The document discusses the history and evolution of strategic management and planning, introducing concepts like the SWOT analysis and Porter's value chain model. It then applies these frameworks to analyze the book publishing sector, exploring opportunities and challenges from digitalization like new distribution channels and aggregation technologies that are transforming the industry. The discussion suggests publishers need strategies to leverage strengths while addressing weaknesses in order to exploit opportunities and defend against threats in the changing environment.

1. National Research University
Moscow – December 5 and 6
BOOKS PUBLISHING BUSINESS AND
THE STRATEGICAL MANAGEMENT
Paulo Faustino, MSc, PhD, PostDoc
faustino.paulo@gmail.com
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

2. 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.

3. SWOT Analysis
i) Any company that undertakes a plan will assess, at some
point, its strengths and weaknesses.
ii) Combining the strengths and weaknesses with a survey of
opportunities and threats in the external environment of the
company (or even beyond it), we get the SWOT analysis -
Strengths, Weaknesses, Opportunities, Threats.
iii) The strengths and weaknesses can be measured in an
internal or external audit, for example, by benchmarking.
iv) The opportunities and threats arise from technological
developments, demographic changes, or changes in
legislation, for example. Usually calls PEST Model

4. SWOT Analysis
Analysis of Analysis of
CURRENT-Situation Future Developments
Company Competitor Environment
Corporate Competitor Context-
Analysis Analysis Analysis
Strengths &
Opportunities
Weaknesses
& Threats
SWOT-
Analysis

5. 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 demand
Key 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?

6. SWOT Analysis - Strengths
Positive attributes, tangible and intangible
Within the organization’s control
What do we do well?
What resources do we have?
What advantages do we have over our competition?
Experienced sales force
Easy access to raw materials
Patents
Strengths are not a growing market, new products, etc.

7. SWOT Analysis - Weaknesses
Negative attributes, tangible and intangible
Within the organization’s control
Detract from ability to obtain/maintain a competitive edge
What expertise is lacking?
Where do we have limited resources?
What access to skills or technology is lacking?
What are the inferior service offerings?

8. SWOT Analysis - Opportunities
Attractive factors that represent the reason for the organization to exist and
prosper
What 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?

9. SWOT Analysis - Threats
Challenges created by an unfavorable trend or development that may lead to
deteriorating revenues
Not within the organization’s control
Are 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, or
services obsolete?

10. External Analysis
General Context Analysis
Law variable
Political variable
Economis variable
Technological variable
Cultural variable
Social variable
Demografic variable
Specific Context Analysis
Clients
Providers
Competitors

11. External Analysis
Sector Analysis
Market
Distribution Channels
Sector Analysis
Barriers to entry and to exit
Potential new competitors
Substitute products
Potential strategic responses to competitors
Power negotiations from clients
Power negotiations from providers

12. Resume of SWOT Model
External Internal
Valorisation Valorisation
Positive Aspects Opportunities Strengths
Negative Aspects Threats Weaknesses
Key Sucess Factores In the Sector In the Project

13. Book publishing SWOT Analysis
Threats Opportunities
Bigger demands on wasting time by the consumer Internet book selling
Internet Piracy
Print on Demand (PoD)
Concentration on retail
Less reading habit by young people Marketing new opportunities
Absence of agreement about models for content protection
Major cooperation in rights matter, supply chain and training
on a digital environment
Closer relationship with clients
Use of technical developments
Merchandising and tie-ins
Weaknesses Strengths
Low brand power (with some exceptions) Growing level of population education
Fragmented supply chain Medium popularity
Absence of direct contact with the final consumer Large set of companies well established
More supply driven than sales driven Established competences
Low technology take-up Attractive Career

14. 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

15. 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.

16. The Value Chain of the publishing book houses
Supporting 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

17. The Value Chain of the publishing book houses
Supporting 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

18. 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 administration
Source: Mark Bide, 1997

19. 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
E
Source: Martyn Daniels, 2006

20. 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

21. Book publishing Value Chain
Source: Publishing value chain , John B. Thompson, 2005

22. Traditional value creation systems of Book Publishing
Source: Dubini, 2001

23. Innovation by Segmentation of value creation systems in digital
Parolini, 1996, 1999; Dubini, 2001

24. Digitalization's Impacts and Book Industry Challanges
a) 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;

25. Digitalization's Impacts and Book Industry Challenges
e) Regardless products being physical or digital, the three key elements of value
on the Internet are: Aggregation, Search & Discovery and Authority & Relevance.
f) The digital content confers the author the opportunity to recognize the change on
the value perception and to look for different publishing models.
g) The change on the evaluation of value indexes introduces new external agents
to the traditional book market (Google, MSN, Yahoo!), which focuses in these
elements which now add more value.
h) Amazon is, clearly, a «killer store», creating a specific presence on the value
chain;
i) The industry must recognize these value elements, which now provide the bigger
value added, and cooperate – coopetion - or work with other agents to add them
value.

26. Environmental changes and book sector impacts
Some information has entertainment value, other business value, but, regardless the specific
source 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 consumers
differs 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.

27. Book publishing sector transformations
The value networks of all content industries share some common
characteristics:
• 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.

28. Book publishing sector transformations
The technological changes that most affect dominant companies aren't, usually,
radically new or difficult from a technological perspective, but they present tow
important 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

29. Book publishing sector transformations
Is possible to explore a set of technologies:
a) Digital printing and publishing on demand
b) Aggregation technologies and syndication
c) Content management and cross-platform publishing
d) Costumer Relationship Management (CRM)
e) Digital Asset Management (DAM)

30. Book publishing sector transformations
Paper Rights, Invoicing,
CRM
PoD
G Web
Content R
Consumer
Creation O Syndicate
U
P e-learning
3G
Distribute
e-book
Source: Cross-media publishing - PIRA International, 2002

31. Book publishing sector transformations
For a company to commit successfully at e-business its necessary
that 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?

32. 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?

33. Strengths (Which ones?) Weaknesses (Which ones?)
… …
Answers (How?) Answers (How?)
… …
Opportunities (Which ones?) Threats (Which ones?)
… …
Answers (How?) Answers (How?)
…  …

34. BREAK AND
WORSHOP