Strategic Position of the News Corporation - Assignment Example

Q Discuss the strategic position of TNC in 2009 emphasizing the strengths, weaknesses, opportunities and threats for the organization at that time. News Corporation is a global media company founded by Rupert Murdoch and is the world's largest publisher of English language newspapers. Its operations span across a number of countries such as Australia, the United States, the United Kingdom and so on. News Corporation has been faced with stiffer competition in both digital and conventional publishing and therefore a strategic analysis of its strengths, opportunities, threats and weaknesses has to be carried out. Strengths Product diversification is a strategic strength that The News Corporation (TNC) has right now, though its rivals such as Warner Bros, Sony all have identical product diversification strategy TNC has an innovative edge in entertainment related developments. TNC is a diversified entertainment enterprise functioning in eight industry segments, including; Television; Filmed Entertainment; Direct Broadcast Satellite Television; Cable Network Programming; Magazines and Inserts; Newspapers; Book Publishing, and Other. The News Corporation functions mainly in the United States, the United Kingdom, Continental Europe, Australia, Asia and the Pacific Basin. It is engaged in the operation of broadcast television stations, and the development, production and distribution of network and television programming through its subsidiaries (Johnson, Scholes, & Whittington, 2008). The Company is involved in the direct broadcast satellite business through its subsidiary, SKY Italia. It also owns interests in BSkyB and DIRECTV, which are engaged in the direct broadcast satellite (DBS) business. It is also involved in the newspaper and magazine publishing business in the United Kingdom, Ireland, Australia and the United States through its various subsidiaries. Through HarperCollins Publishers (HarperCollins), its wholly owned subsidiary, the Company is engaged in English language book publishing on a worldwide basis. TNC has shown consistent revenue and profit growth in recent years. Revenue has grown from $25,327 million in 2006 to $28,655 million in 2007 to $32,996 million in 2008. Net income has increased from $3,426 million in 2007 to 5,387 million in 2008 (www.newscorp.com). They have a strong library content consisting of film achieves in the 1940s to present. Opportunities In the first instance many of its opportunities arise from the very nature of the competitive environment. Opportunities that are literally available to TNC in the television and print media market are many and varied. Especially its strategically important acquisitions have played a very big role in determining its success. TNC acquired Dow Jones & Company. This has helped place TNC on a firm footing. It allowed the company to expand its online presence and tap into the higher growth rates than many of its core traditional businesses. This will allow TNC to maintain their solid earnings growth without the downside of a pure growth company. TNC has benefited from the emerging markets in Asia, especially that of India and China. The combined population of the two countries equal approximately 2.5 billion. This is the economic reality and TNC has much to gain from its expansion into this region. Alternative media outlets such as the television, cable network programming, direct satellite broadcast and the print media such as magazines and newspapers. Therefore it can reach the market using any of these alternatives before or on par with their competitors. There has been a growth in High Definition Television (HDTV) in recent years and TNC has a sizable percentage in this technology. TNC is looking at new technologies that promise to improve spectrum efficiency or otherwise increase available capacity so that DIRECTV could expand the amount of HDTV content. Options such as the use of Ka-band capacity, higher order modulation schemes, such as the 8PSK technology FOX uses for its broadcast distribution to affiliated stations, and further improvements in compression technology. TNC will encourage DIRECTV to have much more than the four HDTV channels it presently has and the five channels that some cable operators carry. In this manner, they hope to help drive the transition to digital television by providing compelling programming in a format that will encourage consumers to invest in digital television sets. Multi-year sports agreements are signed by TNC ranging from ten to fifteen years, such as with football clubs in Europe and North America. Weakness The main weakness of TNC that can be sited is that there is no clear successor for its present CEO Rupert Murdoch. As a result once he leaves the company some divisions will be created. There will be a figurehead CEO to whom lots of departmental heads will have to report. This sends a weak signal to the market. Threats Increasing use of Digital Video Recorders (DVRs) would affect TNC. For example Yahoo or You-tube can come up with DVR input on a regular basis on their websites. Therefore surfers will have uninterrupted access to content such as Oscar events. Thus the surfers will not be compelled to resort to television media for theses sort of events. The growth of online video and alternative media too poses the same threat. The prevailing economic slowdown in the US has meant that demand has dropped for media. The imposition of strict rules and regulations by the government means that TNC will have to adopt certain standards in order to adhere to them. This is a costly affair. This means that the last price to the customer will increase which means that there will be less demand for TNC products and services. On