Ba401_RR Donnelley


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Ba401_RR Donnelley

  1. 1. The Digital Division Case III-VII
  2. 2. Copyright © 2009 R. R. Donnelley & Sons Company. All rights reserved. RR Donnelley is the world’s largest provider of printing and related business services. We use our unparalleled capabilities to help our customers Prepare, Produce, Deliver, and Process printed and digital content.
  3. 3. Company & Industry Background <ul><li>The company, originally known as R.R. Donnelley & </li></ul><ul><li>Sons Company, was founded in 1864 by Richard Robert </li></ul><ul><li>Donnelley, father of Reuben H. Donnelley. </li></ul><ul><li>A privately held, Family run </li></ul><ul><li>Went public in 1956 </li></ul><ul><li>Become the world’s largest commercial printer in 1995 </li></ul><ul><li>Generated 60% of its revenues from directories, catalogs, and magazines </li></ul><ul><li>Organized into 38 divisions collected into 8 business group which were part of 3 sectors </li></ul>
  4. 4.  Church Goodman & Donnelley building at 108-110 Dearborn Street, Chicago, 1868 . Digital Reproduction . R . R . Donnelley & Sons Company Archive .  the ruins of the Lakeside Building at Clark Street and Adams Street, after the Chicago Fire, [ 1871 ]. R . R . Donnelley & Sons Company Archive .  Lakeside Building at Clark Street and Adams Street, built following the Chicago Fire, [ ca . 1873 ]. R . R . Donnelley & Sons Company Archive .
  5. 5. <ul><li>The Evolution of a Graphic Identity : The R . R . Donnelley Indianhead </li></ul><ul><li>From the late nineteenth century onward, RR Donnelley's corporate identity was associated with its distinctive Indianhead trademark . </li></ul> exterior decoration of the Plymouth Court building, [ 20 th   century]. R.R. Donnelley & Sons Company Archive. Joseph C . Leyendecker's design first appeared as architectural decoration on RR Donnelley's Plymouth Court building .
  6. 6. <ul><li>Early Advances in Technology </li></ul><ul><li>RR Donnelley's position as the printing industry's leader depended on a continuous program of research and development . </li></ul>   printing press #D2, 1949. R.R. Donnelley & Sons Company Archive. Another of RR  Donnelley's specialty printing technologies, &quot;Watercolor&quot; printing used rubber plates.
  7. 7. Financial highlights
  8. 9. Sales and Customers by Business Category (% of Consolidated Sales) Financial-5% Memill Lynch Smith Barmey Paine Webber Goldman Sachs Schwab & Co. Books-13% Random House Simon & Schuster Harcount Brace HarperCollins Bantam Doubleday Software/Harware-16% Microsoft IBM WordPerfect Quicken Telephone Directories-21% Sprint Ameritech Nynex Bell Atlantic Southwestern Bell Us West Retailers Wal-mart JC Penny Kmart Service Merchandise Toys “R” Us Metromail-5% Procter & Gambles First Card Mutual of Omaha Whirlpool Magazine-18% TV Guide Family Circle Time Glamour People Reader’s Digest Catalogs Land’s End LL.Bean Eddie Bauer J.Crew
  9. 10. Organization & Incentives <ul><li>Most sales forces were aligned with business groups rather than divisions </li></ul><ul><li>Division-level incentives became group wide in 1991 </li></ul><ul><li>And became sector-wide in 1993 </li></ul><ul><li>So, salespeople sell work to their business group only </li></ul>The Traditional Print Business <ul><li>Used gravure and offset/web presses </li></ul><ul><li>Cost about $12million for offset, and considerably more for gravure </li></ul><ul><li>Considered long-term relationships </li></ul><ul><li>High fixed cost and low variable cost </li></ul>
