studios each in Washington, D.C., New York and Nashville. Sirius established its studio complex in New York City. XM got an exclusive pact with General Motors and Honda to have the satellite radios set up in new cars while Sirius collaborated with Ford and DaimlerChrysler.
General Motors committed to initially do 1,240,000 set ups and thereafter, 600,000 per year. Honda would ship 400,000 cars installed with XM Radios in 2005 (Jones and Hill, 2010).
Concerning capital, XM raised around 2.6 billion US dollars from investors as well as strategic partners in January 2004 while Sirius raised 2.5 billion US dollars by 2004. Much of the funds raised went towards setting up of infrastructure with XM spending 470 million US dollars for three satellites, 267 million US dollars for setting up repeaters systems and 130 million US dollars on control equipment (Jones and Hill, 2010).
XM Radio launched in early 2001, a year behind schedule, backed by advertising campaign worth over 100 million US dollars. XM Radio charged a fee of 9.95 US dollars per month per subscriber. Sirius launched its services in July 2002 and charged a subscription fee of 12.95 US dollars per month per subscriber with the justification that its services were free of commercial adverts.
XM Radio led Sirius Radio with a very big margin with XM Radio boasting of 347,000 to Sirius’ 30,000 by close of 2002. Sirius had installed 133 repeaters in 92 localities while XM had 800 repeaters in 60 areas at the close of 2003 (Jones and Hill, 2010).
XM Radio maintained its leadership over Sirius Radio by surpassing the 500,000 subscribers mark in April 2003 and projected over one million subscribers by the end of the same year. Sirius had slightly over 100,000 subscribers by mid 2003 projecting 300,000 subscribers by end of the same year.
Concerning sales, XM was way ahead of Sirius thanks to General Motors aggressive selling (Jones and Hill, 2010). General Motors launched the satellite radio in 25 out of 57 models and intended to push the number to 44. The company had projected sales of 800,000 fitted with XM’s radio in 2004 and 1.1 million in 2005.
On its side, Honda sold 200,000 and 400,000 cars fitted with XM radios in 2004 and 2005 respectively. Toyota, Volkswagen and Audi also collaborated with XM and the radios were available as options in their cars (Jones and Hill, 2010). Overall, DaimlerChrysler committed to install 550,000 radios by mid 2007 while Ford planned to begin factory installations of Sirius Radios by end of 2007(Jones and Hill, 2010).
In 2001, Sirius suffered a blow when the CEO, David Margolese resigned abruptly. Luckily, though, Sirius converted 700 million US dollars in debt and 525 million US dollars in stock to equity. In addition, the company got a lifeline when three of its initial investors agreed to pump 200 million US dollars in cash (Jones and Hill, 2010).
In 2003 and 2004, both companies made milestones in their differentiation deals. Sirius brought in the National Football League for a seven-year deal to exclusively broadcast football matches costing Sirius 188 million US dollars in cash and 32 million US dollars more for warrants. XM signed a deal in 2004 signed an eleven-year contract worth 650 million US dollars with Major League Baseball granting exclusive rights to XM to air matches (Jones and Hill, 2010).
Internal Strengths and Weaknesses
Since their take off, both stations realized continued growth in revenues. This is because they offered premium services, which found ready market by an audience that was yearning for a break from the tradition of terrestrial radio stations. The terrestrial radio stations had stuck to the same format and had a limited geographical radius after which the signal would fade.
Statistics revealed that 48 percent of the existing FM and AM stations used three formats in their program – country music, news bulletin and sports, and adult content for modern times. In addition, the number of programs was limited and this meant most artists could not get a chance for airtime (Jones and Hill, 2010).
The duopoly in the satellite radio systems created by the Federal Communication Commission comprising of Sirius Radio and XM Radio meant that most of the customers would either choose one of the other. In later process, the two merged to form Sirius XM Radio thus having the whole market. Handled well, the duopoly or monopoly could cash in and realize great sales. This is because the conventional FM and AM stations no longer appealed to the audience (Jones and Hill, 2010).
