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MBA Coursework ('10)- scored the only Distinction in a class of 84 students.

MBA Coursework ('10)- scored the only Distinction in a class of 84 students.

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    MBA strategy_businessinformationandanalysis MBA strategy_businessinformationandanalysis Document Transcript

    • ELECTRONIC AGC FORM SCHOOL OF MANAGEMENTSECTION 1: STUDENT TO COMPLETEI.D. No: ENROLMENT/START DATE :099018609 09/2009PROGRAMME: MODULE: MODULE CODE:MBA(FT) Strategy, Business and MN No Module Code InformationSTUDENT DECLARATION: In submitting work to the University you are agreeing to the followingstatement: “I declare that this assignment is my own work, that all sources of reference are acknowledged in full and that it has not been submitted for any other course“.SECTION 2: TUTOR TO COMPLETE: COMMENT & GENERAL ASSESSMENT Presentation Presentation shows a Presentation is Presentation Presentation shows an Presentation of polished, disorganised. carefully and satisfactory attempt to assignment and coherent Purpose and logically showing organise in a clarity of structure. meaning of organised. organisation logical manner. expression Thoughts and assignment is Thoughts and and coherence. Meaning ideas are unclear and/or ideas clearly Language apparent, but clearly is poorly expressed. mainly fluent. language not expressed. expressed. always fluent. FluentTutor to mark by inserting a X academic in the appropriate box. Attention to the Has addressed Has addressed Has address Some of the Answer fails to purpose of the the purpose of the purpose of the purpose of answer address the assignment the assignment the assignment the responds to the question set. comprehensivel coherently and assignment. purpose of theTutor to mark by inserting a X y and with some question. tion. in the appropriate box.Critical analysis of The assignment Clear Demonstrates Limited Lacks critical literature/theory demonstrates application of some critical evidence of analysis of application of theory through analysis of critical analysis. theory. Purely critical analysis. critical analysis relevant theory. Tendency descriptive.Tutor to mark by inserting a X Arguments are of the topic towards in the appropriate box.Illustrations: Use Appropriate Some use of Some use of A little use of Very little use of examples are examples. Well examples. examples. Little of examples.examples/evidenc fully and reliably integrated and Some integration and No e. integrated and evaluated. integration and evaluation. evaluations.Tutor to mark by inserting a X evaluated. evaluation in the appropriate box. Analytical and Good Some evidence Limited None or Conclusions. clear understanding of the conclusions unsubstantiate conclusions well shown in conclusion only partially ly d conclusions. grounded in summary of being grounded n theory and arguments supported by theory/literatureTutor to mark by inserting a X
    • in the appropriate box.Comments (first and second markers): Tutor marking this assignment Date of marking Mark Awarded Grade Awarded (dd.mm.yyyy) NAME OF MARKER % GradeSECTION 3: STUDENT’S ASSIGNMENT (TO BE COMPLETED BY 5680 wordsSTUDENT)WORD COUNT. To include everything except the AGC Form, references and appendices.No of words = Five Thousand Six Hundred and Eighty words.Student to insert assignment below:Strategy Coursework Page 2
    • 2010Strategic Analysis of Television News Industry in India Mehul Verma University of Leicester 1/29/2010 Strategy Coursework Page 3
    • STRATEGIC ANALYSIS OF TV NEWS INDUSTRY IN INDIA TABLE OF CONTENT: 1. Executive Summary ………………………………………………………………………………………………..5 2. Introduction……………………………………………………………………………………………………………..5 3. Objective of the report…………………………………………………………………………………………….6 4. Research methodology…………………………………………………………………………….……………….6 5. Industry Landscape…………………………………………………………………………………………………..8 6. Industry Analysis…………………………………………………………………………………………………….10 7. Competencies for Existing Firms……………………………………………………………………………..19 8. Strategy for New Entrant………………………………………………………………………………………..24 9. Conclusions…………………………………………………………………………………………………………….26 10. Bibliography……………………………………………………………………………………………………………27Strategy Coursework Page 4
    • Executive SummaryThe ‘Television News Industry’ in India is defining an exciting space for strategic activitiesunfolding with deregulation in the sector and opening up of the market to intense competition. Theobjective of this paper is to conduct a strategic analysis of the ‘Television (TV) News Industry’ inIndia. The study conducts an industry analysis, evaluates industry dynamics, assesses marketpotential, sustainable demand and competition and scope of the industry are conducted in light ofPESTLE and SWOT Analysis. Value addition in the industry is evaluated to consider the strategicviability of investment returns in this sector. Practically feasible and strategic solutions have beenanalysed for the existing firms to improve their competition. The key findings of this study revealthat the TV news industry is projected to continue to be the major contributor to the overallindustry revenue and is estimated to grow at a CAGR rate of 18% cumulatively over the next fiveyears. Overall, the sector is projected to reach £30 billion by 2013 (FICCI PwC Report: 2009). TheIndian TV News sector is worth £12 billion and is expected to reach £15.78 by 2012 (FICCI PwCReport: 2009). Considering the promising growth potential, untapped rural penetration, annualturnover, rising demand, this project