  10. 11. Industry Shifts & New Technologies <ul><li>Change of customer’s wanted </li></ul><ul><li>Largely become of the rapid spread of office computing </li></ul><ul><li>Digital four-color and computer-to-plate were expected to have an even more profound impact. </li></ul><ul><li>In 1995, digital growth was forecast at around 16% annually </li></ul><ul><li>Traditional printing was expected to grow by 3% </li></ul>Digital four-color <ul><li>Reduce cycle times </li></ul><ul><li>Reduce chemical pollution </li></ul><ul><li>Can print directly from computer files </li></ul><ul><li>Infinitely customizable </li></ul><ul><li>Could be delivered in variable quantities as often as desired </li></ul><ul><li>Low cost and small size </li></ul>
  11. 12. Emerging Competition <ul><li>In 1995, at least 55,000 printing companies operated worldwide. Most had fewer than 25 employees </li></ul><ul><li>Donnelley was larger than its next 9 rivals combined. </li></ul><ul><li>Smaller printing companies were building alliances, among themselves and with firm that had high-capacity networks for transmitting files. </li></ul>
  12. 13. A New Business Model <ul><li>Need to develop : </li></ul><ul><li>A transaction management system </li></ul><ul><li>A system for royalty accounting and payment </li></ul><ul><li>An object-oriented database </li></ul><ul><li>A manufacturing database </li></ul><ul><li>Result : </li></ul><ul><li>Cost would be higher than offset/web or gravure for long runs, but lower for short runs. </li></ul><ul><li>On-demand printing would have an enormous effect on customer’s total system cost. </li></ul><ul><li>Total cycle time would be reduced by orders of magnitude – from 20 days to 2 or 3 or single day. </li></ul><ul><li>More tailored marketing and better sales </li></ul>
  13. 14. So…A new division would be required, rather than imply spreading digital technology throughout the company.
  14. 15. Economic & technical validation <ul><li>Research the capabilities and costs of new imaging technologies by Technology Center </li></ul><ul><li>Began by close contact with technology suppliers such as Xeikon </li></ul><ul><li>Oversight and monitoring on Xeikon’s development work </li></ul><ul><li>ผลวิจัยที่ได้ คือ costs were higher than expected แต่ว่า digital per unit costs were lower than the costs of offset printing </li></ul><ul><li>ในกรณีที่ cost สูง สามารถลด cost ได้จาก discount เสมือนว่า RRD เป็นบริษัทใหญ่ มีประสบการณ์ มีอำนาจต่อรองสูง </li></ul>
  15. 16. Reengineering the Technology Development Process <ul><li>The existing process </li></ul><ul><ul><li>cost ที่แต่ละ division ใช้สูงมาก ซึ่งมาจาก information systems technology and incremental technology improvement </li></ul></ul><ul><li>The redesigned process </li></ul><ul><ul><li>วิธีแก้ปัญหานี้ กลุ่มวิจัยจึงคิด process ซึ่งมี phases IV เพื่อให้ช่วยกันคิด project ขึ้นมาจัดกลุ่มทำแบบ matrix </li></ul></ul>
  16. 17. Technology Development Process
  17. 18. Deliverables for Phrase Reviews
  18. 19. From Vision to Reality <ul><li>In April 1994, Barb Schetter was named program manager with the objective of creating a new digital color printing business. โดยต้องรายงานตรงต่อ Cowan ( ซึ่งอยู่ใน phase 3 ของ development process ) </li></ul><ul><li>ตั้งชื่อทีมว่า Trapeze Team ( แปลว่าชิงช้าสูงที่ใช้ในการแสดงกายกรรม เพื่อสื่อว่าเป็นการทำงานแบบ working without net ) </li></ul><ul><li>ถ้าจะ review phase III ต้องระบุ existence of a market, possible applications, construct a deployment schedule and funding plan, and define the scope of the business ภายใน 2 เดือน </li></ul><ul><li>On July 1,1994 Schetter was named vice president and general manager of the Digital Division. The Division would have its own P&L, with marketing and freestanding sales force reporting to Schetter. </li></ul>
