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Strategic or effective management: The News Corporation
1. Problem Domain
The performance of different companies has been affected by internal and external factors. These environmental factors specifically affect or impact management functions. One of the approaches that the management should consider is the implementation of strategic or effective management function. Primarily, the main goal of this paper is to analyse The News Corporation through the given case study. Herein, the Paper will provide information about the strategic position of News Corporation through the use of SWOT analysis. Furthermore, this paper will also evaluate the rational and motivation behind the News Corporation strategy of diversifying into satellite broadcasting and evaluate the advantage and disadvantage of acquisition as method of development with particular reference to the acquisition undertaken by The News Corporation. Lastly, this paper aims on providing a recommendation for a strategic development plan for TNC from 2006 to onwards.
2. Overview of the Company
Accordingly, News Corporation is a publicly traded media corporation that provides media services all over the world. The company is originally an Australian corporation but when they have reincorporated in 2004, News Corporation moves its headquarters from Adelaide, Australia to New York City of the United States. After the reincorporation, the corporation has been able to add to the S&P Index in later part of 2004 and have been able to generate about 75% of its revenues as well as its profits in the United States. The company's business portfolio includes television programming, motion picture production, TV, cable and satellite broadcasting, publishing of newspaper, book and magazine as well as the distribution and promotion of advertising campaign materials and services.
The major shareholder of the corporation is the family of its founder which is Chairman Rupert Murdoch who has been able to spend his 50 years with the company. Murdoch's family controls 30% share of the company. Murdoch has been able to build a media empire starting with his ownership of the Adelaide news, which his father has established. In 1964, he founded The Australian which is the first national daily newspaper and then acquired British and American media properties to expand his business portfolio. The subsidiaries of the News Corporation include Twentieth Century Fox and Fox Entertainment group movie studio. In addition, the corporation has also 34% stake in the DIRECTV Group and also have the ownership of over 30 American television stations, Boston Herald and New York Post newspapers and various Britain largest ciculation newspapers which include The News of the World, The Sun and The Times. Moreover, the corporation has the extensive business operations across Europe, Australia, Asia and Latin America.
News Corporation also brought Intermix Media Inc in July 2005 which is the owner of the largest social networking portal in the World Wide Web MySpace.com and about 30 other websites. It is said that with this approach and with the formation of the Fox Interactive Media, the acquisition of Intermix underscores the company's commitment to expand their business operations in the internet. In the latter part of 2007, the company has been able to acquire Dow Jones & Company which is the publisher of The Wall Street Journal and other companies in news and information. In 2006, the News Corporation revenue was reported to be $25.3 billion in 2006 (Murdoch, 2008).
3. Strategy Options
The most dominant strategic or effective management paradigm in recent years is known as the strategies model (David, 2001). Porter (1998) claims that the intensity of competition in an industry is neither a matter of coincidence or bad luck. Rather, competition in any business industry is rooted in its underlying economic structure and goes well beyond the behaviour of current rival companies. In general, strategy refers to the long-term plan of actions which is established to enable companies to achieve their organizational goal. It is the basis which will serve as a standard for the company to efficiently achieve their goal.
Based on the give case, it can be said that the main strategic approach of the company is with regards to their ability to transform the entire corporation into a company that provides the latest in the media corporations accordingly, the main goal of News Corporation is to create an industry which is unified, logical and creative. The goal of the management is to build an industry with the agility and alertness to find strategic opportunities when they arise, with the notion to anticipate and intervene challenges through the use of conventional wisdom.
With the mission of the company to provide the highest quality content through the most convenient of distribution channels among various customers, the company has been able to provide quality and state of the arts media services and productions that suits the needs of the people in the global market.
4. Theoretical Framework
This part of the paper will analyse News Corporation through the use of Business model and Analytical tools. The business model to be considered is the strategic option to diversification and the analytical tools will be the use of SWOT analysis.
a. Business Model (Motivation for Diversification to Satellite Broadcasting)
Accordingly, Strategic or effective management is known as the process of formulating, implementing and assessing cross-functional decisions which enables different firms to achieve their organizational objective (Drejer, 2002). With this definition, strategic or effective management is said to give focus on integrating marketing, management, finance, research and development production/operations and computer information system to sustain competitive advantages. This definition is said to be in the contemporary business, however, in line with the perspective of the top management, strategic or effective management is the ability of the firm to choose the markets in which the company's distinctive capabilities gain competitive position. In addition, the management views strategic or effective management as the one which is adaptive and incremental in nature and aims on fulfilling the expectation of the stakeholders. Accordingly, stakeholders are composed of the management of the company, the employees and staff the customers, communities and other shareholders and rivals. The management aims on having a strategy which enables them to provide the needs of these stakeholders (Campbell, 2002).
