Strategic Planning at the Chronicle Gazette
The chronicle gazette falls among the oldest in the history of print media houses in the United States. Started out by two brothers in San Francisco, the media house has experienced unprecedented growth, including winning awards. Following the historic breaking of the news concerning the assassination of Abraham Lincoln, the paper garnered a massive circulation in the metropolitan area, which has continued to the present. Currently, it has a record circulation of around a quarter of a million customers.
However, the chronicle gazette, among other newspapers in the United States and other developed countries faces a major challenge. The print media has experienced a decline in circulation since the onset of Internet use. For instance, the chronicle gazette has lost up to 35 percent of its customer base. This further reflects on its advertising revenue, which declined by 8 percent.
This paper seeks to come up with a comprehensive strategic plan for the management of the company. The goal of the plan concerns coming up with realistic solutions that will enable the company not only to remain in business but also to make profits. A critical analysis of the current state of the newspaper publishing industry will help in coming up with both long-term and short-term solutions. This will further include the evaluation of internal and external forces to determine the strength and weaknesses of the company.
- State of the Newspaper Publishing Industry Today
The Chronicle gazette and newspaper publishing industry has undergone profound downsizing. In most cases, newspaper-publishing companies have run out of business, causing their closure. This is because of the changes the world has experienced so far, as digitalization is concerned. The increase in preference for the Internet in daily life has caused a major alteration of the traditional business models. It has therefore undermined the competitiveness of the industry as far as growth and distribution is concerned. The inception of 2014 has not brought much hope to the industry either. This stems as a major point of concern since the newspaper has stood as the most traditional tool of advertisement. For example, chronicle magazine has become a victim in this shift of paradigm, therefore, facing potential closure.
2.1 Data on declining circulation and revenue
The circulation and revenue in the newspaper industry have continued to plummet with no sign of a comeback. Initially, the decline occurred at a steady rate of 2 percent. However, the beginning of the twenty-first century proved a major game-changer in the industry. In 2009 alone, the print media fraternity in the United States experienced a daily decline in circulation by 10.6 percent in a span of six months. This reflected the overall performance from 2007 to 2009 where the industry registered a 30 percent decline.
2.2. Status of newspaper leaders
The United States, despite the big population and demographic hugeness, only has three newspapers with a national presence as far as circulation is concerned. The Wall Street Journal ranks top. The New York Times and USA Today form the next two leaders in the country. The three leading newspapers have equally undergone a series of setbacks, courtesy of the shift in paradigm. The New York Times, for instance, experienced a decline in daily circulation by 3.6 percent in 2013. This loss equally echoed at the offices of USA Today registered a 7.9 percent drop in circulation. Their Sunday’s circulations also had a 4.1 percent fall. This has resulted in a number of resignations and early retirements of people from both top and low-ranking positions in the publishing houses. Janet Robinson, for example, called it quits as the CEO of New York Times in 2012. Other heads, such as top editors have rolled at the USA today. However, they have managed to maintain and at times increase circulation during the weekends.
- Why Newspapers Are Facing Declining Circulations and Revenues
The Internet has received much of the blame for the fall in circulation of newspapers and revenues realized from the circulation. In addition, the response by industry players such as Wall Street Journal to venture into online publishing has given the consumers better alternatives. Here is a detailed analysis of the causes of the decline
3.1. External Assessment
3.1.1. Economic forces
The newspaper industry in its almost five centuries of history enjoyed a monotony of market as the only point of communication. However, the twenty-first century brought economic challenges, such as the constant competition from the television industry. The number of Americans wired to television networks and cable TV has profoundly increased over the years. These television networks offer the same news to the same audience. In addition to the competition, the presence of television caused price sensitivity in advertisement pricing in favor of television and Internet-based advertisements. It consequently forced the industry to subsidize basis on its sales. This automatically beefed up pressure on its revenue, causing far-reaching effects, such as the closure of business. Newspaper companies have since the early 1920s downsized from around 2,200 to below 1,500 in the early twenty-first century.
It is therefore almost impossible for the newspaper companies to compete favorably with the television companies. This has consistently reduced the number of newspaper houses in the United States. The global recession, a far-reaching factor in the economy of the world further complicated the situation for the industry. This is because the recession had a direct impact on the revenue model by forcing businesses to cancel their subscriptions and downsize their spending on advertisements.
Search engines, such as Google and yahoo have also joined the bandwagon of economic factors, forcing newspapers out of business. The search engines have experienced the accusing fingers of the industry citing that they have constantly stolen the contents in newspapers. This has automatically prompted a change in consumer behavior with the search engines a preferred source of news and information. Their expansion of use caused a further 7 percent decline in newspaper circulation in 2008 and 2009.
