Newspaper Industry System - Case Study Example

Newspaper Industry Analysis Executive Summary The newspaper industry has been of great significance in earlier times as it offered diverse news to the readers. However, the industry is now is facing numerous challenges and experiencing decline in various aspects. Various factors inhibit the significance of the newspaper industry in developed economies. The report ascertains that modern technology especially the internet is demeaning the significance of the newspaper industry in the developed economies in a great way. However, the effects of the internet are variant and do not affect the Indian newspaper industry and other developing economies. Table of Contents Introduction 3 Findings 4 Description and Benefits of PEST Analysis 4 PEST Analysis for the Newspaper Industry in the Developed Economies 5 Political Factors 5 Economic Factors 6 Social Factors 6 Technological Factors 7 The Meaning of the PEST Analysis for the Newspaper Industry 8 SWOT Analysis of the Guardian 8 Strengths 8 Weaknesses 9 Opportunities 10 Threats 10 Describe Lewin’s Field Force Analysis 11 Field Force Analysis for the newspaper industry in the developed world concerning the use of the internet 11 Driving Forces 11 Restraining Forces 11 Recommendations to Reduce the Strength of the Obstacles 12 The Indian Newspaper Industry 12 Conclusion 13 References 15 Introduction In the developed economies, the newspaper industry is going through a period of change. Yet whilst the industry is going through a period of change in the developed economies, in other economies such as India the story is different. The modern newspaper industry is facing structural challenges and fundamental transformations where they experience a long-term decline in circulation volume in paid titles as advertisers move to modern means of advertising. As such, newspaper publishers across the globe are facing a decline in: Newsprint prices Advertising revenues Titles Circulation Notably, the innovation and adoption of the internet derive the greatest losses to the newspapers where in developed economies circulation has been falling for a long term (PricewaterhouseCoopers 2009, p. 9). However, in other countries like India, newspaper sales are rising (Mallet 2013, p. 1). Notably, most young people are spending most of their time in the internet where they get the news online instead of reading newspapers (The Economist Newspaper Limited 2006, p. 1). Although, newspapers are yet to shut down in large numbers, we can expect that in the near future, most of the largest newspapers will close business especially in America. Nevertheless, the newspaper publishers are still trying to remain afloat and reduce operational costs by: Spending less on journalism Investing in free daily papers Trying to attract younger readers Trying to create new businesses on- and offline Raising the price of their subscriptions and news-stand copies The Guardian is a British national daily newspaper, which started publishing in 1821. The Guardian has grown to a national paper that deals with a complex organisational structure and international multimedia and web presence (Guardian News and Media Limited 2013, p. 1). Indeed, it is one of the world's best-selling international weekly newspapers, which provides relevant and updated information on international news, politics, entertainment, culture, and comment (Guardian News and Media Limited 2013, p. 1). More than 200,000 people in over 100 countries read the Guardian Weekly (Guardian News and Media Limited 2013, p. 1). To analyze the position of the newspaper industry in the current scenario, I will use the PEST analysis and Lewin’s Field Force Analysis. I will also use the SWOT analysis to analyze the British newspaper The Guardian. Findings Description and Benefits of PEST Analysis The PEST analysis will refer to the analysis of macro-environmental factors that influence the newspaper industry which include: Political Economic Social Technological analysis The PEST analysis is beneficial to a business as it helps in analyzing the external factors that helps in making decisions and designing business plans. Indeed, PEST analysis helps in understanding market growth or decline, which consequently defines the changes, potential, and direction for a business (Qin 2010, p. 467). PEST Analysis for the Newspaper Industry in the Developed Economies Political Factors The changes in government influence in the developed economies have a huge significance in the newspaper industry since they affect the newspaper publishers. Changes in government influence can bring business opportunities in the newspaper industry. In developed economies, nations have broadband connections and most people are online thus threatening the newspaper industry with the new technology (PricewaterhouseCoopers 2009, p. 11). Some developed economies offer substantial subsidies to promote the newspaper industry for example in Ireland where the government subsidizes the Gaelic-language press (The State of the News Media 2011, p. 1). Austria equally offers subsidies to the newspaper industry where it reduces distribution costs and trains journalists with a view of stabilizing the print industry (The State of the News Media 2011, p. 1). Changes in American retailing like in Big Box Stores affect the newspaper industry in diverse ways (The State of the News Media 2011, p. 1). Economic Factors Fluctuations associated with general booms and slumps in economic activity influence the newspaper industry. Between 2007 and 2009, the newspaper industry faced challenges in the developed economies like in U.S and U.K. In U.S, there was an estimated drop of 30% in revenues from online and offline circulation and advertising (The State of the News Media 2011, p. 1). In U.K, there was an estimated decline of about 21% in revenues from online and offline circulation and advertising in the