In doing so, the management is trying to find ways to meet the needs of the stakeholders and this is done through constant communication. By means of communication, the management has been able to clearly relay the purpose of the company to sustain competitive advantage. It has been also believed that key to having strategic or effective management is through empowering their stakeholders, allowing them to be part of the decision making process and enabling them to be part of the business operations (David, 2001). The management perspective of strategic or effective management is to deliver superior stakeholder experience through direct, comprehensive stakeholder relationship and support programs tailored to satisfy stakeholders need.
In the case of The News Corporation, it can be said that the company has been able to use a strategic business model to be able to stay in their competitive position and to be able to provide quality services to their target audiences. One of the business models used by the company is the diversification of their business portfolio into satellite broadcasting. Accordingly, the main goal of the News Corporation to diversify is to cater to the emerging needs of the market. In this regard, the News Corporation has been able to launch the UK Sky Television on February 5, 1989. The Sky television is a direct-to-home satellite broadcasting. The main motivation of News Corporation to diversify is to anticipate the intensifying communication in terms of communications satellite broadcasting services. In addition, News Corporation also diversify to become more innovative in providing their services and media coverage to their target audience in terms of switching from analogue to digital and to consider multichannel broadcasting.
Furthermore, another motivation of the News Corporation to diversify into Satellite broadcasting is to provide a new strategy in terms of programme material distribution. Through this diversification the company has been able to provide opportunities for any broadcaster to increase their channel distribution which allows the distribution of different programmes to different countries.
b. Analytical Tool
This part of the paper will analyse the strategic position of News Corporation through the use of SWOT analysis. Based on the given case, the strategic position of the News Corporation specifically their BSkyB's position has been challenged because of the changing situations of the media market. Rival industries of the company has been able to announced the establishment of the first quadruple play media company in the global market which offers television, broadband, fixed line and mobile communications. The announcement of this company affects the strategic position of the entire News Corporation. In order to make sure that the company will not be left behind, News Corporation has been able to involve themselves into the expansion to technological developments.
Through the use of SWOT analysis, the strategic position of News Corporation in 2006 will be analysed.
Strengths. As a competitive and globally recognised media corporation, News Corporation has been able to have strategic position in the global market. In fact, when News Corporation streamlined in 2003 to 2006, it already had the advantage of size. With several consecutive years of multibillion profits, the company has outshined its major rival companies to become a model firm. Also, News Corporation's decision to focus on diversified market and by considering satellite broadcasting and entering the internet market through MySpace.com was a courageous one, but it has led to its current position as one of the top global brands. The firm has likewise been characterised by many analysts to have an ability to adapt to changing market conditions in order to maximise profit. Listening to and identifying with consumers has allowed News Corporation to construct a corporate culture that bears little resemblance to the News Corporation of the past.
The ability to continuously renew and improve their service in the media, internet and communication while effectively managing the needs of their target audience is the key to maintaining News Corporation's leader status and the key for succeeding in having strategic position.
Not all of diversification and approach have been successful and this can be considered as one of the flaws or weaknesses of the company. Analysts have accused the company of focusing too much on their high-end acquisitions and diversification in spite of the risky effects of such decisions.
The basis for long-term competitiveness is the ability to develop continuously new generations of more advanced media products and services. Therefore one of the company's opportunities is to tap into more markets as a result of the innovations being introduced in the media and television and internet industry Localised capabilities enabling or even enhancing such co-operation will always make a difference when it comes to first-mover advantages. The opportunity to penetrate new growth markets where internet media adoption still has room to go, Leveraging News Corporation's infrastructure business to get first choice and stronger position against rivals is also an opportunity. They also have the opportunity to get ahead of their rival companies, and this should be the case, since the said market is a potential sizeable source of income. The trend of considering the internet market also show cases new opportunities for the company specifically with their acquisition of the MySpace.com
Rival companies are major threats to the business. News Corporation, in contrast, started out in other lines of business and entered broadcast and media capabilities of the company. The firm's inability to keep up with innovations, or recognise its demand, creates a threat for them, a risk that they could be displaced by other industry leaders. The legal and political environment in the countries where they operate in could potentially affect the business negatively. Their apparent complacence could be used by their rival companies to their advantage, and take News Corporation by surprise, with the latter realising too late that they are not the industry leader anymore.
