Environmental factor is another aspect of the base of the growth. Every company has an environmental condition. It actually affects the development of the company .According to it, the organizer make the strategies and turn them into action. Environmental factors include Macro environment, Scenarios, Sources of competition, Understanding competition, strategic gaps. Macro environment contains political, economical, socio-cultural, technological, environmental and legal factors. Scenarios are detailed and plausible views of future development of environment, based on groupings of key environmental influences and drivers of change about which there is a high level of uncertainty The sources of competition rely on five forces，competitive rivalry, potential entrance, buyers, suppliers and substitutes. Strategic gaps have both opportunities and threats. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. It is the method, which lends itself to customization by a firm depending on its size, strategy, time, and culture. Analyzing the advantage and shortage of the environmental factors, handling the concrete PESTEL framework, Key drivers of change, Porter’s diamond and building the scenarios are basic process to the great success. In complex industries and sectors, it requires the coherence five forces framework to promote the dynamics of competition and identify what the customers’ value to manage the effective strategies according to the market to achieve the satisfaction of the customers and seize the opportunities.
Directions for strategy development are built on current position and should cooperate with the product development, market development and anytime diversification. Methods of strategy development split into internal development, mergers and acquisitions, strategic alliances. All these factors work well could lead to the suitability, acceptability and feasibility. Directions and methods of corporate strategy development lay at the heart of successful strategies and ensure the company as a whole unit to adjust internal standards, conform to new requirements and it will benefit the firm in the long run. The strategies are keystones of its future success. A critical component of this is an evaluation of how it fits into the external business environment. Short- and long-range planning must take into account the anticipated market conditions, and these plans must be communicated effectively throughout the firm. The SWOT analysis is one tool that is available to managers that allows for a systematic but flexible method of observing the market and planning in the future.
The 1980s saw New Corp accelerate its development” (The News Corporation, Aidan McQusde, p3). Since then the News Corporation begins a global expansion strategy and a multi-industry strategy. the company successfully adopted a series of strategies, and they realized a rapid development. The News Corp entered the UK, US, Asia, Latin America market step by step. In 1981, the News Corp bought 'The Times' and 'The Sunday Times' from the Thomson Group. The political friendship with the Thatcher government helped him to exploit a monopolies law loophole to buy the papers. In 1980s Murdoch took American citizenship, and acquired 20th Century Fox (1985) and bought the 'South China Mo By 1988, the broadcast four channels had received by more than 12 million viewers in 15 European countries. As early as 1993, News Corp has moved into Asia with the acquisition of the Hong Kong-based satellite television company STAR TV, which broadcasted over China, India, and other 51 countries which occupies two-thirds of the world’s population. In November 1995, News Corp created a satellite service covering Latin America. By 2000, Sky Latin America had over one million subscribers. After the purchase of Direct TV in 2003, with more than two million new subscribers and hence great potential, Murdoch reached its goal of expansion with unparalleled power and ability (Post' and Harper & Row publishers (1987); The 1980s brought more landmarks: the launch of Sky”. By 1988, the broadcast four channels had received by more than 12 million viewers in 15 European countries. As early as 1993, News Corp has moved into Asia with the acquisition of the Hong Kong-based satellite television company STAR TV, which broadcasted over China, India, and other 51 countries which occupies two-thirds of the world’s population. In November 1995, News Corp created a satellite service covering Latin America. By 2000, Sky Latin America had over one million subscribers. After the purchase of Direct TV in 2003, with more than two million new subscribers and hence great potential, Murdoch reached its goal of expansion with unparalleled power and ability.
In this aspect, the environmental factors effected mostly. The sympathetic policy from Thatcher government and the American citizenship provide a free political macro environment. Then it embraces the superior circumstances and has more opportunities to develop, even dominates in some special area. By carefully cultivating relationships with national governments, he has bought ever more influence throughout the English-speaking world and beyond.
Since the 1980s, all the activities are nearly acquiring and establishing new business in different places around the world. During this period, Murdoch transformed the News Corporation into a vertically integrated global media group. The expansion to USA added the profits and assets of the firm. As a whole unit, through the efforts of different media in different continents, it has a special capability to obtain its uniqueness. It acts and exists in a global market and seizes the advantage in the world scope, therefore, the material, the opportunities and the information are all preserved so as to achieve even exceed the expectations to keep the enduring relationship between the customers and the employees. In other aspects, the varieties identify the feature of the firm, it is not easy to imitate. The thoughts, actions and results are made by the whole team and the culture from different areas as a socio-cooperation keep and enhance the uniqueness. It has the ability to response to the events around the world and share expertise, resources and the personnel across the globe.
The entry into satellite broadcasting represents a new distribution of the program material. It provides the opportunity for the broadcasters to increase the distribution of any channel. New technology applied provides a broader space to obtain more benefits and strengthens the business. By this, News Corporation takes a controlling interest. New technology brings more competitive advantage and increase the market power to meet the higher demands of the customers.
