new york time`s case analysis final

Saleh | STRM043 - Competitive Strategy and Innovation | January 12, 2016

New York Times CASE ANALYSIS

Table of Contents

Company general information ..................................................................................................................... 2

NYT`s Core of Competences and Capabilities ........................................................................................... 3

Resource based view of the firm: ........................................................................................................... 3

Valuable capabilities: ............................................................................................................................. 5

Rare Capabilities: ................................................................................................................................... 5

The External Environment .......................................................................................................................... 6

SWOT Analysis .............................................................................................................................................. 7

Strengths: ................................................................................................................................................... 7

Weakness: .................................................................................................................................................. 7

Opportunities: .......................................................................................................................................... 8

Threats: ...................................................................................................................................................... 8

Porter’s Five Forces’ Model:......................................................................................................................... 9

Bargaining Power of Suppliers .............................................................................................................. 9

Bargaining Power of Customers ....................................................................................................... 10

Intensity of Existing Rivalry ............................................................................................................... 10

Threat of Substitutes .......................................................................................................................... 10

Threat of new competitors .................................................................................................................. 11

Financial Perspective ......................................................................................................................... 12

Process Perspective ........................................................................................................................... 13

Customer Perspective ........................................................................................................................ 13

Learning and Growth Perspective .................................................................................................... 13

References .................................................................................................................................................... 15

Appendix ...................................................................................................................................................... 17

Company general information

Started In early 1835 as New York Herald and was founded by James Gordon

Bennett, passing the time 18th of September 1851 Henry Jarvis Raymond and

George Jones announced that they published the first issue of the official New

York Time`s, describing that it’s going to be issued every day except Sunday.

Furthermore, up to date the over 150 years old newspaper (NYT`s) which has

58,000 issues and billions of words drawn grow in a very challenging stages and

survived many conflicts and crises across the USA and the world (NYT, 2016).

The 1996 year gives NYT the first online web and give a worldwide access to it

daily newspaper, and on 2008 the first IPhone mobile application of NYT`s was

launched (NYT`s, 2016).

This report will be analyzing the New York Time`s strategy during the crisis

period and the success of the organization in later stages.

Table: 1 important events

a major players and leaders in

print media and top performer in internationally

news

Launch the NYtimes.com

The Sulzberger family toke

over the company

launched in NYC by a

Henry Jarvis & George

Jones

1851 2012 1995 1967

NYT`s Core of Competences and Capabilities

Since it take many different forms in the last 10 years, NYT`s strength and

accountabilities been always at its own core of competencies and capabilities of

using it to drive it short and long term strategy to survive the uncertain era of

diversity in generations.

In 2009 Sulzberger recognized and summarized the core of competences of

NYT`s by the quality journalism who attracts the quality audiences and that

results impact of attracting the quality advertisers. Hence, we should as well

mention the history and existence of NYT`s for decades, this gives NYT`s market

integrity as one more core of competences. Furthermore, having a loyal

customers is one of the results of having such a strong and quality of journalism

and market (Robert M, 2012).

“Core competence is the collective learning in the organization, especially the

capacity to coordinate diverse production skills and integrate streams of

technologies. It is also a commitment to working across organizational

boundaries. Organizing around core competencies requires a radical change in

corporate organization” (Prahalad & Hamel, 1990, p. 79).

Resource based view of the firm:

By concentrating on the firm as the important unit of analysis. Leaders are

worried of creating a numbers of tangible and intangible resources and

Capabilities, whose financial returns are proper by the firm. The essential thought

that underlies this point of view, the Resource-Based View Of The Firm, it is a set

of arrangement of main and specific resources and Capabilities which are rare,

strong, cannot be changed, and hard to imitate, might empower the firm to

procure financial rents. Along these lines, by resources point of view, the

estimation of a firm value Strategic Assets expands past their commitment to the

production process (Raphael & Schoemaker, 1993).

RBV (Resources-Based View), It was initiated by Jay B. Barney in 1991, it was

strong enough to provide the important tools to identify resources and capabilities

of an organization and show the important of it. However, this helped as well to

explain further identifying Capabilities and resources as group of touchable and

untouchable assets which include the organization management’s capabilities,

processes and routines. Furthermore that assist to identify the ideas and

knowledge which can be used to implement and select the strategy (Barney, Jr,

& Wright, 2011).

NYT`s main Resources:

1. Quality Journalism.

2. Major Player and publisher in the media market, news reporting

and has the brand Integrity which give it a large credibility.

3. Digital initiative can give quality contents to the site.

NYT`s Capability:

1. Large reach for NYT`s globally.

2. Multiple platforms reach for it audience.

3. The NYT`s easily accessed for it news by many different devices

such as, laptops, mobiles, IPad etc...