has been analyzed to be a strategically viable venture for anew entrant who can develop a sustainable competitive advantage, as suggested in this paper. IntroductionThe TV news industry started in 1980s, and moved on to deregulation and economic liberalizationof 1991 to face intense competition due to technological advancement and convergence in the pastdecade. Growth factors expanded the TV news industry to 50 news channels across the nation, toprovide news service to a population of 60 billion people (Census Report: 2009). The televisionnews industry emerges to be the largest constituent with 41% share in the Media andEntertainment industry (FICCI PwC Media Report: 2009). At least 10 more 24-hour news channelswith average annual returns of 11% are expected to launch over the next 5 years. (FICCI–PwCReport: 2009).Convergence of entertainment, telecommunications and technology are opening up new avenuesfor growth, further intensifying competition by identifying new markets. As can be inferred from(Grant, 2008:209), this industry can adopt at ‘blue oceans strategy’, by exploring new markets.Strategy Coursework Page 5
    • This paper has selected the ‘Television News Industry in India’ for analyzing the present and futurescope of growth and investment returns in this rising sector. The ‘TV news Industry’ is a part ofthe ‘Media and Entertainment (Service) sector’ according to Standard Industrial Classification(Government of India), covering the geographical boundaries within India. Objective of the reportThe objective of this study is to analyse the TV news industry landscape with reference to theleading 3 firms in this industry dominate over 70% of the total market share. The paper proposessome strategic recommendations for performance improvement to the existing firms. The studyconcludes with a strategic viability analysis for potential investment, proposing recommendationsto a new entrant. Composition of the paperThis paper is divided into three main categories:The focus of the first part (Part A) of the paper will be to define the industry landscape; conductindustry analysis evaluate the present state of environment to access the profitability of theindustry. This examination is held in the light of strategy tools like- PESTLE, SWOT Analysis andIndustry Life Cycle analysis.The next section (Part B) will discuss growth strategies that firms in this industry might adopt, bythe use of use of Market Segmentation, Vertical Integration Benefits, and Resource based view,Product Differentiation and Strategy of Innovation, evaluating challenges for growth.The final section (Part C) of this paper will consider the strategies a new entrant can adopt to enterthis industry. Research MethodologyThis paper will conduct an industry analysis of nature of competition of three 24-hour TV newschannels that offer nation-wide coverage of ‘news and current affairs’. These channels are locatedin New Delhi and operate in both English and Non-English languages.Strategy Coursework Page 6
    • Data is collected from Ministry of Information and Broadcasting (MIB), Government of India(GoI)website, research study and data study conducted by research firms, academic journals. Timescale analysis is involved for relevant comparisons. Top 3 news channels in India and their market shares (Television Audience Measure (TAM) Report: 2009) Channel TV News Group Market Share Doordarshan News 33% (Government of India) (English and Hindi) Zee News 20% (Zee Telefilms Private Limited) New Delhi Television 17% (NDTV Media Pvt. Ltd) Part A Defining Industry Landscape: Identification of Major PlayersStrategy Coursework Page 7
    • India has 50 news channels catering to about 60 billion population owning, 100 billion televisionsets. With convergence giving way to latest communication technologies, the industry is expectedto grow by 32% in 2012 (FICCI-PwC: 2009). Potential CustomersAt least 75 million homes in rural India do not have access to television, indicating the hiddenpotential in ‘going rural’. Gaps like poor power supply hinder with the expansion potential (TRAI,2008). Rise in low cost TV sets and growing potential power with the people is expected to add 40million potential customers by 2012 (FICCI-PwC Report:2009) SuppliersThe TV news industry heavily depends on the satellite or wireless distribution channels for thecoverage of its area. The dominance of Cable TV operators, Conditional Access Service Providers,Satellite TV service owners, is increasingly being taken over by convergence service providers like-Direct to Home digital TV, Internet Protocol TV, Internet live streaming, mobile update allianceproviders. These suppliers mediate in distributing media content by the TV news industry to theviewers/user of information. Source of Revenue and Market DemandThere are primarily two sources of revenues Channel Viewership Chartin TV news channel, viewership 10% 7% Viewership 5%(subscriptions) and advertisements. 2.50% 5% 2% Series 1 0% Column1Viewership: Price charged by the consumers 2006 2007 2008 2009 Column2is in form of ‘Time & duration’ spent on TV Yearviewing. Example, the graph reveals the timespent on News viewership increased from 2% (2006) to 11% (2009), a rise of 450% in 3 years(TAM Report:2009).Strategy Coursework Page 8
