Assignment Overview:
INTRODUCTION
News corporation identified by the name of its head, Rupert Murdoch, he along with his family have 30% of the total company’s stock. The main goal of Murdock to open News Corporation was to establish ownership in different forms of programming like sports, news, films and children’s shows and send them through satellite or television stations to every household in U.S., Europe, and America.
Rupert established his company news corporation in 1960 in Australia and later on entered the British market in 1980 and became a dominant in the U.S. market. The company went into a lot of debt in 1980 to purchase Twentieth Century Fox and for the formation of Fox television network but was successful in paying off most of the debt by 1990. This shows how successful the firm was. The company operates in nine differentiated forms of media and six continents. The revenue distribution in year 1995:
Film entertainment-26%
Newspaper-24%
Television-21%
Magazines-14%
Book publishing-12%
Rupert Murdoch utilised all its forms of media to promote each other and to influence public officials worldwide. The company earns around 70% of its total profit from U.S.(McChesney, 1997)
The company news corporation went through a long route of evolution from a single newspaper to a multi brand media, this shows the success of the company to evolve and adapt itself with the help of consistent search for innovation, better products, new concepts and new methods of adding value to the company and serve the customers in the best possible manner. Before 2003 the company suffered losses for two year but it earned revenue of $1.8 bn in 2003 and the credit goes to Rupert as he did not follow any set strategic plan of action rather it is his vision which has helped him achieve success. It is since the very beginning that the strategic vision of the enterprise was to become a well integrated media house with the calibre to recognise strategic opportunities when they arise and utilise them for the expansion of the company keeping in mind the challenges it might face. Rupert’s strategic vision as well as style of management helped him to establish a very efficient reporting system which allowed him to achieve highest possible levels of control over the affairs of the company, thereby aiding him to take best possible strategic decisions.
The growth of News Corporation started from 1923 when it began its journey by a local newspaper, The Times, in Australia. In 1980 it created the Australian only national newspaper, two national magazines and around 20 provincial newspapers. The company acquired interest in book publishing, TV broadcasting, film making, etc. In the year 1968 Rupert brought the UK based News of the World Organisation. In 1980 the company started publishing Sun Newspaper. In 1981 Rupert acquired Times Newspaper Ltd (Obama, 2010). So it can be seen that without any set plan for growth Rupert was successful in establishing the largest media company globally from which all his competitors fear.
SWOT ANALYSIS OF NEWS CORPORATION (Thinking made easy, 2009)
Strengths:
1) It capability to transform itself from a conventional form of media to a major olayer in the digital world
2) The vision and personality of its leader Rupert Murdock
3) Sound financial background making it one of the largest listed company
4) International expansion and making the company globally recognised as a leader
5) The ability of the company to adapt to new ideas and generate a diverse variety of products to meet consumer demand. Producing diverse variety of products helps to satisfy wants across different demographic groups in the marketing mix.
6) The capability to reinvent and enhance its services in regards to internet, media and communication and on the other hand managing the diverse needs of the consumer and maintain its position as a leader.
Weakness
1) The management structure is poor as its very informal and emotionally influenced.
2) The dictatorship of Murdoch sometimes has a negative effect
3) Ignoring the interest of the shareholder leads to lack of motivation from the management to perform to the best of their capabilities
4) Financial issues as acquisition requires a lot of capital
5) Absence of any strategic planning methods for the operation of the company as it expands majorly on the basis of acquisition.
6) Decrease in the market share due to the existence of substitute industries like Virgin.
Opportunities
1) Technological development: Transforming itself from traditional TV distribution system (cable and satellite) to digitalization and recognising the importance of internet
2) The global recognition was achieved by the coverage of the Iraq War(2003)
3) Attaining exclusive rights to broadcast English football Premier League led to a number of new subscription
4) The option of Satellite programming
5) Utilisation of the opportunity to enter into strategic alliance with China Mobile
6) Market penetration by acquiring two other newspaper groups
7) Acquisition of Myspace.com gave way to the company to enter into new growth markets.
Threats
1) Slow economic growth of the main market posses a threat on the global positioning of the company.
2) Specific policies of the various countries in which its operating also pose a threat
3) Rivals of the company
4) Inability of their program to use local language is a serious threat to the company’s international expansion.
5) The company is a not able to meet the environmental expectation which will lead to rising of questions on the social responsibility aspect of the organisation.
