DEPARTMENT OF MANAGEMENT STUDIES PONDICHERRY UNIVERSITY
STRATEGIC MANAGEMENT ASSIGNMENT ON NEWS CORPORATION
SUBMITTED TO DR. CHITRA SIVASUBRAMANIAN SUBMITTED BY SALVA MANNEESH VARMA 2nd YEAR MBA
TABLE OF CONTENTS S. No 1 2 3 4 5 6 7 8 9 Topic Introduction Vision Statement Mission Statement Key factors for Success Key Success Areas SWOT Analysis Corporate Strategies Generic Strategies Functional Strategies Pg. No 3 6 6 7 7 9 10 11 12
with secondary listings on the Australian Securities Exchange. In 1985 News Corp announced it was buying the Metromedia group of stations. and the world's third largest in entertainment as of 2009. The company's Chairman. buying the other half in 1984. setting the stage for the launch of a fourth U. News Limited operates today as News Corporation's Australian brand. 2004.S. often abbreviated to News Corp. Chief Executive Officer and Founder is Rupert Murdoch. Moving into the United States News Ltd. made its first acquisition in the United States in 1973. in the newer 1960s1970s corridor of the Rockefeller Center complex and Surry Hills Downtown Sydney. In 1981 News Corp bought half of the movie studio 20th Century Fox. On September 4. the company was re-incorporated under Delaware General Corporation Law after a majority of shareholders approved the move on November 12. News Corporation is a publicly-traded company listed on the NASDAQ. NSW. Sir Keith Murdoch. Soon afterwards it founded the National Star. The News. when it purchased the San Antonio Express-News. and in 1976 it purchased the New York Post. History News Corp was created in 1979 by Rupert Murdoch as a holding company for News Limited. 1985. Murdoch became a
. Now News Corporation has two world headquarters. and subsequent expansion.).NEWS CORPORATION
INTRODUCTION: News Corporation. operating out of Surry Hills. The main asset left to him was ownership of the Adelaide afternoon tabloid. a supermarket tabloid. in New York City.. News Limited was created by Murdoch from the assets he inherited in 1952 following the death of his father. They are at 1211 Avenue of the Americas (Sixth Ave. in Sydney. Formerly incorporated in South Australia. broadcast network. is the world's third-largest media conglomerate (behind The Walt Disney Company and the Time Warner Company) as of 2008.
. News Corp had amassed huge debts. Ultimately the unions capitulated. Delivery vans and depots were frequently and violently attacked. Murdoch declared that: "(Telecommunications) have proved an unambiguous threat to totalitarian regimes everywhere . The move of News International's London operation to Wapping in the East End resulted in nightly battles outside the new plant.. as well spinning off long held Australian magazines interests as Pacific Magazines. A number of senior Australian media moguls were brought into Murdoch's powerhouse. which (like many of its business interests) was heavily subsidised with profits from its other holdings until it was able to force rival satellite operator BSB to accept a merger on its terms in 1990.S. Expansion and Consolidation In 1986 and 1987.4% in July 1995. News Corp (through subsidiary News International) moved to adjust the production process of its British newspapers. who was managing director of the South China Morning Post. the Metromedia deal closed. By 1992. households. can now be picked up in over 96% of U. This network. Much of this debt came from its stake in the Sky Television satellite network in the UK. followed by the purchase of the remaining 36. satellite broadcasting makes it possible for information-hungry residents of many closed societies to bypass state-controlled television channels. BSkyB has dominated the British pay-TV market since. which forced it to sell many of the American magazine interests it had acquired in the mid-1980s to K-III. (The merged company.6% stake of the Hong Kong-based STAR TV satellite network for over $500 million. known on-screen as "Fox".naturalized citizen to satisfy the legal requirement that only United States citizens could own American television stations. This led to a confrontation with the printing unions NGA and SOGAT.. including John Dux. over which the printing unions had long maintained a highly restrictive grip.) In 1993 News Corp acquired a 63. which incurred massive losses in its early years of operation. and the Fox Broadcasting Company was launched.
