Table of Content
Executive Summary
SWOT Analysis
Strengths
Weaknesses
Opportunities
Threats
Mission
Strategies of TNC
Rational for Diversification to Satellite Broadcasting
Motivation for Diversification to Satellite Broadcasting
Diversifying into Satellite Broadcasting
Advantages of Acquisition
Disadvantages of Acquisition
Conclusion……………………………………………………………….
Executive Summary
The company’s overall performance are said to be influenced by internal and external environment. Such environmental aspects specifically impact the functions of the management of specific industries. In this regard, the company must consider efficient and effective management approach to lessen the impact of such factors and maximize the positive effects of these internal and external influential factors. Herein, this report aims on discussing and evaluate the strategic and competitive position of The News Corporation (TNC) through the use of marketing tools such as SWOT analysis. In addition, this paper will also evaluate the motivation and rational behind TNC approach of changing into satellite broadcasting and assess the advantage and disadvantages of acquisition as an approach of international expansion in accordance with what have been considered by TNC. Finally, this paper will also attempt to provide pertinent recommendation for a strategic development plan for the company from 2006 to the future.
1. Discuss the strategic position of TNC in 2006 emphasizing the strengths, weaknesses, opportunities and threats for the organization at that time.
Strengths
· The ability to transform and to diversify from he conventional media industry to a major digital player is one of the strengths of TNC.
· The leader’s personality which give emphasis on a consistency approach. Which enables Murdoch to understand the business more and get into the core of the business to ensure successful operations?
· Good financial performance making TNC one of the largest in the listed company.
· The recognition as one of the media and entertainment industry in the global market since the acquisition of Sun newspaper and converting it into a tabloid format, which enhances the sale and increases marketability daily.
· The international expansion has made the company more globalized and enabled them to build a strong internationally recognized brand which attracted different types of customers.
· The intense financial strength having -55.7% of the total revenues in the fiscal year 2006. Such increase in revenues from the US and Canada have reached $14,102 million in 2006, which improve on an increase of 9.5 over 2005
· The ability of the company innovates and development new products to meet consumer demand. The diversification of their products gives different varieties and fills the gap for more multiple demographic groups in the marketing mix.
Being a globally and internationally recognized media industry, TNC, it can be said that the company hold a strategic position in the media market. Based on the given case, it is stated that when TNC streamlined and reincorporation in 2003-2006, they already gain advantage in terms of size and market niche. With the multibillion income and sales, TNC has outgrown their major rival companies to be the largest firm in this market. In addition, the decision of the management to diversify and the consideration of committing to satellite broadcasting and its acquisition of the MySpace.com, the company has been able to enhance more its strategic proposition and developed a brand which is difficult for other rival companies to outgrow. Likewise, the firm has been characterised by different analysts to be capable of adapting to changing market needs so as to maximise their profit. Their ability to listen and identify the needs of their target market has permitted TNC to construct corporate culture that is recognized by their loyal and satisfied clients.
Another strengths of TNC is their ability to continuously reinvent and enhance their service in line with the internet, media and communication while efficiently managing the needs of their customers which enables them to maintain leader status in the competitive market.
Weaknesses
• Poor management structure of the company which is very informal and emotionally influenced.
• The management control of Murdoch may have negative effect on the company
• The inability of the management to compliment as Murdoch does not consider the interests of the shareholders.
• Financial issues because of the breach of the private bank loan contract and agreement.
• The inability to use strategic planning for company operations.
• Decreasing market share due to the existence of substitute industries like Virgin.
• The management’s poor recognition of the broadband internet technology which may lead to high investment risks and costs.
• Poor management of the information technology which may lead to mismanaging important documents and insecurity of such information.
TNC is focusing too much on the high-end acquisition and diversification despite of the risky impact of their decisions.
Opportunities
The basis for the long-term success of the TNC is their ability to continuously develop new generations of more advanced media services. Hence, one of the TNC’s opportunities is their chance to tap into more markets as the output of their innovations being provided in the television, media, and internet industry.
