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Assess the consequences to a business, such as Spotify, operating in a dynamic market - Edexcel - A-Level Business - Question 1 - 2019 - Paper 1
Question 1
Assess the consequences to a business, such as Spotify, operating in a dynamic market. Dynamic markets are those subject to rapid and fundamental change over a shor... show full transcript
Worked Solution & Example Answer:Assess the consequences to a business, such as Spotify, operating in a dynamic market - Edexcel - A-Level Business - Question 1 - 2019 - Paper 1
Step 1
Consequences of a dynamic market
Answer
Businesses like Spotify face opportunities from new developments, such as video subscriptions, that allow them to attract new customers. The swift changes in consumer behavior prompt companies to focus on niche and high-end services, enhancing their offerings with immersive technologies. Furthermore, the evolution of listening devices from smartphones to smart home devices creates new avenues for competition.
Step 2
Potential counterbalance
Answer
The dynamic nature of the market influences Spotify's product offerings, including music, video, and virtual reality. Despite launching five new music subscription services between 2015 and 2017, none have been successful in achieving profitability, highlighting the challenges of managing marketing costs and competition in a rapidly changing landscape.
Step 3
Potential judgement
Answer
Firms like Apple and Google may operate at a loss to increase their subscriber base, complicating the landscape for Spotify. It is crucial for Spotify to conduct thorough market research to maintain profitability and navigate the evolving demands of the dynamic market.