Strategic Planning in Every Aspect of Life - Term Paper Example

1. Introduction Technology has pervaded every aspect of life. It has also made it possible to communicate globally and transcend beyond time and space. The world has virtually shrunk and sitting in the comforts of their living rooms, people can watch the events around the world with up-to-the-minute details. Whether a bomb is being dropped on Baghdad or the Dalai Lama being interrogated over the China issue can all be witnessed live. Internet is a medium for both mass media communication and also personal communication. Internet makes people remain glued to their screens; they can experience events as they happen. This has affected the publishing industry in general and the newspaper sector in particular. The challenges are many and leading publishing houses have adjusted their strategies to cope with these challenges. The Chronicle Gazette too has witnessed declining subscriptions and advertising revenue. Besides, competition in the industry has intensified. It is not merely disruptive competition but disruptive innovation that has affected the media industry (Sterling, 2008). This includes the network news, cable news and now the different forms of web news. Nevertheless, despite the advancement in internet and communications technology, despite the advantages that internet has over the traditional system of obtaining news, despite the declining sales figures, the future of traditional newspapers remains bright. This report seeks to determine the best short-term and long-terms steps that this newspaper daily should take to make itself sustainable. 2. Report on the newspaper industry 2.1 Declining circulation and revenue It is generally believed that the American newspaper industry faces uncertain future because of stagnant markets, increasing competition from other media for audience attention, and changes in advertiser media choices. The publishing houses are under pressure to maximize profits and company value as many newspapers have phased out of business. The number of afternoon papers and the secondary news appears have exited the American newspaper industry. As of 2004, 98 percent of American daily newspapers are the only daily published in their city of origin (Picard, 2004). News circulate everyday of the “disruptive” changes taking place in the newspaper industry, that include disappearing readers, shrinking revenues, declining stock prices, or looming layoffs (Scott & Clark, 2006). While 80 percent of the adults read newspapers in 1981, the figures declined to 58 percent in 1999 (Thad, 2004). The circulation volume has dropped by ten percent between 1974 and 1999. Further research suggests that the younger adults (between 18 and 34 years) demonstrate reduced interest in reading the daily newspaper while those above 65 still read the paper daily. In May 2007, an analysis by the Newspaper Association of America found that the average circulation of Sunday editions nationwide reduced 1%, while weekday newspaper circulation declined 2.1 percent (Gores, 2007). Statistics by Blodget (2007) gives some interesting insights in to the news paper industry. Despite the growth of the newspaper websites, increasing in blogging and the soaring of online newspaper revenue, it has not made any difference to the newspaper industry. Even though the online revenue has been growing every year, it still accounts for only 7 percent of the total. The newspaper industry has fallen by half as far as coverage is concerned, but it remains $45 billion business which is twice as big as Google and Yahoo combined (Longtail, 2008). The distortion in perception arises because there is a tendency to give weightage to growth and the rate of growth instead of concentrating on absolute numbers. The fact remains that the newspaper industry is a huge business and will continue to be so with changes in the way it operates. The core franchise of newspaper, while in decline, continues to be solidly profitable and vitally important to the local communities (Sterling, 2008). 2.2 Statistics of the important dailies According to a Washington Post Staff Writer as people have been turning to the internet media there has been steady decline over the last 20 years in the news paper industry (Shin, 2005). Even in March 2005 there was a decline of 1.9 percent over the previous year. The Washington Post reported a weekday circulation decline of 2.7 percent, to 751,871 against the previous year during the same period. The Sunday circulation of the paper declined by 2.4 percent, to 1,000,565 from the previous year. Circulation of Wall Street Journal during the same period declined 0.8 percent to 2,070,498, and the decline was attributed to a 23 percent increase in price over the past three years. Change in the distribution strategy was also responsible for the decline in circulation. According to the Newspaper Association of America, some newspapers reported gains in circulation. New York Times for instance reported weekday circulation of 1,136,433 and Sunday circulation of 1,680,582, which was 0.2 percent up compared to the previous year in 2004. This gain was attributed to change in their distribution as they started home delivery in 318 markets against 266 of previous year. USA Today’s circulation remained steady despite an increase in prices. 