CHAPTER I INTRODUCTION 1.

1 Reasons choose the case Mass media is important for society because along with the development of the times. one of media that provide a reliable source in New York is the New York Times. New York Times experienced some growth is the emergence of New York Times Digital which had developed and was operating two website: NYTimes.com and Boston.com, New England's largest regional portal and the Internet home for the Boston Globe. New York Times Company is a big company. Both website were operated by New York Times Digital (NYTD). NYTimes.com and Boston.com included Internet access to the complete contents of The New York Times and Boston Globe newspapers, regularly updated breaking news, and a variety of enhanced interactive features. NYTD was also responsible for managing the Companys Digital Archive Distribution business, which provided content for research news retrieval services, such as Dow Jones and Lexis Nexis. Beside that, New York Times also diversified media company including newspapers, magazines, television and radio stations, electronic information services, and electronic publishing. 1.2 The Problems The problems of this case are:
1. Describe NYTDs evolution to date. What is the strategy of

NYTD? Are the organization and control consistent with the strategy? 2. What impact has NYTD had on the rest of the Company?

3. How does the way NYTD is managed compare to the way a venture capital firm manages a startup? What insight, if any, do you draw from this comparison? 4. What impact do internal perceptions of NYTDs performance have on its operations? 5. Would you change NYTDs existing organizational structure? 6. If so, how would the change you propose affect: a.NYTDs culture and leadership style? b.NYTDs likely budget? c.The way NYTDs performance is judged? d.The way new ideas for the websites are generated? 1.3 The Aim/Objectivity The objectives of this case are:
1. To describe NYTDs evolution to date. To know the strategy of

NTYD and the consistency between the organization and control with the strategy?
2. To find the impact has NYTD had on the rest of the Company.

3. To know the way NYTD manage compared to the way a venture capital firm manages a startup.
4. To know impact do internal perceptions of NYTD performance

have on its operations.

5. To know the change NYTDs existing organizational structure. 6. To give the changes of proposed affect:

a.NYTDs culture and leadership style. b.NYTDs likely budget. c.The way NYTDs performance is judged. d.The way new ideas for the websites are generated.

CHAPTER II LITERATURE For the literature we will focus at the organizations control (bureaucratic control), budget, organizational strucure, and venture capital. 2.1 Organizational control (Bureaucratic controls) Organizational control are in essence the moral code of the organization and define what people should do when no one is watching or a procedure is not specifically defined (James P. Martin, 2008). But for the literature will more focus on bureaucratic control. Bureaucratic controls is a rules, policies, hierarchy of authority, written documentation, reward systems, and other formal mechanisms to influence employee behavior and assess performance. Bureaucratic control can be used when behavior can be controlled with market or price mechanisms (www.businessdictionary.com). 2.2 Behavioral aspect in budgeting ( Participation in the budgetary process ) A budget process is either top down and bottom up. 2.2.1 Top down approach

With top down budgeting, senior management sets the budget for the lower levels (Govindarajan, Anthony, 2007). 2.2.2 Bottom up approach Bottom up approach is method where budgets prepared by the managers of all departments are combined to compute the resource needs of the entire firm (www.businessdictionary.com). The advantage of using this type of budgeting is that you are free to procure all that you need as long as you ask for the right amount of money. 2.3 Venture Capital Venture capital is a part of financial capital, financial capital can refer to money used by entrepreneurs and businesses to buy what they need to make their products or provide their services or to that sector of the economy based on its operation. Venture Capital is money provided by investors to startup firms and small businesses with perceived long-term growth potential. As a have form of entrepreneurship, venture capitalists typically voting