    • Subscription: Advertisers seek a wider mass ers 80% 67% Advertisement Revenue coverage and focus on firms with strong 60% 36% distribution and networking for content 40% dissemination. For example, the advertisement , 20% 0% revenue jumped by 86% (2008-09) due to 08 09 corporate advertisement inflow (TAM Year Report:2009). Trend Analysis Assessment of recent and future changes Analysis: Current trend in the industryDiversification: The industry is characterised by diversification in business operations while firmsuse the ‘Path Goal Dependence’ to continue to carry out specialization in their operations.Convergence: New media opportunities driven by technological innovation is givi giving opportunitiesto offer the multiple benefits of convergence. For example SMS news alert, cricket scores etc are example-SMSinnovative ways to make consumer experience more valuable.Rise in Foreign Direct Investment Regulatory relaxation in FDI cap (26%), rising GDP of the Investment- ,country offers a safe haven for global investors to align with Indian TV news companies companies.Foreign media participation (content (content-sharing) has started to show indications for long long-termcontracts and exchange benefits to establish. For Example, Reuters signed a content sharing dealwith NDTV in 2007. Wall Street Journal collaborated with ‘HT Media’ to open up a new printventure ‘LiveMINT’ in 2006. Future OutlookDemand for the improved quality ‘High Definition TV’ format of TV broadcast with technologicalconvergence are expected to have far far-reaching effects and a potential to rise revenue generation isein this industry to £50 billion by 2015 (FICCI-PwC Report: 2009). FDI inflow and global mediaparticipation is expected to continue to rise by 33% in the next 5 years (FICCI PwC Report: 2009).Strategy Coursework Page 9
    • Hence, TV News industry has a bright outlook for expansion possibilities in the next 10 years andscope to capture unexplored rural and sub-urban markets. TV News industry analysisThis part of the paper will conduct the industry analysis by determining the industry dynamics bystrategic analysis of Porter’s 5 forces of Competition (1980) and Brandenberger and Nalebuff’sValue Net Analysis (1996). Relationship between suppliers, distributors and competitors who mightdestroy a firm’s profits are analysed using Porter’s 5 Competitive Force study. Value Net analysisdescribing firm’s relationship with suppliers, distributors, and competitors and suggests ways toenhance firm profits. Upon industry analysis, PESTLE & SWOT analysis are conducted for TV newsindustry. Analysis of Industry Dynamics“For the firm to make profits, it must create value for its customers” (Grant, 2008:66). In order tocreate value, the firm must understand its customers, suppliers, and competitors. This part of thepaper conducts industry dynamics study by Porters Five Forces of Competition (Porter, 1980). Analysis 1: Growth of Competition: Porters 5 Forces ModelChannel Viewership: Revenue(£)(bln) Threat of New Concentration of Buying Power of Entrant Industry Suppliers Buying Power Rivalry among of Buyers existing firmsDD News 33% 5.5 Strong network Captures both Offers Direct to rural and urban Home service, markets no threat of suppliersZee News 20% 3.5 Offers bouquet Heavy Offers Dish TV of channels concentration in services, no regional markets major threatStrategy Coursework Page 10
    • 17% 2 Ability to Popular in Urban Internet swallow masses protocol TV, smaller players new media toolBuying power of Suppliers: The TV news industry has the dominant presence of over 500 channelswith over 50 in the news space that are diversified across more than 22 regional languages.Advertiser’s powers: Each of the firms competes for viewership and advertisement revenues. Inorder to reach out to large sections of the audience, the advertisers choose the firms with bestdistribution links. However, advertisers have a wide choice amongst the competing firms dependingon the target audience being reached out. Hence, one of the most crucial suppliers, i.e., theadvertiser has a high bargaining power in TV news industry.Distributors Powers: News is distributed by the media distributors like cable and satellite tvoperators, Digital TV and direct-to home broadcast service providers, who transmit the newsthrough local satellite links. So, distributors have a high bargaining power as they are responsiblefor pricing the product (TV news), to the customer.Demand: Viewership is highly fragmented in TV News industry due to diverse languages andcultures, preferences and time devoted to TV viewing by various consumers. Demand forcustomised news programmes and regional specialization, are increasing viewership patters.Concentration: TV News space is characterised by high concentration of the rival firms, competingfor better visibility and customers’ popularity.The broadcast of news is a highly differentiated area with each of the rival firms competing for theair-time. While content and news-packaging may widely differ, but ultimate goal of each of thecompeting firms is mass visibility.Strategy Coursework Page 11
