Internal Operational Niche, Market Dynamics and the General Technological Environment
This business plan focuses on the deep analysis of the current state of affairs at the Chronicle Gazette and draws a roadmap to recovery and eventual bright future. This strategic plan assesses the internal operational niche, market dynamics and the general technological environment that have mutated the print industry, especially in the last decade. The plan also makes recommendations on the critical sections in the newspaper business portfolio and innovations that the paper should implement if only it is to stand in a better position to regain its market share and remain competitive in the current turbulent and highly competitive media industry. Logical plans on how to incorporate into the paper other new media that have been proofed to be very sophisticated in content transmission both speed and versatility are also put into perspective. The plan is in line with the corporate proposition that planning is the beginning of survival and prosperity in the market.
1.0 Introduction – goals of the report
There has been very strong competition in the media industry, and this has led to many companies to run into losses and other even closing down their businesses. Every day there are innovations in the industry and virtually new news media are coming up nearly on a daily basis. These new outlets have made the competition of newscast nearly unbearable since most of them use the internet to convey information to the data consumers. Murdoch in 1990 said that the competition between newspapers and electronic media was so fierce that in many countries readers were moving away from reading newspapers. However, print industry has proved to some extent its ability to overcome competition that electronic media have posed over nearly one decade. With the most recent inventions of media such as Facebook and Tweeter information is relayed to consumers almost immediately it occurs, and this has made newspapers less efficient in timeliness. The new media have embraced globalization, and this has enabled them to reach their publish news online anywhere in the globe. Newspapers, particularly Chronicle Gazette have been affected by this trend and a new strategy of re-invention must be formulated to address the currently experienced crisis of loss in market share and revenues.
2.0 State of the newspaper publishing industry today
The effects of market decline and change in the tastes of customers who have switched their allegiance to electronic media have been felt across the industry. In the last one decade, the subscriptions made to the Chronicle Gazette have fallen to a tune of 35% and the revenues from advertising have also been recorded to have dropped by 28% over the same duration. Other newspaper publishing houses like The New York Times and Washington Post have also experienced steady declines in revenues and sales despite the fact that population of news consumers is rapidly increasing.
2.1 Data on declining circulation and revenue
The circulation of the newspaper in the major towns like Washington, New York, Chicago and even Florida where it claimed dominance for a long time, has been declining at an alarming rate despite efforts made by the management. Circulation has decreased by 28%, and there are no signs of the trend reversing. Chronicle Gazette have recorded decrease of revenues by 23%, and this was brought about by a decline in sales.
2.2 Status of newspaper leaders, e.g., New York Times, Wall Street Journal
Other newspapers like New York Times and Wall Street Journal have neither been spared by the harsh market dynamics. The New York Times in its report of 2015 on revenues, there was recorded an increase of total revenues by $14.5M over one decade which translates to $1.4M per year but his was brought about by raised paper prices and digital advertisements but not an increased market share. However, revenues from advertisements reduced by over 5%.
The Newscorp annual report of 2014 indicated that operating income in the industry has dropped. The report also indicated that The Wall Street Journal, deemed as the leading business publisher worldwide, also experiences difficulties in the revenue decline in the publication portfolio thanks to its already diversified operations.
3.0 Why newspapers are facing declining circulations and revenues
The decline in circulations and revenues collected from the operations was cumulatively brought about by the stiff competition from other media outlets like television, Google, Yahoo, Hotmail among others that utilize internet resources to convey news and make adverts to customers. They edged the newspapers in the sense that they can report news immediately it occurs and they are relatively very cheap for customers to access their content as compared to newspapers. Businesses have also reverted to make advertisements via these media as they are cheap to place an advert and can easily reach target group with much ease. This “migration” of customers has left the industry with no option but to gamble on the already constricted market for survival. The following are the other factors that have led to the decline in revenues collected and general competitiveness of newspaper publishers.
3.1 External assessment
There are numerous factors originating from the external that have affected and still affect the normal functioning of the Gazette and the entire newspaper industry. They range from customer originating factors to government initiated ones. They include:
3.1.1 Economic forces
The worldwide downturn in the economy forced the paper to reduce costs.
