Competitor Profile: WCM has many competitors in the business investment magazine category with Money, My Business, Personal Investor, Australian Property Investment, and Dynamic Small Business magazines being the top rival publications.
Industry Trends: Research has shown the business investment magazine category is a mature market and is currently in decline.
Scenarios:
Best Case: The magazine increases circulation and revenue by continuing to differentiate themselves from their competitors based on content and not price, to meet demands of the target demographic.
Worst Case: The economy experiences a downturn and interest rates go up, negatively impacting the investment sector and thus the attractiveness of the magazine to consumers.
Issues:
- WCM is unable to sustain their competitive advantage through product differentiation especially against larger and more popular publications with greater financial backing. Competing magazines have been around longer and Money magazine has received much exposure as the spin off from the former television show. In addition it has alignments with celebrity financial experts giving it greater validation than WCM which is a relatively new entrant in the market.
- The ability of WCM to retain consumer interest in an economic downturn especially when many investment strategies within the publication pertain to property investment, development, and share investments. In this environment the desired target market are less likely to leverage their homes and use debt equity to finance other investments.
Alternative Courses of Action:
- Maintain the Status Quo and current direction of the publication as it appears to be successful and keep expanding into new states and territories. So far the magazine reaches Queensland, Victoria and New South Wales.
- Sell the magazine to a larger publisher whilst it is still achieving growth in a mature and declining category. There will come a point when the magazine will no longer be able to achieve growth and will experience a downturn in sales as the trend in the declining category indicates. With this in mind the owners should look towards their exit strategy in order to recoup their costs and make a profit from the enterprise.
- Evaluate the opportunity of an Initial Public Offering. Floating the magazine may be a good idea whilst it is performing well and achieving growth.
- Invest into other magazine categories that are experiencing growth and use the experience they have built with WCM to grow the company. This is currently proving successful with the recent launch of HLF magazine dedicated to health, lifestyle and fitness, a growing interest to Australians.
Recommendations:
Comparison of Benefits:
Therefore considering the above benefits of the options, Option 3 appears to be the best as it will give the investors an opportunity to realise a return and will provide the company funds to pursuer other investments/products such as Option 4. Option 1 although currently successful, is short-sighted in terms of not taking into account the negative trend in the business investment magazine category. Furthermore, Option 2 may be difficult in terms of finding a buyer and achieving the best price for the business.
Comparison of Limitations:
The above limitations also imply that Option 3 is optimal as both Options 3 and 4 would involve higher expenditure however the end outcome is more desirable. Moreover, Option 1 is more a short-term strategy and overlooks future complications, and Option 2 relies heavily on a third party with greater bargaining power.
Recommended Option:
Thus the best option for the owners/investors of WCM to pursue would be option 3, float the company on the stock exchange.
Contingency Alternative:
In the event that option 3 is not possible, WCM should look towards option 4 however establish new products over a longer period of time when capital inflows allow.
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