5. Application (Advantages and Disadvantages of Acquisition Method)
With regards to the largest media deals from 1981 to 2002, The News Corporation has been involved in one of these media deals. The company has been able to acquire Gemstar-TV Guide and TNC also acquire DirecTV and also brought small stakes of 20th century fox and other local TV stations. In addition, the company started a satellite TV system for their UK subscribers and also invested in another TV system in Asia which is Star and has their cable Fox News Network. The latest acquisition of the News Corporation is their acquisition of MySpace.com which is the largest social networking website in the World Wide Web.
Primarily, the acquisition approach of News Corporation has taken some advantages and disadvantages to the overall performance and strategic position of the company. Accordingly, there are two basic models of acquisition, one is through cash and the other is through the stock swap. Based on the given case, one of the advantages of acquisition in News Corporation is in terms of market growth. With the acquired company, News Corporation has been able to diversify their products and business portfolio and meet the needs and demands of their target audience. In addition, through the acquisition, the company has also been able to see their potentials in different market including the internet market. The management has also been able to grow in terms of investment and grow in terms of market shares. The company has more opportunities to provide the latest products or services in the interactive media which may lead to further success of the company.
Although the company has some advantages with their acquisition, News Corporation also faced some disadvantages. One of this is the threat of not fulfilling the needs of the acquired company which results in major downturn or bankruptcy of the entire industry. In addition, with so much company at stake, the management is being challenged to be able to meet all the needs of each of the company acquire to stay competitive in the market position. The acquisition entails large values of financial resources involved and if the company would not be able to manage the acquired industries strategically, all their hard work will end to major fallback for the entire industry. In order to maximize the advantage and minimize or eliminate the disadvantages, the company must be able to use strategic management approach to handle all their subsidiaries and acquired industries.
Based on the given analysis, it can be shown that with the management approach of the News Corporation, the company has been able to grow in the media market efficiently and successfully. With the ability of the management to visualize what is needed to grow in the media and broadcasting market, the management considered different approaches and business models such as diversification and acquisition approach. Analysis also shows that with the aim of the company to stay in the competitive and strategic position, they are able to anticipate major challenges and maximize their strategic abilities to meet the needs of their target audience and outgrow rival industries in the global market.
Based on the findings, the following are the strategic development plan for the company from 2006 onwards. Strategic Planning is part of the marketing approach wherein the management team determines ways and techniques to initiate the corporate discount in a corporate unit. Strategic planning can be used in when an organisation intends to instigate or initiate a certain marketing decisions that will enhance the competitiveness of the organisation (Elkin, 1998). With proper implementation of such plan and with the strong commitment of the management as well as the employees with this plan, growth, stability and competitive advantage will be achieved by the corporation.
For this strategic development plan, it is recommended that the management of News Corporation should focus on managing all the conglomerate and subsidiaries of the company. In addition, to be able to maximize their advantage in acquiring MySpace.com, the management should be able to manage this strategically. In line with the marketing development, the company should maximize the use of their financial resources in the latest trends in the market environment. They also need financial resources, to sustain their strategic development in considering employee trainings to ensure that the changes in line with their interactive media planning sill be successful.
In this strategic development, it can be said that the commonness of the two is the initiation of the strategic planning. Accordingly, strategic Planning is part of the strategic development wherein the management team identifies ways and techniques to initiate the development or execute their objectives. Strategic planning can be utilised when an organisation intends to instigate or initiate a certain project, in this case the News Corporation information technology development and interactive media development and the marketing strategy development that will enhance the competitiveness of the organisation (Elkin, 1998).
The strategic plan for each development, specifically in terms of their resource planning, assures that the company only utilised a strategic planning approach that will benefit the company to achieve its goal. In this manner, the management of News Corporation should be able to incorporate strategic planning and implementation in line with its resources for both strategic developments.
It can be concluded that the management must be able to know what is happening in the internal and external environment of the business. This is also done to know if changes are needed to meet the needs of these factors and to avoid problems in terms of the four management functions. Hence, strategic management through proper planning, organizing, leading, and controlling is needed. Through this, the management will also be able to counter the negative impact of globalization, technology, innovation, diversity and ethics.
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