In the same year News Corp announced a deal with MCI Communications to develop a major news website as well as funding a conservative news magazine. News Corp acquired a 34% stake in DirecTV Group.In 1995. The Weekly Standard. Fox established the Fox News Channel. It also reported that after an examination of the available accounts. News Corp significantly expanded its music holdings in Australia by acquiring the controlling share in a leading Australian based label.1 billion) in profits over the previous 11 years but had not paid net corporation tax. ruled in Murdoch's favor.S. although nearly all of the stations' equity was controlled by News Corp. stating that his ownership of Fox was in the public's best interests. News Corp launched the Foxtel pay television network in Australia in a partnership with Telstra and Publishing and Broadcasting Limited. (formerly: Hughes Electronics). The article explained that in practice the corporation's complex structure. The Economist reported that News Corps paid comparatively lower taxes and Newscorp Investments specifically had made £11. merging it with already held Festival Records to create Festival Mushroom Records (FMR). It was also noted that the stations themselves were owned by a separate company whose chief shareholder was U. In 1996. however. the Fox network became the object of scrutiny from the FCC when it was alleged that its Australian base made Murdoch's ownership of Fox illegal. citizen Murdoch.
Development since 2000 In late 2003. In 1999. a 24-hour cable news station to compete against Ted Turner's rival channel CNN.4 billion ($20.
. international scope and use of offshore tax havens allowed News Corporation to pay minimal taxes. Newscorp could normally have been expected to pay corporate tax of approximately $350 million. Michael Gudinski's Mushroom Records. Both Festival and FMR were managed by Rupert Murdoch's son James Murdoch for several years. Also in 1999. In the same year. The FCC.
DirecTV Group sold in 2008 to Liberty Media's Malone. publishers of the Wall Street Journal.this new channel is a bit tedious. Fox Business Network's vice president of business news and the channel's morning anchor. Somehow.Fox Business Network." the company website states." Every day. our vision spans art and humor. "a Fox channel would be more business-friendly than CNBC. reporters and directors who fulfill our mission. commented Rob Carrick in 16 October's Toronto Globe and Mail. On 8 February 2007. an English sports broadcast or an international box-office hit. That mission
. audacity and compassion. whether in an American television series. Murdoch promised guests at the McGraw-Hill Media Summit that. MISSION STATEMENT The creation and distribution of top-quality news. she added. VISION STATEMENT Just as our assets span the world. printers and producers. News Corp established NewsCore. hundreds of millions of people are entertained and enlightened by the authors and actors. for US$6 billion. an Indian game show. information and innovation. ". That channel leap[s] on every scandal. in exchange to his News shares.from General Motors for Electronics. a global wire service set up to provide news stories to all of News Corp's journalistic outlets.6 billion. sports and entertainment around the world. "we will actively use" the other Dow Jones properties. business is more interesting when treated in a business-like way". an Australian newspaper. or what they think is a scandal". for an estimated $5. operator of the largest American satellite TV system. But. 2007 the corporation spun off a business news channel from Fox News . The channel's lawyers were "reviewing all of the fine details of the contract" between Dow Jones and CNBC.. said Alexis Glick.. On October 15. In 2007 News Corporation reached an agreement to purchase Dow Jones. he said. In 2009.
Global Integration: Being in the media business being a global player helps in economies of scale and attaining entertainment content from all over the world. Technology Focus : News Corp’s focus on Technology has helped it to grow over the years has helped it to diversify and grow KEY SUCCESS AREAS Business Processes
1. 3. Identifying a niche market that will ultimately result in growth. and Dow Jones are respected brands in the
industry which contributes to the success of the company. development and
profitability for example News Corp expanded into the middle east with culture specific programming. Human Capital : Being a 50 year old company News Corp had nurtured high quality human capital which is a factor for its continued success. Brand Name: 20th Century Fox.
KEY FACTORS FOR SUCCESS
1.remains unchanged after half a century of expansion and improvement. 6. 2. Partnerships: News Corp always had a focus on partnerships because the media business is involved in many areas so to enter new segments and markets a company has to go for strategic partnerships.
