Present Strategic Plan of Fortune Magazine - Case Study Example

Case Study on Fortune Magazine Table of Contents Case summary 3 SWOT Analysis 4 Recommendations 8 Conclusion 9 Reference 10 Fortune magazine”. AbsoluteAstronomy.com, 2009. June 09, 2009 10 Foster, David H. “Protecting Profit Margins”. March, 2000. The Magazine for Magazine Management , BNet. June 13, 2009. 10 Press release. “Technology changes the media/entertainment workforce”. February 28, 2000. International Labour Organization (ILO). June 13, 2009. http://www.ilo.org/global/About_the_ILO/Media_and_public_information/Press_releases/lang--en/WCMS_007902/index.htm 10 Case summary Magazine publication is a sub segment of print media industries. Magazines differ from one another in terms of their topic of interest and the frequency. Like other industry, this industry is also directly dependent on the economical scenario and the disposable income of the people. This industry is flooded by many private companies like Fortune , Ford, Business week and many others. Fortune magazine is a global business magazine which is published by Time Inc.s Fortune/Money Group. It was founded by Henry Booth Luce in February, 1930, just four months after the Wall Street Crashed of 1929. This was the onset of the Great Depression. At that time a single copy of fortune magazine cost $1, where as the Sunday New York Times was just 5c. From the very beginning it maintained high quantity. It was over sized (11” X 14”), used creamy paper and artistic work on cover paper. It was also famous for its photographs showing the works of Margaret Bourke-White. Initially Fortune was published monthly but later on it became bi-weekly. It covers the entire field of business, people, companies and many more. It also carries out research and publishes the list like Fortune 500, Fortune 1000, Fortune Global 500, Fortune 100 Best Companies to Work For, Fortune Americas Most Admired Companies, Fortune Global Most Admired Company and many others (Fortune magazine, 2009). But Fortune magazine’s readership was declining day by day due to technological advancement. This is due to the fact that people have the opportunity to access any type of news at any time just on a click of a mouse. The Nation Basketball Association’s 2005-2006 NBA seasons was to start on April 19, 2006. It was a major challenge for the magazine to provide the best coverage and to increase the revenue. So the present infrastructure had to be revised. Another reason behind the fall of revenue is increasing cost of production for Fortune Magazine. If they want to retain their market share then they have to bring some changes in their present strategies. They have to update technology infrastructure. This will add to the cost but help to combat the high competition. Before taking any major decision, a detailed analysis of the company and the industry have to be carried out. SWOT Analysis SWOT Analysis of the Fortune will help to understand the present state of the company. It also help to find out the strengths and weaknesses which are within the internal environment of the company as well as help to analyze the threats and opportunities which company faces from its outside environment. SWOT analysis is a very effective tool to analyze the internal and external potential possessed by Fortune which helps the company to overcome the existing hindrance in the path of remaining as the market leader. Strength: All the three major competitors; Fortune, Forbes and Business Week provide good amount of information in the content, the language is also as per the demographic group of their customers. Fortune’s customers comprise of elite, high income group people who belong to middle or old age group and are highly loyal. So Fortune has a better approach toward their readers. The major strength propelling the success of Fortune is the superior physical quality of the magazine. They maintained good quality paper of large size. The cover is always the center of attraction as special is given toward the art work. Due to Fortune’s affiliation with Time Inc. they have to pay less for the papers and for printing. They always maintain good relation with the printers and the distributors. This allows them to have good coordination and reduces any kind of misunderstanding. Fortune maintains the price of newsstand cover as per the prevailing market condition, it kept the price $4.99 which was same as the price maintained by Forbes and just 4 cents more then the rate of Business Week’s newsstand cover price. Also Fortune had the most accurate number of copies circulating in the market. This clearly indicates that the company had a good knowledge about the market condition and that they were able to analyze the demand more accurately. Fortune have lowest ratebase ad subscription price. They provide lowest open rate for advertising page but they do not provide high discount as the others. Hence Fortune manages to earn more profit as compared to the competitors. Fortune manages its advertising cost as in highly effective way which also adds to their profits. They have a strong brand image and recognition which is created by the annual lists like Fortune 500 and Most Powerful Women in Business issues. Weakness: Fortune ranks behind its competitors in many fields. Fortune always had a quality editor’s work but now it’s losing its consistency. This is one of the major weaknesses for Fortune. Readers always expect consistency in what they are receiving through out. Another major problem with Fortune is the age group of its readers. Its readers comprise of middle aged high class people or management people. It does not have much acceptance among the youngsters who will comprise a considerable class of