2.2 MARKETING
Newscorp marketing has been successful due to how they use their vertical and horizontal integration. in terms of inter-promotions, they cross advertise on all their different products so they make sure they make use of that so they don’t have to spend lots of money on advertising they can do it internally and horizontally across their integration
Media, News, Internet Based Companies
Service to customer
Regulations- Its environmental friendly (Product safe) and users friendly as well
Competitive, e.g. price of The Sun changed from 35p to 20p
Affordable-There is wide range of products on offer at affordable cost, so there are no fixed prices. For instance the cost of subscription varies with customer taste and income.
Through own TV channels and newspaper
Advertising- cross advertising or cross promotion between companies Reputation-Strong branding
Strategic Alliance-merger of BSKYB (SKY and BSB) and also an alliance with Astra
International, but started off from Australia and presently in US
World wide
News papers and others-distribution via retailers
Number three (3) Media Company in world after Time Warner and Walt Disney, huge market share, many different products to offer
Encryption code and competitive edge
Talented, 47300 employees, 7.5% growth in employees
Staff –Expertise with high reputation of been successful were been recruited for the right position.
Amazing management style having the right people in the right position
Barriers to Entry (digital channels), acquisition of weak companies with potential growth opportunities. “No Friend, Family or Religion in business.
Customer experience –Differentiation.
2.3 HUMAN RESOURCE MANAGEMENT (HRM)
Newscorp have wide range of experience skilled managers so when Rupert Murdoch does make an investment, he can cherry pick the managers he thinks will have the necessary skills from his organisation and he can bring the team together and that’s why he is successful because he understand how it works as a whole.
2.4 OPERATIONAL ANALYSIS
News Corp operators in eight industry segments such as TV, film entertainment, and digital broadcast TV, magazines, newspapers, books and other assets.
- Share knowledge/resources.
- Talent skilled workforce.
- Logistic operational management.
- The Value Chain.
- High level of control.
- Economics of Scale.
- Owning Sports rights.
- High Investments-improvement products/services.
- Technology.
- Vertical & Horizontal integration.
By keeping an open market News Corp will be able to produce a larger range and diversification of products within its sector. Implementing a horizontal and vertical integration structure will effectively lead to economies of scale, i.e. lowering costs and full utilization of scarce resources.
3.0 PRIORITISED STRENGTHS AND WEAKNESSES
Strengths
- Horizontal and vertical integration
- Brand Image
- Rupert Murdoch
- Inter-promotion
- Newscorp offers the most television channel, more than any other digital service
- Newscorp offers free satellite dish and set-top box upon subscription when consumer join their sky TV
- Diversification
- Skilled and experienced managers and technical staff
Weaknesses
- Scarce capacity
- Rupert Murdoch
- Competitors- Cable and wireless
- Freeview digital terrestrial television requires no monthly subscription where as BskyB does
- BskyB requires a satellite to be fitted
Unique resource that gives Newscorp a competitive advantage is their use of vertical and horizontal integration. Newscorp have a vast amount of highly skilled and experienced managers. They can use this to bring people in from different departments to work as a team and therefore make new ventures successful. For instance when they acquired BskyB, they got the technological staff to deal with the encryption and they got the advertising staff to advertise across different boards therefore do not have to rely on outsiders which in effect lowers cost.
NewsCorp have a number of managers, but they have very little time to do anything else because they are concentrating on their own individual activities. This produces a weakness for Newscorp. Newscorp has very little spare capacity so they have to think about how they will implement future strategies. If you haven’t got any spare capacity or resources left, you have to think how you’re going to put it in operation
4.0 EXTERNAL AUDIT
4.1 PESTIE ANALYSIS
The following factors have an influence on News Corp to analyse how the company’s strategy had been influenced up to the present date and view these as opportunities and threats to stay ahead of competition and minimise threat.
Political and Legal:
Policies will differ depending on the host countries government stability, taxation policy, the foreign trade regulations, and social welfare policy and competition law. News Corp has benefited a lot from Murdoch’s political friendships. However in the future, they have to take into consideration the likelihood of any political or legal factors changing and if so set their strategy in such a way that it can easily adapt to meet their requirements.
Economic:
Economic situations vary from country to country, which means that different strategies have to be adopted in each country. These could be determined by the impact of business cycle, interest rates, disposable income and GNP trends.
Socio- cultural:
News Corp device strategies to accommodate consumer interest as this differ from region to region. Understanding and adapting to consumer needs is always an advantage. For instance, in the Asian Market, STAR’s focus changed from broadcasting programming in English to their native language which became more appealing to the target audience.
Technological and Environmental
News Corp spends a lot on research and development to remain competitive. An example of this is the technological development of encryption technology saw revenues being created and protected. However, today’s technology has to be developed in such a way that it meets with environmental obligations. Emissions have to be kept to a minimum and energy-saving schemes have to be adapted to meet environmental laws and as a social responsibility
4.2 PORTER’S FIVE FORCES
Barrier to entry
Sky operates in a mature market. Sky controls the encryption technology and is currently the gatekeeper of the satellite broadcasting in the UK. For any channel operator, getting through the gate requires the payment of significant fees.