3.1.2 Social, Cultural, Demographic, and Environmental Forces
There are petite effects brought about by the both social and cultural factors as it has been established that people are willing to purchase the newspaper that are in circulations. It has also been established that individuals who are fifty or more years are willing to purchase the paper unlike those of a younger age who are now over-reliant on online media “for instant news.” Wall Street Journal, Washington Post and New York Times are the leading papers in the market regarding customer preferences, market share and financial position.
3.1.3 Political, governmental and legal forces
Political decisions have mainly affected the operations of the paper through its regulations on the type of content that newspapers should carry and general freedom of journalists. Restrictions have been put in place to limits the operations of all the newspapers outside their mother states. This has affected Chronicle Gazette as it cannot freely collect information beyond its niche.
3.1.4 Technological forces
The forces of technology are so far the greatest contributors of the downfall of revenues not only in the Chronicle Gazette bur also in the whole newspaper industry. Advertisers have shifted their advertisements to pop-up online technique and large search engines like Google, Facebook, Yahoo and televisions the greatest beneficiaries of this change. The online sites are preferred because of many factors; they are cheap to place an advert as compared to newspapers, are fast and can reach customers anywhere in the world just by a dial on “Post tab” and the adverts are always available for customers to review in the fullness of their as they reappear now and then as one surfs in the internet. Unless the newspaper embraces the new technologies too, the dilapidation of the newspaper printing industry will completely cripple its operations in less than a century. About the remarks made by Janet Robinson, the Chief Executive at New York Times, the leading paper has resorted to new technology and online platform as a strategy of opening the new avenue for revenue to stream in.
3.1.5 Competitive forces (e.g., Porter’s model)
The Porter’s Model is used to the competitive industrial environment of the paper. New entrants into the market have posed little to medium competition since the economies of scale in the production of the newspaper; sales and good will from loyal readers have been taking advantage of by the Gazette. There has not been product differentiation because of every newspaper report on various happenings differently. Entries into the market by other newspaper houses have been tough as the entry requires large capital to purchase items like modern printers, cameras, and even recorders. Major companies make advertisements through already established newspapers like Chronicle and they totally don’t advertise with start-up houses. Daily copies made by major newspapers like NYT, WP, and Chronicle Gazette are of larger to meet the current demand, and for this reason, their prices are relatively low making it difficult for entrants to compete. Major retail distributors now charge for space on their shelves and give priority to the established newspapers as they are ones that customers buy the most, giving them (retailers) more incentives.
3.1.6 External Factor Evaluation (EFE) matrix
Rivalry among the old newspapers is currently very stiff as every paper are scrambling to maintain and even gain more market share that is being taken by online publishers at a very high rate. Other papers like The New York Times and Washington Post have lowered the prices of their articles to make them cost friendly to motivate readers purchasing the paper. Online media can be referred to as substitute goods, have posed the greatest challenge so far. Michael Porter once said that substitutes limit the charges on products and this directly translates to the limitation on returns.
4.0 Internal Assessment
The newspaper was forced to retrench some its staff in 2014 since it could not meet salary expenses entirely. Sales and revenues have been on the decline, and the numbers of copies printed on a daily basis have reduced by 31% over the last ten years. Advertisements placed by old clients are now very low, and this threatens the perpetual continuity of the corporate. Chronicle Gazette is still using cameras and printing machines that are less modern, and this makes the printout less appealing as compared to the leading and competing papers. The newspaper is still using old paper distribution technique and has completely avoided embracing new online technologies, and this has been established to be the primary course of economic instability experienced by the newspaper.
4.1 HR capabilities
The newspaper has the following staff in its corporate organization.
The Publisher – He is the one responsible for the procedures of newspaper operations both marketing and editorial. The other duties of the publisher are monitoring the financial strength and smooth running of the paper.
Editor – He is responsible for the content that the journal carries and budgetary allocation to editorial activities. He ensures that the information content is at the standard level of the industry by reading sections of the press releases before they are distributed for consumption
Photographer – She takes pictures during events and at the occurrence of sceneries that make stories to write about. Unlike large publishers like Washington Post, Chronicle Gazette has only one photographer and have sometimes relied on Reuters for pictures of events that happen in other states.
