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Assessment of the Newspaper Industry

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 21st 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.

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?

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

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

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?

How realistic are the consultant’s recommendations?

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

Overall, how well does the report hang together?

Assessment of the Newspaper Industry

The primary goal of this report will be identify the problems that results in steady decline of the subscriptions of the newspaper in the metropolitan area that is affecting the entire industry. The report will provide insights regarding the strategic vision of a company called The Chronicle Gazette so that it can help them in building a new environment that will result in earning profits.

In the recent times, it can be seen that most of the professional readers are inclined towards the internet in getting the news from around the globe. The introduction of smart phones, easy availability of internet and other devices has allowed the readers in getting all the information within a short period of time and not depend on the daily newspapers. In the past years, it has been seen that most of the consumers are not taking the delivery of newspapers in the morning, as they are getting all the necessary information in their smart phones (Casero-Ripollés and Izquierdo-Castillo2013).

A survey that was conducted by University of Oxford presented the data that only around 11 percent of the consumers pay for the news content that is available. This is due to the fact that most of the news are available online and is free of cost. This has led to most of the customers shifting from a newspaper to the online base. It was also seen that almost 62 percent people in the United States were addicted to social media to get the latest news whereas 18 percent of the people started using the social media too often. These studies show that it has led to the decline in the circulation of paid media and that the circulation of newspapers declined by around 24 percent (Nielsen 2015).

The major issues were that it involved huge costs in printing and delivering the newspapers due to the involvement of high cost in acquiring the raw materials. The growth of the digital media has led to more number of customers in shifting towards the online media, as it helps them in getting the information on a timely manner. It is also to be noted that the consumers get the latest news from the online media, as it gets updated whenever new things are happening across the globe. The newspapers on the other hand, are printing the news after a day where the consumers are being informed regarding the information one day after the incident has taken place (Rothmann and Koch 2014).

Factors Contributing to the Decline of Newspaper Publishing

Figure 1: Fall in the newspaper firms

(Source: Pattabhiramaiah, Sriram and Sridhar 2017)

Figure 2: Data showing the use of newspapers from 2017-2021 (predictable)

(Source: Holm, Gunzel and Uhoi 2013)

Most of the leaders in the publishing industry of newspaper have been facing numerous challenges regarding the decisions that they need to take for their business to flourish. It has been seen that the cost of raw materials have boosted, which is hampering their level of profit to a great extent. The leaders are looking for innovations that will help them in increasing their level of sales and the attraction of the newspapers towards the customers as well. The use of better level of technologies will also assist them in effectively publishing the papers so that the customers can be informed regarding the news on an immediate manner (Karimi and Walter 2015). Wall Street Journal has come up with a solution of providing the news on the online media for which the customers need to pay a subscription amount. The major problem that they were facing that most of the consumers were not complying with the publishing house, as they had other choices from where they could get the latest news free of cost. This also led to the loss of the company (Villi and Hayashi 2017).

The progress in the level of technology has affected the economy of the newspaper industry to a great extent. The major threat is that the companies who could not cope with the technological advancements made huge losses in the market share that resulted in increasing the level of unemployment in countries like Europe and the United States. In the recent times, it was seen that majority of the companies in the newspaper industry has been facing issues related reduction in the sale of advertising, higher amount of copy pricing, drop in the profit margin due to low circulation of the papers in the locality and loss due to classified advertising as well. The major profit of the company depended on the classifieds that they used to get, which declined to almost 70 percent. This affected their revenue generation as well (Kungl and Geefs 2018).

The integration of the internet has affected the social factors as well with respect to the newspaper industry. The companies need to influence the reading behaviour of the customers so that it can help in increasing the sale of the newspapers. The low cost of subscribing to the internet has resulted in most of the people switching from purchasing the newspaper to subscribing to the pages that are available over the internet. This is due to the fact that the people get the news as it is happening so that they can stay updated (Suijkerbuijk 2014).

Impact of Technology on the Newspaper Industry

The demographic factors has also affected the newspaper industry, as most of the consumers who belong to the young generation are aware of the latest technologies that allow them in getting the information from the internet. It is being seen that over the next few years, the newspaper readers will decline to a great extent due to the availability of technology (Kungl and Geefs 2018).

The changes in the political scenario also hampers the external environment of the newspaper industry. This is due to the fact that the rate of taxes as well as other allowances that are being enjoyed by the industry gets changed with the changes in the governmental policies and regulations. The changes in the government also affects the interest of the readers towards newspapers due to the type of campaign that is being taken up by the media houses. The rise and fall of the political parties create a significant impact on the social environment of this industry as well (Jonkman et al. 2016). 

