Market Analysis of the Newspaper Industry - Case Study Example

?Analysis of Newspaper Industry PEST analysis, its purpose, and the business benefit. PEST is one of the most important planning tools used to analyze a given environment before initiate a project or business. PEST, otherwise known as PESTEL stands for Political, Economical, Sociological, Technological, Legal, and Environmental. PESTEL is an important tool used for analyzing the business environmental influences and potential changes to guide strategic decision-making (Burgemeister 2003, p. 13). In order for an organization to make effective decisions and plan effectively, the organization must be able to have a thorough understanding of the wider meso-economic and macro-economic environment where it operates. Meso economic environment is that environment where the business operates but has limited influence over. Macro-economic environment, on the other hand, include factors that impact an organization, but the organization have no direct control. Understanding these factors is very important for an organization since it makes it possible for an organization to take advantage of the opportunities available and minimize the risks that an organization may encounter. Conducting PESTEL analysis entails scanning these environments to spot and understand the broad and future trends (Burgemeister 2003, p. 13). PESTEL analysis acts as a useful tool for understanding the business environment in which an organization is operating. For example, PESTEL analysis helps organization understand risks associated with market growth or decline. This is important because it help an organization in making a decision as to whether to venture in a given market or not. For instance, before newspaper business can venture in the British newspaper industry, it is crucial for that company to conduct a PEST analysis. The analysis will help the company have a good understanding of the British newspaper industry in light of the politics at play, economic situation, socio-cultural, technological and environmental issues involved. If the PEST analysis shows the British environment to be conducive for business, then the company can go ahead to establish a business in the country, otherwise the company will stop making such a move to avoid risks revealed by the PEST analysis (Burgemeister 2003, p. 15). PEST analysis also acts as a useful business orientation tool. In this regard, PEST is used to establish when the organization or product is with regard to what is taking place outside that might affect activities taking place inside an organization at some point in time (Burgemeister 2003, p. 15). PEST analysis for the British newspaper industry Political Britain is one of the countries that enjoy strong political stability in the country. The political stability enjoyed in the country has created a conducive environment for doing business. The newspaper industry, in particular, has enjoyed growth in Britain due to political stability. In fact, the British government usually promotes the growth of newspaper since it is used as a means of communicating with the people. Nevertheless, there has been growing move by politicians and celebrities in the country to have control of newspapers. This follows a recent Royal Charter that proposed a regulation of the newspaper industry (IBISWorld 2013). This kind of political interference is posing real danger to the industry that has enjoyed freedom for decades. Despite the move by politicians to regulate the industry, the future of the newspaper industry in the country remains bright. Economical British is one of the countries that have suffered most from the financial crisis accompanied by recession that rocked the country in 2007. The newspaper industry is among the sectors that have been worse hit by the recession. The financial crisis in the country saw many people lose their jobs and the prices of basic commodities skyrocketed due to inflation. This has since resulted in a decline in the number of newspaper consumers in the U.K. Research shows that a majority of those who used to buy newspapers are finding it doing so due to the poor state of the economy. As such, most consumers are opting to use the little income to purchase basic commodities instead of a newspaper. Currently, newspapers in the U.K. are bought mainly by the middle-income earners (Pym 2013, p. 4). However, not everything is lost for the newspaper industry in Britain, as the government has designed an economic stimulus, which is aimed at improving economic growth. The latest economic report of commissioned by the Office for National Statistics (ONS) showed that the British economy grew by about 0.8%., which service, manufacturing and construction industry all registering a significant growth. The growth is also expected to continue in the foreseeable future. This is a clear indication that the newspaper business in the country will soon be booming, as people will be having enough cash to buy newspapers. In fact, the survey also indicated a significant growth in employment in the past few months, which is a good signal for companies intending to venture in the British newspaper industry (Pym 2013, p. 4). Sociological Sociological factors also impact hugely on industries, British newspaper industry not an exception. Britain is one of the most multicultural countries in the world. These impacts hugely on the performance of newspaper industry in the country. Generally, British are regarded as a reading nation. Most British nationals have the culture of reading. This has spurred the growth of the newspaper industry in the country. However, this industry is under the threat of the changes in cultural norms, beliefs, and attitudes. Research indicates that British nationals are increasingly becoming health conscious with some believing that one can contact diseases by reading newspapers. Many people also prefer to read newspapers online, as opposed to buying a printed version (IBISWorld 2013). Technological The emergence of the internet has greatly changed the way people receive information. The external environment of the newspaper industry in the U.K. is among those that have largely been impacted by the emergence of the internet. In this regard, the print media in Britain is gradually being substituted by the internet. The internet has also increased competitiveness with easy barriers to entry that require few resources and low capital. This is posing a real threat to the print publications in the U.K. With internet in almost every household in the U.K., people are able to open sites and read all information that can be found in newspapers. This change has compelled giant British newspaper companies such as Guardian and Verdens to compliment their daily prints with online version. These sites are updated every time without necessarily having to way until the next day’s print. The emergence of the internet has also made it possible for people from all over the world to access British news in a click of a second. The internet and technological advancements has significantly changed habits of readers and their perception of news. This has resulted in a significant reduction in demand for prints (IBISWorld 2013). SWOT analysis of the British newspaper The Guardian. SWOT analysis is a business tool used to assess a company’s strengths, weaknesses, opportunities, and threats. The Guardian is a British newspaper publishing company and is one of the oldest and largest autonomous newspaper companies