Analysis of the Newspaper Industry - Term Paper Example

? The Newspaper Industry Executive Summary The newspaper industry is now under threat with its main business of selling advertisement space and words to readers falling apart. There has been falling circulation in New Zealand, Australia, Latin America, Western Europe, and the US for the last few decades, although there are rising sales, for example, in India. This business report begins from this point and continues to perform a PEST analysis on the newspaper industry in developed countries with an aim of discussing the political, economic, socio-cultural, and technological factors that impact the industry. This is then followed by a SWOT analysis, which is a more thorough approach to understanding the current situation of the newspaper industry in the developed world. In order to get a clearer picture, the SWOT analysis is carried out on the Guardian Newspaper, which is a perfect example for the newspaper industry in the developed world. Lewin’s force filed analysis was then carried out on the impact of the internet on the industry; especially sine is the most significant factor affecting the newspaper industry today. Finally, drawing from the force field analysis, the report discusses the reasons for the continued growth of the industry in India, which is largely due to the low penetration of internet services in the country. Table of Contents Contents Page 1. Executive Summary……………………………….2 2. Introduction………………………………………..4 3. PEST Analysis of the Newspaper Industry……….4 4. SWOT Analysis of the Guardian Newspaper……..7 5. Lewin’s Force Field Analysis……………………..9 6. Newspaper Industry Success in India…………….11 7. Conclusion………………………………………..12 8. References………………………………………...13 THE NEWSPAPER INDUSTRY Introduction The newspaper industry for a long time set the agenda for the news for most of the other media forms. However, the newspaper industry is now under threat with its main business of selling advertisement space and words to readers falling apart (The Economist, 2006: p1). The internet has affected all forms of old media but has probably impacted newspapers the most. There has been falling circulation in New Zealand, Australia, Latin America, Western Europe, and the US for the last few decades, although there are rising sales, for example, in India. This decline has been hastened by the advent of the web, particularly since most young people now prefer to get their news from the web (The Economist, 2006: p1). This business report seeks to carry out a PEST analysis of the newspaper industry in developed nations, a SWOT analysis for the Guardian Newspaper, which has one of the highest readerships in the UK, and carry out a Lewin’s field force analysis for the impact of the internet on the industry in developing markets. Finally, it will also discuss the reason for continued success of the Industry in India. PEST Analysis of the Newspaper Industry PEST is an acronym that stands for political, economic, social, and technological factors affect the operations of a business. After assessing these factors, business managers, can then identify the factors that pose risks or opportunities to inform their decision-making. It provides the context for the role of the organization in relation to its external environment. It also underpins various other analytical techniques such as scenario planning at micro-level, for example, individual or institutional, or macro-level like UK-wide, EU-wide, or worldwide (Meyer, 2012: p58). Depending on the scale and scope of the analysis, business managers consider the factors that influence changes, factors that will be important in the future, and those important at present. Its benefits to the business include spotting of business opportunities and revealing what direction change is taking in the environment to shape what is happening. Moreover, it helps the business to avoid projects that could end up failing and breaks free any assumptions business managers have about the industry by helping to create an objective view of the market and environment (Meyer, 2012: p58). With regards to the newspaper industry, political factors have a big impact, especially recently. Changes within safety and health regulations in most developed nations have also meant that there is increased emphasis on ensuring they comply (Meyer, 2012: p60). This is of special significance to newspaper industries due to the nature of the job with fast moving and unguarded machines, as well as high noise levels. Newspaper organizations, therefore, have to ensure they comply with these regulations to avoid compensation claims that could impact their bottom line. In addition, working time directives, especially in the European Community, have also affected the industry. Since newspapers have to be printed for twenty-four hours, some of the workers will have to work the night shift, which means they have to get annual health checks. Due to health reasons, some employees are not fit to take these shifts, which could affect newspaper organizations with regards to shifts since there is limited work during the day. Environmental regulations also affect the industry since it has significant levels of paper waste (Meyer, 2012: p61). It is important, therefore, for them to recycle the paper. Economic factors also have a significant impact on the industry. Newspaper companies will be affected by shifts in GDP, as well as shifts in various economic indicators such as exchange rates, interest rates, and inflation. The recent economic crisis that hit the developed world led to the collapse of financial institutions, which hit the industry hard in terms of advertising sales because most companies cut down on ad expenditure with decreased borrowing ability (Meyer, 2012: p61). The dual-business model of newspapers with readers and advertisers has ensured that the industry has been successful for a long time. After