rights as a determinant of firm policy direction in accordance with the number of shares owned (www.investopedia.com). Venture Capital is a form of "risk capital". In other words, capital that is invested in a project (in this case - a business) where there is a substantial element of risk relating to the future creation of profits and cash flows (www.tutor2u.net). Risk capital is invested as shares (equity) rather than as a loan and the investor requires a higher "rate of return" to compensate him for his risk. Venture capital has two approaches: 2.3.1 Financial capital Financial capital can refer to money used by entrepreneurs and businesses to buy what they need to make their products or provide their services or to that sector of the economy based on its operation. 2.3.2 Startup company
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Is a company with a limited operating history. These companies, generally newly created, are in a phase of development and research for markets. 2.4 Organizational structure The two organizational structures most commonly found are the Functional and Matrix Organizations (Springer, 2001) a. Functional Organizational Structure The traditional (functional) management structure has survived for more than two centuries. However, recent business developments, such as the rapid rate of change in technology and increased stockholder demands, have created strains on existing organizational forms. Advantages Disadvantages Easier budgeting and cost control Does not provide are possible Flexibility in the use of manpower A broad manpower base to work with b. Matrix Organizational Structure The matrix organizational form is an attempt to combine the advantages of the pure functional structure and the product organizational structure. This form is ideally suited for companies, such as construction, that are project-driven. The project manager has total responsibility and accountability for project success. Advantages The functional organizations Disadvantages exist Multidimensional flow those Multidimensional work flow information oriented emphasis the projectto the

necessary

accomplish the project tasks Decisions normally favor strongest functional groups No customer focal point

primarily as support for the project Conflicts are minimal, and

requiring hierarchical referrals are more easily resolved There is a better balance among time, Dual reporting
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cost, and performance Other types of organizational structure (Afzal moman;2010): 1. Centralization. In a centralized organization, the decisions are made by top executives or on the basis of pre-set policies. These decisions or policies are then enforced through several tiers of the organization after gradually broadening the span of controls until it reaches the bottom tier. 2. Decentralization, also called departmentalization is the policy of delegating decision-making authority down to the lower levels in an organization, relatively away from and lower in a central authority. A decentralized organization shows fewer tiers in the organizational structure, wider span of control, and a bottom-to-top flow of decision-making and flow of ideas. In a more decentralized organization, the top executives delegate much of their decision-making authority to lower tiers of the organizational structure. As a correlation, the organization is likely to run on less rigid policies and wider spans of control among each officer of the organization. The wider spans of control also reduces the number of tiers within the organization, giving its structure a flat appearance. One advantage of this structure, if the correct controls are in place, will be the bottom-to-top flow of information, allowing decisions by officials of the organization to be well informed about lower tier operations. For example, if an experienced technician at the lowest tier of an organization knows how to increase the efficiency of the production, the bottom-to-top flow of information can allow this knowledge to pass up to the executive officers.