in the world. Guardian has proved to be a newspaper of choice for many readers in the U.K. and beyond due to a number of reasons. Firstly, The Guardian commands broad market coverage at different locations of work. The newspaper mostly targets a selective segment of the market, including the educated class, analysts, and philosophers. In addition, the fact that the newspaper is available in different sizes and the strong distribution network distinguishes the Guardian from its competitors. The Guardian also enjoys a strong following and demand since it is written by some of the most famous writers of all times. Some of the writers of the newspaper include W T Arnold, Norman Bentwich, Brian Aldiss, Ohn Arlott, Karl Capek, Asa Briggs, and Michael Billington, just to name but a few. In addition, The Guardian has a peculiar packing, which makes it distinctive and easy to recognize. Further, the newspaper has unbeatable global resource. The company has established a contractual agreement with Washington Post and Le Monde for unique access to the new stories (IBISWorld 2013). The major weaknesses of The Guardian include its limited market of the demographic market segment. It is noted that, despite its good circulation, its profit still fall below those of its major rivals such as The Mirror and the Sun (Intelligent Life 2012). Newspaper industry still has a wide opportunity the Guardian can explore. So far, Guardian newspaper is doing so well in the U.K. and the U.S., where most of its circulations is concentrated. However, Guardian newspaper still has plenty of opportunities to expand its readership. The Asian market, for example provides good opportunity for Guardian newspaper. In addition, the availability of the internet also provides it with the opportunity to expand its readership beyond its current limits (Intelligent Life 2012). As far as threat is considered, Guardian newspaper faces still competition from other newspaper firms such as The Mirror, Observer, Telegraph, The Times, and the Sun. As such, any strategic, move made by these firms can result in a decrease in popularity of Guardian newspaper. The emergence of internet publications and internet newspapers also poses a serious threat to Guardian newspaper (Intelligent Life 2012). Lewin’s Field Force Analysis Field Force Analysis is a decision making tool developed by Kurt Lewin in the 1940s. The tool is used as a change management tool by helping make decisions by analysis the forces that promotes change and those that are against change in an organization. It also act as an effective communication tool since it helps managers in communicating the reason behind a given decision taken. The technique is applicable in two situations namely to decide whether to initiate a change and to increase success chances by intensifying the forces that promote change or weaken those that are against change (Singh 2009, p. 31). Field Force Analysis for the British newspaper industry The State of the British newspaper industry Newspaper industry is undergoing a lot rapid changes. This is attributed to the spate of technological advancements. The U.K. newspaper industry, for example, has registered a decline in revenue in the recent past as more and more people are finding it convenient to get information on the internet. The advertising through the newspaper has registered a significant decline in revenue as companies and individuals currently use the internet and other technologies for advertising (Cridland 2009). Desired situation The British newspaper industry needs to be at a state where it can compete favorably with the emerging technologies by going completely digital in which news is made available on the internet. Where the current situation might go if nothing is done Business and technology analysts agree that newspaper industry; particularly, the print might soon be faced out of the market if nothing is done to arrest the situation. This is because it might soon be replaced entirely by the online publications. Forces driving the change towards the desired situation The forces driving the British newspaper industry towards the desired change include the emergence of the internet, which makes it possible for the print newspaper to be digitalized. Others include the need for increased revenue, and wider readership. Forces resistant to change Despite the desire to make the changes, there are forces that resist this change. These include uncertainty of the newspaper market, concerns of loss of revenue, loss of jobs, and awareness of the shortcomings in the proposed change. These can be represented in a scale: uncertainty-extremely strong; loss of revenue-strong, loss of jobs-weak; awareness of the shortcomings of proposed change-very weak. Despite the resistance to change in the British newspaper industry, change is viable, thus should be initiated. This is because the world has completely been revolutionized by technology. This implies that less and less people will be reading print newspapers in the near future. Reasons why the Indian newspaper industry is not facing the same challenges as those in the developed economies Several reasons explain why the Indian newspaper industry is not facing same challenges as those of other developed countries. Firstly, the increase in literacy rate coupled with the increase in disposable income among Indians has created millions of potential newspaper readers. Report indicates that literacy rate in India has grown by about one-third. This accounts for about 35% of India’s population in 1976 to about 82% of its population as of 2009. As a result, many Indians are hunger to know, a situation that has resulted in the increased number of people reading newspaper in India (Santhanam and Rosenstiel 2012). Unlike in developed countries, reading a newspaper is considered something meant to inspire rather than a throwback, as witnessed in most developed countries such as in the U.K. Executives in India reveals that anyone India reading a newspaper is still being looked at with a lot of respect. As a result, some people still buy newspaper in India for prestige, as opposed to people in developed countries. Once an India learns how to read and write, they become extremely excited of their new skills. As a result, the first thing that such an individual does is to make sure that people and neighbors sea them read newspaper as a show of their new skills. These factors certainly explain why Indian newspaper industry has not suffered from the problems that other developed countries have faced (Santhanam and Rosenstiel 2012). References Burgemeister, S 2003, Market analysis. New York, NY: GRIN Verlag. Cridland, J 2009, Newspapers in the UK: An introduction. September 29, 2009. Viewed 30 Aug. 2013 http://www.mediauk.com/article/4/newspapers-in-the-uk-an-introduction. IBISWorld 2013, Newspaper publishing in the UK: Market research report. Viewed 30 October 2013 http://www.ibisworld.co.uk/market-research/newspaper-publishing.html. Intelligent Life 2012, Can the guardian survive? Viewed 30 October 30, 2013http://moreintelligentlife.com/content/ideas/tim-de-lisle/can-guardian-survive. Pym, H 2013, UK GDP: fastest growth for three years. BBC News, 25 October 2013, p. 4. Santhanam, H. L., & Rosenstiel, T 2012, Why U.S. newspapers suffer more than others. Viewed 30 Aug. 2013 http://stateofthemedia.org/2011/mobile-survey/international-newspaper-economics/. Singh, K 2009, Organization change, and development. New Delhi, India: Excel Books India. Read More