Global Business Environment - Pearson PLC - Case Study Example

Pearson PLC. Contents Mission, Objectives and History 3 Company Profile 3 Missions, Visions and Objectives 3 Growth of the Company 4 Market Conditions and Competitive Environment 5 Market Strategy 5 Porters Five Forces 6 Market Evaluation 7 Conclusion 9 Reference List 10 Mission, Objectives and History Company Profile Pearson PLC is a British multinational organization that engages in educational and publishing activities. The company is considered as the largest book publishing and education firm in the world. It should also be noted that the industry, in which the company belongs, is media. Back in 1844, the company was founded by a famous personality, Samuel Pearson. Nonetheless, in the initial years, the company operated in activities relating to building and construction works. The name of the organization then was S. Pearson and Sons. During Great Depression in 1921, the company purchased several local newspaper houses and were clubbed together as Westminster Press in U.K. In 1969, the company was first listed in the London Stock Exchange. In later stages of 1990s, the company acquired several media and non-media assets. The education division of Simon and Schuster was acquired by the company in 1998. It was only at that juncture, when the organization merged its corporate education branch of Addison-Wesley Longman to that of Simon and Schuster and started operating in the market as Pearson Education. Thus, the organization has a long learning curve. Presently, the company’s headquarters stands at 80 Stand London and operates across various nations of the world. As of 2012, the net operating income of the organization was £ 286 million (‘A Rich Seam’). It generates employment opportunities for about 37000 individuals worldwide. Currently, the CEO and the chairman are John Fallon and Glen Moreno, respectively. It is a public limited company with high brand value in the market. Missions, Visions and Objectives Mission One of the most important missions of the organization is to enhance literacy level of the entire global market. The corporation desires to become the leading academic service provider in the world. The firm attempts to break all cultural barriers between nations and feels that only modern means used for transmitting educational services can unite the globe as one well-educated unit. The organization desires to provide education services on the basis of equity. This means that it desires to provide special incentives to all underprivileged classes of societies (Fayol, Industrial and General Administration, p. 134). Vision The primary vision of the organization is to simply augment the access to proper education for individuals, across all nations of the world. However, Pearson intends to improve this access through the use of reliable experience and technology. Objectives The primary objective of the organization is to assure high social inherent values in all its business deals. The company desires to become the leading education service provider in the global market. The firm also desires to enhance its business revenue and profit in a way that it never generates negative externalities in the market. One of its primary business objectives is to enhance the level of its community partnership deals in commerce. Growth of the Company From the above analysis, it can be claimed that the growth strategy in business for Pearson PLC is to expand by acquiring new firms. The company of Pearson PLC have experienced significant growth rates in business in recent years. The revenue of the company was £ 4.4 billion in 2007, however, with its strong growth potentials, the organization have progressed and achieved a growth of about £ 5.9 billion in 2011 (‘A Rich Seam’). It was claimed by the organization that about £1 billion was generated from its new emerging markets. The organization also faces cut-throat competition in the media industry, where it operates. Companies like, John Wiley & Sons, Scholastic Corporation and Houghton Mifflin Harcourt Company, are some of the potential competitors of Pearson PLC in the market. Nonetheless, in the recent years, the CEO and chairman of the company have claimed that they would introduce a new Restructuring Programme for future business growth (‘A Rich Seam’). In this program, the organization would try to increase its business primarily in the fast growing nations of the world, like, India and China. This program will, simultaneously, also address to the digital and non-digital services of the company (Hales, ‘What Do Managers Do? Critical Review of the Evidence’, p. 88-115). Therefore, from the above analysis, it can be claimed that Pearson PLC is an organization with high brand value in the market, but it competes on a broad basis in the media industry (Watson, ‘The Emergent Manager and Process of Management Pre-Learning’, p. 221-235). Market Conditions and Competitive Environment Market Strategy The appropriate marketing strategy, to be adopted by the company, can be easily determined by analyzing through an Ansoff Matrix. Products Markets Existing New Existing Books, newspapers and magazines Schools and Higher Education New Books, newspapers and magazines Expanding digital services Established markets of the company are nations in Europe and North America. Newspapers, magazines and books published by the company in these markets are famous. However, in these new markets, the company has established schools and higher educational institutes, like, Pearson school and Pearson Higher Education (‘A Rich Seam’). As stated in the above context, the business of the organization is growing in emerging economies of the world as literacy levels of such nations are seen to be improving with time. Nonetheless, in order to access remote marketplaces in developing (emerging) economies, the company is now spreading out its commercial practices through use of digital platform. Porters Five Forces Bargaining powers of consumers (High) The power of consumers is high in this industry, as in occasions of bulk purchases; bargaining powers of consumers are substantially high. Moreover, cost of