Deriving from the issue of the traditional television versus the cable television and premium movie channels, it was evident that subscribers were willing to pay for the premium services. Statistics showed that more than 69 percent of TV households subscribed to basic cable television and 20 percent who subscribed to satellite television (Jones and Hill, 2010).
The duopoly got able financial and strategic investors. XM landed an exclusive pact with General Motors and Honda while Sirius had an exclusive pact with FORD and DaimlerChrysler.
Such exclusive deals enhanced distribution of the two radios through the manufacturers who among other things agreed to either fit the radios or work with dealers for customers who chose the radios. XM reaped so much from the deal since General Motors fitted 1,240,000 radios initially and was to fit 600,000 radios per year from 2004 to May 2007 (Jones and Hill, 2010).
In addition to the exclusive deals, the radio companies got strategic investors and financial investors. XM had General Motors, Hughes Electronics, Clear Channel Communications, American Honda and Hearst Communications as strategic partners. Financial investors for XM included Columbia Capital, Madison Dearborn Partners, Baystar Capital and Eastbourne Capital. XM Radio raised 2.5 billion US dollars by 2004(Jones and Hill, 2010).
The companies landed exclusive deals from sports associations. In December 2003, Sirius signed a seven-year exclusive pact with the National Football League to air soccer matches, a pact that cost Sirius Radio 188 million US dollars in cash. In October 2004, Sirius signed another five-year exclusive deal with Howard Stern which cost Sirius Radio around 500 million US dollars (Jones and Hill, 2010).
In October 2004, XM Radio landed an eleven-year exclusive pact with Major League Baseball, which offered XM Radio exclusive rights to air matches through satellite. The matches included the famous World Series. During the same period, XM Radio started a channel for Opie and Anthony who had been off air due to profanities. This channel increased the revenues for XM Radio with 1.99 US dollars per month per subscriber (Jones and Hill, 2010).
Though the companies experienced delays in launching their satellite Radio, they adopted strong structures that were able to broadcast as envisaged. This gave the subscribers a reason to continue with the subscriptions because at no place does the case study point out to defective facilities (Jones and Hill, 2010). Sirius Radio solved some initial problems and business continued operating smoothly regardless of the time lost.
The number of subscribers continued to increase steadily for the two stations. XM Radio, which launched seven months ahead of Sirius Radio, had 347,000 subscribers by the end of year 2002. It hit the 500,000 mark the following year and projected one million subscribers by the end of 2003. Sirius projected a subscriber number of 300,000 by the end of the year 2003(Jones and Hill, 2010).
Internal Weaknesses
In as much as the motor manufacturers provided a channel of distribution, the two companies over relied on them instead of looking for other ways from the beginning. As such, it became risky for the two radio stations when sales in cars went down.
The slowdown in sales turned out into a great crisis in 2008 as austere measures regarding credit in the United States of America led to a drastic fall in car sales. For instance, projections for 2008 forecast sale of 13.5 million cars compared to 16.1 million in 2007. Worse still, the forecasts for 2009 pointed at sales of 13.1 million cars (Jones and Hill, 2010).
The decrease in car sales meant decrease in sales of radios since the car dealers were the major distributors for satellite radios. This was a weakness for the two companies since they chose one major distributor (Jones and Hill, 2010).
The two companies concentrated so much on satellite radio and failed to engage in differentiation of their services. This is a weakness because customer preferences change with time and just as people got used to conventional FM and AM radios, they could still get bored with the satellite radios. Technology is changing rapidly as seen with the launch of internet radio and a possibility of the same on motor vehicles too (Jones and Hill, 2010).
Another weakness was in the penetration strategies. The use of auto dealers at the beginning yet people were yearning for satellite radio even in the homes was a bad move. The companies would have used more dealers to penetrate the ready market (Jones and Hill, 2010).
In comparison with the internet technology, satellite technology seems obsolete and stations entrenched in it might find it hard to continue in business in the near future. A combination of the two types of technologies would go a long way in assisting the satellite radio stations a chance of survival and growth.
It should also be important to note that the radio stations took too long to launch giving way to other innovations to launch. In fact, the satellite radios became a favorite of the middle-aged people as the young people preferred to listen to iTunes through their iPods (Jones and Hill, 2010).