    • Most of the firms have experiences set of journalists and a selected team of professionals withwhich, the firms establish their name in the market as the ‘face of the channel’. This is regarded asa crowd-pulling strategy to attract viewership. Similarly content of the programmes is seeking aconcentration towards popular genres- like – cricket, scams, celebrity shows, gadgets, lifestyleshows. However, the industry has high attrition rates with growth in industry, opening up betteropportunities to staff.Industry RivalryCompetitors: Not only is the competition confines to timely delivery of accurate information, butthe highly competitive market place with cash-rich media houses vertically integrating thepotentials of content distribution along with the earlier task of news production. Ex. Zee Televisionstarted its Direct-to Home in 2005 and is now successfully competing against Internet ProtocolTelevision (IPTV). Many firms have exposures into the stock markets -Bombay Stock Market (BSE).Excess capacity and exit barriers: Being a capital intensive industry, usually the same framework oftechnology can be used to diversity the news channel and target an entirely new set of customers.However, such integration will require a long-run planning and then effective targeting of themarket. Hence, usually for many firms, in the absence of diverse markets, the capacities are putfor single use only.Threat of New Entry: Heavy capital cost of setting up TV News firm itself acts as a barrier to newentrant. However, break-even may only come after long gestation periods (5-7 years) when thechannel becomes profitable. Conclusions to Porters’ Five Force Analysis: TV News industry is highly competitive with new players making an entry enough to sustain the competition. While consumers and advertisers have a wide range of choices, yet try to focus around the dominant players in the industry. However, this needs the behaviour of complements to access the nature of competition.Strategy Coursework Page 12
    • Analysis2: Brandenberger and Nalebuff’s Value Net AnalysisThe unexplored potential in the complementary firms has been identified by (Brandenberger andNalebuff, 1996:117), defining the room for profitable cooperation. For example, 5 Force Analysis inTV News industry predicts intense rivalry for viewership. But the Value Net introduces thepossibility of cooperation among TV news channels to expand distribution and acceptance ofstandardized HDTV formats. At the same time it predicts cooperation with suppliers (cableoperators, Dish TV operators and convergence service providers) to boost the channel coverageand distribution to existing and newer markets.The missing force in Porters Analysis: i.e., presence of complements stands critical for the analysisof TV news industry and is represented by growth of convergence technologies. The availability ofbroadcast news is no more restricted to television sets, but be easily accessed on mobile handsetsin forms of live broadcast by the 3G enabled services or SMS alerts. Many consumers aresubscribing to ‘Breaking news’ alerts or remain updated on cricket scores via ‘Cricket LIVE’ or evenmake their stock purchases and sales decisions via stock alerts.The rise of the role of complements has begun to influence the structure of the industry landscape.In fact, TV news companies have entered into business understandings with leadingtelecommunications companies. This has emerged to be a win-win situation for the firms,associated complement companies (telecommunication companies) and finally the customers.It can thus be analyzed that creation of value to the customers has increased by the increase incompetition between the six forces.Firms can resort to Coopetition and encourage technology standards to be set for the industry.Currently, the industry is united for pressing on the government for regulatory relaxation andcooperation from suppliers (cable operators, channel distributors, and multi-service operators,Satellite communications Providers and convergence facilitators). Further, firms can improveefficiency jointly. For example, offering bouquet of channels by Zee News, not only packages theoffer to the viewer attractively, but also reduces the distribution costs for the firm. Analysis 3: PESTLE AnalysisStrategy Coursework Page 13
    • Political Factors: The political factors include political stability in the country, trade and tariffrestrictions, which play an influential role on growth of business. This is especially, relevant whenthe business is highly capital intensive like that of TV news industry. Being a service drivenindustry, the use of Political Influence and Public Opinion tools suggested by (Kotler, 1992), havetheir relevance on functioning of this industry.Economic Factors: Economic cycle of the country has a significant impact on the industry as highcapital commitment and long run commitment to viability of the project make it a criticalconsideration for TV News companies. For Example, Reliance Media Pvt Ltd and Videocon industriespostponed their plans to launch the TV news channels during the financial meltdown of 2008. Mostchannels cut costs by 30% during 2008 due to the financial meltdown (FICCI-PwC Report: 2009).Social Factors: Social factors such as age, demography, culture, lifestyle, working class etc hasbeen an important determinant in deciding the targetaudience. The TV industry strives to customize programs tosuit the preferences of the target customers.Technological Factors: Advancement in technology hasgreatly impacted the industry landscape, infusing in toughcompetition.Legal or Regulatory Factors- With deregulation opening upnew markets, are creating better opportunities.Strategy Coursework Page 14
    • Channel Political Economic Social Technological Legal Environmental DD News Voice of Annual Consumer CAS, DTH, Government Regulation of budgetary preference Convergence regulation, media content the allocation s government Economies for Better Regulated of Rise in standards Scale opportunities freedom of of living of with expression, people deregulation being a government’s channel Zee News Influence of Financially New media Innovation and Rising Enjoys freedom ruling party strong base experience adaptability to taxation rates of expression new technology Rise of low-cost TV sets Expected growth in Power scarcity in subscription rural areas revenues NDTV Political Corporate Changing Expected Foreign Market Power parties have Advertising is viewership growth from based on Size media an impact on influences by patterns diversification, Deployment of corporate economic cycle new products holding Rising unused strategies, offerings restriction awareness resources increase in Foreign media literacy collaboration ratesStrategy Coursework Page 15