the other hand rivals who have already adhered to these rules and regulations will be able to provide services at a lower cost to the customers. Thus there will be more demand for them. Q. (2) evaluate the rationale and motivation behind TNCs strategy of diversifying into satellite broadcasting. Evaluate the methods used by TNC to enter this market. The News Corporation is a diversified entertainment company with operations in eight industry segments including satellite broadcasting. TNC is involved in the direct broadcast satellite business through its subsidiary, SKY Italia. It also owns interests in BSkyB and DIRECTV, which are involved in the direct broadcast satellite (DBS) business. Television industry around the world particularly in Europe and North America is undergoing a transformation. Due to new technologies and regulatory changes new programming choices are coming up.DBS is a promising new technology with a large market potential. Major reasons for its success are programming, price and the fact that consumers can purchase the home receive unit and have it installed easily. It was estimated that there were about 44 million DBS household consumers in United States alone by 1994. Television transmission directly to home receivers has been one of the more successful commercial applications of satellite communications. The transmissions have not been at the power levels originally planned in every instance nor has the reception been that good always on small size antennas. But throughout the world, there has been a mark development for direct broadcast satellite television (DBS-TV). For example North American television viewers demand a wide range of programming options. Therefore markets for direct broadcast satellite pay-television service have expanded rapidly. Viewers are increasingly considering pay-television a basic home service. While digital cable and digital terrestrial broadcasting will also benefit from these end-user trends, it is satellite television that has economies of scale for continental coverage, plus the channel capacity, to offer the largest selection of programming. On the whole pay-TV penetration exceeds 85 percent in the North American market, making each additional percentage point won that much more difficult to achieve. DBS service providers have made greater gains in market share in the past few years by heavily subsidizing subscriber acquisition, yet they must now focus on profitability to make sure the long-term feasibility of their industry (David, 2008). Mergers within the cable industry have created a number of cable giants. Participants in the DBS market are following doing the same. DBS providers are using consolidation to extend their customer reach while broadening service offerings. TNC acquired a 34% interest in Hughes Electronics Corporation in 2003.Through this acquisition it utilized Hughes' DIRECTV for direct broadcast satellite transmission. News Corporation's track record of innovation as a content provider and as a satellite broadcaster is unmatched. The company is renowned for challenging the established- and often stagnant - media with new products and services for television viewers around the world. News Corp. brought a world of innovation to Hughes and DIRECTV from its British DTH platform, BSkyB. They launched BSkyB in 1989 with just four channels of programming. In 1998, frustrated by the limitations of analog technology and with a strong resolute to give viewers even wider repertoire, BSkyB launched a digital service that consisted of 140 channels. In 1999, in order to hasten the pace of conversion to digital and to drive penetration, BSkyB offered free settop boxes and dishes. The conversion to digital took three years and cost BSkyB nearly one billion dollars, but by 2001, when the transition to digital was done, BSkyB's customer base had grown to 5 million homes. Through BSkyB's digital offering, BSkyB viewers may choose from 389 channels delivering programming 24 hours each day. They also have a number of new services, including world-first interactive innovations such as a TV news service that gives the chance for viewers to choose from multiple segments being broadcast at the same time on a news channel, multiple camera angles during sporting events, or multiple screens of programming within a certain genre. This apart, BSkyB customers have access to online banking, shopping, travel, email, games, tourism and information services. With the launch of Europe's first fully integrated digital video recorder in 2001, BSkyB customers won access to even more interactive capabilities and viewing choices. SKY Italia reported an increase in operating income for nine months ending on March 2008 from 207 million dollars to 238 for nine months ending on March 2009. Therefore TNC realized that tying up with both these companies would prove to be productive for them in the direct broadcast satellite aspect. DBS is a system for transmitting television and other program material via satellite directly to individual homes and businesses. Direct broadcasting satellite systems operate at microwave frequencies, in a portion of the Ku band; in North and South America these systems operate in the frequency range 12.2-12.7 GHz. A definition broader than DBS would be direct-to-home signals, or DTH. This was at first meant to differentiate the transmissions directly intended for home viewers from cable television distribution services that sometimes carried on the same satellite. The term DTH is older than DBS satellites and is often used in reference to services carried by lower power satellites which required larger dishes (1.7m diameter or greater) for reception. Q. (3) Recommend a strategic development plan for TNC from 2009 onwards - justifying