The NYT`s Competitive Advantage:

1. Capable to innovate.

2. Times Co. formed a R&D Ventures group in 2012. 3. R&D is a valuable division of NYT`s to enhance it audience

experience and satisfaction.

Attractive industry:

1. The focus on the trend changes of generations from papers to

digital by developing their technology and offers an options for it

clients (readers and advertisers).

2. NYT`s uses maximum capacity of their technology to offer different

and unique products comparing to the competitions.

Formulation the strategy and implementation:

1. NYT`s digital initiative to increase it audiences globally and

maximize it base and market share.

2. NYT`s journalist are the major strength of the organization.

3. Invested in the initiative of digital concept and support the strategy

and efforts.

Superior Return:

1. The NYT`s IPhone application generated over one million users

from the day it launched in July 2008 (Time`s, 2008).

2. On a monthly basis an average of 70 million page visit come from

only mobile application of NYT`s from all around the world (Time`s,

2008).

Reports this days not showing strong capabilities for NYT`s digital, as mention on

their report “The New York Times is winning at journalism. Of all the challenges

facing a media company in the digital age, producing great journalism is the

hardest” (Davies, 2014, p. 27). However, In 2008 the Time Inc.`s digital

generated a total of $245 m, which made a 10% of the whole advertising revenue

for the company, as well it was way far higher than any competitors in the market

(Johnson & Ives, 2009).

“Digital initiatives, a key strategic focus, significantly contributed to our revenue

mix and provided meaningful diversification. Total digital revenues increased

approximately 15% to $387 million in 2010, accounting for more than 16% of

overall revenue for the Company. In 2010, we also made a significant investment

in our pay strategy for NYTimes.com through an approach designed to preserve

the site’s significant audience reach and advertising inventory” (Company, 2011,

p. 45).

Valuable capabilities:

NYT`s has the right valuable resources to strength it entry to the digital world and

give competitive advantage to the organization as well finding new opportunity to

expand the company.

Rare Capabilities:

The NYT`s resources required to

Summarizing NYT`s Core competences as following and supported with a SWOT analysis in Table3: 1- Major player and publisher in the media market and news reporting. 2- One of the biggest Brand name globally. 3- Very high quality journalism. 4- Quality audiences. 5- Quality advertisers. 6- The digital generation and online publication.

The External Environment

Looking at a new era of the industry, NYT`s external environment are

summarized in below:

audience are influenced to get their news from many sources available such as

digital, social media and many tools available to surf the internet such as tablets,

laptops and smartphones, that’s leads to very large reduction of buying a printed

newspapers and audience searching for reliable sources of news in general.

New York Times Strategic option

Janet Robinson, president and CEO of NYT`s and Arnold Sulzberger`s Jr.

(NYT`s Board Chairman) in 2009 was clearly addressing the company issues

and how their strategy can reflect on this issues by how its taking down the

company financially, their earlier strategy of digital and advertising focus seems

to be not going through the right bath due to the advertising decline and

technological fragmentation in the media business. However, NYT`s when they

started their earlier digital strategy in 1996 they had different expectations and

future overview.

NYTimes.com explored different streams and strategies of driving in revenues, In

the beginning of their web initiative (1996) there was a charges implemented for

the international audiences, however and one year later they changed this

approached and opened up the website internationally.

In the next 10 years after the fact, the company started their (Times Select

experiment), this was a side of their audience online access with some fees to

provide the audience access to Op-Ed as well exclusively access to news

reporters at the NYTimes.com, simple and easy to use, offering wide range of the

Times' online documents, and additionally other website components.

Two years later, the fast grow and development on websites and online business

reach a level requiring change in the strategy and focus. In that time, Times

Select had around 200K memberships with above $10m, however, company

chose to stop this activity due to the understanding of the expanding and impact

of the world search inquiry implied that the advertisement incomes move faster

because of the expanded movement – made by offering this information and

access for free – would become quicker than the membership as well benefiting

the income.

Arnold Sulzberger’s Jr says: “Our strategy must be rooted in the fundamental

premise that we must be OF the Internet, not merely ON it, requiring all of us to

move from publishing our content on the Web to becoming full Web publishers”

(Kafka, 2009, p. 1.).

Summarizing above lead us to some strategic issues New York Times are facing

as showing in Table 4.

Table 4: NYT`s strategic issues

SWOT Analysis

The SWOT analysis can show us the strengths, weakness, opportunities and threat of such a large expanded organization.

STRENGTHS: The real quality of the New York Times is its image name, which is exceptionally prominent around the general population for its fair news reporting and extraordinary distributed. The NYT`s likewise has a large market share in the business because of its supply chain management and its image name. The NYT`s as well has generated a few times the best journalist ability furthermore has the quality of its representative's, team and the client responds. Additionally has the quality of venturing into the innovation and entered to the online news stage.