· Technological development – the transformation from the conventional terrestrial system of TV distribution in competition with cable system and satellite, to the adoption of digitalization as well as the recognition of the importance of the internet.
· The coverage of the Iraq War from 2003 makes the company to be recognized in the market.
· Having new subscribers because of the exclusive rights to Broadcast of English football Premier League
· The chance of developing single-language media in the US market.
· The option to control satellite programming through their decoding technology as their response to the law passed by China
· The opportunity of modifying the broadcast content to meet the demands of the Asian market
· Achieving market development because of the acquisition of Turner South to attain market and product development.
· Acquiring two other newspaper groups for increasing the market share (market penetration)
· The opportunity to have a strategic alliance with China Mobile, to develop innovative media products and services/
· Continuous global market expansion takes advantage and generates new markets to increase its profit. Specifically, with the developing countries.
TNC has also the chance to enter new growth markets because of their acquisition of Myspace.com. They also have the opportunity to get ahead of their competitors.
Threats
• The slow economy in the main market of the company may affect their international expansion which posts threats on their global position.
• Threats of the specific country policies and regulations where TNC is operating
• the inability to make their program used the local language may serve major threat in international expansion/
• Other rival companies of TNC may post greater challenge like Virgin in UK and Disney in the US market.
• Inability to meet environmental expectations of the company may post threat to the overall performance.
• the emergence of the internet may hinder the growth of newspaper and other print and publishing of the company.
• Changing consumer behaviour and media market may post a threat to TNC.
• Inability to cope and adjust to the technological advancement may generate critical challenges to the entire business operations of TNC.
• The inability to retain loyal clients can also post a threat for the TNC in operating successfully.
2. Evaluate the rationale and motivation behind TNC’s strategy of diversifying into satellite broadcasting
Mission:
To give the highest quality content with the most convenient marketing communication approach and distribution channel, among different clients, News Corporation has been able to offer high quality and innovative media services and productions which suit the needs of the people in the world market.
Strategies of TNC:
· Willingness to accept changes in terms of management approach to meet the needs of the global market.
· Investing in new businesses and generating new trends in the media and broadcasting industry than acquiring and buying existing companies
· Consideration of the shareholders and maintaining good relationship among shareholders to enhance market share.
· Strengthening bargaining power as well as market position through the use of e-purchasing on their supply chain, specifically for Sun and Times newspaper.
· Raising investment fund through the use of bank loans and loans from other financial institution that offers minimal interest.
· Continue their expansion through merging and acquisition to enter the new market or new international market.
TNC is in line with their ability to change ad adjust the business into an industry which give the latest and innovations in the media corporations. TNC objective is to establish a business empire which is united, creative and logical and to create a corporation that utilizes strategic opportunities as they arrive, with the aim of anticipating challenges brought by the changing environment.
Rational for Diversification to Satellite broadcasting
1) To gain economic of scales the company should learn to share their expertise among others and efficiently manage their resources as well as personnel across platforms in the global market.
2) In line with the personality of Murdoch, the leader should have the ability to retain full accountability and control through acquisition approach.
3) The aim of the company is to transform the media industries to become major digital player in the market
Diversification Rationale
Rationale
Strategic Stretch
F Strategic use of resources
F Generating economy of scale
Generate connections in the value chain
F Consideration of technical /
management expertise
Improvement of key success factors and core competencies
F Reduction of dependency on
one revenue strength
Generating robust business portfolio
Create Linkage in Value Chain
F Meeting the needs and demands of both the customers and the shareholders.
F Providing as many clients by giving superior quality content with the use of convenient and affordable distribution channels.
F
Enhance core competency
F Using well integrated strategy which will includes management and technical expertise and skills of the employees to enhance core competency.
F Strengthening of the industry’s ability to responds on global events and incidents.
Creating robust business portfolio
F Transformation from traditional media industry to becoming major digital player.