the recommendations made. Strategic development plan involve defining and setting realistic long term strategic goals for achievement. "Strategic development plan is the conduct of drafting, implementing and evaluating cross-functional decisions that will enable an organization to achieve its long-term objectives" (Aaker, 2007). Thus it's clear that strategic management is all about defining, setting and achieving long term objectives of the organization. In the process the business organization might fail in its efforts to successfully implement long term strategic initiatives though. In this respect effective use of communication techniques within and without the organization is emphasized by strategic management experts in order to achieve these long term objectives. Communication within the organization is necessarily influenced by its leadership style and organizational culture and structure. A vertical top-down structure with an autocratic leadership style as is the one presently prevailing at TNC is less likely to facilitate efficient communication between different layers of the hierarchy while conversely a horizontal structure with a democratic leadership style would more likely facilitate good communication flow between departments. Strategic long term goals such as market share, profitability, an increase in the share price, quality improvements, customer satisfaction and brand loyalty have to be achieved by adopting such strategies as good internal and external communication practices, employee relations, good motivation strategies and HRM practices, sound financial management including positive cash flows and better overall performance metrics. For example there are good and bad business practices being adopted by companies in the process of planning and design of management and business strategy. TNC depend on the available information to make such decisions. This is strategically a bad business practice because information asymmetry often misleads managers and their subsequent decisions based on such imbalanced information could be wrong. Labor is a resource that has to be managed according to widely accepted international HRM practices. Organizational success is determined by the internal strengths of the organization in controlling, rationalizing and utilizing the available resources to the maximum benefit of competitive advantage. Workers at News Corporation are motivated through a good mixture of both financial and non-financial benefits (Coulter, 2009). Performance-related pay might encourage baristas and other crew members to contribute more and more to the success of the organization. Employees should be told in no uncertain terms that competition has forced the management to take decisions and face tougher choices. Under the News Corporation' banner it's no more the brew to regain sagging spirits alone but also the source of regeneration of identity. Its ability to create a wholly different atmosphere at News Corporation depends on the new organizational culture centered on more competition and less ideals. Nowadays organizations have better approaches to such intricate problems. In the planning and design process of VRIO (value, rarity, inimitability and organization) framework businesses have adopted such revolutionary approaches. Authentically paradigmatized business settings essentially generate active and proactive strategic responses irrespective of the strategic environmental constraints. Thus it's not a secret that organizations have a tendency to respond to their strategic environment, both operational and competitive, with a heightened awareness of associated implications. There is no gainsaying the fact that under such circumstances the best strategy would be determined by not only the quality and quantity of information but also the ability/inability to assess outcomes in advance. Thus the whole exercise is determined by a set of approximate principles that require managers and decision makers within TNC to develop a conceptual framework and a contingency model for response to its strategic environmental pressures. It's a fallacy to assume that operational aspects of an organization can be improved just by adopting a particular strategy that has been tried successfully elsewhere unless the management has readily available to it the latest information and it knows about its own strategic operational and competitive environments well (Thompson, & Martin, 2005). It's equally well nigh a necessity that the organization adopt an articulate strategy that serves as a contingency model in approaching a problem. TNC should continue to invest on Research and Development (R&D) so that the resource variation is maintained by it in order to build up an inventory of inimitable resources. Finally TNC should carry out a market evaluation and make appropriate changes in its strategy as a continuous task so as to make continue inroads in the print and television media. TNC cannot afford to be complacent. They should continue to invest in experimenting with newer technologies in order to come up with novel inventions. Else they could be overwhelmed by other competitors. REFERENCES 1. Aaker, DA 2007, Strategic Market Management, 8th edn, Wiley, New York. 2. Annual Report 2009, News Corporation, retrieved from www.newscorp.com on March 12, 2010. 3. Coulter, M 2009, Strategic Management in Action, 5th edn, Prentice Hall, New Jersey. 4. David, F 2008, Strategic Management: Concepts and Cases, 12th edn, Prentice Hall, New Jersey. 5. Johnson, G, Scholes, K & Whittington, R 2008, Exploring Corporate Strategy: Text & Cases, 8th edn, Prentice Hall, New Jersey. 6. Thompson, J & Martin, F 2005, Strategic Management: Awareness and Change, Cengage Learning Business Press, London. Read More