Recommend ONE WAY the use of big data could help improve Hinton's revenues, following the business transformation process, with appropriate justification. You should refer to relevant professional and academic literature and use Harvard style referencing. Scenario Hinton Independent News (HIN) is a privately owned newspaper group that publishes, prints and circulates 10 regional newspapers daily and 40 regional newspapers weekly. Circulation figures are shown in the graph below and indicate a steady decline in sales - a trend experienced across the entire UK and international newspaper industry. 400000 300000 200000 100000 0 2014 HIN newspaper circulation 2015 Year ended 30 June - Daily newspaper circulation 2016 2017 2018 Weekly newspaper circulation Increasingly, people in the UK are accessing news in other ways, including news on TV and smartphones. All HIN's newspapers have experienced falling circulation, and HIN acted two years ago to make a few of its newspapers available to view online for free. These online newspapers attract digital advertising, and the number of readers in this medium has been promising. The founding family of HIN owns 60% of the shares and the remaining 40% of shares are owned by a private equity investor, BBD. HIN is NOT listed on the stock exchange and shares cannot be easily sold or valued. The HIN Board has been slow to react to external factors, resulting in a significant decline in profits over the last five years, due to falling revenues (both newspaper sales and advertising revenues). Following some rationalisation, costs have been reduced and controlled, but most of the operating costs for HIN are fixed. As a result, the revenue reduction has hit profits hard and operating profit has fallen from 48 million in 2014 to only 3.5 million for the year to June 2018. It is forecast that HIN will have an operating loss of 6.0 million in this financial year. 60 40 20 0 -20 2014 2015 HIN Operating Profit 2016 2017 Year ended June -Operating Profit million NEWS 2018 2019 Forecast Currently, HIN produces its newspapers in a traditional way -by determining the volume of editorial content in each edition, depending on advertising space that has been sold. Then, the journalists research and write their stories, submit them to a news editor who edits and fine-tunes the story and then this is submitted to the copy desk, which may make further changes, such as changing the size or title of the headline or to make the story shorter depending on the intended space and location in the newspaper layout. All newspapers are printed in HIN's own print site, which uses modern high-speed printing presses. Excess available print capacity is sold to external customers, which generates a small amount of additional revenues. At a recent board meeting, the board representative of the private equity investor, BBD, stressed that urgent action needs to be taken due to falling circulation figures, falling revenues and the latest forecast of an operating loss in the current financial year. The private equity board representative of BBD believes that if action is not urgently taken, HIN could be bankrupt within 2-3 years. The board discussed at length that the entire newspaper industry is experiencing declining circulation and that HIN has three possible courses of action: Merge with another newspaper group, close completely or take radical action to undergo a business transformation process (see glossary of terms). The board agreed that it did not want to merge with another newspaper group. The board had previously agreed to decline a few offers from other newspaper groups, as the other newspaper companies only wanted access to HIN's newspaper titles, but they wanted to make large numbers of HIN's employees redundant. The founding family of HIN, which has three board members, did not want to see the end of HIN and the loss of jobs. The board also does not want to close the family newspaper company. || After much discussion, the board agreed to urgently investigate a business transformation process. This would involve a major change to the way that HIN operates and would result in some job losses but would let HIN become profitable again within two years and would create a more long-term sustainable business model. The business transformation proposal is summarised as follows: Install a new IT system to automate the editorial, page layout, flow of data and content production. Automated Journalism (AJ) software already is operational within other newspaper groups. Close around 15 of HIN's regional offices, which will result in some job losses and will also require some journalists to work from their homes, as they only need access to the internet to access the new AJ system This would require HIN to train its journalists to input all their stories into the AJ system, using HIN-supplied laptop computers The AJ system would also allow HIN to easily produce a wide range of digital publications Printed editions of some newspapers will cease and online (digital) versions will be available HIN will plan to attract more digital advertising, which will generate higher revenues than printed newspaper advertising Additionally, HIN plans to introduce a "paywall" (see glossary of terms) for some of its new online newspapers. Already, some of HIN's competitors operate a "paywall" that only allows subscribers access to the online news. The new AJ system uses a form of artificial intelligence (Al) in the production of news stories, in innovative ways, which include: 1. Streamlining the workflow of gathering news by allowing journalists to focus on what they do best, which is writing news stories 2. Automation of mundane and routine tasks which allows journalists to concentrate on writing the stories rather than tracking down relevant backup information 3. Crunching more data more quickly, which helps with financial news stories 4. Locating relevant media insights so that information can be correlated quickly and efficiently, and included in the news stories 5. Eliminating "fake news" by checking facts in a speedy and reliable way The board faces the dilemma of whether to undertake the Business Transformation process. It will require around 10 million investment to cover the cost of the AJ system, training costs and the required redundancy payments for staff in the regional offices whose jobs will be lost. HIN currently has adequate finance for this investment. Requirement The board has asked you as HIN's senior management accountant to review this business transformation proposal and prepare a presentation for the next board meeting, which addresses the following specific concerns of the board members: 1. Recommend whether the business transformation process for HIN should be approved or not, and explain the reasons for your recommendation with three justifications.. 2. Identify three risks caused by implementing the business transformation process and recommend actions that should be taken to overcome the three risks you've identified. 3. Recommend one way the use of big data could help improve HIN's revenues following the business transformation process. LA CHEEF OF KETORE 1 41 HOW 28. CO