The use of advanced technology such as the internet has helped in developing the mass communication technique to a great extent. The advent of the internet has gradually declined the use of print media, as all the information are being available on the websites of the news company. The progress in the technology has led to the changes in the habits of the readers, which has affected the circulation of newspaper and a gradual decline in the revenue from advertisement.

The threat of new entry in the newspaper industry is low compared to established media houses. This is due to the fact that they have immense capital to increase their budget and circulate the newspapers to a larger part of the locality. This will result in increasing the rate of attraction among the customers. On the other hand, the threat of new entrants for the small media houses is high, as there are many existing competitors in the market as well as low capital to invest.

The threat of substitute in the print media is low, as all the companies are dealing with printing the news so that the people can read the newspapers. This is due to the fact that the old and new companies will be dealing with the same materials and the use of printing technique as well (Krumsvik 2014)

The bargaining power of the customers is low, as most of the newspapers are given at a low cost to the customers. The major revenue that is generated by the publishing house is through advertisements so that the burden of cost does not fall on the customers. This has resulted in giving the newspapers to the customers at a lower cost.

Social and Demographic Factors Affecting the Industry

The bargaining power of suppliers is high, as the suppliers control the demand of the raw materials in the market. This helps some of the large companies, as they have the resources in influencing the suppliers to supply them the products at a lower rate.

The competitive rivalry among the firms is very high, as all the companies want to increase its level of sales by selling more number of newspapers in the market. This has resulted in fierce competition among the publishing houses that are present in the locality (Krumsvik, Skogerbo and Storsul 2013).   

Key external factors

Weight

Rating

Weighted Score

Opportunities

Local coverage

6%

4

0.24

Government support

7%

2

0.14

Mobile gadgets

13%

3

0.39

Internet

10%

2

0.20

Threats

Lack of interest

15%

3

0.45

Growing Competition

19%

2

0.38

Economic downturn

15%

4

0.20

Decline in subscription

12%

4

0.48

Indirect competition

3%

2

0.06

Total

100%

2.54

The EFE matrix can be beneficial in many ways. It is easy to understand so that employees can get a better idea of the factors that may affect the success of the organization. It also focuses on the key factors that affect the organization internally as well as externally. This will help the company in strategizing the major factors so that the opportunities and threats that are present in the external environment can be reduced to a great extent (Villi and Hayashi 2017).

Organizational process of Chronicle Gazette is easier; as it consists of reporters at one point and the other end consist of employees who are responsible for searching great news and writing blogs   portraying content with quality information. The content are often well covered by the employees for which they have been often awarded. On the contrary, there is an experienced team of members that have been assigned for selling the space of advertisement (Wheelen et al., 2017). They are the major people who are responsible for identifying business and incoming of major revenues for the publishing newspaper. All the processes and structure of the organization are competitive in form and determined.

HR capabilities

Publisher- In this the publisher is accountable for managing all the functions processes of the newspaper in both editorial team and team of business. The major roles and purpose of the publisher is to supervise financial functioning of the newspaper.

Editor- in this organization the editor is hold accountable for managing all the content of the editorial part and supervises the financial operation and the manages the cash spent by the editorial as well as other resources of the newspaper (Wolf and Floyd, 2017). The publisher and the editor are generally responsible for the same position.

Editorial content editor- the editorial content editor will be accountable for managing the editorial page as well as the supplementary content along with the op-ed page for the paper.  In this context those paper are the documents that are usually printed on the editorial content such as letter to the editor, and in that all the columns will be syndicated by the columnists, local members and outsources senders (Elmes and Barry, 2017).

Political Scenario and its Impact on the Industry

Managing editor- the management editor is usually appointed to handle and supervise the daily day production of newspaper and the online content of the newspaper.

City editor: These city editors are appointed to maintain the charge of the copydesk paper. The city editor covers the area of the news that is usually related to metro area of the newspaper location. This specific position is the most crucial amongst all the employees for collecting and evaluating the news that took place in the area (França et al., 2017),

Chief copy editor- the chief copy editor is responsible for maintaining the copydesk. In this context, the members on the copy desk read stories and other contents from different sections through the use of internet and ensures they are written from the perspective of the industry standards (Bocken et al., 2015). The chief copy editor has the authority to take any final decision of the copy contents.