Rupert Murdock did not have any particular strategy for growth whereas he mainly expanded his business by making numerous acquisitions throughout the world thereby becoming the most successful corporate group. Now talking about the future strategy which the company should follow one has to carry out the pest analysis as it basically involves the study of the external environment of the organisation. The study can be divided into four parts (Coursework.info, 2011):
1) Political environment
Strict regulation are placed by many country on the media entry in many countries like when the news corporation had to enter the U.K. market there was a limit of 20% on the ownership of TV company. Even in India there is a limitation on foreign business and even permission is required for foreign direct investment. In U.S, any media company cannot own more than 35% of all the families, so as to constrain monopoly in the field. So to establish its network in different country the company will have to follow different rules and regulations. Rupert Murdock is a smart man and he has maintained good relations with the local government of many countries so when it comes to talk about the policies of that particular country the local government is a great help. He supports political leaders who help him in business. Example: In the case of U.K. market he helped Thatcher in her election and she in return declared that his acquisition does not violate any rules of the government.
2) Economic environment
The economic condition of the country is also a very important factor that affects the success of the company in a country. The economic condition of the country is conclude from the GDP of the country so the countries who’s GDP is high has good media growth prospects like in Asia the GDP is high so is considered to have great prospect for success of media. The economic factors have a great impact for example in 1990 bank crisis News Corporation had to face great financial difficultly and the company was under great debt so it can be seen that when the economic factors are not favourable one should not invest in that particular country.
3) Social environment
It mainly relates to the attitude of the people towards leisure activities. In case of BskyB there was a great increase in the number of subscription as the people enjoyed watching sports channel during their leisure time as people find watching sport’s match on TV rather than going to the stadium. . The latest Social Trends survey shows that television tops the list of leisure activities for the United Kingdom. In U.S also the situation is the same as around half of the men and women watch TV in their free time.
4) Technological environment
The technical factor can be a major reason for the growth of a company and if the company is not advanced in technology in accordance to the rest of the world it can be a hindrance to the growth of the company. Rupert’s company is technological advanced as it is his company which moved from tradition methods of TV to digitalisation and understood the role of internet in the growth of the business.
Recommendation:
1) Focus on internet marketing approach to enhance market share.
2) Provide high quality content to attain customer loyalty and good customer relationship
3) Mange financial resources efficiently to minimise its weakness
4) To take into account other sources of investment like joint venture to flourish in the international market.
5) To keep a backup plan of management in case of departure of Murdock from the company.
6) Let the shareholders also benefit in case the company earns extra ordinary revenue.
7) The company should re-examine its investment strategy in US in regards to the distribution presence in the US and select a differentiated approach.
8) The company should pay attention towards the approach it has to take towards the cross ownership restrictions in the industry.
Bibliography:
Coursework.info, 2011. ‘Strategic management case study’ viewed on 4 June 2012.
McChesney R, 1997. FAIR, Fairness and Accuracy in Reporting, ‘The global Media Giants (we are the world)’ viewed on 4 June 2012.
<http://www.fair.org/index.php?page=1406>
Obama V, 2010. ‘The News Corporation’ viewed on 4 June 2012.
<http://voices.yahoo.com/the-news-corporation-5185677.html?cat=3>
Thinking made easy, 2009. ‘The News Corporation as media and entertainment industry in the global market’ viewed on 4 June 2012.
< http://ivythesis.typepad.com/term_paper_topics/2009/02/the-news-corporation-as-media-and-entertainment-industry-in-the-global-market.html#ixzz1wvLV3k9p>
References:
Coursework.info, 2011. ‘Strategic management case study’ viewed on 4 June 2012.
McChesney R, 1997. FAIR, Fairness and Accuracy in Reporting, ‘The global Media Giants (we are the world)’ viewed on 4 June 2012.
<http://www.fair.org/index.php?page=1406>
Obama V, 2010. ‘The News Corporation’ viewed on 4 June 2012.
<http://voices.yahoo.com/the-news-corporation-5185677.html?cat=3>
Thinking made easy, 2009. ‘The News Corporation as media and entertainment industry in the global market’ viewed on 4 June 2012.
< http://ivythesis.typepad.com/term_paper_topics/2009/02/the-news-corporation-as-media-and-entertainment-industry-in-the-global-market.html#ixzz1wvLV3k9p>
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