    • Analysis 3: SWOT Economic growth, De-regulation Fragmented market Rising demand, Demand for specialisation Convergence Poor quality check Growing consumerism, Excessive diversity Better technology Weakness Strength Opportunity Threat Commonwealth games broadcast, FDI Growth of internet Technology Excessive choice for New Media Applications Consumers Further deregulationStrengths:Rising economic growth rate is leading to a higher dispensable income of the growing middle-classof the population. With improvement in lifestyle of customers, their demand for qualityentertainment continues to grow. Demand for customised entertainment and current affairs withimprovement in literacy rates and awareness has created immense scope for electronic mediaindustry to rapidly expand. Clearly, this indicates a rising demand.The industry is witnessing a growth in demand for TV news audience and hence there are“strategic windows of opportunity which means that there are only limited periods during whichthe fit between the key requirements of a market and the particular competencies of a firmcompeting in that market are at an optimum” (Abell, 1978:21). So, investment in a market mustbe based on timing when the strategic window is open. Also, the scale of investment and decisionon the direction of the investment must be carefully evaluated with respect to the demand.De-regulation and encouragement in foreign media participation has strengthened the scope ofalliances and partnerships with the international players and has also empowered the industryfinancially. Due to rise in financial capabilities, emergence of high-end and latest communicationsStrategy Coursework Page 16
    • technologies are moving at a fast pace. Clearly, this indicates availability of resources to sustainrising demand.Democratic framework of India recognises ‘Press’ as the Fourth Estate of the nation. This hasmade the TV news industry highly independent, with the thrust on raising issues in the rightperspective. The power to create public opinion comes inherited in the system.Weakness:Owing to diversity of country with different languages, varied target customer groups, risingdemand for customised programmes combining entertainment and information, has made the TVnews industry highly fragmented. Highly competitive space has led to erosion of profitability forsome firms.Setting up an electronic news Media Company may costs huge capital requirements, whereasdistribution of content may take a high proportion of cost. As sustained visibility is the key tosuccess in a highly fragmented market.While the suburban and rural belts can emerge out to be greener pastures for the future, poorelectricity supply, problem in connecting remote areas may turn out to be costly task for the firms.OpportunitiesScope for further changes in the industry landscape with de-regulation and sustained participationof international media players, there is a tremendous scope for growth in this sector.Technological advancements are making the possibility of connecting remote areas, a reality. Thepositive future outlook may give scope for better collaboration.The TV news industry may be highly competitive, but on issues like thrust on de-regulation, unityin proposing the Government’s Ministry of Information and Broadcasting for foreign mediaparticipation, all the firms in the industry get united.With the growth of the industry, improvement in creative output, better reach to the audience,interactive media initiatives, there is a rising inflow of talented staff, creative professionals, staffStrategy Coursework Page 17
    • salary structures, job satisfaction has improved. This indicates the creation of knowledge as aresource that can be strategically explored.Threats:New media initiatives like growth of internet as a source of much faster and widely accessedmedium, is posing a threat to the TV news industry. Many views choose watch other entertainmentprogrammes and catch up for news headlines on television. This greatly reduces the TRP ratings orthe viewership rating points.However, the share of television access is amongst the highest in the primary media deliverychannel space.Rise of firms in the media industries are exposing the viewers to excess of choices, giving rise to apossible threat of lacking customer loyalty. Customers have begun to feel they are beingbombarded with too much information. Application of SWOT Analysis:Channel Strength Weakness Opportunity ThreatDD News wide distribution Bureaucratic New Media government structure applications, support fully digitalized studios by 2012 Slow movement Direct to home changes in in procedures to satellite political regime Allocation from under pass communications the 11th five year plan. Corruption in Awaited Use of Digital Satellite system Commonwealth News Gathering(DSNG) Games in HDTV for the modernization Format of Satellite Earth Stations worth £15.11Strategy Coursework Page 18