After the merger, unfortunately, the share price fell from a high of 3.4 US dollars to a low of 0.40 US dollars per share as the market capitalization for the new firm went down to 1.2 billion US dollars. Such a trend could lead to a delisting from the stock exchange and this would make it extremely hard for the company to raise capital from the public (Jones and Hill, 2010).
Opportunities
Although using auto manufacturers was as a risk, the company should have increased the number of manufacturers. Top among these were Nissan and Toyota companies. These two companies had initially granted XM Radio the dealer option for installation of the XM Radios while Toyota had given Sirius Radio the same option.
These two auto manufacturers are among the fastest growing in the industry and it would be prudent for the merged company to strike a pact with Toyota and Nissan for possible factory fitted radios (Jones and Hill, 2010).
The merger realized between XM radio and Sirius radio is an opportunity for the new firm to extend and expand its business since expenses for running the businesses as separate entities has gone down considerably. As such, funds previously used for recurrent expenditure like salaries could pay for advertising and other promotions (Jones and Hill, 2010).
Since the internet radio is a reality and a competitor to Sirius XM Radio, the company should venture into internet radio too and quickly utilize the Wimax technology for car radios. This will assist the company in retaining its customers as well as tapping the young generation, which does not prefer the satellite radio (Jones and Hill, 2010).
There is another opportunity of collaborating with the FM and AM stations that are so numerous in the United States of America. Sirius and XM Radios did it at some point in their history and it would be beneficial if they ventured even more. Sirius XM could offer to allocate some channels to the FM and AM stations for a fee and this would only mean more revenues of the new company, Sirius XM (Jones and Hill, 2010).
There exists another opportunity of working with companies like Apple to enable Sirius XM stream through the internet. In future, such collaboration would see Sirius XM extend its reach outside America to the whole world and reach the young adults.
Since there is no limitation for channels, Sirius XM can still come up with more premium programs like free music programs to retain the existing clients.
Threats
Internet radio is a real threat to satellite radio since the era of smartphone offers subscribers more choices for radio other than the terrestrial and satellite (Jones and Hill, 2010). The digital age could also embrace internet radio more than the satellite radio. Internet radio is available in any region in the world unlike satellite, which is also limited by geographical distances. In addition, all a client needs is a computer and internet connection and proceeds to utilize the computer while listening to the radio at the same time.
Terrestrial radio is another threat for Sirius XM (Jones and Hill, 2010). Previously, it was not a real threat but with the entrance of consolidators like Clear Channel Communication, the battle is slowly shaping up. Clear Communications Channel has utilized economies of scale concept and designed a branded format for radio programs and its pop format is picking up so well. Terrestrial radios are in the process of moving towards digital broadcasting and this would really challenge Sirius XM Radio.
The emergence and development of satellite television and cable television systems is another threat to Sirius XM (Jones and Hill, 2010). These systems providers are offering digital radio programs as part of their normal offering of television services and the radio programs come at no extra cost.
Demography poses a threat. The young people are more inclined to digital products while the satellite radio appeals to the middle aged. This implies that the digital products have a longer future than the satellite radio (Jones and Hill, 2010).
SWOT Analysis
Sirius XM, formerly two separate radio stations, has exhibited more strengths than weaknesses in their history. Federal Communication Commission’s decree of allowing only two companies to buy the spectrum granted them a duopoly and later a monopoly after the merger. Monopolies can thrive very well in business if there are proper structures and avoidance of complacency. The subscriber number continued increasing rapidly with the inception of the two companies and should continue rising if the management works on the weaknesses.
Sirius XM should harness the strength of the presence of strong strategic and financial investors well enough to sustain the business at all times. The company needs to seek for more deals to increase premiums for the business to grow. The company can turn its weaknesses into strengths as well. The issue of poor market penetration calls for trained sales and marketing team with proper coordination. The team should focus on opening up new markets and creating rapports with existing and potential distributors, as well as getting new customers.