The revenues of the Chronicle Gazette are down across broad are that have been causes by the information related to the company that are now made public in internet. In this context, the financial position of the newspaper agency is offering a silent alarm with the falling down of subscription of 38% in the previous 8 years along with the slowdown of advertisement revenue by almost 28% (Gerow et al., 2015). However, focusing on these financial figures it can be said that the financial position of the company is in a position of fluctuation. Therefore, Chronical Gazettes needs to work on the financial revenue and needs to look for increasing the subscription and find out substitute source of increasing the revenue.

The current marketing trend switching towards publication of news and the rest part of the advertisement and promotion are done through internet websites along with other interactive media campaigns. However, the sale revenue resources had shifted from copy newspaper to interned sources in the current years (Govindan et al., 2015). The above figure of revenue shows that marketing and sales capability of the company is not up to the mark. Therefore, the teams that are managing the marketing and sales needs to come with different techniques of sales promotion to sustain the level of subscription and to display the incentives to the advertisers thereby initiate sales (Cassidy, 2016).

In case of sales the Chronicle Gazette has al sales team that are responsible for managing the customer advises  based on these they have to restructure the sales and make required investment on the equipment’s. Chronicle Gazette has got high customer base wherein both the parties needs to keep track of the latest technology (Piercy, 2016). However, they also have the opportunity to implement other customer segment for broadening the vision and service base.

Low Threat of New Entry in the Newspaper Industry

Operational process if Chronicle Gazette can also be observed as the value chain evaluation to demonstrate the competitive edge of the company. Chronicle Gazette is one of the leading newspaper company in the metropolitan area of Singapore that have managed to reach a paid distribution if almost 225, 00 consumers that have ranked amongst the first. Focusing on the outbound logistic the newspapers are distributed within periodic time to the retailer and they are also delivered in internet version for the subscriber (Adams, 2015). On the contrary, the inbound logistic related to the material paper and ink capability are needed to be delivered to the production factory within a specific tome for reaching in time production.

However, the operational capacity of the company can be made more effective by using the internet and email sources for delivering reports as well as photos that are central requirements for press release for reducing the time as well as cost. In this as0oet, the quality standard of the reported contents and the advertisement needs to be reviews by the chief editor prior to process release. They are also needed to be managed in clear flow for each of the department to avoid the any replication of the task (Serra and Kunc, 2015).

Presently Chronicle Gazette has no operation for the online version of news, IT capacity is needed to be implemented for which find is required for investments in technologies such as servers internet and web developers. They also need to consider the security issues as there are several confidential and private contents that may be easily disposed through internet sources and other access authorities.

Strengths

  • The company has been running the business by selling the news since a long period of time.
  • The company has effective writers and reporter who are well aware of the need of the consumers
  • Writers working in the company have an efficient flow and flair of putting the words in their content that give the feel that customers seek for (Serra and Kunc, 2015),
  • The newspaper company does not only sell news but they also sell the     standards of living for the customers through the publication of articles associated with home, living and technological process.
  • Newspapers have a fixed cost for publication that is hindering the cost of shifting on the  internet resources
  • High growing competition from the low cost new entrants
  • Lack of understanding about the cultural changes and use of extensive internet sources
  • They have closed the conventional way of running business and shifting towards online method of news.

The company Chronicle Gazette has been working in the industry for a long time like the other company. The company has been facing several difficulties due to increasing competition from the internet resources that has currently become a most suitable method of news readability. Therefore, considering the current situation of the company there needs to have secured steps for securing the activities of business and set it back into the success path.

Examples:

  1. Two of the major newspaper, such as Detroit news and Detroit press partnered their operations as their review cost increased due to less production of advertisement (Serra and Kunc, 2015). However, together they fought against the cist effectives and managed to reduce the subscription to three days within a week.
  2. Catching up the option through an alternative source of news  that are accessible on several wireless devices and emerging business that has been seen but the audiences and investigative reporting team. For instance Pro Pubic, Kaiser News health.
  3. Some of the new paper has delivered print as well as online readership platform. Amongst these one of the political newspapers named as Politico raised 50% of their shares from advertisement and frees printing of newspaper while managing 3 million online subscribers (Cassidy, 2016).

Chronicle Gazette can collaborate with restaurants, clubs and shoe companies as well as clothing retailer’s fir offering free coupons as a part of complimentary service with the subscription (Piercy, 2016).

These suggestions may be taken as short term implication for the company while offering the company to increase the revenue stream. Discount offers will retain and attract people to buy Chronicle Gazette and they will be receiving sales guarantee as well.