same period (The State of the News Media 2011, p. 1). In other European nations where families own newspapers and private money cushions the newspapers industry, they felt the effects of the global recession but survived the onslaught, as they did not have high debts. The economic structure in the developed economies affects the country’s newspaper industry. For instance, the American newspapers are more dependent on advertising, and hence suffer a lot from the challenges in the newspaper industry (The State of the News Media 2011, p. 1). Social Factors Changes in consumer behavior, tastes, fashion, and lifestyle influence the newspaper industry in the developed economies The age structure, population growth rate, and career attitudes in the developed economies also affects the newspaper industry The new age structure of 15 and 24 spend about 30% less time reading national newspapers once they start using the web. More young people in the developed economies are getting their news online thus jeopardizing the newspaper industry (The Economist Newspaper Limited 2006, p. 1).  There is general rush and change in behaviour and style where the internet is seducing readers to advertise and read online news (The Economist Newspaper Limited 2006, p. 1). Classified advertisements are quickly shifting online in developed economies, as readers keep moving online. As a result, revenues of newspapers continue to fall in developed economies that opt for modern media. Organizations are now using tablets and other mobile devices to make paid digital subscriptions, which are more attractive than newspapers adverts. However, the rise in literacy rates is creating a potential of new readers who test their literacy levels by reading newspapers (The State of the News Media 2011, p. 1). Technological Factors The creation of databases, electronic communications, automation, and the rate of technological change influence the newspaper industry in the developed economies. The innovation of the internet reduce the reliance on news from newspapers as more people shift to getting news online (The Economist Newspaper Limited 2006, p. 1). The rise of digital advertising reduced returns from newspaper advertisements as readers and advertisers adopt to the more effective and effective digital advertisements. The newspaper industry is seemingly using outdated technology compared to the recent automated technology seen in tablets, electronic communications, and other mobile devices that the modern world adopts (The Economist Newspaper Limited 2012, p. 1). However, the newspaper industry in the developed economies is also using modern technologies to establish web presence. The Meaning of the PEST Analysis for the Newspaper Industry The analysis shows that political factors are promoting the newspaper industry in the developed economies as the governments offer subsidies to the newspaper industry. However, the changes in economies like in America retailing and changes to broadband connection inhibit the newspaper industry in developing economies. Moreover, the economic structures, global economic recession, and the dependence on advertising limit the newspaper industry. The social factors where most young people and the general society is shifting to online news and advertising demean the newspaper industry. Ultimately, the technological factors that include the increased use of the internet, digital advertising, and electronic communications limit the development of the newspaper industry in the developed economies. As such, the newspaper industry is under siege in the developed economies. SWOT Analysis of the Guardian Strengths The Guardian offers wholesome news relating to international news, politics, entertainment, culture, and sports (Guardian News and Media Limited 2013, p. 1). It attracts international recognition for the quality and independence in reporting and groundbreaking digital innovation (Guardian Media Group 2013, p. 1). The Guardian is currently the newspaper of the year and has been the best newspaper site in the world (Guardian Media Group 2013, p. 1). After the Second World War, the Guardian became one of the important ways to spread democracy among the Allies. The Guardian Weekly has more than 200,000 readers in over 100 countries (Guardian News and Media Limited 2013, p. 1). The newspaper covers global events and addresses the plight of the marginalized and poor (Guardian News and Media Limited 2013, p. 1). Readers can get a free delivery of the newspaper each week, wherever they are in the world. Readers can also access the digital edition of the paper in the internet (Guardian News and Media Limited 2013, p. 1). Guardian writers are free to present the truth unconditionally without the interference by shareholders or any external forces. The Guardian has an internal ombudsman who responds to the complaints and corrections. Weaknesses The Guardian is not available in all countries and in different languages. It faces numerous accusations on biased criticism of Israeli government policy and discrimination against Hasidic Jewish. Some Guardian reporters, writers, and editors use discriminatory language against the Jews or Israel. Opportunities The Guardian adopted the Guardian News & Media’s digital-first strategy to expand its global audience (Guardian Media Group 2013, p. 1). It can collaborate with other news sources like WikiLeaks, Observer, the Washington Post, and Le Monde (Guardian News and Media Limited 2013, p. 1). It launched the website Guardian America and Guardian US to enhance its operations. The owners of the Guardian, Scott Trust reinvest profits into the Guardian and attract considerable support from anti-war readers (Guardian Media Group 2013, p. 1). It is now an international media organisation with a new Berliner design. Threats It has valuable competitors with huge market presence and international recognition like the Daily