They should have set targets against the company overall targets. The same team should enable the company overcome the weakness of over concentrating on auto manufacturers for distribution purposes as they acquire alternative routes for distribution. Sirius XM should upgrade the relatively obsolete technology to modern levels to compete effectively with other players in the industry.
Concerning differentiation as a weakness, the company can venture into other lines of business for stability’s sake. Such lines would involve coming up with clothing lines targeting the teams they work with like soccer leagues among others.
The weaknesses at Sirius XM are easily surmountable and this means that the company is still competitive and if proper strategies are in place, the company has a very high chance of becoming profitable. The issue of low share price needs adequate advertising coupled with the sales and marketing campaigns to convince potential investors to own the company through purchase of shares.
Concerning the threats the company is currently facing, with certainty, the company is able to turn threats into opportunities. The company should venture into internet radio too and harness the internet to promote the satellite services through advertisements on the websites.
The company should update its official website often to show any new feature on the satellite radio as well as the premiums charged to create awareness. The company should also engage Wimax technology to provide radios to cars for the generation that is not comfortable with the satellite radios.
Sirius XM should engage the cable television and satellite television providers for a possible collaboration in their programs. For instance, Sirius would sign an agreement with cable television in which the cable television would air Sirius XM’s programs at a fee paid by Sirius XM so that the programs remain free to the clients purchasing the cable television systems. Sirius XM radio would better engage the satellite television for putting up their advertisements through the satellite television.
Terrestrial radios are a threat to Sirius XM but these are potential partners in the business. The companies have a chance of getting their programs broadcast through the satellite radio as they do advertisements for Sirius XM (Jones and Hill, 2010).
Turning those threats into opportunities combined with the existing opportunities show that the company should engage in designing strategies for better business. The opportunities are numerous and include the presence of strong strategic and financial investors, more auto manufacturers like Toyota and Nissan, and differentiation of services.
Corporate-Level Strategy
Corporate level strategy refers to strategies that deal with the wide and long term investigations of the type of business the firm is in or wants to be and how it wants to get where it intends (Business Dictionary.com, 2013). To accomplish its goals, a firm may decide to venture into new line of business, or boost the current performance through various ways, merge or acquire related companies or coming up with priorities on how to invest the available resources (Business Dictionary.com, 2013).
Sirius XM Radio is a satellite radio firm based in America, with over 100 radio channels. The company delivers its programs through 800 plus gadgets including car radios, home radios and office radios (Sirius XM Satellite Radio, 2013). Currently the company’s broadcasts are available through the internet at the company’s website: Sirius.com and through the Sirius XM Internet Radio (Sirius XM Satellite Radio, 2013).
Sirius XM’s mission is to acquire maximum subscribers and maximum possible revenues. Its goals include influencing people’s attitude towards subscribing for radio services. The company endeavors to convince people why it is worth to pay premium for radio programs in the best possible way.
The second goal relates to enhancing the client experience so that the client gets better services all through (Sirius XM Satellite Radio, 2013). The company also aims at increasing the number of conversions from trial customer to subscribers. Overall, the company targets to minimize the number of subscribers who disconnect the company’s services by stopping their subscriptions (Sirius XM Satellite Radio, 2013).
Sirius XM works in all ways to enhance revenue accruing per client as well as minimizing costs accruing from marketing. In other words, the company aims at reducing overall costs as it increases revenues from clients (Sirius XM Satellite Radio, 2013).
The company aims at communicating with the customer from the day the customer subscribes to the rest of their subscriptions with Sirius XM to create and sustain a rapport that depicts that Sirius XM understands the customer throughout the client’s full cycle with the company (Sirius XM Satellite Radio, 2013).
To accomplish this, the company will afford the appropriate offer to the appropriate client at the appropriate time while at the same time avoiding the equating of offer to change in prices. The second way is to have a deep understanding of the clients by getting a 360-degree outlook of the client’s relationship with Sirius XM Radio (Sirius XM Satellite Radio, 2013). Lastly, the company shall collect and use improved client knowledge to prognosticate points of change and keep the customer’s history intact.