Strategies to Survive in the New Business Environment

Chronicle Gazette needs to react in a proactive way to improve changing requirements and start launching online official website. Launching an official online website will help them to deliver the news to broad numbers of readers while taking the business to a next level (Piercy, 2016). They will be able to deliver exiting news and publish articles that people are selling for.

Reference List

Adams, C.A., (2015). The international integrated reporting council: a call to action. Critical Perspectives on Accounting, 27, pp.23-28.

Barkema, H.G., Chen, X.P., George, G., Luo, Y. and Tsui, A.S., (2015). West meets East: New concepts and theories. Academy of Management Journal, 58(2), p.460.

Bocken, N.M.P., Rana, P. and Short, S.W., (2015). Value mapping for sustainable business thinking. Journal of Industrial and Production Engineering, 32(1), pp.67-81.

Casero-Ripollés, A. and Izquierdo-Castillo, J., 2013. Between decline and a new online business model: The case of the Spanish newspaper industry. Journal of Media Business Studies, 10(1), pp.63-78.

Cassidy, A., (2016). A practical guide to information systems strategic planning. Auerbach Publications.

Elmes, M. and Barry, D., (2017). Strategy retold: Toward a narrative view of strategic discourse. In The Aesthetic Turn in Management (pp. 39-62). Routledge.

França, C.L., Broman, G., Robèrt, K.H., Basile, G. and Trygg, L., (2017). An approach to business model innovation and design for strategic sustainable development. Journal of Cleaner Production, 140, pp.155-166.

Gerow, J.E., Thatcher, J.B. and Grover, V., (2015). Six types of IT-business strategic alignment: an investigation of the constructs and their measurement. European Journal of Information Systems, 24(5), pp.465-491.

Govindan, K., Soleimani, H. and Kannan, D., (2015). Reverse logistics and closed-loop supply chain: A comprehensive review to explore the future. European Journal of Operational Research, 240(3), pp.603-626.

Holm, A.B., Günzel, F. and Ulhøi, J.P., 2013. Openness in innovation and business models: lessons from the newspaper industry. International Journal of Technology Management, 61(3/4), pp.324-348.

Jonkman, J.G., Trilling, D., Verhoeven, P. and Vliegenthart, R., 2016. More or less diverse: An assessment of the effect of attention to media salient company types on media agenda diversity in Dutch newspaper coverage between 2007 and 2013. Journalism, p.1464884916680371.

Karimi, J. and Walter, Z., 2015. The role of dynamic capabilities in responding to digital disruption: A factor-based study of the newspaper industry. Journal of Management Information Systems, 32(1), pp.39-81.

Krumsvik, A.H., 2014. Stability in Times of Change-Trends in Newspaper Executives Attitudes towards Digital Media. Nordicom Review, 35, pp.97-108.

Krumsvik, A.H., Skogerbø, E. and Storsul, T., 2013. Size, ownership and innovation in newspapers.

Kungl, G. and Geels, F.W., 2018. Sequence and alignment of external pressures in industry destabilisation: Understanding the downfall of incumbent utilities in the German energy transition (1998–2015). Environmental innovation and societal transitions, 26, pp.78-100.

Nielsen, R.K., 2015. Local journalism: The decline of newspapers and the rise of digital media. IB Tauris.

Pattabhiramaiah, A., Sriram, S. and Sridhar, S., 2017. Rising prices under declining preferences: the case of the US print newspaper industry. Marketing Science, 37(1), pp.97-122.

Piercy, N.F., (2016). Market-led strategic change: Transforming the process of going to market. Routledge.

Rothmann, W. and Koch, J., 2014. Creativity in strategic lock-ins: The newspaper industry and the digital revolution. Technological Forecasting and Social Change, 83, pp.66-83.

Serra, C.E.M. and Kunc, M., (2015). Benefits realisation management and its influence on project success and on the execution of business strategies. International Journal of Project Management, 33(1), pp.53-66.

Suijkerbuijk, M., 2014. Digitalization in the newspaper industry: a business model for the e-newspaper from a customer perspective (Master's thesis, University of Twente).

Villi, M. and Hayashi, K., 2017. “The Mission is to Keep this Industry Intact” Digital transition in the Japanese newspaper industry. Journalism Studies, 18(8), pp.960-977.

Wheelen, T.L., Hunger, J.D., Hoffman, A.N. and Bamford, C.E., (2017). Strategic management and business policy. pearson.

Wolf, C. and Floyd, S.W., (2017). Strategic planning research: Toward a theory-driven agenda. Journal of Management, 43(6), pp.1754-1788.

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