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Comparing SM and YG Entertainment

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by

Carolyn Chang

on 8 August 2013

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Transcript of Comparing SM and YG Entertainment

SM and YG Entertainment
Founded by Lee Soo Man in 1989
Houses idols such as SHINee, Girls Generation, Super Junior, TVXQ.
YG's Reputation
Originally known for their hip-hop image at first
Currently known for letting their artists appear on variety shows the least, as well as their dynamic music that they produce in-house.
Involved in marihuana scandals in the past.
Catchy songs
All of their idols are good looking.
Known for their slave contracts, and people leaving their company (JYJ, and Hangeng).
SM was the top entertainment company, but recently, YG has overtaken the top positions.

SM's Reputation
5 Forces of SM Entertainment
Threat of Entry
Low threat of entry
Capital requirements of entry are high
SM already has several talented artists
SWOT Analysis of SM Entertainment
Strength:
Artists and celebrities are extremely good looking, draws in more fans.
Send celebrities onto Korean Shows to gain popularity
SM has the most actors, singers and models signed in the industry.
5 Forces of YG Entertainment
SWOT Analysis of YG Entertainment
Strengths
Korean wave in Asian countries (Hallyu Wave)
Positive and upbeat lyrical themes
Creates new trends
Less capital than other industries.
Produce their own music

Founded by Yang-Hyun-Suk
Founded in 1996
Known for signing PSY, well known K-Pop Star
Houses artists such as BIGBANG, 2NE1, Epik High
Mission Statement: Become a brand that brings a valuable change to the lives of everyone around the world based on YG Spirit.
Vision: Witness the Change
Introduction
SWOT Analysis of SM
Weaknesses
Generate 'catchy' songs opposed well written songs
Lip-Sync
They focus more on the looks of the performance, more dancing, less quality singing.
SWOT Analysis of SM
Opportunity
Penetrate more into the US Music Industry, similar to PSY.
Introduce meaningful music, attract a new group of fans
Conclusion & Recommendation
SWOT Analysis of SM
Threats
YG
JYP
Slave Contracts
Having artists work too hard
5 Forces of SM
Buyer Power
Switching cost is low
There are other entertainment groups
Buyer can "shop around"
Yet, buying power may be low, since SM has several artists and is very popular.
5 Forces of SM
Supplier Power:
Song Writers
Producers
Behind the scenes
5 Forces of SM
Threat of Substitutes
YG Entertainment
JYP Entertainment
Other music genres

5 Forces of SM
Competitive Rivalry:
Competition amongst other entertainment groups
Differentiation
Market Growth
SWOT Analysis cont.
Weaknesses
Cultural Differences
A lot of competitors
Illegal Copies
Closed communication between YG and Korean Broadcasting companies
SWOT Analysis cont.
Opportunities
Internet and Social Media
Various promotions
Many fans who like one group in YG Entertainment, tend to like the other groups that debut under YG Entertainment
Fan Loyalty

SWOT Analysis cont.
Threats
Sustainability
Scandals and Rumors
Trend is changed rapidly
Fans think that their music is trying to imitate Western style music
More competition, due to more groups debuting every month.
Potential Entrants
New(er) Entertainment companies
Low threat of entry
Capital requirements of entry are high
YG has several talented artists
5 Forces Cont.
Buyer Power
Buyer power fluctuates, as they are the consumers of the music that YG produces
The threat of fans switching their favorite artists is higher, with so many newer groups debuting.
Switching cost is low
There are other entertainment groups
Buyer can "shop around"
5 Forces Cont.
Threat of Substitutes
Other entertainment companies, such as CUBE, JYP, SM, Woollim, etc.
5 Forces Cont.
Competitive Rivalry:
Competition amongst other entertainment groups
Differentiation
Market Growth
5 Forces Cont.
Suppliers
Produces music in house, as well as collaborations with Western producers, such as Diplo.
Usually takes YG artists longer to produce an album.
YG's Stock Performance
SM's Stock Performance
Gaps in Reputation:
YG
YG's desired image is to be seen as an entertainment that is caring, warm, and guarantees of trainee's success. The desired image is somewhat similar to the image seen by public however, involvements in past scandals have affected their image in a negative way.
Gaps in Reputation:
SM
SM's desired image is also very similar to YG's image. They want to show public that every trainees will be successful after getting trained by SM and holding the most talented singers in Korea. Yet, the public recognition is quite different. Many people think SM has less skillful and talented singers since they mostly focus on the mass appeal over the quality of performance.
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