EBI initially offered electronic versions of encyclopedias to businesses and schools. However, when Microsoft entered the market in 1993 with a cheaper product, EBI's revenues halved by 1996. Under new leadership, EBI implemented a prospector strategy, shifted to digital and online platforms, cut prices, and opened new revenue streams like subscriptions. This transformation helped EBI become a more competitive and trusted source of online information.

1. ENCYCLOPEDIA BRITANNICA
INC.
Presented By:-
Trina Mukherjee
Shananya NB
Sai Ankitha
Priti Kumari

5. EBI’S INITIAL RESPONSE
• 1981- Electronic version of the encyclopedia was offered to
businesses.
• 1989- Comptons Encyclopedia published on CD for school
and libraries, increasing margins.
• 1989- Sales strategy changed to door to door selling.
• 1990- Record high revenues achieved.
• 1993- Microsoft entered the market with Encarta with a
cheaper product costing $100

6. EBI’s RESPONSE TO
MICROSOFT
• Sale of Comptons unit for $57mn
• Including free CD with the purchase of any set of
encyclopedias.
• Subscriptions offered to target universities.
• 1995 EBI reduced the cost of their CD to $200.

7. OUTCOME
• Revenues halved to $325mn by 1996
• Microsoft became a dominant player in
the market
• New leadership implemented.

9. • Prospector strategy.
• Digitalization and CD sales.
• Come in-line with competitors.
• Competitive advantage through superior
reputation.
• Offer incentives to best employees.

10. What Did Safra Actually do?
• Adopt Prospector Strategy and was successful.
• Became the most trusted source of information,
knowledge and learning in digital media.
• Disbanded door-to-door sales.
• Slashed prices.
• Opened new revenue streams.

12. Transformation Strategy
• Shift sales away from hard copy to IT
based platforms.
• Charge a subscription fee for access to
certain content for a period.
• Performance measure- subscribers per
month.

13. MCS 1: Incentive Scheme
• Once target number of subscribers is met, a percentage of additional
profits are used to fund quality of life upgrades for staff.
Benefits of MCS 1
• Goal congruence- actions of senior management and
shareholders will align with interests of employees.
• Increase in productivity.
• Employees will feel more included and motivation will
improve.

14. MCS 2: BOTTOM-UP BUDGETING
• Lower level managers have to justify their budgets to senior
managers.
• Links knowledge with decisions rights.
• Enables face-to-face communication between top managers and lower
levels of management.
• Create a strong company culture of inclusiveness and efficiency.
• Such a culture will help to influence the way employees think.
• Allow them to better frame the transformation potential of EBI’s
business model.

15. Conclusion
• Ineffective response to Microsoft.
• Safra should follow a strategy of
cutting costs and prices.
• Management, budgeting and
resource allocation