WEAKNESS: the significant weakness of the NYT`s is the structure of it cost and it low income from the online NYT`s. additionally has the weakness of the work inefficiencies and a lot of obligation weight on the organization. The NYT`s as well has the weakness as the daily paper business which is slacking back because of the expansion in the utilization of innovation by individuals and the advancement of the assets which is making the daily paper an old technique for perusing. Digital generation of NYT`s confronts rivalry from a few competitors of online news.

Digital space

- Fast grow with high market

competition

- Profitability’s issue of Digital

market

- Online profit need improvement

- The transaction from printing to

digital (new generation believes in

online materials

Strategic Issues

Maintaining Market Position

- Full depending on the history

of the company and name

- Many competitors in the

market with better positioning:

The Washington Post

News Corporation

EX. Gannett Co

OPPORTUNITIES: There are a few opportunities for NYT`s, has the chance to dispatch itself by teaming up with Apple (IPAD). As well has the chance of venturing into the online commercial and begin it offers and online services for advertising, this will expand its incomes. NYT`s got the best opportunity for a worldwide development and expanding with many international techno sources.

THREATS: NYT`s most threat is with online news innovation, Furthermore, it involve with political dangers. NYT`s additionally threats the danger of instability of the incomes. However, threats from substitute channels. With the expansion in the paper and the expense of conveying the paper, NYT`s as well have the threat of increment in the costs which will influence the matter of the organization in the long term.

Table 3: NYT`s SWOT analysis

STRENGTHS WEAKNESSES

1- Brand popularity

2- Quality journalism (world most powerful journalistic voice)

3- Loyal employees and customers

4- Online platform and digital techno

1- Highly company cost structure 2- Digital NYT`s has showed Low

revenue 3- Newspaper business is falling and

become old fashion due to techno and digital generation

4- shortcoming of the work inefficiencies and a lot of obligation weight on the organization

5- Many competitors on digital generation

6- Coverage reach

OPPORTUNITIES THREATS

1- Launching the NYT`s through new Techno such as IPAD

2- Online market place to increase company income

3- Expand internationally and cooperate with different techno sources

1- The online technology of news has a fact of risky political issues

2- instability of the incomes 3- dangers from substitute channels 4- printing and delivering cost

increasing on long term

Porter’s Five Forces’ Model:

Table 4: porter1s five forces

BARGAINING POWER OF SUPPLIERS

Critical Production

Generating news are highly comparative and very much similar and can easily be copied and match from other competitors, this impact very positively NYT`s and give it news a high value.

Critical volume to suppliers

high volume are giving the suppliers low bargaining as they depend on it and in a times if this producer decrease this volume it will impact immediately the profits and that gives a privilege to NYT.

Materials Suppliers change (print to digital)

the industry change in running business reduced the number of suppliers as companies diverted to digital and reduced the materials cost, when this suppliers number reduce is impacting the business and positively benefit NYT due to the publicity and brand name it has.

Intensity of

Existing Rivalry

Bargaining Power of Suppliers

Threat of Substitutes

Bargaining Power of

Customers

Threat of New Competitors

Bargaining Power of Customers

Subscribers The Bargaining power of subscription is competitive as clients has many different platforms of generating news and it’s with lower cost.

Advertisers the power of advertising are similar in competitive way as advertisers have many options with different range of cost, furthermore popularity of NYT it give an advantage.

Bargaining Leverage

NYT`s known to it client with it High-quality products and services which considers essential for clients and emphatically influences NYT, as this clients in the end are spending more to maintaining receiving such a brilliant services. However, the high number of clients for both digital and printing who are not tending to see no any bargaining to NYT.

Intensity of Existing Rivalry

Innovation and Product Differentiation The key of successful of NYT are it innovations and product which give a huge advantage to NYT`s among the high rivalry in the market of digital and printing.

Industry Size

The expand in the industry size gives NYT`s advantage as it have a strong understanding to it the market competition, and this can be adds as an essential successful to NYT`s and its multiple platform globally and it gives NYT`s extra value.

Threat of Substitutes

Substitutes for the NYT`s substitution threat can reach high level as there are wide range of other available platforms such as Radio, TV`s, social media and magazines.

Quality and Differentiation

retaining clients for NYT`s are main key of successful after showing the ability of providing high quality of standard with consistency to it clients which impact NYT`s positively as it clients are not welling to change to

competitors and satisfied of NYT`s services.

Threat of new competitors

Capital Investment For a new market entrant will need to set a high expenses budget in order to compete with NYT`s and reach that globally present and brand name as NYT`s, all this investment will considered from competitors as a high risk which will always give NYT`s advantage.

Online Media

with the digital generation and the wide range of platforms in media this gives NYT`s a high level of competitors might enter the market due to the low cost of investment in the online platforms.