CHAPTER III CASE ANALYSIS 3.1 Background Case New York Times
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The New York Times Company has a division, New York Times Digital (NTYD) which operates NYTimes.com (the website for The New York Times newspaper) and Boston.com (New England's largest regional portal and the Internet home for the Boston Globe). Scott Meyer, general manager of NYTimes.com, and Lisa DeSisto, general manager of Boston.com, were satisfied with the current state of their careers. They are worried about the plan to change NTYDs organizational structure. The New York Times Company In 2001, the Company owned a variety of media properties, including The New York Times newspaper, the Boston Globe, the Worcester Telegram & Gazette, and 14 other regional newspapers, located primarily in the southern United States. The Company also owned several broadcast media properties, which accounted for 5 percent of revenues, and NYTD, which accounted for 2 percent of total revenues. The year was shaping up as a tough one for both the Company and the economy, which had posted an anemic 0.3 percent annual growth rate in the second quarter. The previous year, during the dotcom boom, the Company had increased its investment in NYTD dramatically. But by early 2001, corporate profits had started to decline, and the Nasdaq had fallen to half its peak, which had been reached in March 2000. As a result, tolerance for the losses NYTD had been accumulating were diminishing rapidly. New York Times Digital By September of 2001, NYTD had developed and was operating two websites: NYTimes.com and Boston.com. Where NYTimes.com aimed to attract an international audience, Boston.com focused strictly on attracting and retaining a dominant share of the Boston metropolitan area. Developing the NYTD Organization
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The way that the NYTD operation was managed had evolved over a six year period, since The New York Times first ventured onto the Internet in 1995. NYTD was shaped by choices related to organizational structure, leadership, culture, staffing, budgeting, and performance evaluation. While the creation of NYTD as an independent unit altered the official reporting structure, it marked only the beginning of a transformation of the informal power structure. The relationship with the newspaper changed slowly and subtly. For about a year, NYTD operated as a confederation of websites in a very decentralized structure. 1. Culture and Values The New York Times newspaper was steeped in tradition and operationally very conservative. At the time of the separation in mid-1999, however, there was a concerted effort to create a distinct Internet culture within NYTD. NYTD sought to create an experimental culture. 2. Hiring and Compensation The employment market for technology-related positions was extremely competitive in the late 1990s. The pension program, valued within the newspaper organization, was eliminated from NYTDs compensation package. Prior to the two rounds of layoffs in early 2001, NYTD had grown to approximately 400 employees, of whom fewer than one-quarter had experience at the newspaper. 3. The Budgeting Process The boom in the Nasdaq market and the separation of NYTD from the newspaper organization altered budgetary constraints dramatically. NYTD developed a bottom-up approach to budgeting. In late 2000 and early 2001, however, financial resources once again became the primary constraint. Subsequently, the Company made a series of incremental cuts to NYTDs budget. Two painful rounds of layoffs followed in January and in April. As a result, many
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existing features that were not drawing significant user attention were discontinued. 4. Performance Evaluation Financial targets were negotiated by NYTD and the Companys senior staff during the corporate budgeting process. These targets tended to focus on the most important metric for the corporation, which could change from one year to the next depending on the Companys strategy and the condition of the economy. Maintaining a healthy relationship became more challenging as the core business suffered through the advertising downturn that began early in 2001. 3.2 Case Analyis

After discuss about NYTDs our group will answer some question which related with NYTD. There are six question will be discussed: 1. Describe NYTDs evolution to date. What is strategy of NYTD? Are the organization and control consistent with the strategy? NYTD evolution to date: New York Times Digital (NYTD), a division of the New York Times Company was operate New England's largest regional portal and the Internet home for the Boston Globe (NY times.com and Boston.com). In 2001 the company also owned several broadcast media properties, and the new york times brend was believed to be the companys most valuable asset, built through years of topnotch reporting and analysis, plus marketing and promotion. The paper had won 79 Pulitzer Prizes, more than any other newspaper. By September of 2001, NYTD had developed and was operating two websites: NYTimes.com and Boston.com. The websites included Internet access to the complete contents of The New York Times and Boston Globe newspapers, regularly updated breaking news, and a variety of enhanced interactive features. NYTD was also responsible for managing the
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Companys Digital Archive Distribution business, which provided content for research news retrieval services, such as Dow Jones and Lexis Nexis. There is a Sophisticated Information Technology systems automated significant portions of the process of converting nwspaper content to website contente. The news team did much more than simply reformatting articles for the Internet. They also sought to find new and creative ways to make full use of Internet multimedia, including slideshows, audio and video content, and special interactive sections, such as one for the Salt Lake City 2002 Winter Olympics. Access free to NYTimes.com make the users were required to register for the site, providing NYTD with demographic information. And with Registration information enabled NYTimes.com to serve advertisements to targeted audiences, and if we can complete the target all revenue for NYTimes.com was generated by selling advertisements on the website. NYTD also can produce New products were introduced regularly to the website, created by crossfunctional teams of salespeople, market researchers, software developers, editorial staff, and general managers. Strategy of NYTD:

NYTD always develop the organization with always make Free online registration to access NYTimes.com, but users must NYTD want to get a strong message that we were a different

improvements to its organizational structure. register to used. business, a different company, and a different culture, therefore NYTD formed a culture committee. Beside that NYTD sought to create an experimental culture. Bureaucratic controls, procedure,and paperwork were minimized NYTD developed a bottom-up approach to budgeting, with this approach give opportunity for employees to be involved in setting their own goals and expectations for a given financial period. One website for all information
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Have the classification of ad.