    • cr.Zee News High viewership Increase in Robust growth consumerism, ratings operating costs: number of factors advertising Offers a complete Rising content Digitisation (rollout spend, bouquet of channels to costs per hour of CAS and DTH) content pricing viewers, MSOs and the with cable Higher employee DTH players. Ex: the penetration will technology & costs company has offerings increase from 70 regulation in news, comedy, mln homes in 2006 Problem of music, sports and to around 113 mln competition Attrition fashion, regional news homes by 2011. channels Slow rollout of source: CAS equitymaster.comNDTV Association with a Share price fall by Diversification into Declining foreign broadcaster slowdown specialty channels viewership and revenue share Oldest in the market Financial stakes acquired by Bombay Stock Kingfisher Group Exchange Listed company Key Finding: Creation of ValueIt can thus be analyzed that in the highly concentrated market of TV news industry, initiativetaken up by one or more dominant firms is quickly being adapted by the other firms in theindustry. In order to compete amidst high competition, the firms must closely understand thecompetitor by way of competitive intelligence through regular analysis of data forecastingcompetitor’s future strategies, “predicting competitor’s reactions and determining ways toinfluence competitor’s behaviour” (Grant, 2008:67).Strategy Coursework Page 19
    • Industry life Cycle Analysis On the Industry Life Cycle curve, the TV news industry is in its growth stage as marked in the graph. As the industry opened up only about 15 years back, the real growth has started to show since the past 5 years. Burgeoning rise in new firms in the market, benefits of technology coupled with innovation of convergence have started to position the growth phase of the industry. PART B Competencies required by existing firms to be successfulThis part of the paper analyses 5 strategies that the existing firms can adopt to emerge outsuccessful. Strategy 1: Concentration on Market Segmentation Some segments are more attractive than the othersCurrently, a majority of the national news space is concentrated with 24-hour news channels. Butapplication of market segmentation, by segmenting homogeneous consumer tastes and targetingthem by offering specialist program mix. Detailed analysis suggests the hidden potential of theuntapped regional markets for info-tainment programmes (programmes with a combination ofnews and entertainment) from the Tier II and Tier III cities or suburban markets. Based ongeographical expand of population, language, socio-political environment, the firms can carefullytarget such emerging markets. For example, the business wing of Zee News identified the need for‘Commodity-focused programs’ in the sub-urban cities like Surat (Gujarat), Jalandhar (Punjab) etc.Zee news now dominates the viewership in these cities (rose by 67% in 2009) by focusing onagriculture- education and commodity trading based news programmes.Strategy Coursework Page 20
    • Thus diversification with specialization can be an effective strategy for the firms to achieveviewership. Interestingly, this also results in better advertisement revenues for the firms.Further, “operation within the existing capacity can give rise to economies of scale in production”in advertising and distribution of news in certain concentrated segments than others (James &Trautman, 1990:13).Hence, the strategy to classify the target market into submarket on the basis of theirattractiveness and focusing on the most profitable segment will add to the TV news firm’sprofitability and will help them have competitive advantage. Strategy 2: Vertical Integration BenefitsVertical integration refers to a firm’s ownership of vertically related activities (Grant, 2008:350). InTV news industry this is of critical importance. The assumption behind theory of verticalintegration is “reduction in transaction cost and attainment of market share by taking over thecompetitors” (Ahn & Litman, 1997:13). Usually the media houses own and telecast, howeververtical integration can be extended to distribution of content. Some firms exploited the benefit offirst mover advantage by bringing out to the market, a combination of media production skills andtechnological innovation attained in distribution. Firms possessing the required technology ofbroadcast and distribution can integrate their resources to reach out to the viewers creating a costdifferentiation, achieving a substantial reduction in the transaction costs. For example, Zee Newsenjoyed the ‘first mover advantage’ by initiating Direct–to-Home initiative satellite distribution hasused the technological know-how to directly reach the consumers houses.Secondly, it makes the firm gain a competitive advantage over its rivals due to its complete chainof broadcast and network facilities. In fact, other rival channels are tying up with DTHarrangement to reach to all those consumers who subscribe to DTH services.An entrant may be able to “influence the existing structure of the market by totally reversing thedominating market behaviour” (Melesko, 2004:299)Strategy Coursework Page 21
