Paulo Faustino "Books publishing business and the strategical management"
National Research University Moscow – December 5 and 6BOOKS PUBLISHING BUSINESS AND THE STRATEGICAL MANAGEMENT Paulo Faustino, MSc, PhD, PostDoc firstname.lastname@example.org Presidente of Media XXI/Formalpress Porto University and Lisbon School of Mass Media Centrer of Investigation in Media and Journalism/Nova University of Lisbon Columbia Institute of Tele Information, Coumbia University
From the emergence of management to strategic planning• The 60s and 70s are known as the «golden age» of the business strategy, particularly as the theory of strategic planning;• In the 60s, the discussions at Harvard Business School focused on the compatibility of the strengths and weaknesses of a company – its distinctive competences – with the opportunities and threats which the market face.• The market environment, through its constant changes originated threats and opportunities and the strengths and weaknesses were adapted to avoid the threats and to obtain advantage through the opportunities.• An internal evaluation of the strengths and weaknesses conducted to the identification of the distinctive competences; the internal evaluation conducted to the identification of potential factors of success.• This framework it would be known as the SWOT analysis, as result of the combination of the Strengths, Weaknesses, Opportunities and Threats.
SWOT Analysisi) Any company that undertakes a plan will assess, at somepoint, its strengths and weaknesses.ii) Combining the strengths and weaknesses with a survey ofopportunities and threats in the external environment of thecompany (or even beyond it), we get the SWOT analysis -Strengths, Weaknesses, Opportunities, Threats.iii) The strengths and weaknesses can be measured in aninternal or external audit, for example, by benchmarking.iv) The opportunities and threats arise from technologicaldevelopments, demographic changes, or changes inlegislation, for example. Usually calls PEST Model
Theory of SWOT Analysis It aims to: identify and compare companies’ strengths and weaknessesas, as well as the opportunities and threats derived from the external environment. The main point is: to provide the company with adequate resources and capabilities to respond to the external demandKey questions for the SWOT Analysis How are we Using (or how can we use in the future) our strengths? How can we Reduce or eliminate the weaknesses? How can we explore each opportunity? How can we defend ourselves from each threat?
SWOT Analysis - StrengthsPositive attributes, tangible and intangibleWithin the organization’s controlWhat do we do well?What resources do we have?What advantages do we have over our competition?Experienced sales forceEasy access to raw materialsPatentsStrengths are not a growing market, new products, etc.
SWOT Analysis - WeaknessesNegative attributes, tangible and intangibleWithin the organization’s controlDetract from ability to obtain/maintain a competitive edgeWhat expertise is lacking?Where do we have limited resources?What access to skills or technology is lacking?What are the inferior service offerings?
SWOT Analysis - OpportunitiesAttractive factors that represent the reason for the organization to exist andprosperWhat are the growth markets?What are the current lifestyle changes?What resolutions to problems exist?What are the positive market perceptions?Is there an ability to offer greater value to create demand?
SWOT Analysis - ThreatsChallenges created by an unfavorable trend or development that may lead todeteriorating revenuesNot within the organization’s controlAre there intolerable price increases by suppliers?Are there changes to government regulations?Is there an economic downturn?Has there been devastating media coverage?Has there been a shift in consumer behavior?Has new technology been introduced that may make products, equipment, orservices obsolete?