Strong Brand Name

the strongest advantage for NYT`s are their brand name which is very must advance than any other competitors and has a solid base in the market.

New York Times Balance Scorecard

“The balanced scorecard developed by Robert Kaplan and David Norton. The

balanced scorecard methodology provides an integrated framework for balancing

financial and strategic goals and cascading performance measures down the

organization to individual business units and departments” (Robert M, 2012, p.

47).

The performance measures included in the balanced scorecard derive from

answers to four questions:

How do we look to shareholders?

How do customers see us?

What must we excel at?

Can we continue to improve and create value?

Table 5 draw the balanced scorecard of New York Times and discuss further

their KPI and evaluate it strategy accordingly up to the year 2014.

Table 5: NYT`s Balance Scored card

As we notice that the most income for NYT`s are from the digital clients, no matter what is the devices or technology used such as laptops, IPad, smartphones. However, NYT`s most income generated from the distribution and advertising. Up to Sep 27th 2015, NYT`s Co income fall 1% to $1.13B.with a net revenue before extraordinary items of $11.6M vs. loss of $574K. The advertising revenue reduced with 4% to $433.9M. Net Income reflects Selling, general and administrative cost decrease of 6% to $533.1M (expense), Depreciation and amortization (b) decrease of 22% to $46M (expense), early termination charge decrease from $2.6M (expense) to $0K (Source, 2016).

Financial Perspective

The evaluating of NYT’s business as a KPI measurement can be by evaluating their profit margin, current and profit ratio.

In the year 2014 NYT`s has picked around 33,000 new digital subscription which increase the total to 760,000 (Chittum, 2014).

2015 NYT`s launched the NYT VR, The New York Times takes a step into virtual reality for it new App (NYT, 2016).

The NYT`s Launches The Upshot, Times Premier, Launched NYT Now for

iPhone, Launched T Brand Studio (NYT`s, 2016).

Financial: - increase the digital advertising revenue- reduce the operating cost- target other investment - corporation with innovative partners such as Apple - drive significant revenue from digital imitative

Customer:- product availability on different platform- audience target

- data and news availability and accuracy - availability of digital and printing materials- social media

Business Process: - Increase market power - reach various segment - merge with media platforms, such as YouTube, google, apple- reach maximum market share on internet

Learning & Growth:- share knowledge - journalism, employee turnover. - acquisition internet companies and learn from - expanding globally an reach maximum number of audience on other growing countries

NYT`s Strategy

Process Perspective

Process change empowers NYT to advance its hidden processes to reach valuable returns which requires ideal utilization of it digital initiative to enhance it services provided to the clients, and reach wider range of segmentation in the market.

The processes KPI can be evaluated by, quality, market power, news delivery, cycling time and the employee cost.

Customer Perspective

The increase in the circulation number and subscriptions are indicator of the repetition growth and client’s satisfaction.

Advertising revenue will automatically increase with the expanding of the circulation and reach.

Social media are the generation trend and will support the increase of globally reach and different audience segmentations (age segment).

Customer’s retention are one of the most important key measurement for the NYT`s performance and growth, and it support to increase the market share for NYT`s.

Learning and Growth Perspective

Key sources for NYT`s learning and growth are it associates, and journalist, this employees are the sources of financial income and costumers loyalty, however system and processes of learning and development required ongoing investment in its employees and the improvement of it internal system.

Turnover ratio in organizations are key to indicate the success of NYT`s, the KPI measurement of learning and growth of NYT`s can be according to its turnover.

Theoretically, NYT`s company need to look on the digital strategy as a long term strategy and focus on digital income. Furthermore, the company announced the great opportunity on monetizing mobile, the options added recently on mobile such as (mobile moments) expanded the mobile adds and taking off extra video units, giving the company expanded certainty that Q3's advertisement result was irregular. Easy access and innovation verticals keep on doing well while retail stays unstable. Is likewise the view ability initiative anticipated that would

proceed to modestly effect on digital advertisement incomes in the close term, NYT's developing presentation to computerized promoting, which expected to generate ~30% of total advertisement incomes, latest updated expected to become to 33% one year from now and above nearest competitors with 20% (Morgan, 2015). Following all above analysis of NYT`s it can be prescribed that the organization must expand it digital strategy and interest it current loyal audience which will offer the NYT`s to keep up its position in the business sector even with the decline in the company market share from daily paper market and make a larger use of its existence globally with the largest base of reporters and unique journalism and having a vast faithful client base.

The NYT co. influences its abilities by method for teaming up with a few media organizations and tries to enhance its financial related position, as the organization can work together with digital giants as Google, You Tube and apple.

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Appendix

Financial statement 2010-2014

new york time`s case analysis final

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