3. Forces affecting the newspaper industry 3.1 External environment 3.1.1 Economic pressures Newspapers have been forced to deliver profits amidst competition. The economic pressures that newspapers face is rising and falling interest rates, fluctuating share prices, the relations with the owners, workers and suppliers, pay for facilities and equipment and a range of other pressures as they continue to be involved in creation production, marketing and distribution of newspapers (Picard, 2004). The media managers are under pressure to maximize profits and share prices. In a capitalist economy like America the newspapers have to produce profit and provide reasonable return to the owners as most newspapers are private enterprises. It is necessary for them to achieve financial strength and reinvest the profits earned. Reduction in advertising spending is also due to the downturn in the US economy as property and recruitment ads have reduced (Doran, 2008). Consolidation in the industry has forced mergers and acquisitions which could lead to larger market shares for those that emerge victors and help to cut costs also. 3.1.2. Social, cultural, demographic, and environmental forces One in three Americans go online at least once a week for news compared to 20 percent in 1998 (Thad, 2004). At the same time both local news viewer ship and regular viewer ship of network news have witnessed a decline. Contrary to common belief a study of the young adults between 16 and 24 years has found that about 84 percent watch television and listen to radio for over two hours each day but about 50 percent read newspapers or magazines even if it is for less than an hour. The internet is preferred by the young (between 9 and 17 years) and the better-educated people. Readers buy and read newspaper for wide variety of reasons that include news, entertainment, advertisements and business information (Lacy & Martin, 2004). Hence a newspaper needs to bundle content to attract readers from different interest groups. Decline in quality can reduce readership. 3.1.3 Political, Governmental and Legal Forces It is believed that the newspaper industry can thrive on international and political news but the freedom of expression has been curtailed. The publishers have to get government permission to publish the works of scholars and researchers who happen to live in countries with oppressive regimes. The publishers are not allowed to edit manuscripts from Iran or other disfavored nations. They cannot change spelling, syntax or grammar or replace “inappropriate words” or even add illustrations (Liptak, 2004). This policy is ridiculed by the publishing fraternity as no permission is required to publish but permission is required to correct typos. According to the lawyers who represent U.S. publishers and editors, the U.S. Treasury Departments Office of Foreign Assets Control (OFAC) who has imposed this rule, lacks power (Keyes, 2005). The OFAC in the first place does not have the authority to grant permission to collaborate with authors from US sanctioned countries. 3.1.4 Technological forces Technology in internet and communications have advanced to such an extent that technology has impacted the credibility of the journalists. A good journalist must possess basic computing skills and a sub-editor must have the ability to operate computer programs (Obijiofor & Green, 2001). Reliance on technology also results in journalists losing their natural word skills. The internet technology tempts the journalists to rely on anonymous sources without verifying the authenticity of the news or the event. Unethical practices have increased as face-to-face interviews have been replaced by information collected through the internet. 3.1.5 Porter’s Diamond Model Porter’s theory of competitive advantage places innovation at the centre of the process of development and competition (O’Connell, Clancy & Egeraat, 1999). This model presents a dynamic and evolutionary view of the creation of firm advantage based on a number of traditions. This requires that factors for innovation have to be created and are not inherited. The basic factors include the natural resources, demographics, climate and location while the advanced factors include communications infrastructure, sophisticated skills and research facilities. Advanced factors are a product of investment by individuals, companies and governments. New technologies and sophisticated skills play an important role in establishing and sustaining any industry. 3.1.6 External Factor Evaluation (EFE) External Factor Evaluation (EFE) consists of weighing the opportunities and threats of the company within the industry. The Chronicle Gazette while facing threats also has ample opportunities to build upon. Opportunities 1. Developing new business model 2. Having online presence. 3. Alter content to appeal to mass audience. 4. Reconsider distribution channels. 5. Have a broader mix of editorial and advertising content. Threats 1. Declining advertising revenue 2. Declining subscription 3. Defection of readers towards online publications. 4. Increased consumer control. 5. Broadband penetration even in rural areas. 6. Consolidation in the industry. 7. Fierce online competition. 8. Rising newsprint costs. Competition is good for the news paper industry as competition forces exert pressure on the company to spend money to attract the readers. As the quality improves and the rates reduce, more readers are attracted to read the newspaper. Competition also pushes the journalists to perform better. Competition should not be viewed as a threat but an opportunity to improve. 4. Internal assessment 4.1. Organizational processes and structure The Chronicle gazette is a leading newspaper in a major metropolitan area and has a strong brand reputation; it has a paid circulation of 225,000 customers. They do not have an online presence and appear to be crumbling due to the pressure exerted by the competitive forces. 4.2. HR capabilities It is a first-rate newspaper and its writers have won awards but they have not changed with the time. Their attitude remains the same and they have not adopted technology. 4.3. Financial position Financially the company is sound but for the past eight years the subscription and the advertising revues has declined and the company has been facing trouble. 4.4. Marketing/sales capabilities No attention has been paid to the changed market forces and trends in the industry. 4.5. Operational capabilities The organization has capabilities but need some direction. The members of the executive committee are experienced, responsible and adaptable to the changing market forces. 