newspapers are sold to readers, the readers are then sold to advertisers. However, this is undergoing significant changes as changes in readers’ behavior drives a financial crisis. Readers are not willing to spend as much money and time reading papers, which is pushing advertisers to other media forms (Meyer, 2012: p62). Since advertising is a newspaper’s biggest source of revenue, and no other revenue stream being remotely close to replacing it. Socio-cultural factors also impact the newspaper industry, particularly with regards to the workforce. Changes in socio-culture also portend changes for recruiting new staff. These social forces include religious practices, traditions, trends, and societal values. Social forces could lead to anger and loss of trust towards newspaper organizations, as well as social disapproval like bad publicity, negative comments and campaigns on the internet, and boycotts (Meyer, 2012: p63). The newspaper industry finds itself caught between two trends; a tradition of readership and unwillingness by readers to pay for getting news they can get on the internet. While there is a generation that has grown up reading newspapers and will continue to do that, these habits are changing. Increasing rates of unemployment has led to many people abandoning the ritual of morning newspapers, and it is possible the next generation will not be drawn to the idea of reading newspapers. This is because the current culture is moving ever more towards the internet, which means people now get news on their mobile phones and personal computers for free (Meyer, 2012: p63). Finally, technological factors have begun to influence the operations of newspaper organizations. Technological factors like scientific innovations have varied effects on business, either creating threats or opportunities. While automation has led to staff reductions, it has also improved efficiency and made the process faster (Meyer, 2012: p63). Technological changes can either improve or decimate a business through a shift of demand from a particular product to another. As newspapers have moved from bulletins written by hand to gazettes, and finally online, they have survived the advent of TV and radio. Based on this history, it may seem that the industry can survive technological forces. However, the advent of the internet is a big threat, although the industry has seen it as an evil, which is necessary. The industry has been forced to follow the readers to the web, although it does not provide as much profit as print media. The technological future of the industry is on the internet and most newspaper organizations will be forced to embrace future technological innovations on the internet as they have had to do with social media (Meyer, 2012: p64). SWOT Analysis of the Guardian Newspaper Following the PEST analysis of the newspaper industry in the developed world, it is clear that the four factors have significant impacts on the industry. To better comprehend the current situation of the industry in the developed world, an approach that is more thorough should be carried out using a major newspaper organization using a SWOT analysis. The Guardian Newspaper has various strengths that make it competitive in the industry. First, it possesses a broad coverage of the market that spans the UK and the US with a select market of educated middle class people (Kelly, 2011: p166). It is also distinctive from its main competitors by its strong network of distribution, its wide variety of sizes, and its copy detail. The organization also has a selective editorial that is made up of famous writers from over the years, such as Karl Capek, Asa Briggs, Michael Billington, and Brian Aldriss. It also has a unique packaging that is easily recognizable and prominent, while also having an international resource base that is almost unrivalled in the UK. Its contractual agreements with foreign papers such as the Washington Post and Le Monde allows them to access unique stories, which enhances their ability to give worldwide news analysis (Kelly, 2011: p166). The Guardian’s weaknesses include a limited demographic segment for marketing, which is the educated middle class. This mature market does not seem to have much room for growth. The newspaper also lacks opportunities to expand, while its digital development has been of inconsistent quality (Kelly, 2011: p167). The newspaper is also very conservative and, while it is known for comprehensive news coverage, it is not known for attempting radical transformations. In addition, it is exposed to the various cycles of advertising. They have also found it difficult to monetize the products they offer online, lagging behind competitors like the Sun on this issue. The youth market does not pay much attention to the newspaper because of its conservative nature. In addition, the management seems to be more concerned with the controlling of costs, rather than the improvement of the product. Finally, their costs are quite high and seemingly inflexible (Kelly, 2011: p167). With regards to opportunities, the newspaper could expand its strong brand to the online forum. They also have the opportunity to avail their digital content to resellers, while also segmenting their diverse content in order to reach other niche markets that they do not have a significant presence in (Kelly, 2011: p167 ). The newspaper could also market their product to the youth who have not shown much interest in them, which they could do by availing more of their content on social platforms and mobile devices. They could also increase their usage of the internet for marketing and sales. The use of digital media could reduce their entry barriers to the young market. The Guardian Newspaper could also seek to expand readership past the UK and US, particularly in Asia where most political and economic changes are going on. Finally, it is also possible to collaborate with other papers