Executive world. Therefore, Sonic was seeing the


            For decades, Sonic
Records has been a front-runner in the music-industry.  To keep up with the changes to go
electronically, they will be teaming with an online music store.  They went with this decision because of the change
in this industry as there is less demand for CDs that are being sold in
stores.  In order for Sonic to continue
to succeed in this industry, the subsidiary needs to be formed. 

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            Sonic’s competitors have already been using this method
for years now but, Sonic has now chosen to take this step into the Internet
sales.  ITunes is an industry that is on
top of the times and can be a downfall for E-Sonic as they are behind.  However, E-Sonic is an Internet based
business which will have no issues going global.  As long as E-Sonic uses low-cost announcement
areas to target culturally responsive music, they will be successful. 

            E-Sonic will be able to attain excellent workers with a
background in music as the labor market has improved since 2009.  There has been a Human Resource department
within Sonic for many years and they will hire workers who will fit well in
this culture.  They will also guide the
workers who are selected to divide with the subsidiary. 

Strategic Analysis

            According to the
North American Industry Classification System (NAICS), there are a few codes
that E-Sonic would fall under.  First,
code number 334614 which is Software and Other Prerecorded Compact Disc, Tape,
and Reproducing (NAICS).  Second, code
number 454111 which is Electronic Shopping (NAICS).  Finally, code number 512230 which is Music
Publishers (NAICS). 

External Market Environment


            Over the last
several years Sonic has seen a decrease in demand for CDs (Martocchio, n.d.).  New era of downloading music came available,
free streaming of music, music stations such as Pandora and iHeartRadio, and
burning CDs on computers were a major part in why CDs were decreasing.  Consumers have switched from having CDs to
more current way of the music world. 
Therefore, Sonic was seeing the decrease in revenue and knew they had to
get on board which is where E-Sonic comes in.

            E-Sonic’s strategy is to quickly grow to keep up with
their competitor’s growth.  Sonic was
determining whether or not to start E-Sonic, so they did some comparing to a few
other businesses and the CEO at the computer firm stated, “We had hoped to sell
a million songs in the first six months, but we did that in the first six days”
(Martocchio, n.d.).  Furthermore, Sonic
had their doubts of starting the subsidiary because people were electing to
download music illegally.  However, piracy
music was seeing a lot of legal issues such as lawsuits that made this
situation decline.  Therefore, Sonic made
the choice to capitalize E-Sonic because of the decreasing income from the pirated
music and customers started to steer towards MP3’s.


            Since E-Sonic
began selling music online later than their competition, this puts them in a
spot where they will have significant competition.  E-Sonic’s biggest competitor will be iTunes
because everyone is familiar with Apple and their name is known globally.  This business has the same aims as
E-Sonic.  Pandora would be another top
competitor as they offer a free service because it is paid for by
advertisements and the customers have an option to pay to skip those
advertisements.  Also, Sirius XM is an
Internet radio that is available to customers which can be added to a vehicle
in replacing CDs.  Sirius is another
well-known business.


            E-Sonic will be
able to reach a wide spread of new customers through Internet sales.  By being a part of this they will be able to
reach these customers all over the world and not having the overhead
expenses.  Additionally, digital
distribution allows these businesses to expand to customers outside their
target marketplace.  By changing to
digital transactions will advance E-Sonic to a range of current talent they
have in their parent business.  Positions
will need to be formed within this business with technology background and
specialists in the digital world along with networking.  E-Sonic’s best approach might be acquisition
a foreign base in the online music industry. 
E-Sonic will be able to present a business at home once they are
reputable along with high excellent faculty. 