2. Evaluation of the strategies they adopted within this period.
Whether a strategy is properly made is worth checking. However, there are some evaluation criteria to test the value of a strategy, which are Consistency, Suitability, Validity, Feasibility, and Acceptability.
Consistency is to check whether a strategy is in accordance with the objective. If not consistent, the mission or objective has to be changed, or the strategy has to be rejected. When such situations occur, they may probably be an indication of the inconsistence: If the success of one department means the failure of another, the organisational structure should be inconsistent or duplicative; Conflicts within the organisation that are not people-related; Operating problems are brought to the top for resolution of policy issues. However, Strategies can become internally inconsistent over time, as they develop incrementally.
Suitability checks whether an option is suitable or not. However, there is not absolute suitability, but the relative suitability: there may be other options more suitable. The suitability should be examined in SWOT analysis or TOWS, PESTEL, Scenarios, 5-forces. When checking the suitability, we should avoid bias and address all three factors of environment, capability and expectations.
Validity is the assumption or calculation on which the strategy is based is well grounded. These are key functions for the survival of the business; therefore, a strategy that fails one of these criteria is suspect
Feasibility is about the Capability of being carried out, which is composed of these aspects: Financial, Resource deployment, Environmental factors, Commitment of managers and employees. Financial is to assess financial feasibility. A funds flow forecasting should be conducted so to identify the funds required for any strategy and the likely sources of those funds, and to assess feasibility of meeting targets of return (e.g., profits). Resources assess resources and competences needed for carrying out the strategy, which is mainly about the threshold and core competences. They determine the possibility to gain competitive advantage. External factors include customer acceptance, competitive reaction, supplier acceptance, approval from government or other regulatory body, etc. Commitment indicates that managers and employees, who are important factors in a successful implementation.
Acceptability assesses the expected performance outcomes of a strategy, which can be of three broad types: return, risk, stakeholder reactions. Actually, it is difficult to prove a strategy is optimal or not, like any scientific theory cannot be proven to be true.
Here the News Corporation’s global expansion strategy will be discussed. At the beginning of the 1980s, with the early expansion continued focusing on traditional product areas, the company expand its business into UK, by purchasing The Times and The Sunday Times from the Thomson Group. Moreover, the political friendship with the Thatcher government helped him to exploit a monopolies law loophole to buy the papers. This strategy is a success. As to the consistency, it is consistent with the company’s expansion goal. In addition, Australia is one of the Commonwealth members, which made the two countries have more similarities in both economy and politics. Therefore, it is suitable for the News Corp to make its first step towards the world.
2.1Entry into the satellite broadcasting
Entry into the satellite broadcasting is another big step for the News Corp. With the company continuing to expand and develop its traditional market areas, and the acquisition of the US book polishers Harper& Row and Triangle Publications, the Australian Herald and weekly Times (HWT), and the Twentieth Century Fox and six television stations from Metro media broadcasting group, It began the strategy of entering the satellite-broadcasting field. After the annual report which mentioned the satellite broadcasting strategy, the company took control of the satellite television plc(SATV), which distributed English-language television programming by satellite to cable systems in Europe. In 1988, Murdoch launched a four-channel sky service to be transmitted from a new satellite system called Astra. In the next year, the Sky television was started. In addition, in 1990, it merged with its rival the British satellite Broadcasting (BSB).
It is in accordance with the company’s expansion strategy. Murdoch described: “Our evolution from a single newspaper to a multi-media, multi-platform global media company reflects our adaptability and agility.” Amid in 1983, in his annual report, Rupert Murdoch said that:“ In the past years, we have given careful study to the Company’s options for the future, particularly in relation to the fast, emerging opportunities in electronic and satellite-assisted communications … ..”. And the satellite broadcasting has its own special features: the distribution of programs to more than one country, which accords with Murdoch’ expansion strategy finely. As to the feasibility, the firstly is the economic basis. The company had become one of the world’s largest consortiums. However, the increased debt involved with the acquisition of Triangle Publications was of such magnitude that Rupert Murdoch was obliged to commit News Corporation to a significant debt reduction program following a little reported financial crisis in 1987 that the only way to overcome it was the guarantee of Murdoch by his private property; the secondly is the resources. The acquisition of Twentieth Century Fox and the restructuring of the US subsidiaries provided the opportunity for SATV to get entertainment and other information programming from the group. It is the core competence. The thirdly is the environmental factors of Feasibility. The personnel support is a critical factor. As for the staff involved, Murdoch had chosen to launch a multi-million pound venture with a handful of Australian TV cronies he had known for years – and not much else’ (Andrew Neil, Full Disclosure, 1996). To launch Sky TV, Murdoch brought in managerial talent from across News Corp. Andrew Neil, editor of the Sunday Times, Gary Dave, a creative programmer from Fox, and Pat Mast Andres, who knew about selling advertising in a competitive environment, strengthened the team. Frothily, the customer acceptance is very important. The individual satellite receiving dishes were now available at a price and size that made the customers affordable and usable by the large number of households through Europe. For the strategy’s acceptability, in terms of risk, it is under great risks. At the time, Sky was operating from slum offices in Foley Street in London’s West End, the new Sky Broadcast centre in Isleworth still construction site. Besides, the company was still in the debt crisis. As for the returns, It is not promising at the time. In the year to 30 June, 1990,134 million pounds had been invested, yet losses of nearly 10 million pounds per month were being incurred.