  19. 20. <ul><ul><li>ISG เป็นกรุ๊ปใหม่ ที่เน้นด้านเทคโนโลยี เป็นเพียงแค่การขายข้อมูลอย่างเดียว ไม่สามารถทำรายได้จนเป็นธุรกิจที่เข้มแข็งได้ จึงต้องมีการตั้ง market ใหม่ </li></ul></ul><ul><ul><li>ด้วยเทคโนโลยีใหม่นี้สามารถ print at any scale, using any print technology, or deliver the image in any other form the customer wants </li></ul></ul><ul><ul><li>criteria ของ new business ประกอบด้วย </li></ul></ul><ul><ul><li>1. grow twice as fast as the corporation </li></ul></ul><ul><ul><li>2. reach at least $100 million in sales </li></ul></ul><ul><ul><li>3. achieve an above-average ROA </li></ul></ul><ul><ul><li>ในกรุ๊ปนี้ไม่มีงานที่เป็นแบบ interchangeable work พวก incentive จะจ่ายตาม performance ของแต่ละ division </li></ul></ul><ul><ul><li>ISG ขายให้กับบริษัทนอกกรุ๊ปด้วย โดยขายให้พวกบริษัท Financial service, Pharmaceuticals, Health care </li></ul></ul><ul><ul><li>แต่ว่า แต่ละ division ในกรุ๊ปมี sales force น้อยมาก ดังนั้นจึงต้องสร้าง sales force ให้ได้ </li></ul></ul>The Information Services Group
  20. 21. Building the division <ul><li>เลือก Memphis, Tennessee เป็นที่ตั้งแห่งแรก เพราะมันเป็น central processing and distribution point of Federal Express (Fed EX) </li></ul><ul><li>จากการที่ตั้งอยู่ใกล้ Fed EX จึงได้ข้อดีคือ เหมือนกับว่ามันสะดวกขึ้น ส่งของได้เร็วและน่าเชื่อถือ Memphis เลยกลายเป็นจุดแข็งของบริษัท </li></ul><ul><li>ทำการทดลอง printer แบบดิจิตอล 11 ชนิด เพื่อใช้ในงานต่าง ๆ ที่หลากหลาย เหมือนว่าถ้าเลือกได้เหมาะกับงาน RRD ก็จะเป็น industry’s low-cost digital producer </li></ul><ul><li>เริ่มจัด system โดย develop 3 software tools มี 1. Target-IT จะช่วยให้ลูกค้า pick, pull, compose their own pages 2. Send-IT ช่วยให้ลูกค้าส่งคำสั่งจากเครื่องคอมพิวเตอร์ของตัวเองได้ และ 3. Order-IT ช่วยรวมงาน </li></ul>Operations and Technology
  21. 22. Organization, Reporting, Relationship and Roles Partial Organization Chart, 1995
  22. 23. <ul><li>Target markets </li></ul><ul><ul><li> ตั้งทีมวิจัยโดยสัมภาษณ์ลูกค้าและ Donnelley’s marketing directors </li></ul></ul><ul><ul><li> ปรับ target อยู่เรื่อย ๆ ตามที่บอกว่า they were continually updated based on </li></ul></ul><ul><ul><li>experience in the marketplace </li></ul></ul><ul><ul><li>สรุปว่า target มี 1. magazine reprints, 2.corporate literature, and product literature for pharmaceuticals and health care, and 4.advance, liquidation, and prospecting catalogs </li></ul></ul><ul><li>Positioning </li></ul><ul><ul><li>ที่สำคัญก็คือที่พูดว่า “ we sometimes say we’re not selling printing anymore, we’re selling marketing tool” คือ สอนลูกค้าเรื่องการตลาด เรื่อง information ลูกค้าจะได้รายได้เพิ่มขึ้นจาก by allowing greater market segmentation and more focus on selling </li></ul></ul><ul><li>Consultative Selling ซึ่งก็คล้าย ๆ กับ positioning </li></ul>Marketing and Sales Strategy
  23. 24. <ul><li>มี 3 ประเด็นคือ division’s own sales reps , the ISG sales force, sales force of other business group </li></ul><ul><li>business group leader, sales managers, sales representatives มัน did not always see eye to eye. </li></ul>Challenges of Internal Acceptance <ul><li>เจอปัญหา expected sales had not yet materialized, and under intense financial pressure. </li></ul><ul><li>ผู้บริหารต้องการ see profits by 4th quarter, and a breakeven year in 1996 </li></ul><ul><li>profit from our new business. It’s hard to be unprofitable around here for even a few year แต่ระยะยาวมันไม่รู้ </li></ul><ul><li>ไม่ยอมขยายต่อ จนกว่าจะพิสูจน์ได้ว่า Memphis was working well </li></ul><ul><li>ทาง Donnelley ไม่มั่นใจว่าจะ work ในระยะยาวหรือไม่ ในการประชุมก็พูดกันแค่ว่า let’s see คือ ยังไม่เกิดขึ้น </li></ul>