Sirius XM pursues related diversification as its corporate strategy. This resulted mainly from the competition the company faced from terrestrial radio, internet radio, cable television and satellite television (Sirius XM Satellite Radio, 2013). As such, they have currently taken up to providing broadcasting through the internet, and applications such as Apple App and through cellular phones that have the Android software (Sirius XM Satellite Radio, 2013).
This is related diversification because the company sticks to the same business of broadcasting but uses different modes other than the satellite broadcasting (Business Dictionary.com, 2013).
This strategy is advantageous in that, it enables the company to stick to its core business while at the same time keeping up with the competition of the day. Since the company is experienced in the field, adopting new methods becomes relatively easy. It is a multi-business system, which provides information through broadcasting and also manufactures and sells radios through various agents.
As per the SWOT analysis, it is possible and already happening at Sirius XM. They have diversified into internet radio, and provision of broadcasts through cellular phones. They have strong financial and strategic partners who are willing to pump more finances into the business even when the business is not doing well which shows the level of confidence in the business.
The primary modes of distribution through the auto dealers should increase by bringing in other auto companies. The company is already doing so with companies like Toyota and Nissan and it is possible to negotiate with other companies like Audi (Jones and Hill, 2010).
Broadcasting and selling of satellite radios is broad enough and tasking and as such, Sirius XM is in a better position if it sticks to its core business and diversifies in related services instead of venturing into completely new businesses. As earlier, observed, signing exclusive deals with companies and athletics groups is better still.
The merger between Sirius and XM Radios was a good move since they consolidated the resources that each had. There are some teething problems like depreciation of the share. The remedy for such a problem is thorough sales and marketing campaigns and advertisements. In future, Sirius XM should try to acquire some terrestrial radio stations that would provide more local reach and enhance the awareness of the company.
Business Strategy
There are three types of business strategy, which include cost strategies, differentiated products and services strategies and focus strategies (Business Dictionary.com, 2013). Successful companies use cost strategy. It involves selling goods or providing services at relatively low prices a benefit, which accrues from taking advantage of economies of scales. Consumers benefits from savings realized from the economies of scale.
However, a firm relying on this strategy must retain some of the savings to boost its profits. Differentiated products and services strategies involves adding special features to an already existing product or service and charging customers for the extra features. Differentiation leads to increased profits that accrue from the premium charged (Business Dictionary.com, 2013).
Focus strategies is a combination of cost and differentiation strategies. As such, the firm engages in both cost strategy and differentiation strategy depending on the type of clients in a particular market. The firm must understand the market well before applying this strategy as it is risky if the market is complex. This strategy targets the urban middle class clients by providing such clients with a near perfect combination of cost savings and differentiated goods (Business Dictionary.com, 2013).
Sirius XM employs differentiation strategies as seen in its adoption of internet streaming and broadcast through applications like Apple App and android cellular phones (Sirius XM Satellite Radio, 2013). This strategy aims at solving the various threats that the company has faced in the past. Such threats include that of demography where the satellite systems did not appeal to the young but to the middle aged only. This would have denied the company a future.
As such, Sirius XM differentiated into internet streaming. Secondly, the threat from cable television too pushed Sirius XM to differentiate to collaborate with Apple Incorporation to provide such streaming through their application and this too would assist to capture the young people (Sirius XM Satellite Radio, 2013).
Sirius XM has also opened up different radio channels to cater for different tastes by different audiences. Such channels include comedies, talk shows, sports news, commercial free music channels and news bulletins.
Differentiation is what the company needed most to overcome the threats in the industry, which mostly came from the terrestrial radio stations, cable television, satellite television and internet radio. The strategy has worked well for Sirius XM because the company can now compete with any company in the same industry. They have a say in the latest internet radio technology and are available online throughout the world.
Further, the company is in a position to adopt focus strategy; it can combine both cost and differentiation strategy. The company can collaborate with cable television to offer their programs through the free programs that cable television provides to customers. Sirius XM would pay some fees to cable television so those customers who are not able to subscribe to the premium-programming can use the cable television to tune in.
In addition, the company would develop exclusive programs to already existing clients at a premium. Comedy shows and talk shows hosted by famous people like Oprah are likely to retain customers even at an extra fee as long as the company develops such programs even further. The Opie comedy show can be made more interactive to attract a greater audience but at an extra fee.