2.2Developing the US market
The News Corporation reached to the US market in the 1980s, In 1984, a US-focused geographic and product shift begins in the company. In 1984, it purchased the Twentieth Century Fox and six television stations from Metro media broadcasting group, which made a foundation for the secondary developing. In 1995, its news papers and magazines still provided a majority of New Corp’s profits. The newspaper business in Australia and Great Britain were all in good condition. Moreover, the increasing profits came from the film and from television. After years of competition, in 2003, Murdoch acquired 34 per cent of Hughes Electronics including DirecTV, America’s biggest satellite operation with more than 11 million viewers. Finally, he established a satellite foothold in the US market.
The consistency of this strategy is quite in accord with the corporation’s expansion policy. “Indeed the economics of program production meant that the only way to create a world wide brand was to succeed first in the huge US market. It was the only way to achieve economics of scale. So the more that Murdoch expanded around the world the more he needed to make it in the United States. And here distribution was much more of a problem” (Chenoweth, N., Virtual Murdoch, Vintage, 2001)
The suitability of this strategy is result of the ambition and the opportunism of Murdoch. He can always catch the strategic opportunities created by the unique and unanticipated events. He is an expansion-minded person. His political friendship brought him great influence. His acquisition of Times Newspaper attributes to his support for Margaret Thatcher’s 1979 general election in UK. He is so clever a businessperson that he can always supports the winner who can help him later. That created him the capability of expansion.
The acceptability of the strategy is positive. In terms of risk, it is relatively low. As Murdoch had lied a stable foundation for his expansion. In1980s the News Corp acquired the Twentieth Century Fox and six television stations from Metro media broadcasting group, which obtained many advantages over other now rivals. these acquisitions supplied the company with access to studios for making films and television program, to a film library of more than 2,000 titles, and to a distribution platform for that content. That was the base of Fox Broadcasting Company, which with its affiliated local stations managed to establish in the late 1980s a fourth national television broadcaster in the US. In addition, this expansion into US has a great significance for the revenue increase. However, Rupert Murdoch had to be careful that his acquisition, and the debt association with them, should not against private bank loan agreement, which requires the borrowing amount of money no more than 10 percent of the net asset.
The feasibility for the strategy is generally fine. As to the environment, the US law prevented foreign citizens from holding more than 25 percent of any company with a broadcasting license. In 1985, Rupert Murdoch joined the US nationality, while News Corp itself remained an Australian company at that time, which made the way to expand clear.
2.3The sports-led programming strategy
In the mid 1990s, when the News Corp decided to develop its US market, it had many rivals, such as the NBC, CBS, ABC, and the existing cable operators. At the time, other media consider programming as the resource to get a commercial success, while Murdoch focused on obtaining distribution channels. He made a sports-led programming strategy.
The feasibility of launching the sports channel is that the sport programs are inexpensive in cost, easy for producing and best viewed live. Therefore, it is easy to get customer acceptance – which lead to the increasing numbers of subscription. Further more, the Fox obtained the broad cast right to the national football Leagues’ NFC games and so on. In addition, it purchased some sports teams, such as LA Dodgers, Lakers and King Baseball teams.
The strategy of sports-led programming was Murdoch’s “battering ram”, as he had been demonstrated by BSkyB. After that, the News Corporation obtained many broadcast rights and did many purchases, such as the US local television stations and so on, to enlarge itself. Murdoch finally managed to establish a satellite foothold in the US by acquiring 34 percent of Hughs Electronics including Direct TV, which is America’s biggest satellite operation with over 11 million viewers. Those are the foundation of Murdoch’s global operation.
This strategy was well accepted and got satisfactory Returns. The success of BSkyB’s sports strategy made the corporation one of the most profitable television broadcasters in the UK. In December 1994, the company made a public offering of 20 percent of its shares for more than ￡46n, which reduced News Corporation’s interest to 40 percent.
3. Recommend strategies they could use for the future.
Murdoch’s News Corporation has been a miraculous success in the world. However, there are some potential problems within the Corporation. As Andrew Neil, a former editor of the Sunday Times and the Executive Chairman of BSkyB, has predicted: Whatever Murdoch’ feelings regarding the hereditary principle in News Corp, both News Corp and its founder would die together. Murdoch himself has stated that ,“For better or worse, our company is a reflection of my thinking, my character, my values”(Financial Times, Profiles). The company has too much reliance its founder that once the now owner died, no one could continue the miracle. So It is better that the company take a strategy to restructure the ownership of itself, and make the regulations on company management, so to ensure the resplendence of the News Corporation can maintain.
Conclusion
This report gives a general introduce about the bases of growth and strategy evaluation of The News Corp since 1980. After the evaluation, there are some recommendations for the improvement for improvement of The News Corp. All of the above can help people get to know the theory of company strategy better.
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