3.1.2. Social, Cultural, Demographic, and Environmental Forces
The cultural forces, in addition to social factors, affecting newspaper circulation have almost remained the same. However, research suggests that only the elderly population displays a willingness to consume the newspapers as compared to the young generation. This means that the industry has a challenge of comprehensively addressing the increasing diversity of consumers. In addition, the wide markets constantly respond to change, thus containing them becomes hard. The increase in knowledge and education further drives them to consume the Internet products more than print media. This is majorly because of the high Internet connectivity, especially in the United States, which enjoys over 70 percent of connectivity. This means that the culture of consumers has greatly shifted, especially in the United States and the developed world.
Demographically, the consumer strata stagnated. Newspapers and magazines have different niches ranging from high-end consumers to low end consumers. Therefore, economic hardships, such as recession easily affect the low-end niche as compared to the high-end niche.
3.1.3. Political, Governmental and Legal Forces
Legal and political forces often span from state of the nation and the laws and legislations governing the media. The main issues addressed in this area include the freedom of the media and ethical issues involved. The media might also have harsh restrictions, such as in many parts of the developing world, therefore, affecting their competence. The media houses in the United States have to acquaint themselves with the laws that govern the consumption of news. This includes the rightful acquisition of news.
3.1.4. Technological Forces
Technological advancement coupled by the Internet remains the biggest external factor affecting newspaper circulation. The Internet, as discussed before, has constantly spearheaded the replacement of the traditional newspaper industry. For example, it has reduced the costs of production coupled by low entry requirements. This has automatically changed the business mode for the industry to a more competent scenario. The Internet sites that users interact with have nearly all the contents in the newspaper. In addition, technology makes it possible for consumers to receive news as it breaks. This means that they automatically prefer such sites as YouTube and Google search engine among others to the newspapers, which can only give updated news in a 24 hours cycle. This has contributed in altering consumer preference.
3.1.5. Competitive Forces
This section specifically uses the porter’s model to analyze the state of affairs. The industry operates under persistent risk of facing substitution. The alternative products, largely represented by the Internet have lowered the cost of production coupled by an increase in interaction with the clients. The Internet further increases the time taken for updating the news. This has caused the reduction in percentage of consumers using the traditional media. Industry rivalry has increased with the decrease in customer base for all the newspaper companies including the chronicle gazette. The rivalry has prompted some companies to lower their prices with others making their products completely free. This means that such companies only maximize on the advertisement costs.
Threat of new entrants to the newspaper publishing industry remains low. This is because major newspaper distributors exploit their upper hand insofar as the economy of scale is concerned. They used that advantage in the production and sale of newspapers. Clients in need of advertisement space also prefer buying space from the leading newspapers instead of the small ones. However, capital remains the biggest challenge for new entrants into the industry. This is because of the high cost of equipment, such as printing machines and cameras. In addition, entry level remains low given the low profit margin prevailing in the industry. This is made worse by the already over flooded presence of other newspapers competing for the declining market.
Consumers have gained power over the suppliers in this industry. The Internet and other agencies for disseminating news have increased over the years. This has given the consumers a wide range of products for choosing. Newspapers also have similar products that the buyer can find in other products. This means that the news in the chronicle can as well feature in the New York Times. Ultimately, the customer acquires the ability to negotiate the newspaper prices.
The power of the suppliers to the industry remains at an equilibrium with a highness in some particular areas. This is because the number of companies supplying the industry has remained small. The low prices maintained in cost of raw material, such as paper and ink stems from the strong relationships that exist between companies in the industry and the suppliers.
3.1.6. External Factor Evaluation (EFE) matrix
The evaluation of external factors classifies the analyzed factors into opportunities and threats. The newspaper publishing industry definitely has more threats than opportunities. In evaluation, the Internet proves to be biggest threat that the industry has to contend with if it has to remain in business. This is because the Internet has remained at the brink of facing out the main product of the industry. Other threats include the fore mentioned search engines that offer alternative sources of information and news.
The Internet interestingly also falls under the opportunities for the chronicle gazette and the entire industry. This is because it provides the newspaper companies a new platform of an online presence. In addition, it gives them a 24-hour economic presence to the consumers. This becomes better because it widens their customer base from the traditional locals to every single user of the Internet. The New York Times and wall street journal remain some of the best examples of companies that have successfully manipulated the Internet for their benefit.
- Internal Assessment
4.1. Organizational Processes and Structure
The organizational processes and structure of the chronicle gazette failed to meet the emerging challenges in the industry. The distribution channels of the company proved insufficient towards the beginning of the twenty-first century. In addition, the decision-making body completely ignored technological advancements. The company, therefore, failed to upgrade to online publishing like the other players in the industry.