How about the organization and control are consistent with strategy : Yes, the organization and control consistent with the strategy. Because each strategy has been involved in a real information and can be verified on the condition of the company. 2. What impact has NYTD had on the rest of the Company?

NYTD as decentralized divisions of New York Times company has the following effects:
Many senior newspaper executives would have been actual

uncomfortable with entrusting priceless New York Times brand to an operating unit that they didnt control and decision making biases. This is accordance with literature review that decentralization, also called departmentalization is the policy of delegating decision-making authority down to the lower levels in an organization, relatively away from and lower in a central authority (http://en.wikipedia.org/wiki/Decentralization).
A team approach and a spirit of openness were emphasized and

information was shared. This accordance with literature review that one advantage of the decentralized structure, if the correct controls are in place, will be the bottom-to-top flow of information, allowing decisions by officials of the organization to be well informed about lower tier operations (http://en.wikipedia.org/wiki/Decentralization).
3. How does the way NYTD is managed compare to the way

a venture capital firm manages a startup? What insight, if any, do you draw from this comparison? Venture Capital: 1. 2. 3. Different stages of finance It might bring culture which may not be suitable for growth Increased intervention may increase lead time of product development
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Company: 1. 2. 3. 4. Company managements decision would be the final decision Company can increased its investment in any condition They can choose their own culture Bottom up Approach NYTDs way to managed company are by take advantage of the better pricing that the corporation is able to get from vendors and choose what budgeting type to manage cost and expense of the company in this case is using bottom up approach, company can handle company as their own, because their decision would be the final decision but by using rights as venture capital, described of firm in wikipedia.com as a form of entrepreneurship, venture capitalists typically have voting a determinant policy Using direction inaccordance with the number of shares owned.

venture capital might bring culture which may not be suitable for growth because company which is have capital in join venture has their own culture that can different with NYTDs culture. Beside that, since 1995 NYTD had its own culture and at mid 1999 NYTD had its culture Internet culture. From these differences managed NYTD as their own is better than using a venture capital firm, because NYTD can decide their way for better future by its self without venture capital firms intervetion.
4.

What impact do internal perceptions of NYTDs performance have on its operations? All the media attention lavished on dotcoms contributed to an

internal perception that NYTD was the glamorous side of the business. NYTD required to increase profitability by improving efficiency of greater operational costs. Because they focus on revenue generation only, not concerned about expenses. The ultimate business model for media websites was as uncertain as ever, people felt operation could not possibly take full advantage of
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the Internets vast potential. As an integral part of the newspaper, NYTimes.com was perceived internally as a credible part of the corporation. Many senior newspaper executives would have been acutely uncomfortable with entrusting the priceless New York Times brand to an operating unit that they didnt control. The end of 2000, NYTD having pressures to achieve profitability, as a result, management decided to pursue greater operating efficiencies by centralizing operations. Using bottom line target especially bottom up are critically important when NYTD had been in a loss position. This is supported by research conducted by wikipedia.com and its based on with the literature, bottom line or generally called net income is the income that a firm has after subtracting costs and expenses from the total revenue, whereas a bottom-up approach is the piecing together of systems to give rise to grander systems, thus making the original systems sub-systems of the emergent system. In a bottom-up approach the individual base elements of the system are first specified in great detail. Since NYTD do this way, like developed a bottom line and bottom up approach to budgeting, revenue of the company raised highly exceed what budgeted and from the expected. 5. Would you change in NYTDs existing organizational structure? I would change organizational structure. Environmental changes and organizations increased product line compel to change in structure. Beside that I want use Functional Organizational Structure because that structure have many advantages. If use Functional Organizational Structure we can get easier budgeting and cost control are possible, flexibility in the use of manpower, and a broad manpower base to work with. 6. If so, how would the change you propose affect : a. NYTDs culture and leadership style?
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The New York Times newspaper was steeped in tradition and operationally very conservative. NYTD sought to create an experimental culture . Some defined processes were allowed to develop, but were never considered to be set in stone. Information was shared, and decision making was transparent. I think NYTD can developed good culture and leadership style with : There should be informal culture as they are hiring young employees to retain them. There should be some necessary distance between senior executive and other employees. Internets culture should meet with culture of head corporate. Should be coordinating leadership and decentralized functionality. b. NYTDs likely budget? NYTD developed a bottom-up approach to budgeting. Though most solid ideas for new projects were generated by experienced executives and journalists, ideas for new content and new features were encouraged from throughout the organization. Yes, NYTD developed a bottom-up approach to budgeting. Changes will be done is NYTD using 2 approaches, top-down and bottom up. This is consistent with the literature review that should be in the budgeting using a combination of both approaches (top-down and bottom-up), (Anthony and Govindarajan, 2007). This is consistent with the literature review that should be in the budgeting using a combination of both approaches (top-down and bottom-up), (Anthony and Govindarajan, 2007). c. The way NYTDs performance is judged? Performance evaluation approach in which a fund manager's skill is judged by the extent to which the manager's investment decisions resemble the decisions of managers with distinguished performance records.
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I think NYTDs performance is primarily evaluated by the following questions: 1. Can we tolerate the loss we are generating? 2. 3. Are we having any significant operating problems? If any damages being done to the core business or the core brand? If NYTD can handle that problem, we can say NYTD have good performance. This is consistent with the literature review that how a company can handle that problem. (Anthony and Govindarajan, 2007). d. The way new ideas for the websites are generated? There are 2 ideas for the websites are generated : Cross functional culture Innovative ideas from employees are appreciated.

