Foundations of Global Business - Book Report/Review Example

 Foundations of Global Business Executive summary The trend in the newspaper industry is changing in the developed countries, where the demand for print newspaper is being replaced with a much higher support for online content. The technological advancement, access to technological infrastructure and a growing number of middle-class are some factors contributing to this trend. However, the case is different for the developing countries, as well as other countries such as India, where the demand for print newspaper is continuously growing. The application of PEST and SWOT strategic analytical tools can go a long way in enabling the newspaper industry in the developed world to assess the various environmental factors that are contributing to the current trend, and thus adjust the industry to align well with the changes and the present circumstances. Introduction In the developed economies the newspaper industry is going through a period of change. This change can be attributed to a number of factors. 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. Despite the start of the newspaper industry in India as early as 1780, the industry continues to grow by the day, with the newspaper consumption for the country standing at 99 million copies of newspaper, as of the year 2007, which was 11.2% increase compared to the previous year (Houston& Rosenstiel, 2011 n.p.). Some interesting statistics also points to the fact that by 1993, there were over 35,000 print newspapers in India, with 3,805 among them being dailies (Nair, 2003 p1485). All these characteristics sharply contrast with the newspaper industry in the other developed countries, where the newspaper industry seems to be dwindling. Therefore, this report seeks to describe PEST analysis and its purpose and benefits to businesses, while also undertaking a Pest analysis of the newspaper industry in the developed countries, and also seeking to understand why the newspaper industry in India continues to thrive, while it is declining in the other developed countries. Findings (main body of the report) PEST analysis, its purpose and the business benefit PEST (Political, Economic, Social and Technological) analysis, is a technique applied as a framework for analyzing the external environment of a business, with the aim of understanding the macro-environmental factors that influences the running of the business organization (Analoui & Karami, 2003 p75). The purpose and benefit of the PEST framework is that; it is applied as a stool for strategic planning or for marketing research, which enables the business organization to discover all the macro-economic factors that it has to put into consideration, when defining the nature of the products and services it has to offer to the market, and the channels through which such objectives are to be realized (Analoui & Karami, 2003 p74). The PEST Framework puts the following factors into consideration: Political Environment factors: This consideration is mainly focused on assessing how the government of the land intervenes in the economy of the country where the business is operating, in view of the such regulatory factors such as taxation policies, political stability, tariffs, environmental regulation laws, labor laws, and other forms of trade restrictions applied by the government to control the economy of the country (Analoui & Karami, 2003 p76). In addition to these factors, the government also plays a vital role in the control of the business environment, through such factors as the infrastructure provision and the provision of some goods and services in form of merit goods and other subsidies. The political factors highly influences the running and the success of a business or industry, by defining the cost of running the business through taxation, as well as defining the friendliness of the business operating environment. Economic environment factors The economic factors that a business entity needs to put into consideration when planning for the appropriate entry or marketing strategy includes the inflation rates, the interest rates, the rate of growth of the economy, as well as the exchange rates applicable for different currencies (Analoui & Karami, 2003 p74). The economic factors have a great influence on the operation and success of a business, considering that they determine the cost of capital for a business, through the interest rates, as well as the operational costs and profitability, through the exchange rates, which in turn determines the value of exports and the costs of imports (Analoui & Karami, 2003 p83). Social Environmental factors These are the factors that define the business operating environment, based on the cultural aspect of the area that a business is established. Such factors may include the population growth rate, which determines the rate at which the market for the business grows, as well as the cultural norms and attitudes, which then determine how the community perceives the goods and services offered by a business (Analoui & Karami, 2003 p75). The social factors largely determine the