Motivation for Diversification to Satellite broadcasting
· Creating a media empire I terms of agility to have strategic opportunities and to sustain their management control and competitive position in the international market.
· It enables TNC to gain enhance the distribution of any channel, which allows them to distribute programmes to different nations
· Murdoch’s aim of international expansion will pursue.
· International expansion will generate more revenue and profits of TNC.
Diversifying into Satellite Broadcasting
l Satellite Broadcasting enables TNC to establish an effective distribution channels that provides high quality content for consumers,
l Higher Revenue and Profit
l The diversification enables the company to gain more revenue and profit due to the emergence of new subscribers.
l Diversification enables TNC to be considered as the most competitive and the most profitable television broadcaster in the entire UK.
l Political Factors
l The influence of the leader of TNC enables them to meet the challenges of regulations and policies of politics and government.
l It enables them to adhere to the national regulatory systems of the host country.
l The political relationship will bring the company into a better performance.
l Low Cost
l Through the use of different distribution channels, the resources of TNC which include their expertise are able to fully utilised to reduce variable and operational costs.
3. Evaluate the advantages and disadvantages of acquisitions as a method of development with particular reference to the acquisitions undertaken by TNC.
Acquisition of the company can be said to have advantages and disadvantages. TNC has been involved in major deals in the media market from 1981 to 2002. The company has acquired different companies such as Gemstar-TV Guide DirecTV and also they acquire small stakes of 20th century fox and other local TV stations. Furthermore, TNC has started to operate a satellite TV system for their UK subscribers and also invested in Asia for another TV system which is Star and cable Fox News Network. The latest acquisition of the TNC is their acquisition of MySpace.com which is the largest social networking website in the internet.
Advantages of Acquisition
• It helps in speeding up the international and global expansion from being an Australian based to global multinational corporations.
• Enables them to diversify their products and services and easily develop new products through the acquisitions with NewsCorp, BSB and others.
• Enabling them to reach various types of clients and reaching target audiences easily.
• Helps them to easily enter US market and UK market through the acquisition of companies like 20th century fox, NewsCorp and others.
• Enabling the company enter new market and business venture like television, print and publishing industries, direct TV, internet news and satellite broadcasting.
• Increasing market share and market growth and reaching different types of clients.
• Market domination because of the existence of newly developed products offered by TNC to the market such as the satellite broadcasting.
• Generating competitive position in the market environment and becoming the market leader.
• The chance of reducing costs of initial capital and expertise because of acquisition of existing business.
• generate loyal and basic group of clients such as their 11 million TV viewers from Direct TV alone
TNC is in line with market niche growth. With their acquired industry, TNC has been able to diversify their business and meet the demands of the clients in the global market. Furthermore, through this, TNC has also been able to see their potentials in various markets which include the online market. The investment of the company has also grown because of this acquisition, specifically in terms of the market share. The industry has more opportunities to provide innovative services in the communication and interactive media leading to their success.
Disadvantages of Acquisitions
Many acquisitions are in line with the threat of major downfall if they are not able to handle the acquired companies effectively. The acquisition also entails large values of financial budget involved and if the company would not give importance with each acquired companies, then they have to meet economic disability in the future.
• Increase debt since acquisition needs larger capital and investment to buy or acquire existing company such as the NewsCorp.
• Increase debt for investing in the acquired company in enhancing and improving its marketability.
• Restrictions due to the government policies and regulations for some business operations this includes the prevention of the UK and US law for expatriate to hold certain percentage of any industry in line with the broadcasting license.
• Acquisitions may encounter some risks in going against political and government law.
• Financial risk in terms of radical expansion which is due to rapid decision making and acquisition. Because of the slowing of economies in main market, gap in terms of working capital may lead to higher and expensive short-term lending.
• Implications in terms of breach of contract from private bank agreement because of unpaid high debt level used for acquiring companies.
• Cultural diversity may lead to employees and management clash and conflict or issues.
• May lead to shareholder issues because not all may be given the opportunity to have transparent information.