External Analysis General Context AnalysisLaw variablePolitical variableEconomis variableTechnological variableCultural variableSocial variableDemografic variable Specific Context AnalysisClientsProvidersCompetitors
External Analysis Sector AnalysisMarketDistribution Channels Sector AnalysisBarriers to entry and to exitPotential new competitorsSubstitute productsPotential strategic responses to competitorsPower negotiations from clientsPower negotiations from providers
Resume of SWOT Model External Internal Valorisation Valorisation Positive Aspects Opportunities Strengths Negative Aspects Threats WeaknessesKey Sucess Factores In the Sector In the Project
Book publishing SWOT Analysis Threats OpportunitiesBigger demands on wasting time by the consumer Internet book sellingInternet Piracy Print on Demand (PoD)Concentration on retailLess reading habit by young people Marketing new opportunitiesAbsence of agreement about models for content protection Major cooperation in rights matter, supply chain and trainingon a digital environment Closer relationship with clients Use of technical developments Merchandising and tie-ins Weaknesses StrengthsLow brand power (with some exceptions) Growing level of population educationFragmented supply chain Medium popularityAbsence of direct contact with the final consumer Large set of companies well establishedMore supply driven than sales driven Established competencesLow technology take-up Attractive Career
The strategic management and the concept of competitive advantage• The matrix of Michael Porter (1998) synthetizes the typology of the strategic choice. COMPETITIVE ADVANTAGE Lower Costs Differentiation Broader Market COMPETITION AREA Restrictor Market
The strategic management and the concept of competitive advantage• Porter looks to identify the drivers of the company’s competitive advantage, using the value chain model as an analysis systematic way of all the activities executed by a company• As well as the way as they are connected between each other or to the activities of other companies (suppliers, distribution channels, final consumers, etc.).• In other words, he looks to describe the way as a company may obtain a competitive advantage of sustainable cost or differentiate it of its competitors.• The competitive advantage is defined as the creation of an unique and valuable position through the configuration of a different set of activities.
The Value Chain of the publishing book housesSupporting Activities:• Company Infrastructure: Make/Buy choice; Authors’ capture and selection, Definition of the editorial line and publishing house; Programming the distribution plan through the selling points; Brand policy (of the publishing house, collection, product).• Human Resources Management: Training staff connected to the suppliers relations; Selection and training of internal staff; Selection a training staff with commercial responsibilities, sales force.• Technological Development: Development of the procedures for control and management of suppliers, Development of procedures for management warehouse; Editorial Know-how, Printing Know-how; Development of the procedures for management warehouse of the finished products and for management orders; Development of procedures for emergencies management.• Acquisition: Acquisition of raw materials, Suppliers selection; Acquisition on raw material (paper, iconography), Acquisition of the asset; Acquisition of external services, Investment on informatics equipment; Acquisition of promotional material. Source: Dubini, 1997
The Value Chain of the publishing book housesSupporting Activities:• Setting the catalogue, Setting the proofs, Editorial activity, Printing; Orders reception, Orders dispatch, Warehouse management, Transportation, Diffusion; Promotion, Literacy awards organization, Promotion at the selling points, Advertising, Communication Department; Providing back numbers; Stocks ruptures’ management.Primary Activities:• Internal logistic• Operations (phisical-techincal transformation)• External logistic• Marketing and Sales• Services
Publishing Generic Value Chain Company Infrastructure Strategic Functions Business and planning strategy Nuclear Contents acquisition; Content development; Product and design Functions development; Content format; Marketing, Promotion; Sales; Manufacturing; Execution; Warehousing; Costumer service; Other income sources. Human Resources Management Support Business process support Functions Financial administrationSource: Mark Bide, 1997
The Main Phases of Value Chain from Publishing book business A U S T E H D A A O M S E G R R E A A E V G C I X R A N U L E R H T E E C A T E L E & Y C A C G C O G D & U H E E D T P A I R T O S M E I M T S E I R S E R O E I C L O N N N O O E N T T N V V E A R N y C ESource: Martyn Daniels, 2006
The Main Phases of Value Chain from Publishing book business • Selection: choice reduction based on knowledge, competence and perception. • Development: process of production and editorial which converts the manuscripts in the book. • Access: the activity of «publishing» • Aggregation: the act of consolidation of the total offer • Search & Discovery: The bigger the offer, the bigger virtual research and value. • Authority & Relevance: the act of qualification, which must assure that the product chosen is the appropriated. • Execution: the act of perform the sale and obtain the product. • Management: to add value by creating a direct relation and providing services to an individual – CRM (Customer Relationship Management).Source: Martyn Daniels, 2006