nature of the market that a business can target. Technological Environmental factors The technological factors refer to the nature of the technology applicable in a business or an industry, and other factors such as the technological incentives in existence, as well as the rate of technological growth and change (Analoui & Karami, 2003 p77). The technological factors largely determine the barriers to entry into a certain market, as well as the efficiency of production, which in turn determines the quality and the costs of productions for a business. PEST analysis for the newspaper industry in the developed economies Political factors The newspaper industry in the developed countries has been adversely affected by political factors, especially occurring in the form of government regulations on the industry. Most governments in the developed countries have introduced some legal regulations on the newspaper print industry, in the form of health regulations for the employees working in the industry, and most especially in the night shifts, whom the governments want insured and also enrolled to regular health checks (Houston & Rosenstiel, 2011 n.p.). Additionally, the environmental regulation in regard to waste management of the newspaper industry has been tightened, requiring the industry to ensure the recycling of all, or most of the waste papers it produces. These regulations have increased the costs of operation in the newspaper industry, eventually reducing the economies of scale of production (Houston & Rosenstiel, 2011 n.p.). This has left the businesses in the newspaper industry with limited profits. Economic factors The economic factors have also played a role, though just to a small extent, in the decline of the newspaper industry in the developed countries. The increased number of middle-income population means that they are able to access other media devises that divulges information, other than the newspaper, thus reducing their need for newspaper as an information sources (Houston & Rosenstiel, 2011 n.p.). Additionally, there has been a general increase in inflation rates, which has driven the cost of producing newspapers slightly higher, thus hindering massive purchase of the newspapers. Technological factors The improved technological infrastructure and accessibility in the developed countries has meant that many people are in a position to access digital media platforms, such as social media and digital news platforms, thus reducing the need for newspaper as a source of news (Houston & Rosenstiel, 2011 n.p.). Social factors The rise in digital-orientation culture in the developed countries has effectively reduced the need for newspapers as a source of news. The developed countries are currently moving towards a digital-oriented society, where technology and the internet form the basis of their information gathering (Houston & Rosenstiel, 2011 n.p.). Another social factor is the increased literacy and improved lifestyle through the growth in the number of middle-income class, which in turn is able to access digital media, at the expense of newspaper, as a source of information. SWOT analysis of the British newspaper The Guardian Strength A major strength of the British newspaper, The Guardian, which it has always capitalized on, is the long British history. The Guardian was founded in 1821, as a local daily, The Manchester Guardian, but has grown over time to become the most popular newspaper in Britain, both in the circulation and the online presence visitations (Humphrey, 2005 p14). This is a major strength for the newspaper, since it has a solid customer base that relies on it for delivering the promises it has made over the centuries. The other strength is the active and booming online presence, which has received over 9 million global visitors in the year 2012 (Halliday, 2012 n.p.). This is a diversification strategy that has enabled The Guardian newspaper to capitalize on both the print and the online platforms, to serve the interest of its diverse customer needs. Weakness Multiple vulnerabilities have characterized The Guardian newspaper, which has in turn damaged its reputation, as a newspaper that is easily penetrated and manipulated. For example, in the mid 1990’s one of the newspaper editor was discovered to be working for the Soviet Union intelligence body KGB (Williams, 2009 n.p.). Additionally, in the wake of the London bombing in the year 2005, a journalism trainee in The Guardian who published a controversial article was later discovered to be a member of the Hizb ut-Tahrir, which is an Islamist group, painting another vulnerability of the newspaper to outside influence and penetration (Williams, 2009 n.p.). Opportunities The Guardian has a major opportunity to capitalize on, in the form of the wealthy history of the newspaper, which means that it has a solid customer base that cannot be easily challenged by other media newspapers (Halliday, 2012 n.p.). Therefore, The Guardian can take advantage of this opportunity to give its customers what they expect, both in the print and the online platform, thus averting any threats posed by its main