Industry Prospects

            The long-term
viewpoint for E-Sonic looks to be optimistic. 
E-Sonic has financial support from a top leading music business and
production dynasty known as Sonic Records. 
They will support E-Sonic with endless resources that their competitors
did not have when they started in this marketplace. Just last month, E-Sonic
has already contacted a successful IPO and has the financial backing of a
business that has a solid reputation, in addition to their executives having
reputable contacts with all of the major record labels and most of the smaller
ones (Martocchio, n.d.).  The global
music revenues are remaining to rise after more than ten years of being
established.  The global recorded music
market grew by 5.9% in 2016, the highest rate since IFPI began tracking the
market in 1997 (IFPI, 2017).  Digital
income now accounts for 50% of global revenues (IFPI, 2017).  112 million users of paid streaming subscriptions
driving streaming revenue growth of 60.4% (IFPI, 2017).  Looking at this data, the digital downloads
and revenue will be staying successful for many years to come.  With that being said, E-Sonic will need to
remain to multiplicity its offerings to continue being competitive in this
marketplace, and not fall behind yet again. 


            E-Sonic is just
starting out and they will need to expand the labor force.  “The formula for success in the industry has
proven relatively simple.  Superior
marketing, a robust selection of artists, and a user-friendly web interface
helped current firms establish their market leadership (Martocchio, n.d.,
p.6).  In order for E-Sonic to be
successful, they will need to recruit talent with a music background or
business degree.  The management team for
E-Sonic is new to the digital era which includes software enhancement and
online advertising. 

the recruiting needs to be based off these two areas first to ensure an
effective platform for buyers.  The
location for E-Sonic is in the perfect place to recruit talent.  “Located in Los Angeles, e-sonic hoped to
recruit the best and brightest of the music and software development industries
(Martocchio, n.d. p.7).  This business is
in a larger city and if they will need to present competitive incomes and
benefits.  Having the employment rate low
E-Sonic will be able to the top talent that they need to get them off the
ground.  Furthermore, with the financial
backing from Sonic, E-Sonic will have the funds to offer solid rewards to
employ and retain the talent required.  The
other stations that they will need to recruit for are customer service
representatives, IT assistants, and web developers. 

average salary for a software Developer in Los Angeles, California is $78,443
per year.  People in this job generally
don’t have more than 10 years’ experience. Experience has moderate effect on
this job (PayScale, n.d.).  The average
pay for a web designer in Los Angeles, California is $54,823 per year. A skill
in Web development is associated with high pay for this job (PayScale, n.d.). 

of Internal Capabilities


            It is tough on businesses going from a brick and mortar
storefront to digital.  The requirements
from all involved are high, there needs to be a lot of strategic planning and
successful publicizing.  The management
team will need to communicate and focus on some of the high-tech add-ons along
with the online positions that they did not have before.  By familiarizing the functional capabilities
of E-Sonic will show to be the step they need to be successful.  By evaluating the departments of the
engineers, human resources, and developers will place them in the direction the
company wants to go.  The management team
have an objective which are downloads and the ability to purchase music
online.  The online retailer competition
will be extreme and is why it is important to have a reward that reflects the
skills of the individual that is needed for this business.  There’s a saying, “you get what you pay
for.”  E-Sonic will need to have a team
of talented employees and ensure they retain them as this should be a part of
their reward strategy. 

Resource Capabilities

            The Human Resource
department will need to ensure they are recruiting the best talent for E-Sonic
as well as Sonic.  The work force of
these two businesses should mirror the successful evaluation of assets and
weakness to remain to be an industry front-runner in music.  Human Resources personnel will need to work
with the employee in this business to see what will be needed from them, to
develop them, as well as showing them how to use the systems.  This will help the employee’s get information
and they will understand why it is important to retain crucial employees.  Also, the Human Resources personnel can
develop the reward program that will move E-Sonic in the right path of what the
business wants.

            The Human Resources personnel will be involved with
employee engagement and ensure all employees are getting what they need to
succeed.  They will be there to ensure
all departments are fully staffed and to create job descriptions for each
position.  Within these criteria’s they
will ensure the business does not come into any legal situations.  Therefore, the Human Resources department is
a vital part of the business.