Structure and Control Systems at Sirius XM
Sirius XM Radio has five top management staff including the Chief Executive Officer, Executive President and Chief Content Officer, Executive President Sales and Operations, Executive Vice President and Chief Administrative Officer, Executive Vice President and General Counsel and the Executive Vice President and Chief Financial Officer (Sirius XM Satellite Radio, 2013).
The above corporate structure is lean and efficient. The presence of a Chief Executive Officer depicts a hands-on officer since this is an employee hired by the board of directors and is not one of the owners. As such, the Chief Executive Officer position is merit based and the board cannot easily manipulate him. It would have been different if a managing director, who would have been one of the owners chosen by the others to manage the business with limited or no skills for the job, headed the structure.
The business strategy adopted by Sirius XM of differentiation requires a person who does not have any conflict of interest and most Chief Executive Officers do not have such interests. Below the Chief Executive Officer is an Executive President who is in charge of content. Sirius XM is a broadcasting company and having such a senior person in charge of content shows that the company is ready to pursue the strategy from the top.
This person plans for broadcast programs. In addition, the officer also influences differentiation of products and services. This includes addition of new channels, improvement of existing ones as well as bringing in new programs on existing channels.
The presence of another Executive President this time for operations and sales is a show of commitment to the growth of the business. Any content designed by the content president and team needs to reach the potential and existing clients to advise them on such things as rates, the new programs, channels and so on. This team would work closely with numerous marketing relationships that already exist.
Again, the presence of an executive president is a clear indication that Sirius XM is committed to its strategy. There exists a department dealing with business development. This department is very crucial in any business and more so to Sirius XM Radio. Guided by an executive president, the department can really enhance business by coming up with new content and channels.
The department of human resources is a pointer to the fact that Sirius XM takes the issue of its employees with seriousness. However, the board should create another position to deal with systems on a technical level so that the content so improved does not lack structures for dissemination. This position would require a qualified technician who would double up as the coordinator for systems maintenance and work closely with companies that collaborate with Sirius XM to manufacture the radios.
This would ensure that such things as systems breakdown do not occur. In addition, such a department or person would also keep the company informed on the latest subcomponents that would make the system better. The same person would be in charge of all technicians in the industry with several assistants under him/her.
Sirius XM rewards its employees relatively well as well as its managers. This arises from the fact that the staff turnover rate is quite low. The management too rarely suffers from high turnover. With this in place, it therefore means that control systems at Sirius XM are intact and that the salary gap between the management and the employee is fair.
Recommendations
Sirius XM is a viable and profitable business, which can even be more profitable if the company puts certain measures. Concerning the inherent weaknesses of the company, it is proper that the company should continue engaging every available marketing relationship and avoid concentrating on any one of the m. as seen earlier, over reliance on auto manufacturers for distribution of radios suffered greatly during the 2008 financial meltdown as it led to lower sales of the cars.
The sale of cars especially from General Motors, Honda, and DaimlerChrysler as well as FORD affected the number of radios from the then separate entities of Sirius Radio and XM Radio. This was a bit risky for the company. Therefore, there is need to constantly spread risk through acquisition of several marketing relationships.
Secondly, the management at Sirius XM should seek exclusive deals with sports club to increase their justification for premium charges on their broadcast programs. Many young people who like sports are likely to subscribe to the company’s programming.
Sirius XM should keep pace with the unfolding Wimax technology, which enables subscribers to receive internet streaming through their car radios. In addition, the company should carry out research on how to enhance the internet radio to reach clients outside Unites States of America
Lastly, Sirius XM Radio needs to keep on updating its satellite technology and blend it with the internet infrastructure so that the young can accept to subscribe to their programs.
References
Business Dictionary.com. (2013). BusinessDictionary. Web.
Jones, G. and Hill, C. (2010). Theory of Strategic Management with Cases. 9th ed. Thomson South-Western: China, pp.173-185.
Sirius XM Satellite Radio. (2013). Corporate Overview. Web.