    • Costs associated with vertical integration: Restructuring the editorial content, exploring gaps inconsumer choices, innovative concepts in distribution and advantageous advertising pricingschemes can be better sought methods. STRATEGY 3: RESOURCE BASED APPROACHIt may be useful to focus on the core-competencies of the business in a way that such a focuswould help the firm to assemble its news production and broadcast capabilities in a way toexperience a better vertical integration of its resources, such a move will also create barriers toentry for the firm (Prahalad & Hamel, 1990).In the fast changing competitive environment, firms need to consistently evolve and innovate toretain and increase viewership. As indicated by (Grant, 2008), that ‘the greater the change inexternal environment, the more likely it is for the firm will depend on its internal resources andcapabilities to create a secure foundation for long term strategy’. “External environment isresponsible only for 8% of the changes, and rest 92% comes from within the firm” (Jackson,2009: Lecture 5).It is not the size of the firm’s resource base, which is primary determinant of capacity; it dependson the firm’s ability to leverage its resources effectively by the means of converging, balancing andcooptetition (Prahalad & Hammel, 1990).To adopt this, the firms must analyze their key strength on the basis of existing resources andcapabilities, and develop future growth and expansion strategies around them.The TV news firms must analyse their key strengths- in terms of tangible/ intangible/humanresources. For example, NDTV employed a talented team of investigative journalists. The companybased 55% of its programs around environment-based news stories and broadcasted them ininteresting case study based 30 minutes programmes. Within 3 months (May-July 2008) of thelaunch, coupled with innovative advertising, the viewership of the programme increased by 37%(TAM Report: 2008).Strategy Coursework Page 22
    • The resource based view of strategy has further been supported for its “coherence and integrativerole that places it well ahead of other mechanisms of strategic decision making” (John Kay: 1999). STRATEGY 4: PRODUCT DIFFERENTIATIONUsing conjoint analysis, i.e. process of analyzing the strength of the customer preferences, fordifferent product attributes. This strategy can be used to re-design news program mixes withunderstanding of customer’s tastes and preferences. This strategy is useful in forecasting viewer’schoices and reinforces the findings into offering right products to the rising demand. STRATEGY 5: USE OF INNOVATION AS A SOCIAL MARKETING TOOLConcepts of social marketing involving nationwide participation can help the firms develop on itspotentials. This further means the use of resources of the firm to deliver new methods.For example, the print edition of Times Now, The Times of India Group started with nationwideseries of campaigns- ‘Lead India’, ‘Teach India’ involving nationwide participation of their viewersand readers. It promoted the idea of ethical issues like ‘each one, teach one’ and also gave amajority population to add to the intellectual simulation being generated by the power ofcommunication medium.Past trends of demand for news is giving way to customised bundling of information andentertainment popularly known as ‘info-tainment’. For example, 30 minute news shows on DDNEWS on Personal Finance (Morning Bell- a half an hour show on expected trends from stockmarket) / Commodity Trading ‘Insight into Futures Trading’. Similarly, one-minute news capsulesare being designed to give value for time to the viewer. Main FindingsIs assessment in line with actual profitability? This part of the paper captures the attractiveness ofthe industry. This will be analysed with regards to how the industry structure determinescompetitive behaviour and that in turn affects the profitability of the industry.Strategy Coursework Page 23
    • Thus we know that the nature of competition is high, this drives the margins low but, applicationof right strategy may help the firms to emerge out profitable. Part C Recommendations: Strategy for a new entrantAs a new entrant into the TV news industry is in search of market visibility, they may begin by a‘Product Differentiation Strategy’ in that the emergent strategy must be used as a ployto define a competitive edge in the overcrowded market. The company may consider acapital investment of a minimum of £1.5 crore and at the end of 5 years, this investment can givereturns of £2 crore at the growth of 33%. To begin with human resource, the company must hirekey anchors and reporters from leading rival channels in that they give an established recognitionto the new channel. This may incur the firm high initial costs, but the company can earn betterrecognition. Next, the company must carefully evaluate the circles with high demand for anddeveloping an interesting program mix with news value and entertainment.A good amount of spending on innovative marketing, pre and post-launch media campaignsinviting corporate leaders to the launch event will the curiosity of the viewers and thereby pull inpotential advertisers.The program mix for discussions and chat shows must tag-in celebrities, business leaders, andinfluential political leaders and follow seamless advertising offered by Integrated MarketingCommunications (IMC), across various multi-media mediums and thus advertise heavily in thedailies about its special news-hours.The new entrant must launch itself on the celluloid screen with unique logo, channel identification,fresh colour and improved screen(less cluttered TV screen differentiating itself from the regularnews channels). In all- it must relate to a fresh thinking in the mind of the viewer! The Development PlanKeeping in mind, the rising need for specialization across the diverse markets, the TV news firmsmay choose to develop their programming content in 2 specific areas:Strategy Coursework Page 24