Suppliers
Because Sky is a large company and the brand is highly recognised, this enables the company with bargaining power against local and global suppliers.
Buyers
The regional and global operations show that consumers have a very strong bargaining power. TV channels rely heavily on viewers to watch their programming
4.3 CRITICAL SUCCESS FACTORS
- Rupert Murdoch is the driving force most major decisions and minor decisions are made by him, he knows the business to world to the best; his thought and actions are one of the key success factors of News Corp.
- Technological developments, BSKYB launched the UK’s first digital service in 1998 with an operating profit for the year 2003 £321m, a 68% increase in 2002
- Their use of Horizontal and integration
5.0 PRIORITISED OPPORTUNITIES AND THREATS
Opportunities
- Economic Change
- Flexibility in our lifestyles
- Expanding channel range
- BSkyB has introduced Sky which s brand new technology which offers multi channel viewing and recording digitally on a set-top box
- Expanding channel range
- Tap into niche markets
Threats
- Global competition
- Technological advancements
- Environmental issues
- Cultural sensitivity
- Economic downturn
- Falling share price reduces the value of BSkyB shares.
- Competitors offers other services including telephone and internet which reduces television subscription price to customers has an appeal
At present, the economy is enjoying steady growth. And it’s in this healthy economic environment that consumers, as a whole, have more disposable income. The effect of high disposable income is that luxury goods become more affordable. But what does this mean to the media industry that NewsCorp operate in? This produces an opportunity for this industry. For example, technological advancements like high-definition media products, which are sold at premium prices, are an opportunity for organisations to exploit, as there is a growing mass market for this type of product because it is becoming the norm.
We are living in global world, firm are no more competing locally or national, it international now where firms around the world are player of a global market of a specific industry. Walt Disney and Time Warner are key players and competitors within the media industry, but as we are expanding more around the world and emerging markets and economies, such as India and China are developing rapidly. Greater competition is unavoidable as firms within these countries are likely to start competing.
6.0 STRATEGIC POSITION OF NEWSCORP
News Corp’s strategic position in the media industry is strong with the brands within the company. The most important strength is its vertical and horizontal integration of its HRM, operations and marketing, which are unique resources that give News Corp a competitive advantage. The biggest threat facing News Corp is competition due to globalisation, which is inevitable but the effect it has can be minimised. The opportunity that News Corp should be exploiting is the steady growth in the economy by investing more in technological developments. They should also diversify into developing economies where there is potential for success.
7.0 POTENTIAL FUTURE STRATEGIES
- Expanding into other European countries
- Acquiring Amstrad
- Broadband
- Home telephone
- Dow Jones
- Joint ventures with other leading Newspapers
- Price reduction
- Expand into online social networking
After listing the potential strategy of Newscorp, these strategies will go through three stages of screening namely suitability, acceptability and feasibility in order to determine the winning strategy which will ultimately be justified to the shareholders.
8.0 SUITABILITY SCREENING
After going through the suitability screening three of my strategies have passed to the nest stage of the screening to assess their riskiness. The three to go the next stage are Expanding into other European countries, Acquiring Amstrad and Broadband
9.0 ACCEPTABILITY
The risk of each project has can be assessed
10.0 FEASIBILITY
Following the acceptability screening, the winning strategy is by acquiring Amstrad. In practice this is a great opportunity as Newscorp likes growth and Amstrad could be added as one of their portfolios and in terms of strength it’s a great asset as it lowest the cost of production. They could leave the management and employees to maintain the brand loyalty of the company and this will work as its has been before.
11.0 RECOMMENDED STRATEGY FOR NEWSCORP
News Corporation has grown from the publisher of Australian newspaper into the world’s most international media provider. The company has distinguished itself by delivering two things above all else quality and choice.
If Newscorp acquire Amstrad, it will enable it to accelerate and rollout of enhanced TV services. Newscorp already controls content, and this deal importantly gives it full control over the future direction of its set-top boxes. The acquisition accelerates supply chain improvement and will tem to drive innovation and efficiency for the benefit of their customers
Acquiring Amstrad will boost Sky's technical capabilities by allowing it to streamline the process of designing and procuring set-top boxes.
For BSkyB the deal means bringing one of its main set-top box suppliers in-house and should speed up the development of new products as it seeks to stay ahead in the increasingly competitive pay-TV market.
Until now, BSkyB's developers had come up with product specifications in-house then gone to potential suppliers asking them to come up with detailed designs to be made and sold back to Sky. Making Amstrad a sub-division still cuts out much of the costs for BSkyB and speeds up the process.
BSkyB could in the future look to supply Amstrad set-top boxes to other satellite operations around the world owned by News Corporation, which is BSkyB's largest shareholder with a 39% stake. These include Sky Italia, Star TV in Asia and Australia's Foxtel, which News Corp subsidiary News Limited manages with a 25% stake.
13.0 REFRENCES
Johnson G, Scholes K and Whittington R, 2006 Exploring Corporate Strategy (text and cases), 7th edition, prentice hall
News Corporation, [date accessed 1st December 2007]
Reuters, [date accessed 1st December 2007]
Yahoo finance, [date accessed 1st December 2007]