the reader class, once they age. So they might loose their biggest asset of loyal readers. Fortune is not as efficient as its competitor in the field of marketing for advertisement sales. No doubt that they have a strong brand image, but advertisements lead to further benefits. It attracts more ads which lead to higher revenue for the company. Opportunity: For Fortune the biggest opportunity is the unexplored market which comprises of youngsters who are in the management courses and will soon be in the higher managerial position. Also the present reader base of Fortune is highly loyal which cannot be easily influenced by the tactics of competitors. Development of new technology in the field of printing and distribution is taking place at a higher rate. If the company goes for adopting these, then no doubt that they will have advantage over their competitors. Fortune has the accessibility to high quality, low weight varieties of papers which are handier for the reader and also easy to manage by the company. Reading is an all time favorite activity, hence availability of websites attract the readers for further reading. This makes the readers easily aware of the new releases through out the world, which increase the customer base in the international market. This is also an efficient cost effective method. Time Warner operated CNNMoney.com was established to cover the major news on the present world state, especially on business and finance. It was a platform for the major business news paper of Time Inc. like Fortune, Money, and Fortune Small Business. This gave a huge opportunity to Fortune to reach the reader through internet. Threat: The biggest threat to fortune is the increasing cost of paper and printing. Day by day the cost of production is increasing which is hampering the profits margin. But as Fortune has collaboration with Times Inc. so it might not affect them to a large extent. Hike in the postal charges adversely affects the operating cost, as the postal charges represent 12% of the average charges of the magazine (Foster, David H., 2000). So this was also one of the threats on Fortune. Growing trend of online reading in also a big threat for Fortune Magazine. People can easily get all the updated news just in a click of a mouse and also free of cost. This directly hampers the sale of magazine (Press release. 2000). As print media is very much dependent on the economic state of a country, so this is also a threat to the company. The competitors of Fortune like Forbes and Business Weak along with the other form of media is also a great threat. (SWOT Analysis Resource Page. 2006) Recommendations The SWOT analyses indicates that Fortune’s revenue is moving down because of many factors such as less demand of magazine (because of economic state and high competition among the revels) and also the threat from new technology. On the same time SWOT analysis indicates that Fortune has highly loyal customer and superior quality of physical product along with commendable editorial work. So taking all these criteria under consideration Fortune should select their strategic plan. They should reduce the fixed cost on per issue by lowering frequency to 25 issues. This will reduce the fixed cost PER ISSUE; hence will lead to effective utilization of resources and cost of production per copy will reduce. This will lead to saving of $600,000. Fortune should bring change in the demographic profile of their readers by shifting toward the young generation and high income profile. This will help Fortune to attract much more advertisement. Due to their stable rates and high discount the revenue from advertisement will go high. For cost minimization, Fortune should alter the size of the magazine, which can be made to 8 x 10 and 7/8ths. This minor change will not have any impact on the readers, rather it will make it more handy. Fortune should maintain its newsstand cover price as it is because the reader of newsstand are not loyal, but prices for subscription can be increased to some extent as these readers are loyal enough. So the over impact on sale and on revenue will be positive. Thus Fortune, by bring these change in the production specification, can save around $1 million which should be reinvested in the company for technological up-gradation and editorial’s work. Conclusion If Fortune brings these changes, then Forbes and Business Weak are also likely to bring changes in their present strategic plan. Forbes will continue to focus on individual wealth and business week will continue to focus on current economic news. They both will try to increase exposure of their websites. They will follow Fortune and will provide the digital issue of their current issue to their subscribers. Both these companies will not change their production plane and trim size of 8x10 ½. They both will maintain current ratebase at 900,000 and 970,000 and price of newsstand at $4.99 and $4.95. Forbes might increase open full page advertise rate to $95,570 and Business Week $111,000. So Fortune should keep all these criteria into consideration while setting their business plane for the coming year. By following the above mentioned changes, Fortune will be able to “increase its revenue” and to “overcome the threat from technological changes going around” Reference Fortune magazine”. AbsoluteAstronomy.com, 2009. June 09, 2009 Foster, David H. “Protecting Profit Margins”. March, 2000. The Magazine for Magazine Management , BNet. June 13, 2009. “SWOT Analysis Resource Page”. 2006. Idaho State University. June 09 2009. Press release. “Technology changes the media/entertainment workforce”. February 28, 2000. International Labour Organization (ILO). 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