4.2. human resource capabilities
Human resource proves one of the most competent in the industry. This is because of the numerous awards the employees received. The information relayed suggests that the human resource had the ability and capacity to develop the employees to realize the highest level of their potential in the field of journalism. In addition, this excellence automatically inspired the entire human resource fraternity of the company to step up its commitment. This would automatically increase their performance with guaranteed quality. This, therefore, means that the capabilities of the human resource have blueprints of excellence.
4.3. Financial Position
It is apparent that the chronicle company has a challenge insofar as revenue is concerned. This is because of the reported decline in business volume. The company has lost its subscriptions and circulation percentage by a margin of around 35 percent. This is largely contributed by the presence of online competitions. Nevertheless, the top management has expressed willingness to initiate a serious strategy that will put the company back on top.
4.4. Marketing/Sales Capabilities
The marketing capabilities of the company majorly focus on print media. This is because it remains the only distribution channel of the product. This means that the marketing potential of the company remains underexploited. Therefore, there is a need to expand the sales and marketing front by developing new products for the consumers. It is important to note that the company has decided to embark on a strategic plan to realize this potential. The marketing analysis will help in formulating the best strategy for the company.
4.5. Operational Capabilities
The operational capabilities, especially in terms of efficiency and effectiveness remain underexploited. The company has evidently lagged behind in adopting new technology to match the changing demographics. This has given its competitors an edge thus the decline ineffectiveness. The company has also failed to explore new fronts of increasing subscriptions, which causes an increase in circulation. In addition, the company has failed in reviewing the prices of the newspaper to suit the prevailing market conditions.
4.6. Our Strengths and Weaknesses as a Publisher
The strength of the company lies in the unexplored fronts of publishing. This includes the new markets, their segments, and news channels. This would ensure a sudden expansion of the market base to unprecedented heights. However, the weakness of the company lies in its delay in embracing technology and using it to its advantage. In as much as the Internet poses a great threat to the newspaper industry, it offers equal opportunities for the revamping of the industry.
- How Companies in the Publishing Industry are adjusting their Strategies to cope With the Challenges
Newspaper companies have websites to help in creating an online presence. Some papers have increased their subscription prices. An analysis of the market has further helped them to understand the dynamics of the market. This understanding has prompted some management to reduce their circulation in areas that offer no economic value. The wall street journal, for example, has managed to reach to a bigger audience through its website. The site provides some content free while others are only available on purchase. Free sections include sports and entertainment among others while articles and editorials go at a fee. This strategy of free access to popular content has dramatically increased its readership.
Newspaper companies have adopted the use of the Internet in response to the digitization process the world has undergone. The availability of papers, such as the New York Times and the Washington post spans from phones to iPad and desktops. The move automatically enlarges the market base of the newspaper. In addition, it helps in reaching the segment of young consumers who have the highest attraction to technological advancements. The wall street journal, for example, managed to initiate over 10,000 users on iPad alone, which increased their revenue.
Other companies opted to shut down their delivery of print papers. They instead focused on online publishing and distribution. The Seattle post-intelligencer shut down all the print production causing a cease in delivery to all a mere 100, 000 people. Today, the company enjoys a subscription of over 4 million people. Apart from running its own news, the site has linked to other news agencies that offer alternative news to the company.
- Offering Comprehensive Solutions
6.1. Short-Term Steps
The first step towards reviving the company requires the immediate acquisition of a website. This will immediately confirm the presence of the company online. The best part with the online presence concerns its ability to keep the company in business at any time at any place. The paper can supplement its print media by providing the same content on its website. This will automatically place the company as a big newspaper company with the flexibility to the changing market. In addition, the online presence helps the company to increase its revenue on advertising.
The contents of the site should further undergo classification as to which should remain free and which to attract a fee. The presence of both free and paid content helps the website to receive more subscriptions. In addition, the free content should feature some of the popular topics as opposed to more serious topics. This will help in attracting more people whose first preference when using the Internet falls under such popular topics as entertainment. However, the company must ensure that the content available on the webpage reflects quality and precision. The payment procedure should also remain simple and with no underlying costs.
6.2. Long-Term Steps
The state of the global economy further calls for taking a close look at the costs of running a company. The company should work towards reducing costs while maximizing available opportunities. The cost reduction should touch on areas, such as advertising, production, and distribution. A cost-benefit analysis of the market will further help in knowing the right market segment to address. This will help in stepping up the efficiency of the company. Outsourcing and linking with other news agencies might form one of the most formidable cost-efficient measures. The company must also invest in human resources to help realize the quality of content posted to the consumers.
In conclusion, it is important for the company to note that despite the digital migration, newspapers must present quality work with no traces of busness. This helps in winning and building consumer confidence. In addition, online platforms help in building better relationships with customers. The company must therefore make good use of this opportunity.