Graphics editor – He is charged with the responsibility of heading the graphics department. He ensures that right graphics that meet international standards are put in the paper and make changes as he may wish on graphics that are not explaining its content clearly.
Reporters – The reporters are assigned to gather news on the assigned fields from all the places that they can reach. They sometimes take pictures of events, and they also interview people at this news making events for in-depth information that they report.
4.2. Financial position
From the Income statements of 2007 to 2014, the publisher has been recording continuous decrease of revenues hence low profits. In 2014 alone $2M were lost as a result of heightened competition from online publishers. Assets of the paper have depreciated, but the financial position is not strong enough to support the purchase of the new equipment. There has been a tendency of investors selling their shares at prices lower than they initially purchased and this has reduced the value of the firm by 6%. Liabilities are hiking, and some banks have even declined to give the paper overdrafts citing its nondescript future.
4.3. Marketing/sales capabilities
Sales have dropped as readers are finding it easy to read online sources. Some online sources are free to access and contain news updated every minute. Some these sources have even gone a step high by including pictures and videos of news reports. This has negatively affected sales of daily papers especially to young citizens who have completely been taken by “fast trending” news.
4.4. Operational capabilities
The paper has maintained old channels of distribution, but this strategy is no longer effective when it comes to delivering papers to diverse readers in time. People want to hear about events as they happen and not the history of history news. It is currently doing fewer advertisements; ranging from business adverts to obituaries. Its operations are only confined in a few states like Ohio, Wisconsin, Massachusetts, and Illinois; unlike other leading papers like NYT and Washington Post that circulate the paper in the whole of the United States.
4.5. Our strengths and weaknesses as a publisher
The publisher has highly trained technocrats in all the department only that they are few and more should be added. Chronicle Gazette also enjoy good will from perennial readers who have remained loyal to the paper despite the whirlwind in the industry. The greatest weakness of the paper is a lack of energy, motivation, machinery and motivation to enable them to cope with fast industrial dynamics. Technology is advancing very fast, but the paper is doing very little to move with its pace.
5. 0 How Companies in the Publishing Industry are Adjusting their Strategies to Cope with the Challenges (Provide at Least three Examples)
Washington Post, New York Times and even the international publishers like The Guardian of Britain, China Daily and Asahi Shimbun of Japan, have all moved very quickly in adjusting their papers so that they can meet dynamic customer needs. All of them have embraced the online route to provide their customers with timely news as the wait the papers circulated. They have also created an online newspapers purchasing portfolio and have even given customers latitude on subscription bundles to make to read the papers as early as three o’clock at dawn.
6.0 Steps Chronicle Gazette might take to deal with the challenges
Chronicles, like the other leading media houses listed above, needs to overhaul its analog system and incorporate technology and the use of internet if only it is to regain its competitiveness and challenge the leaders in the industry. The following are stepwise strategic changes that Chronicle Gazette should embrace.
6.1. Short-term steps
i.) The paper, in consultation with IT specialists, should implement an online version for it to play a level ground with others. This will only be realized by the allocation of enough resources like manpower and funds into this initiative.
ii.) Train the current marketing staff on the new marketing trends and online techniques that can be used to selling the paper content to consumers.
iii.) Cut down costs by reducing redundant staff and offering the elderly staff with a retirement package to pave the way for new blood into the process. Office and plant expense like unnecessary trips should also be reduced.
iv.) Give incentives to customers such as cutting down the price for paper
v.) Create an interactive online platform and invite old, current and prospective advertisers into the platform where the paper will have an opportunity to show them new market trends.
Vi.) The publisher should consider increasing the content in the newspaper and also give free samples to customers purchasing the paper in bulk.
vii.) Open oversees distribution channels to promote boosting its market share.
6.2. Long-term steps
i.) The publisher should consider restructuring the organization structure to add to its ranks the positions of the operations manager, public relations manager and strategic risk manager to assist run business very smoothly.
ii.) Use the online platform to increase customer base
iii.) Set days to publish subsidized newspapers, this will motivate customers to purchase the paper during these days.
iv.) Reach special people like the blind through online platform by embracing voice broadcasts.
v.) Look to keep the current and make new clients who will be posting their adverts with the newspaper.
vi.) Employing young and energetic staff to marshal the new market strategies.
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