  24. 25. The RR Donnelley Today… <ul><li>The world’s premier full-service provider of print and related services </li></ul><ul><li>Serving organizations worldwide </li></ul><ul><li>Doing business for more than 144 years </li></ul><ul><li>Deep experience in meeting your market’s unique challenges </li></ul><ul><li>2008 sales in millions: $11,581.6 </li></ul><ul><li>Stock trading symbol (NASDAQ): RRD </li></ul><ul><li>Nearly 60,000 employees serving customers with locations across the globe </li></ul>
  25. 26. Building RR Donnelley to Succeed May 2003 February 2004 June 2005 April 2006 Acquisitions (1) Divestitures December 2005 October 2004 Package Logistics July 2005 Sept 2005 Poligrafia January 2007 May 2007 December 2007 March 2008 January 2009 PROSA
  26. 27. Positioned to Serve You … Combined Worldwide Resources Argentina Austria Australia Barbados Belgium Brazil Canada Chile China Costa Rica Italy Japan Korea Luxembourg Mexico Philippines Poland Puerto Rico Russia Singapore Czech Republic El Salvador France Germany Guatemala Honduras Hong Kong Hungary India Ireland Spain Sri Lanka St. Lucia Switzerland The Netherlands Trinidad United Arab Emirates United Kingdom United States Venezuela
  27. 30. An Unmatched Portfolio
  28. 31. <ul><li>Serve over 50,000 customers </li></ul><ul><li>Serve 100% of Fortune 100 and 93% of the Fortune 500, and have approximately 15% of their print spend </li></ul><ul><li>Opportunity to continue to grow our Fortune 500 Relationships </li></ul>Blue Chip Customer Relationships
  29. 32. <ul><li>Asia </li></ul><ul><li>Europe </li></ul><ul><li>Latin America </li></ul><ul><li>Canada </li></ul><ul><li>Business Process Outsourcing </li></ul><ul><li>Global Turnkey Solutions </li></ul><ul><li>Printing operations in the U.S. </li></ul><ul><li>Magazines </li></ul><ul><li>Catalogs </li></ul><ul><li>Retail inserts </li></ul><ul><li>Books </li></ul><ul><li>Directories </li></ul><ul><li>Commercial printing </li></ul><ul><li>Financial printing </li></ul><ul><li>Variable statement printing </li></ul><ul><li>Forms </li></ul><ul><li>Labels </li></ul><ul><li>Office products, document organization & storage </li></ul><ul><li>Digital solutions </li></ul><ul><li>Direct mail </li></ul>U.S Print & Related Services International U.S Print & Related Services 74% International 26% RR Donnelley Segment descriptions
  30. 33. <ul><ul><ul><li>Over 50% of Chinese directories and a significant portion of the regional directories in Asia/Pacific </li></ul></ul></ul><ul><ul><ul><li>Books for more than 30% of global publishers </li></ul></ul></ul><ul><ul><ul><li>Produces three of the top consumer brand magazines in China </li></ul></ul></ul>RR Donnelley-Asia
  31. 34. Products Commercial Print: magazines, catalogues, retail Telephone Directories In-box materials Expertise Production facilities located in or close to all major markets Flexible service platform geared to local needs and languages ISO certification (9001; 14001; OHSAS 18001) Titles* Produced Magazine: 472 titles Catalogs: 245 titles Retail Inserts: 65 titles Volume of Copies Magazines: 530m copies Catalogs: 246m copies Retail inserts: 438 copies  RR Donnelley Bindery in Krakow, Poland RR Donnelley Global Print Solutions - Europe
  32. 35. <ul><li>Largest Printing company in the region </li></ul><ul><li>Locations in Mexico, El Salvador, Costa Rica, Venezuela, Brazil, Chile, Argentina, Puerto Rico, St. Lucia, Barbados and Trinidad </li></ul><ul><li>15 Manufacturing facilities </li></ul><ul><li>Main product groups: Magazines, Catalogs, Inserts, Books, Premedia, Print/Forms, Labels, Variable Print (Outsourcing), Direct Mail, and Computer Print Out (CPO) paper </li></ul> RR Donnelley facility in Tambore, Brazil RR Donnelley-Latin America