Nowadays, there is a significant development in field of technology which has made a drastic change in the lifestyle consumer behaviour due to which the lifestyle of common people have been much easier. Therefore, the music industry had made unimaginable wonders in human's life. Music has become part of our lifestyle and we can feel the difference.
EMI is one of the world's top music companies and best known for different recording lables, artists, songwriters and music catalogues. In the course of their own music company they are able to serve our artists, writers and consumers all over the world. EMI is one of high street retailer of UK in the music industries with having global branches in different countries. It holds huge reputation in UK market by focusing on sales of music. EMI is not only the manufacturer of music but it act as distributors in the market as it market share is less but hold a position of brand in the market in this competitive world. EMI offers stylish, high quality music and sound recording with providing outstanding service especially their own brands since last 3 decades.
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EMI is organised into two core divisions: EMI Music which specialises in signing, developing and promoting recording artists and their recordings, and other is EMI Music Publishing which specialises in signing, developing and promoting songwriters and their songs.
2.0 Operating Finanacial Data (Summerised)
before exceptional items
206 2.1 Operating P/L
before exceptional items
Source: 2003-2007 figures taken from EMI Group PLC 2007 Annual Report
Source: ANNUAL REVIEW 2009/10 MALTBY CAPITAL LIMITED
3.0 EMI Music as a System
3.1 Internal Structure:-
As an organisation EMI music is alos having departmental structures on different management levels. As per company is having its higher management level which was having a very important impact on the control of the company. After acquisition by MALTBY Capital Limited company has modified many of its operating policies. Its internal structure became more effective to control and for operations of different management levels. It has adopted the effective process of communication to make understandings between all of its departmets easily. Mainly they are having departments of people who can manage development and innovations required for music. Though EMI music is facing many difficulties since last three - four years. It is suffering from loss since last two years and it is now becoming difficult for EMI music to manage it.
As a music company the management level of the organisation has to work for the input required for the output to earn income. The management level is working on the different input sources required for production of music like to tie up with some singers, music composers and other technical experts required to do every work required. As per the EMI music they are having their comtracts and tie ups with some very big and famous names in the music industry like David Guetta, Katy Perry, Norah Jones and The Beatles.
3.3 Production Departmets:-
EMI music is having good recording facilities to record songs and it is having a very good technical staff to handle all the process of recording and manufacturing. It is also launching its new recording facility to help the customers to buy music instantly. It is trying to record and produce music instantly from the live shows and after finishing the show they are looking forward to provide the music to the audience of the show to purchase instantly. EMI music is looking forward to apply new policies to reduce their production expences though they are having advantages in the usage of latest technologies.
3.4 Publication of Music:-
Always on Time
Marked to Standard
Emi music is no. 1 music publishing company in the world. It is having over 50 artist to publish their music. EMI is having more publication than Sony Music annually. The advantage for having such annual output of production is the technological advantages the company is having. EMI music is having its publication houses in Unitd Kingdom and United States of America with annual publication more than Sony Music.
Application of Porters 5 Forces
Threat of New Entrants
Power of Buyers
Power of Suppliers
Threats of Substitutes
According to the music industry we have considered here it is threatning for the company to face and to tackle new entrants to stay in the market.
The power of buyers always effects any company. In the case of EMI as a music producing company the buyers always effects its performance because buyers always considers prices so to make the market share safe it is always have to be considered about the prces of their products in comparison of their competitiors.
It is always said competition is not healthy for companies. Competitive rivelry is benificial for the company because if competitiors reduces their prices in case of increasing the market share and for that they might do the mistake to maintain the quality. This can also happen with our own company. So it will both positively and negatively effetct the company
The company always considers the prices in which it gets the meterials from the suppliers. In this case company has to fix margins at either quality or price to maintain. So if company sacrifices quality it will effects its sales and profit. If it is considered to price it will deffinietly effects sales and profit because of low price the sales will increase and with increased sale the profit will automatically increase.
