MGT 497. Business Policy and Strategy

Assignment: Strategic Planning at The Chronicle Gazette

Introduction: Problems in Publishing

All businesses must be concerned with the rapid pace of change we face today. No company is secure, not even the largest and most profitable. Coping with change has been a business concern since people began doing business. Recall how the arrival of automobiles put buggy whip manufacturers out of business.

Today's pace of change is unprecedented. Consider what has happened in the retailing arena. Online retail sales went from nearly nothing in the mid-1990s to a projected $242 billion in 2010. Traditional retailing stores have been heavily affected. eBay has become a retailing behemoth enabling individuals to buy and sell goods online with total annual sales in the billions of dollars.

Or consider the fate of many dot-coms. One of the most spectacular dot-com stories - the rise and fall of AOL - illustrates how technology (telephone-based online computing) created a huge success story, and how technology (Internet email) led to a reversal of this success.

A major goal of strategic planning is to anticipate environmental changes (economic, business, political, governmental, social) and prepare the organization for dealing with them. Clearly, in this age of rapid change, all business entities should engage in some measure of strategic planning. Without it, they will have difficulty negotiating today's turbulent business environment.

One industry that is currently suffering the destabilizing consequences of the Internet revolution is the publishing industry. Included here are textbook publishers, trade book publishers, newspaper publishers, and magazine publishers. All publishers are facing serious challenges. Revenues are down across the board. If these challenges are not handled properly, there is a good chance that a large portion of the publishing industry as we now know it will go out of business.

One challenge publishers face is dealing with the fact that information traditionally controlled by them is now freely available to the public through the Internet. Not long ago, if a homeowner wanted to place tiles on his bathroom floor, he would purchase a How-to book. Today, he goes online and encounters several sources that show how to lay tile - some even provide a video clip to illustrate the process. As a result, sales of How-to books are plunging.

Case Study

Susan Feinman is publisher of The Chronicle Gazette, a leading newspaper in a major metropolitan area. Her paper has a paid circulation of 225,000 customers. It is a first-rate newspaper and over the years, its writers have won awards for their work.

Susan's big problem is that there has been a steady decline in subscriptions to the newspaper. In the past eight years, subscriptions have fallen by a total of 35%. Because subscriptions have fallen, advertising revenue has also dropped - by 28%. Susan knows that declining subscriptions and revenues are affecting the entire publishing industry. Even the great newspapers - such as the New York Times and Wall Street Journal - are facing subscription losses.

The principal cause of The Chronicle Gazette's problems is the rise of the Internet. With the Internet, people have access to an endless source of news stories - for free! A regular feature of Internet sites like Yahoo, MSNBC, Hotmail and CNN News is up-to-the-minute news accounts, often accompanied by video treatments of hot topics. When major stories break - such as the London terrorist bombings or the Sichuan earthquake - detailed accounts begin appearing on Wikipedia almost immediately, and videos show up on YouTube. Furthermore, by Googling topics, readers can explore interesting stories to whatever depth they desire.

Susan is worried that her newspaper will become the 21^st century equivalent of buggy whip manufacturers. After several meetings with The Chronicle Gazette's Executive Committee, Susan decides to hire a consultant to work through the strategic implications of the changing business environment. Hopefully, by looking at the problem from 40,000 feet, she and her managers can develop a better idea of the challenges the newspaper faces. Once these challenges - and their sources - are understood, the newspaper can develop strategies to deal with them.

You have been hired as the consultant. Your job is to put together a consulting report of 10-15 pages (typed single spaced with 12 point font). The report's goal is to offer the management of The Chronicle Gazette a strategic vision of where the newspaper publishing industry stands today and where it is headed over the next decade. You also need to propose strategies the newspaper can investigate to survive in the new business environment. Structure your presentation so that it can be used by Susan's team as a roadmap to putting together a detailed strategic plan.

Sample Outline of the Consultant's Report

You have latitude in how you present your report. Following is an outline of an approach that would meet the requirements of this assignment. Feel free to adopt it or to pursue a different approach.

1.Introduction - goals of the report 2.State of the newspaper publishing industry today

2.1. Data on declining circulation and revenue 2.2. Status of newspaper leaders, e.g., New York Times, Wall Street Journal 3.Why newspapers are facing declining circulations and revenues

3.1. External assessment 3.1.1.Economic forces 3.1.2.Social, cultural, demographic, and environmental forces 3.1.3.Political, governmental and legal forces 3.1.4.Technological forces

3.1.5.Competitive forces (e.g., Porter's model) 3.1.6.External Factor Evaluation (EFE) matrix

4.Internal assessment 4.1. Organizational processes and structure 4.2. HR capabilities

4.3. Financial position 4.4. Marketing/sales capabilities 4.5. Operational capabilities (e.g., How efficient are we? How effectively are we adopting new technologies?) 4.6. Our strengths and weaknesses as a publisher 5.How companies in the publishing industry are adjusting their strategies to cope with the challenges (provide at least three examples) 6.Steps The Chronicle Gazette might take in order to deal with the challenges 6.1. Short-term steps 6.2. Long-term steps

How Your Report Will Be Assessed

The Chronicle Gazette is facing deep trouble. If Susan and her team do not respond effectively to the challenges the newspaper faces, it is likely the newspaper will be shut down.

The survival of The Chronicle Gazette will depend on a dramatic re-thinking of what it is and how it should operate. Band-aid solutions won't work. Survival will require creative ideas. Your consulting report should reflect creative thinking.

While you have latitude in determining the details of how you present your report, ultimately, you will be graded on the following factors. So in writing your consulting report, write it in such a way as to get high ratings for the questions listed below.

How well-formulated is the consultant's assessment of the state of the publishing industry today, particularly newspaper publishing?Weak12345Strong

How thorough is the consultant's review of external factors that bear on the business (e.g., economic, political, governmental, and social forces)?Weak12345Strong

To what extent does the consultant's report reflect a creative and dramatic approach to dealing with the newspaper's future direction?Weak12345Strong

To what extent has the consultant logically linked The Chronicle Gazette's current state (internal factors) with the proposed strategic direction the business should follow?Weak12345Strong

How realistic are the consultant's recommendations?Weak12345Strong

How logical and well-reasoned are the consultant's points?Weak12345Strong

Overall, how well does the report hang together?Weak12345Strong