• Inability to cope up with the expectations of the hosts countries and the government, environmental and customer expectations.
4. Recommend a strategic development plan for TNC from 2006 on wards – justifying the recommendations made.
TOWS Matrix
External Opportunities
(O)
External Threats
(T)
1. Enhance and expand the market of its Internet Business
1. Emergence of highly competitive company.
2. Growth of the company’s subsidiaries.
2. Economic downturn.
3. Increased customer loyalty.
3. Increasing prices of key inputs.
Internal Strengths
(S)
SO
Focusing on internet marketing approach to enhance internet market.
Providing high quality content to gain customer loyalty and good customer relationship
ST
Strong reputation and resources of TNC attract industrial expertise which can improve customers’ trust in considering its Internet channel.
Consideration of Joint venture to improve and expand market portfolio
Enhancing information technology and technological equipments to outgrow rival companies
1. Good Customer relationship
2. State of the art equipment and facilities that caters to the needs of clients
3. Access to cheap and secure financing.
Internal Weaknesses (W)
WO
Managing financial resource effectively to minimise weaknesses
consider joint venture and other investment to international market to enhance customer reach
WT
Applying strategic management structure to gain shareholders trusts
Investing in information technology infrastructure
Enhancing brand loyalty though customer satisfaction.
1. Saturated Market
2. Inability to manage financing sources
3. Limited access to international markets.
Recommendation (Strategic Development Plan)
The result of the analysis using, TOWS Matrix have resulted in strategically choosing the most appropriate management approach to minimise threats and weaknesses and maximise opportunities and strengths of TNC. Herein, it can be said that the management can use total quality management to ensure that they meet and satisfy the needs of their clients.
Ø Strategy Description
In order to ensure competitive advantage and to be able to take advantage of their opportunities and strengths and to minimize the effects of their weaknesses and threats, the company is recommended to consider the following vision for the next 5 years. Vision is an important aspect of strategic plan to make sure that the innovation is successful. In this regard, the following are some of the probable vision for TNC which they can use as part of their enhancement and improvement to achieve organization objective.
· To be known as a diversified industry that provides innovative and high quality diversified products in different industries.
· To be identified as industry that provides the needs and demands of the consumers by using technical and technological advancement as an integral part of its corporate strategy.
· To be the leader in providing diversified customers both from individual and organisational level by means of strategic management.
Herein, the strategy that should be implemented by the company will be based on strategic management approach, through integrated management system, focusing on their globalization, internationalization and technological advantages.
Ø Action Plan
This part of the report, aims on identifying if the firm is capable of initiating the said strategic actions (Avison & Fitzgerald, 2003).
- Project Management
The consideration of project management as part of the action plan is important since it enables the company to determine the responsibilities for implementing the new strategy for The News Corporation Company. Herein, project management requires their human resources to posse’s innumerable competencies from management proficiencies, personal skills, technical professionalism and other important aspects to adjust with the changes by the external market factors (Meredith & Mantel 1995).
- Specific Processes to Successfully Implement the Action Plan
A. Team Organisation
The strategy will not be able to pursue without the team that will implement such strategy. Hence, the team for TNC includes the top management and chosen employees
B. Controls Establishments
In order to implement the plan effectively, the management of TNC should consider the control of establishment which includes scheduling and monitoring. Scheduling is helpful to have a guidelines and guidance in implementing the change and monitoring is needed to know which part of the project or strategic actions needs to be improved.
- Contingency Planning
This is needed to make sure that the company will have a back-up strategy in case the first approach is not successful in making the company competitive in the next five years
Conclusion
It can be concluded that the management must be able to know what is occurring in the internal and external environment of the company. This is also done to know if changes are needed by the company to meet the changing needs of the clients. In this regard, strategic management through proper organizing, planning, leading and controlling is needed. Through this, the management will also be able to counter the negative effect of technology advancement and other internal and external factors.
0 comments:
Post a Comment