Book publishing Value ChainSource: Publishing value chain , John B. Thompson, 2005
Traditional value creation systems of Book PublishingSource: Dubini, 2001
Innovation by Segmentation of value creation systems in digitalParolini, 1996, 1999; Dubini, 2001
Digitalizations Impacts and Book Industry Challangesa) Digitizing it not only increases the complexity of product relations and the number of printings in which a book can be produced, but it also, potentially, raises the audience for the book;b) Digitizing doesn’t change the activities where the value might be added in the value chain, but it changes the priority of the importance of those elements for the reader;c) All that exists between the author and the reader must add value or face the possibility of being removed of the business by other elements;d) The reader has the perception of value on the Internet in a different way of the physical environment;
Digitalizations Impacts and Book Industry Challengese) Regardless products being physical or digital, the three key elements of valueon the Internet are: Aggregation, Search & Discovery and Authority & Relevance.f) The digital content confers the author the opportunity to recognize the change onthe value perception and to look for different publishing models.g) The change on the evaluation of value indexes introduces new external agentsto the traditional book market (Google, MSN, Yahoo!), which focuses in theseelements which now add more value.h) Amazon is, clearly, a «killer store», creating a specific presence on the valuechain;i) The industry must recognize these value elements, which now provide the biggervalue added, and cooperate – coopetion - or work with other agents to add themvalue.
Environmental changes and book sector impactsSome information has entertainment value, other business value, but, regardless the specificsource of value, it’s necessary that people be available to pay for information.As we see, many of the information suppliers strategies bases on the fact the consumersdiffers significantly in the way they evaluate specific informational goods.Strategies to reuse information (Shapiro and Varian, 1999):• Versioning, in which the content producers propose versions of the same product for different market segmentations;• Bundling, in which a set of distinctive information and services are offered in packages at a single price, reducing the capability of the consumer to identify the price of each one of the products;• Price Differentiation, based on the principle that specific consumers confer distinct values to the same product, and that the consumption occasion determines a different importance relative to the contents.
Book publishing sector transformationsThe value networks of all content industries share some commoncharacteristics:• The relationship between the agents is each time more fluid and non linear;• Products are, each more frequently, provided in a service context and other value added elements;• Are centered in the consumer, and dependent on the exchange of strategic information, planning and knowledge processes, and the collaborative practices in areas like design and integration;• They depend on tangible and intangible measures as value change and similar benefits, which may include co-branding opportunities, brand extension and communities creation and loyalty costumer.
Book publishing sector transformationsThe technological changes that most affect dominant companies arent, usually,radically new or difficult from a technological perspective, but they present towimportant features:• In first place, they typically present a different performance attributes package – that, at least at first, is not appreciated by the existent consumers.• In second place, the performance attributes that consumers appreciate increases so high that new technology can invade these established markets.• Only at this point the majority of consumers want technology. Unfortunately, for the most established suppliers is too late: the pioneers on new technology dominate the market. Source: Bower and Christensen, 1995
Book publishing sector transformationsIs possible to explore a set of technologies:a) Digital printing and publishing on demandb) Aggregation technologies and syndicationc) Content management and cross-platform publishingd) Costumer Relationship Management (CRM)e) Digital Asset Management (DAM)
Book publishing sector transformations Paper Rights, Invoicing, CRM PoD G Web Content R Consumer Creation O Syndicate U P e-learning 3G Distribute e-bookSource: Cross-media publishing - PIRA International, 2002
Book publishing sector transformationsFor a company to commit successfully at e-business its necessarythat be in conditions to answer these kind of questions:• What do I have?• Where is it?• In which format?• Which rights do I have to use it?• How much is going to cost?
General Conclusions, Discussion and Workshop• The introduction of new technologies opens to traditional publishers a set of challenges by increasing its business and the identification of the market segments to transfer informative contents.WORKSHOP – APPLY SWOT ANALYSIS TO BOOK SECTOR.Consider the following main instructions and questions: Define objectives (TRO – Top-rank objective) Discover and list SWOTs Generate possible strategies How can we Use each Strength? How can we Stop each Weakness? How can we Exploit each Opportunity? How can we Defend against each Threat?