The major substitute in music industry is not a proper substitute but nowadays people uses it very much it is called as PIRACY. It is having a major negative impact on the company. People get all the music and other publications free of cost so it effecs majorly on revenue and profit.
4.0 Financial Performance:-
EMI music as a music producing company is having its financial data with some good figures and some bad figures. While eying on its revenue it is having huge revenue every year but when it comes to profitability there are no good news about this company.
Taking concederation the data of 2009 and 2010 (Annual Report 2009-10 MALTBY Capital) company is earnong the gross profit but after remaining accounting treatments the company is having losses only. It is having around 67.30% change in its loss after tax payment. It is having a huge figures of loss in last few years and if it has earned profit, it is not as much as to which we can tell is an amount of profit.
EMI music is having liquid assets but its liquidity is not as per it can use as per its requirement in aany circumstances. Because of losses faced by the company it is not having liquidity in case of investments and other liquid requirements. It is having imapairment of intengible assets on a quit large bases and that is the main thing because of the company is havong losses since last few years overall and unable to use the liquidit of its assets.
PESTEL Objects which can effect the Company
PESTEL Thing which may change
Frequency in how this will change (1-5)
Impacts by dynamics
Importance or impact/Relevence-
Very high, High, Medium, Low, Very Low
Which area of an organisations finance is it likely to effect(B/S, P/L, C/F)
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As per the performance of the company since last few years and as per its reports company is having a weak management system. It has to improve its technology adaption process to lower the cost of production and it must have adopt a better marketing policy to improve the sales. Management have to allocate the assets as per their requirements and must have to utilize the sources available for them. EMI music still needs to work on allocations of their assets according to their needs which still needs to be understood by the management.
EMI as a music company and despite having its sales on the top of the market still suffering from severe loss. It is having many operational problems because of its weak management systems. It is having advantages with many intellectual properties like it is having copyrights of many composed musics anf lyrics etc. It is having good marketing strategies then its competetors and human resource.
(before restructuring charges and fair value adjustment in 2008)*
% EBITDA / Revenue
(after restructuring, depreciation & amortisation but before impairment of goodwill and intangible assets)
(after impairment of goodwill and intangible assets)
Cash flow generated from operating activities
CASH FLOW FOR FOUR YEARS
Year ended 31 March 2010*
Year ended 31 March 2009*
Cost of sales
Fair value adjustments
Loss from operations
Total finance charges
Loss before tax
Loss before tax
Loss after tax
PROFIT AND LOSS
Balance sheet of EMI Music
Music catalogues and other intangibles
Property, plant and equipment
Investments in associates
Corporation tax recoverable
Cash and cash equivalents
Trade and other payables
Corporation tax payable
Other provisions for liabilities
Other financial liabilities
Net (liabilities) / assets
Capital and reserves
Foreign exchange reserve
Equity attributable to equity holders of the parent
Calculations of ratios
net income after tax
Loss after tax
EMI was suffering from loss in 2 years
2010 it lost less than 2009
In the report page 79 its impairment of intangible assets are too large, that's the reason of it lost too much.
Profit margin 2010=EBIT/Sales revenue=334/1651=0.202301635
2009= EBIT/Sales revenue=293/1569=0.186743149
Asset utilization 2010=Sales revenue/total assets=1651/5484=0.301057622times
2009=Sales revenue/total assets=1569/6468=0.24257885times
Gross margin 2010=Gross profit/Sales revenue=726/1651=0.439733495â‰ˆ0.44 not change much
2009=Gross profit/Sales revenue=692/1569=0.441045252â‰ˆ0.44
Current ratio 2010=current assets/current liabilities=921/76=12.11842105
2009=current assets/current liabilities=931/115=8.095652174
Liquid ratio 2010= current assets- trade receivable /current liabilities
2009= current assets- trade receivable /current liabilities
Return on equity 2010=net income after tax/total equity=222/-636=-0.349056604
2009=net income after tax/total equity=107/98=1.091836735
ROCE 2010 =EBIT/Capital employed=334/3927=0.085052203
2009 =EBIT/Capital employed=293/5635=0.051996451