Telegraph and The Times, and The Independent. The owners of the Guardian also own numerous media, which lowers their concentration on the Guardian newspaper. The Guardian has been consistently loss making. Technological innovations like the internet and digital media limit the reliance on the Guardian and other newspapers. Describe Lewin’s Field Force Analysis The Force Field Analysis provides a framework which analysis the factors that influence the situation of a company in the modern market. It analyzes the forces within the organization which drive a person towards or away from a desired state, and which oppose the driving forces thus helping in decision-making (Coghlan, & Brannick 2009, p. 140). Field Force Analysis for the newspaper industry in the developed world concerning the use of the internet Driving Forces The streamlined organization structures support the use of the internet in newspaper industry. Institutional policies and strategies like digital-first strategy support internet use in newspaper industry in the developed world. The developed nations like U.S and U.K have enough resources to support the digitalization of the newspaper industry. Such countries have access to broadband internet and large search engines like Google that would support the newspaper industry (PricewaterhouseCoopers 2009, p. 6). There is an urgent need to avail real-time and correct information to the increasing readers. Changing markets demand for changes in the newspaper industry. Readers in the developed nations need improved services, quality news, and updated information that the internet platform supports. Restraining Forces Most people or the social trends move towards modern media like TVs, internet, and social sites. More people opt for web-based news through mobile, notebooks, and tablets due to its relevance and correctness. People have a negative attitude against the use of internet in the newspaper industry. Web portals, bloggers, and social sites as Facebook offer up-to-the-minute updates. The use of internet in the newspaper has limitations where the internet edition is also below par. The web editions in the newspapers industry is very sketchy and lack regular updates. The newspaper industry is cutting costs thus limiting the effectiveness of their web editions. Recommendations to Reduce the Strength of the Obstacles Invest more on the driving forces by availing relevant resources and avoid cutting costs. Ensuring the constant detailing and updating of the web editions in the newspapers industry. Enhance improved use of the internet and modern technologies. The Indian Newspaper Industry The Indian newspaper industry is not facing the same challenges as those in the developed economies because of the following factors: Growth in literacy levels in India from 35% of the population in 1976 to 82% in 2009 (The State of the News Media 2011, p. 1) Increasing population that offers a great market (Mallet 2013, p. 1) Rising income levels and disposable income that allows Indians to afford the newspaper Improved employment opportunities Rise of the middle class that increased interest in reading newspapers Initiation of vernacular languages and vernacular dailies in neglected towns and villages (Mallet 2013, p. 1) Reporting local affairs and sponsoring local projects that encourages Indians to read newspapers (Mallet 2013, p. 1) The low cost of Indian newspapers Lack of accessible broadband internet in areas where Indian newspaper circulation is on the rise (Mallet 2013, p. 1) Conclusion The report shows that the newspaper industry in the developed economies is subject to structural challenges and fundamental transformations it experiences a long-term decline in circulation volume in paid titles as advertisers move to modern means of advertising. The internet is the greatest technology that most young people are adopting thus inhibiting the newspaper industry. Additionally, there are political, social, economic, and technological factors that limit newspaper industry. However, Indian newspaper industry is not facing the same challenges as the developed economies because of the growth in literacy levels, improved employment opportunities, initiation of vernacular languages and vernacular dailies in neglected towns and villages, and reporting local affairs and sponsoring local projects. As such, to limit the decline in the newspaper industry, developed countries should improve employment opportunities, initiate vernacular languages, and vernacular dailies in neglected towns and villages, and report local affairs and sponsor local projects with a view of encouraging people to read newspapers. References Coghlan, D & Brannick, T 2009, Doing Action Research in Your Own Organization, SAGE, New York City. Guardian Media Group 2013, The Guardian. Retrieved 24 October 2013, Guardian News and Media Limited 2013, About Guardian Weekly. Retrieved 24 October 2013, Mallet, V 2013, ‘India’s newspapers shrug off industry woes,’ The Financial Times, 13 August 2013, retrieved 24 October 2013, < http://www.ft.com/intl/cms/s/0/436ce7f4-027d-11e3-880d-00144feab7de.html#axzz2idksx9OA> PricewaterhouseCoopers 2009, Outlook for Newspaper Publishing in the Digital Age. Retrieved 24 October 2013, < http://www.pwc.com/en_GX/gx/entertainment-media/pdf/NewsPaperOutlook2009.pdf> Qin, Z 2010, Introduction to E-commerce, Springer, New York City. The Economist Newspaper Limited 2006, who killed the newspaper? Retrieved 24 October 2013, < http://www.economist.com/node/7830218> The Economist Newspaper Limited 2012, News adventures. Retrieved 24 October 2013, < http://www.economist.com/news/business/21567934-after-years-bad-headlines-industry-finally-has-some-good-news-news-adventures> The State of the News Media 2011, Why U.S. Newspapers Suffer More than Others. Retrieved 24 October 2013, < http://stateofthemedia.org/2011/mobile-survey/international-newspaper-economics/> Read More