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CHAPTER IV CONCLUSION

4.1 Conclusion of this case study analysis are: 1. New York Times Digital develop a bottom-up approach to budgeting. Its good because bottom-up budgeting is most likely to generate commitment to meeting the budgeted objectives. In addition, research has shown that budget participation has positive effects on managerial motivations for two reasons (Anthony and Govindarajan, 2007): a. There is likely to be grater acceptance of budget goals if they are perceived as being under managers personal control, rather than being imposed externally. This leads to higher personal commitment to achieve the goals. b. Participative budgeting results in effective information exchanges. The approved budget amounts benefit from the expertise and personal knowledge of the budgetees, who are closest to the product/market environment. Further, budgetees have a clearer understanding of their jobs trough interactions with superiors during the review and approval phase. 2. New York Times Digital operated as a confederation of websites in a very decentralized structure.

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4.2 Recommendations for The New York Times Company: For the company: To make an effective budget preparation process blends the two approaches, top-down and bottom-up (Anthony and Govindarajan, 2007). For the society: 1. To make people know about the condition of company 2. To know more about the system that the company used, and could be a reference to their company. For the knowledge: Can learn more knowledge about budget participation, how to control the organization, and organizational structure in New York Times company.

REFERENCES

Achtmeyer, William F. 2001. Center for global leadership. Received on http://mba.tuck.dartmouth.edu/cgl/downloads/20006_NYTDigital. pdf. Access on April 14 Ardichvili, Alexander and K. Peter Kuckinke. 2002. Leadership Styles and culture values among managers and subordinates. Received on http://unpan1.un.org/intradoc /groups/public/documents/apcity/unpan007373.pdf. Access on April 10, 2011 Afzal moman. 2010. Centralization vs Decentralization. Received on http://en.wikipedia.org /wiki/Decentralization. Access on April 15, 2011. Govindarajan, Vijay, Robert N. Anthony. 2007. Management Control System. Singapura: The McGraw-Hill Companies, 2011
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Hockel, Paul. D. 2009. Implementing itil across contrasing organizational structure. Received on http://faculty.ed.umuc.edu/~sdean/ProfPaps/Bowie/F09/Hockel.p df. Access on April 14, 2011 Martin, James.P. 2008. Organization control. Received on http://www.sbnonline.com/2008/08/organizational-controlgetting-credit-for-how-well-your-company-is-managed/. on April 17, 2011. Access

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