on some of these issues in order to save costs (Kelly, 2011: p168). The threats facing the Guardian are primarily from competitors, especially the Telegraph, the Observer, and the Times. In addition, the advent of online newspapers provides a unique threat (Kelly, 2011: p168). It also seems that print media is becoming less appealing to the youth, while there is also their vulnerability to piracy over digital forums. Most people expect digital content to be free, which is another threat. The current economic recession also provides a threat to their bottom line. In addition, the move by advertising companies to the web, increased use of direct marketing, and increased print product VAT all pose a threat. Finally, the increasing influence of retail channels poses a threat (Kelly, 2011: p169). Lewin’s Force Field Analysis The force field analysis model describes the performance level at any given time as an equilibrium state between forces, which are encouraging movement upward and discouraging forces of restraint. Therefore, there are forces that promote change, while others discourage change and these are at equilibrium. The driving forces are economic, conscious, logical, reasonable, and positive changes, while forces of restraint include social, unconscious, illogical, emotional, and negative forces (Cryns, 2012: p33). The two sets of forces should be taken into account when reacting to, managing, or dealing with change. To achieve change, increasing the positive changes is not enough since those forces against will still be present, making it more difficult to take advantage of the driving forces. Therefore, change is easier if restraining forces are reduced (Cryns, 2012: p33). Lewin’s force field analysis can be used to decipher the changes caused by the internet in developing countries. Various forces promote the move to the internet for newspaper organizations in developing countries. First, the internet has the ability to provide additional news over the whole day compared to the newspaper that is released once or twice a day, which ensures the readers are updated day and night (Cryns, 2012: p34). The internet also allows for customization of news according to preferences and needs of personal readers. In addition, the readers can also be alerted via email when news of interest comes up, while also allowing for the posting of news with video. In developing countries, it also allows for news dissemination at minimal cost. It is also possible for the organizations to get data concerning popular news, aiding them to get grips of emerging news pertaining to consumers and their preferences (Cryns, 2012: p34). However, there are also forces that discourage the integration of internet into the newspaper industry in developing countries, such as reduced employment due to automation. The internet has also led to longer lapse times between papers. In addition, the internet has introduced the era of the bloggers, doing away with educated journalists. The advent of social networking has enhanced high-speed information transfer, which has threatened to cut out the newspaper completely. The internet also threatens to cut off completely advertisement money as advertisers look for other avenues. Finally, the internet has led to free classified websites like Kijiji and Craigslist, which have replaced the classifieds section (Cryns, 2012: p35). These factors have led to newspapers in developing countries to resist change. Newspaper Industry Success in India Despite these threats to the traditional newspaper industry around the world, the industry in India is still growing. This can be attributed to a booming economy and rising rates of literacy. The industry in India is expected to generate revenues of $4 billion in 2014, growing by 13% in the past five years (Jeffrey, 2012: p43). Poor penetration of the internet in India is another reason why readership of newspapers is growing, particularly when coupled with growing literacy and a booming economy. The threat from the internet in India is still in its early stages, unlike in developing countries. The booming economy, compared to the recession in western developed nations, has seen more advertisements and classifieds placed in papers for dating services, cars, phones, and property, which has contributed to their growth. The cost of newspapers is also much lower than it is in developed nations at $0.09, which is aided by the high revenues from advertising (Jeffrey, 2012: p44). Growing local content, rising literacy from increased enrollment in schools, high advertising spending, and the economic boom have all contributed to the growth of the industry in India, unlike the downturn in developed nations. Conclusion The advent of the internet and technological innovations enabled by the internet, such as blogging and social media, threaten to change the newspaper industry radically. This can either be construed as an opportunity or a threat with the ability for newspaper organizations to navigate the changing environment being reliant on their inherent strengths and weaknesses. How the newspaper industry adapts to the internet and its impact on traditional newsprint will be determined by how they can integrate their newspapers into the internet culture to rope in the young generation, which prefers to get their news from the internet. References Cryns, D. S. 2012. Impact of the Internet: Newspaper Industry. Munich: Grin Verlag. Jeffrey, R. 2012. India's newspaper revolution: capitalism, politics and the Indian-language press, 1977 - 99. London, Hurst. Kelly, M. 2011. The media in Europe: the Euromedia Research Group: [the Euromedia handbook]. London [u.a.], Sage Publ. Meyer, P. 2012. The vanishing newspaper: saving journalism in the information age. Columbia, University of Missouri Press. The Economist. 2006. Who killed the newspaper? Retrieved October 31, 2013, from http://www.economist.com/node/7830218 Read More