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SWOT Analysis for Audible

Audible is a web digital content provider founded in 1995. The company started by providing digital content played in audio players, personal computer, and other mobile devices. Audible focused on production and marketing of audio books. To understand the companys business environment, this paper conducts a SWOT analysis. The SWOT analysis explores the weaknesses, threats, strengths, and opportunities of the company in its business environment. To be successful, the company needs to maximize its strength, utilize its opportunities, minimize its weakness, and avoid threats. Strengths and Weaknesses Strengths

One of the key strength of the organization is the growing demand for new media. From 2003, the demand of new media and information technology was estimated to grow by 5.6% and spending on audio book as expected to grow by 2.8%. Among the expected increase user of audio contents are commuters and fitness enthusiast. In early 2000s, there was an increase in the number of households listening to audio books. The increased usage of audio content increased the market for the company to become one of the leading audio content providers in the Internet (Mark and Mitchel 3).

Another Strength the company is keeping a Harry Potters series book in their audio content. Harry potter allowed the books to be available in audio tapes and CD. This created a great impact on the growth of children's audio category and on booksellers who were willing to promote audio books. This was a great opportunity for Audible to increase its market by attracting many customers in early 2000 (Mark and Mitchel 3).

The growth technology, including the Internet is also a great strength for the company. By early 2003, Internet had become a key source of education and entertainment in the US. Today, wireless and digital transmission technologies have grown and Internet users are able to download contents from any part of the world. The company can upload audio books, which can be purchased and downloaded by users and burn them onto CDs. This has reduced the cost for the company as well as increasing the market. It is estimated that the CD burn market increased from 120 million in 2001 to 546 in 2005. The introduction of apple, application, which enabled users to download contents online, was also a big boost for the company. The application enabled the company to lower its distribution cost as well as increase audio content market by reach a large number of customers outside the USA (Mark and Mitchel 4).

Another strength of the company is the support it received for the first three years after its introduction. The company was able to attract an impressive business partner, such as J.P Morgan, Volpe Brown Whelan and Wit capital. The company also received venture capital from Patricof & Co Ventures, Kleiner Perkins, Ironwood Capital, AT&T and Microsoft. This boosted the expansion of the company and hence the creation of the brand name (Mark and Mitchel 4).

The company chief executive officer had worked as an author, media consultant and business consultant for 20 years. This was an advantage to the company since he had a good experience in the business. Most of other employees of the company had experienced either in production or sales (Mark and Mitchel 15).

Weaknesses

Despite the well established brand name, Audible had few weaknesses in its business, and this contributed to its downfall. One of the weaknesses of the company was the lack of immediate content such as newspaper newsletters magazines and journals. This limited its customers from receiving up to date contents in their devices.

The loss of digital rights to Harry Potters contents in 2003 was also a major weakness of the company. Harry Potters content was the main contents in the company which attracted large sales for children and household users. The company also suffered a major weakness due to increase in expenditure than revenue. Due to tremendous changes in technology, the company incurred huge expenses to facilitate production of some of the digital contents. This also contributed to a decline in share price and removal of the company shares in the over the counter market in 2003 (Mark and Mitchel 18).

The company largest shareholder was Microsoft, which had 35.1% of Audible shares. Other shareholders included two individuals with 15.9%, Amazon random house. The executive officers of the company owned only 11.1 percent. This was also the weakness of the company since the management did not have a large interest in the company (Mark and Mitchel 6).

Opportunities and Threats To understand the company's opportunities and threats of the company, Porter's 5 forces analysis is applied. The five forces include rivalry among the competing firms, threats of new entrants, bargaining power of the suppliers threats of new substitutes and bargaining power of the buyers.

Opportunities Audible had several opportunities that could have been utilized to facilitate its success in the audio content market. One of the greatest opportunities for the company was Internet and development in technology. The company was established when Internet was fast developing and was becoming an essential for businesses and household usage. There was also increased mobile phone usage in early 200s. The Audible Company should have utilized the opportunity in production and marketing of its products and services. Internet lowers the cost of distribution and production since users download contents and burn them on CDs by themselves. Payment is also made online (Mark and Mitchel 7).

Another opportunity for the company is maintaining a well established partners such as Microsoft and Amazon. The organization has been in operation for many years, and they have well established brand names. Hence it was a big opportunity for the company to market itself. The company further got a big boost in its ventures by receiving financial support from well established partners. The company chief executive officer had 20 years experience as an author and a business journalist. The company could have utilized the experience of the CEO to maximize sales and production of quality digital contents (Mark and Mitchel 8).

Threats

The major threat for the company was competition. Major competition is from existing audio content companies in the market as well as new digital companies in the market. The company competes with traditional online retail stores, catalogues, clubs and libraries were involved in selling, loaning and renting audio books on cassettes and CDs. Several other new companies joined the market in 2000 occupying a large market share. Another threat for the company was the bargaining power of the suppliers. Microsoft and Amazon were the major suppliers of audio contents in Audible. The companies owned more than 50% shares and hence controlled several activities in the company such as price of their products (Mark and Mitchel 11).

Outline Audibles 5 Elements of StrategyTo survive in the market, Audible focused on setting up a strategy in the audio content production. Among the strategy included production of digital newspapers, magazines, journals, publications, and newsletters. This focused on raising revenue for the company. The company also focused on increasing its relationship with giant content producers such as Random House Audio, HarperCollins Audio, AOL time Warner Audio and Simon & Schuster Audio. Random house was the largest book publisher in the world, and it produced 5000 titles annually. The partnership with digital media giants helped the company to raise its revenue (Mark and Mitchel 9).

The company also focused on production of downloadable contents. This helped the company reduce the cost of distribution because users downloaded the content and burned them on the disk or tape on their own.Main Issues Audible FacesAudible faces many challenges in their business. Among them is increased cost of operation. The company expenses are exceeding its revenue; hence the company is likely to operate at a loss in the near future. Another issue facing the company is increased competition. There is a large number of emerging digital content companies providing their services, online and at a lower price. Libraries renting and loaning audio CDs are also creating a negative market for the company (Mark and Mitchel 10).

For the company to carry on in the market, it should focus on the use of new, as well as the emerging technology to reduce the cost of production as well as marketing its contents. This will increase revenue and reduce expenses hence the profitability of the company (Mark and Mitchel 12).

Who is likely to want to purchase Audible outright? Why?The most likely company that can purchase Audible outright is Amazon. Amazon has become one of the leading booksellers in the world through the Internet and by purchasing Audible it can maximize its sales by selling audio contents

How can Audible become a profitable company

Audible can become a profitable company by forming partnerships with digital content companies who have a well defined market to increase its market share and hence sales revenue. The company should also diversify its products and services to cover the larger target market and this will increase profitability of the company.Works CitedMark, Ken and Jordan Mitchel. AUDIBLE.COM. Case Study. Ontario: Ivey Management Services , 2004.