Scale and Experience Economies Are the Most Effective Means of Establishing Strategic Assets - Coursework Example

Running Head: strategic assets Scale and experience economies are the most effective means of establishing strategic assets of the of the institution] Scale and experience economies are the most effective means οf establishing strategic assets Introduction "For better or for worse, our company (News Corp) is a reflection οf my thinking, my character, my values." -- Rupert Murdoch. That is exactly the philosophy οf Rupert Murdoch - the owner and the chief executive οf The News Corporation. However as a strategic management consultant contracted by News Corporation I will provide advice on the process οf strategic formulation. I will apply the steps required for formulating the companys strategy according to the framework proposed by Johnson and Scoles(1999). Strategic Analysis Strategic Analysis is concerned with the understanding the strategic position οf the organization in terms οf its external environment , internal resources and competences, and the expectations and influence οf stakeholders defined by Johnson and Scoles(1999). The environment According to Rupert Murdoch News Corporation are blessed with many things: dedicated employees; a consistent vision; compelling products and services; loyal customers throughout the world; and boundless opportunity as the global thirst for entertainment and news explodes. It is true there are all kinds οf opportunities for News Corporation. However in the unstable world environment we probably will experience economic downturn for a period οf time. I would say that there are risk and threats in every aspect. The news media is very sensitive to most countries in the world. It is even worse in this moment when America is attacking Afghanistan. The economy is suffering a downturn as a whole. Technology is growing very fast. The cross-border globalization οf communication still remains a difficult issue for news companies. Local government plays n very important role in the industry. Country like China they control news media tightly and there are heaps οf regulations and restriction in the country. Never before has this industry seen such turmoil both in terms οf changes in technology and challenges posed us and our competitors by regulatory authorities around the world. Global competition is becoming more and more intense. There are high development costs for news companies. The industry is in a mature stage οf PLC. News companies are fighting hard to maintain market share. It is time to emphasis efficiency and low cost. As for the five forces, it is difficult for new entrants to come. However the buyers have stronger bargaining power as they have more choice and better knowledge about the industry. There are no specific substitutes for News Coporation as they cover almost all aspects οf news media. The competitive rivalry is very strong in the news industry. The News Corporation has a vast range οf products like * filmed entertainment; * television; * cable network programming; * magazines and inserts; * newspapers; and * book publishing. The principal activities οf associated entities include: * satellite, television and cable broadcasting; * newspaper publishing; and * print and electronic television guidance applications. It covers all over the world and products serves every segment οf market. It is said to be the most integrated news company at the moment. The Resource. News Corporation had total assets as οf June 30, 2001 οf approximately US$43 billion and total annual revenues οf approximately US$14 billion. News Corporations diversified global operations in the United States, Canada, continental Europe, the United Kingdom, Australia, Latin America and the Pacific Basin include the production οf motion pictures and television programming; television, satellite and cable broadcasting; the publication οf newspapers, magazines and books; the production and distribution οf promotional and advertising products and services; the development οf digital broadcasting; the development οf conditional access and subscriber management systems, and the creation and distribution οf popular on-line programming. Operating Income by Geographic Segment 2001is like this: US 67%, Australia 7%, United Kingdom26% ( source: http://www.newscorp.com) The company is now in a fair financial situation. But we should not forget the crisis in early 90s. The high debt level resulted in over-spending in acquisition οf Triangle and the modernization οf printing plants in Australia and UK. I think that is an extremely dangerous situation οf the company. At the moment we should think carefully before move any further. The financial management should be more careful and strict. The human resource. I would say Rupert Murdoch is the largest asset οf News Corporation. He is so talented and suitable to be the chief executive than no one else can be compared with him. This is a great advantage to the company. It is also a threat. Rupert Murdoch is more than 70 years old till this year, It is time to consider who can succeed the company. He seemed to prefer the hereditary principle. But up till now there are no solution for this. There are a lot οf qualified management people in the company, I recommend Rupert Murdoch pass more responsibilities to them in order to make the company going smoothly. There are also lots talented people in the company. They specialize in every aspect and have done a great job for the company. (Source: Media General Financial Services, Inc.) The resources and competences The News Corporation has unique intangible resource which help the company to todays status. These intangibles include the creative management οf Rupert Murdoch. The international recognisation in media industry. The informal and less bureaucratic organizational structure is very efficient in decision making. News Corporations success worldwide is due to the integrated teamwork, efficient communication, creativity οf top management (especially the chief executive), and risk-taking courage οf management. None οf these is easy to follow. The courage οf risk taking, the advanced thinking οf the management group and determination are essential to the success οf the company. Murdoch is someone who is a born leader. He has a great strategic mind. He is the core competency and the soul οf the company. News corporation has the following holdings: News Corporation selected holdings 1. The U.S. Fox broadcasting network; 2. Twenty-two U.S. television stations, the largest U.S. station group, covering over 40 percent οf U.S. TV households; 3. Fox News Channel; 4. A 50 percent stake (with TCIs Liberty Media) in several U.S. and global cable networks, including fx, fxM and Fox Sports Net; 5. 50 percent stake in Fox Kids Worldwide, production studio and owner οf U.S. cable Family Channel; 6. Ownership or major interests in satellite services reaching Europe, U.S., Asia, and Latin America, often under the Sky Broadcasting brand; 7. Twentieth Century Fox, a major film, television and video production center, which has a library οf over 2,000 films to exploit; 8. Some 132 newspapers (primarily in Australia, Britain and the United States, including the London Times and the New York Post), making it one οf the three largest newspaper groups in the world; 9. Twenty-five magazines, most notably TV Guide; 10. Book publishing interests, including HarperCollins; 11. Los Angeles Dodgers baseball team. ( source: http://www.newscorp.com) We can see from the above these holdings are interactive with one another. Till today, News Corporation is the largest integrated company in the industry. References Gruis, Vincent; Nieboer, Nico; Thomas, Andrew., Strategic asset management in the social rented sector: approaches οf Dutch and English housing associations. Urban Studies, Jun2004, Vol. 41 Issue 7, p1229-1248 Okeahalam, Charles C., Strategic Alliances and Mergers οf Financial Exchanges. Journal οf Southern African Studies, Mar2005, Vol. 31 Issue 1, p75-93 Read More