rivals (Conlan, 2008 pA2). Threat The major threat faced by The Guardian newspaper is the threat of competition from its rival media companies, especially the Mail Online and Telegraph, which had managed to raise their rivalry to a global visitation statistics of some million visitors, against The Guardians 9 million visitors in the year 2012 (Halliday, 2012 n.p.). The two newspapers have been a threat in both the print and the online platforms. Describe Lewin’s Field Force Analysis The force field analysis is a strategic analysis tool that is applied to determine the nature of the changes that are required in business environments (Lewin, 1943 p52). The strategic tool is applied through an analysis of the forces that are against a change and the forces that are for change, and then making a decision depending on the strength of either the for-change-forces, or the forces against-forces. The Forced Field analysis is applied mainly for two purposes. First, it is applied in determining whether to go ahead with introducing the contemplated change or to abandon it altogether. Secondary, this tool is applied to strengthen the forces that are in favor of a change, while weakening those that are against the introduction of the change (Lewin, 1943 p117). Field Force Analysis for the newspaper industry in the developed world concerning the use of the internet. Forces for change scores Forces against change scores Consumer want new products 10 Staff fearful of technology 5 Reduced production cost 8 Change proposal: The increase in online content publication, and reduced print processing. Disruption and inconveniencies to historical customers 10 Reduced labor cost 10 Risks of content manipulation 8 Reduced access time 10 Risks of reduced revenues 10 Reduced wastes and environmental pollution 10 Risk of staff retrenchment and its repercussions 10 Total Score 48 Total Score 43 Analysis: While the introduction of online content publication and the reduction of the print processing may have some negative implications on the newspaper industry in the developed world, it is more suitable, since it will reduce the cost implications as well as the concerns for waste management, while making it possible to reach more customers. Considering that the developed world is now moving towards technologically-oriented news sources, it will be easier to target more online subscriptions, as opposed to attract more customers for print newspapers. Why the Indian newspaper industry is not facing the same challenges as those in the developed economies The Indian newspaper industry is not facing the same challenges as those in the developed economies, considering that the number of print newspapers is just increasing, while the percentage of newspaper consumption and circulation is on the rise. There are various factors that can account for this scenario. First, there is an increase in the literacy levels in India, with increased literacy rising from 35% of the Indian population in 1976 to around 82% of the population in 2009 (Houston& Rosenstiel, 2011 n.p.). This comes with some benefits such as increased income and the need for information (Nair, 2003 p4182). This being the case, the need for newspaper as a source of information is continuously rising in India. Another factor that accounts for the increased growth of the newspaper industry in India, as opposed to the other developed countries, is the state of the online technology penetration in India. Considering that most of the Indian population is not well covered by online technology with only slightly over 4% coverage, as compared to the other developed countries, then, the need for print media as the source of information is still high (Houston& Rosenstiel, 2011 n.p.). Finally, political factors also account for the increased growth of the print media in India, since the online technology and the internet is highly under the government surveillance and censorship as opposed to the rest of the developed world, thus creating more room for print newspaper to thrive (Nair, 2003 p4187). References Analoui, F., & Karami, A. (2003). Strategic management in small and medium enterprises. London [u.a.], Thomson. Conlan, T. (8 October 2008). "Guardian owner the Scott Trust to be wound up after 72 years". The Guardian (London: Guardian News and Media). Halliday, Josh (September 12, 2012). "The Guardian reaches nearly 36 million readers across print and online". The Guardian. Retrieved October 27, 2013. Houston, L. & Rosenstiel, T. (2011).Why U.S. Newspapers Suffer More than Others. Project for Excellence in Journalism. http://stateofthemedia.org/2011/mobile-survey/international-newspaper-economics/ Humphrey, A. (2005). "SWOT Analysis for Management Consulting". SRI Alumni Newsletter (SRI International). Lewin, K. (1943). Defining the "Field at a Given Time." Psychological Review 50, 292–310. Nair, T. (2003). Growth and Structural Transformation of Newspaper Industry in India: An Empirical Investigation. Economic and Political Weekly 38 (39), 4182-4189. Williams, K. (2009). Read All About It!: A History of the British Newspaper. Routeledge. 12-59. Read More