switching is also low in the industry. There are large numbers of competitors in the market and if consumers are not satisfied with a product of a particular company, then they can always shift to another content published by some other organization. However, since brand value of Pearson PLC in the industry is high, the bargaining power of buyers in here is relatively lower (Fells, ‘Fayol stands the test of time’, p. 345-360). Bargaining powers of suppliers (Low) The suppliers for companies in this industry have relatively low bargaining power. They can either be journalists, printers or paper providers. There is large number of suppliers in this industry altogether, which is why each one’s bargaining power becomes very low. The primary suppliers for the organization are digital content providers. However, content providers (or suppliers) in digital market of the industry enjoys a relatively higher bargaining power. This is because these content providers often manipulate titles of any writings printed by publishing firms to the e-Readers, either in favour or against the company (Mintzberg, ‘The Manager’s Job: Folklore and Fact’, p. 249-270). Threat of new entrants (High) If a new company desires to start up a business relating to providing education service or publishing, then it needs to gather good content and a moderate amount of investable fund. If a new entrant in the industry is a giant multinational company, then cost of entry in such an industry for the concerned organization would be very low. However, if the organization here is very small, then lack of finances might prevent it from setting up a new competent business. For entering in the publishing industry, not much technological innovations are required for an organization and thus, it becomes very easy to launch a new business in such an industry. This proves that threat of new entrants in the market is high for existing competitors in the market (Willmott, ‘Studying Managerial Work: A Critique And A Proposal’, p. 249-279). Potential rivalry in the market (High) There are various small as well as large publishing houses across various marketplaces in the world. Therefore, the degree of rivalry among firms in such an industry is relatively high. Some authors claim that competition in the industry largely depends on brand positioning models of each of the business firms. Threat of substitutes (High) In the early days, academic or content publishing houses did not face much competition. However, in recent years, scope of threat has significantly risen. The increased use of internet media has reduced powers of the publishing companies. Nowadays, advertisements or contents (found on several internet sites) are found to attract readers more than a magazine or book published by a publishing organization. At the same time, modern technological gadgets also remarkably support the use of internet media. Some researchers state that this is the epoch of “Google” (Sims, ‘The Formation of Top Managers: a Discourse Analysis of Five Managerial Autobiographies’, p. 57-68). Market Evaluation If a market evaluation is done to recognize the exact market structure for Pearson PLC to operate in, then it can be claimed that it experiences a monopolistic market structure. Parameter Theory Pearson PLC Number of buyers Infinite The company serves its products to infinite number of individuals across all nations of the world. Number of sellers Few There are few potential competitors of the company in the industry. Nature of product Differentiated (qualitatively) The company’s products are published books, newspaper and magazines. These are qualitatively different from that of its competitors. Cost of Advertisements High If the company desires to remain as the leading publishing house in the world as well as to sustain the threat of internet media, then it needs to incur high cost of advertisement. This will help in attracting more customers (J.C. Wood & M.C. Wood, Henri Fayol: Critical Evaluations in Business and Management, p. 222). Optimal business strategy Profit maximization The company is a profit maximizing organization in the industry. Entry and Exit High cost of entry but low cost of exit If the company desires to cease its operations, then its fixed cost in business would be low. At the same time, a new company would need to acquire high brand value and fund to enter the industry with substantial power. Conclusion This is the era of “consumerism”; where profit making firms intensively compete among them in order to win over a higher share of market in the industry. It is almost impossible for a firm, in present scenario, to lead the market competition without using appropriate strategic management. It is true that the organization of Pearson PLC enjoys a wide base of potential customers and brand value in the industry. Even so, rapidly changing tastes and preferences of consumers, along with externalities in the business world, can soon shake up this strong hold of the organization. It is, thus, highly rational on the part of the company to figure out appropriate means of marketing and business expansion strategies in order to sustain its position in the competitive industry. Reference List ‘A Rich Seam’, Pearson, 2013. < http://www.pearson.com/> Fayol, H. Industrial and General Administration. (Paris: Dunod, 1916). Fells, M.J. ‘Fayol stands the test of time’, Journal of Management History, 6(8), 2000, p. 345-360. Hales, C.P. ‘What Do Managers Do? Critical Review of the Evidence’, Journal of Management Studies, 23(1), 1986, p. 88-115. Mintzberg, H. ‘The Manager’s Job: Folklore and Fact’, Harvard Business Review, 1990, p. 249-270. Sims, D.B.P. ‘The Formation of Top Managers: a Discourse Analysis of Five Managerial Autobiographies’, British Journal of Management, 1993, p. 57-68. Watson, T.J. ‘The Emergent Manager and Process of Management Pre-Learning’, Sage Publications, 32(2), p. 221-235. Willmott, H. ‘Studying Managerial Work: A Critique And A Proposal’, Journal of Management Studies, 24(3), 1987, p. 249-271. Wood, J.C. & Wood, M.C., 2002. Henri Fayol: Critical Evaluations in Business and Management. (Oxford: Taylor & Francis, 2002). Read More