    • a) National reach with news focus andb) Specialist categories- like NDTV Lifestyle, Zee Business News channel.Such a move will foster fuller capacity utilization with a better exploration of the knowledgeresources. Program content could be made more interactive with quiz questions rewarding gifthampers, viewer interactivity may be increased. Citizen Journalist concept initiated by CNN-IBNwas a successful idea as it increased interactivity space for the viewers.This is a way of garnering ‘Differentiation Advantage’ for the firms and helps them avoid being‘caught in the middle’. However, constant evolution would be the key to sustain differentialadvantage.Use of Social marketing for promoting influential concepts – This is an innovative strategy bywatching and managing the pattern of demand. Usually during specific program telecast like-national and assembly elections, Parliament sessions, National budgets, cricket match series,festivals, national disasters, unforeseen circumstances like terror strike coverage/ accidents etc,the viewership increases. Also during annual examinations (March) or university examinations(March-May), the viewership patterns fall as consumers time preferences on entertainmentreduces.Such cyclical changes in demand structures can be well watched and effectively handled. Forexample, starting helpline service during national disasters or programs designed to cope withexamination stress can help to maintain the pattern of demand.Test decision to enter- select entry vehicle, will compare costs to entry vehicleIdeally a new entrant will have to have the required content competence, integrated technologyand effective distribution to make its presence felt.In order to beat the competition in the TV news media industry, a new entrant will need tohave the latest technology with excellent distribution networks. Internal resources of the firm-Strategy Coursework Page 25
    • editorial and technical skills of the work staff will have to be more competent.Constant innovation by the use of convergence could be the key to beating the competition.Dominance in presence to be captured by innovative advertisement, corporate excellenceawards sponsorship, industry round table conferences pulling in the corporate leaders. Furthernews segments and programs to be culled out of this. ConclusionThe analysis conducted for the TV News Industry reveals the current profitability levels of theindustry and the performance of the firms with regard to the competitive forces. The twocompetitive forces- ‘Rivalry among the Existing Firms’ and ‘Buying Power of Customers’ has beenanalysed to be fairly high. So, the existing firms can pursue ‘Market Segmentation’, ‘ProductDifferentiation’ and ’Vertical integration. Using resource based view, and social marketing, thesefirms can trigger actions that improve structural attractiveness. Whereas, a new entrant shouldpossess competitive advantage of technology and knowledge to meet the challenges posed by thechanging industrial landscape. Hence, it can be learnt that, the new entrant must be prepared totake on the opportunities emerging out of deregulation of the sector, must channelize foreigninvestment inflow and benefit from the technological innovations of convergence, new mediatechniques and Integrated Communications Technology (ICT). With sustainable growth andexpansion scope in the current economic scenario, a new project can hence be analyzed to beyielding positive results. BibliographyAbell, D. F. (1978) ‘Strategic Windows’ Journal of Marketing, 42(3):21-26Strategy Coursework Page 26
    • Ahn, H. & Litman, B. R. (1997) ‘Vertical integration and consumer welfare in the cable industry’Journal of Broadcasting & Electronic Media 41(4):453–477Brandenberger, A. & Nalebuff, B. (1996) ‘Co-opetition’ New York: Currency DoubledayChopra, Y. & Dasgupta, K. (2008) ‘The Indian Entertainment and Media Industry: Unraveling thepotential’ 25th annual edition of the Indian Entertainment and Media (E&M) Industry Report byFICCI and PricewaterhouseCoopers, New Delhi, IndiaDertouzos, J.N. & Trautman, W.B. (1990) ‘Economic Effects of Media Concentration’ Journal ofIndustrial Economics 39(1):1-14Grant M. R., Contemporary Strategy Analysis 6th Edition Oxford: Blackwell PublishingHirschman, A. O. (1964) ‘The Paternity of an Index’ The American Economic Review 54 (5): 761Jackson, P. (2009) ‘Strategy Lecture 5’ University of Leicester, School of ManagementJoint study report by AC Nielsen & Kantar Media Research (2009) ‘Television Audience MeasureReport: 2009’ available online at http://www.tamindia.com/ (accessed 22.12.2009)Kay, J. (1999) ‘Mastering Strategy: Based Strategy’ Financial Times 27th September, pp.1Kotler, P. (1992) ‘Marketing Management’ 11th Edition, New Jersey: Prentice HallMelesko, S. (2004) ‘Vertical Integration and Excess Capacity: Investment Policies and Decisions bySwedish Regional Newspapers’ Journal of Media Economics 77(4):295-308Porter, M. (1985) ‘Competitive Advantage: Creating and sustaining superior performance’ NewYork: Free PressPorter, M. (1990) ‘The Competitive Advantage of Nations’ New York: Free PressPrahalad, C. K. & Hamel, G. (1990) ‘The Core Competence of the Corporation’ Harvard BusinessReview, 68(3):79-91Exchange rate used: 1 GBP = 75.1544 INR (as on December 22, 2009)http://www.equitymaster.com/detail.asp?date=10/10/2007&story=3 accessed on 26.01.2009Government of India Census Report: 2009 http://www.censusindia.net/ accessed on Dec 20, 2009Strategy Coursework Page 27
    • Images: gettyimages.com, googleimages.com, accessed 28.01.2010Image of company logo: www.ddindia.com; www.zeenews.com, www.ndtv.com accessed onJanuary 28, 2010 ---------END---------Strategy Coursework Page 28