5. Companies in the industry adjusting to technology The market conditions influence the strategies of the newspaper companies and no firm can escape this influence. Firms started commercializing without a firm vision and strategy. This led to compromising on the quality, public service and responsibility (Picard, 2004). The American Press Institute (API) is the oldest and largest center for professional development in the industry. To face the challenge they focus on non-readers and non-advertisers to determine what information-driven jobs they need to have done (Sterling, 2008). They then design new solutions to attract this segment. News papers have to differentiate as far as the news that they publish is concerned. Pressures force them to increase prices but market conditions must change before firms can increase prices without losing all the customers (Lacy & Martin, 2004). News papers do not compete for prices. They offer a different sort of value for the price which consumers do not get elsewhere. They offer product differentiation and then they are in a strong position to increase price and make profits as in the case of USA Today. Disruptive changes have to be spotted timely and resources have to be allocated. Disruptive innovation has to be introduced to the existing business model. Most newspapers still focus a larger portion of their time and attention on the print product instead of on new disruptive models (Scott & Clark, 2006). Many have started their own online version but they have merely replicated their print model online instead on a new business model. Metro International has augmented its contents with substantial contribution from wire feeds and reduced distribution costs by placing its papers in centralized locations. Challenges that are posed to the news paper industry include free news items available on the internet. Some have even started free dailies like the Examiner which is targeted to attract the young readers and time-strapped families (Ahrens, 2005). The Washington Post has responded to the challenge by distributing free commuter tabloids full of entertainment stories and entertainment news. News-Star prints a magazine that features articles about Oklahoma women ten times a year. The Post has conducted extensive research of non-readers to understand why they do not buy the newspaper. Both the readers and the non-readers want more plan-your-day information on local news and entertainment. They have also expressed that the paper should be as easy to navigate as the online news magazines or papers. Advertising on the internet is more lucrative than in the newspapers as they have a feedback mechanism not available in the print media. The New York Times and the Washington Post are both considering charging for premium content on the website as the consumers have been trained to get news items free of charge. 6. Recommendations for The Chronicle Gazette Thus the challenges that the newspaper industry faces are technology, costs, quality and attitude. New technology is impacting the how one can access content and the publishing industry too can expect an explosion in sales. The newspaper industry has to get rid of old system and attitude. Today there are new market forces, new distribution models and new competition. Online presence poses both threats and opportunities and this fact cannot be ignored. Publishers have to get rid of old system and the old attitudes if they have to remain in business and generate profits (HarperCollins, 2008). They have to stop behaving like venture capitalists. The Chronicle Gazette should focus on the opportunities which would help them to combat the threats. 6.1. Short-term steps First and foremost, the journalists, the editors and the sub-editors have to be trained in computer technology and computer programs. They have to be up-to-date and as per the industry requirements. Online presence is absolutely essential but this should be with a differentiation. As suggested by some authors, product differentiation has to be considered for survival. The demographics suggest that the older age group still prefer the print media while the younger generation prefers the online version. The Chronicle Gazette should hence strive to satisfy both the consumer groups and not have a replica of their print media online. If this is done, consumers being trained to acquire everything for free, would further stop subscription of the print media and turn to the online version. The print version and the online version should have different content to attract different consumers groups. This would be strategic as well as innovative as the Porter’s Diamond Model suggests that innovation can help to have competitive advantage. 6.2. Long-term steps The content that is written by the journalists has to be modified to suit the mindset of the new generation. The Chronicle Gazette should seriously consider tying up with major search engines like Google, Yahoo or the latest Google rival cuil.com instead of merely accepting them as threats. They have to embrace technology and one of the ways in which they can effectively use technology is to start a focus group of its readers. This should further be segregated into different sections depending upon the category of news that they are interested in. This would help The Chronicle Gazette to assess which are the most popular topics/subjects that are appealing to its readers. Online advertising is directly related to readership and hence innovative ways have to be devised to attract readers. They could think in terms of contests among the readers. There could be rewards for referrals which could be investigated the first time a reader visits the website. This would enhance readership and increase loyalty. To generate advertising revenue, there should be discounts offered for those that would like to include their advertisements both in the print media and the online version. The paper size of the print media could be reduced to make it handy thereby also taking care of the costs involved. Investments have to be made in training the people to use and implement technology because technology alone can increase revenue and allow the company to become solid and stable. References: Ahrens, F. (2005). U.S. newspaper industry struggling. MSNBC. Available from: http://www.msnbc.msn.com/id/7000036/ [accessed 31 July 2008] Blodget, H. (2007). Death By Month: Tracking the Newspaper Industrys Decline (NYT, DJ, TBC, GCI, MNI). Available from http://www.alleyinsider.com/2007/8/death_by_month_ [accessed 31 July 2008] Doran, J. (2008). Besieged US newspaper journalists face final deadline. 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