5. Strong acquisition focus : News Corp has been very aggressive in terms of its acquisition a
major example being the acquisition of Dow Jones. Fox news. Maintaining High Liquidity : News Corp always maintained a high liquidity which helped in fast and aggressive strategic acquisitions. User Involvement: Being a media company the long-term success of the company depends
on the brand value and the user involvement in the products and services of news corp like its films and programs. 3. 4.
Teamwork is more crucial to producing results today than ever before. but its time has passed. and at the same time.
3. The demands on the total organization are too great for a few people at the top to call all the shots. It can be a source of energy and inspiration when people are encountering difficult obstacles. Leadership Rupert Murdoch being at the top level has provided the company with stable and strong leadership that has been a big advantage for News Corp. membership on more than one team is the norm. It can serve as a beacon when people temporarily lose their way.Organizational and human processes 1. and (3) people at the top often withheld crucial strategic information from those lower in the organization in the belief they couldn't handle it.
. It can be a magnet for attracting talented people. and it is unlikely that anyone entering the work force will remain on the first team they join for more than a year at most. In fact the more people who can be involved in shaping the vision. the very nature of teams and their functions are changing rapidly. 2. there have been 3 pervasive patterns that will no longer work in knowledge-based organizations: (1) the primary flow of information was vertical—within departmental walls that were often impermeable. In the past it was typical to go for long periods—even an entire career—as the member of one functional team. Vision A compelling vision is one of a company's greatest assets. the better. Communication
In most organizations. (2) information was hoarded and used as a source of power over others. Command and control" leadership carried many organizations to very high levels of financial performance during periods when competition was not so great and things didn't change very fast. The CEO has a primary responsibility to shape. communicate and sustain the vision. Today. but this need not be a solitary task.
Developing good conflict skills needs to be high on everyone's personal and corporate agendas.e. It has become crystal clear that many of the greatest opportunities for productivity improvement lie at the interfaces of the processes used to produce products and serve customers—and it is fruitless to excel in one process while lagging in others. and acquisitions bring together different cultures and set the stage for major internal conflicts and power struggles. Stakeholders are more informed and frequently more demanding. StrategicAlignment
Process reengineering and systems thinking are moving strategic alignment back to the top of many corporate agendas. it's counterproductive. Conflict Resolution The new economy increases the potential for conflict in virtually every area of organizational life. online) Dow Jones acquisition/integration
. 6. Aligning self-interests with corporate interests is not as simple as it used to be. SWOT ANALYSIS Strengths
• • •
Diversified media and entertainment business Consistent revenue and profit growth Strong library content Weaknesses
No clear successor for CEO Murdoch News Corp leadership maintains a "I know better than you" attitude about everything
Alternative media outlets (i. In fact.5. mergers. Employees are being asked to do more with less—without the promise of job security that existed in the past.. Alliances.
2. Alternatively. This also includes Geographical expansion and diversification.• • • •
Newspaper and broadcasting market growth HDTV growth Multi-year sports agreements Free to air Mobile DTV with 'up sell' opportunities Threats
• • • • •
Increasing use of Digital Video Recorders (DVRs) Growth of online video. according to W. alternative media Economic slowdown in the US Regulatory risks A failure to pursue economic models that stray from 'direct pay’. differentiation or focus in order to achieve a sustainable competitive advantage and long-term success in its chosen areas or industries. Diversification : News Corp has believed in diversification in related fields what
started as a Newspaper company has expanded into a media conglomerate spanning TV . an organization can achieve high growth and profits by creating a Blue Ocean Strategy that breaks the previous valuecost trade off by simultaneously pursuing both differentiation and low cost. Such a corporate strategy answers the questions of "which businesses should we be in?" and "how does being in these businesses create synergy and/or add to the competitive advantage of the corporation as a whole?" Business strategy refers to the aggregated strategies of single business firm or a strategic business unit (SBU) in a diversified corporation.
1. a firm must formulate a business strategy that incorporates either cost leadership. Movies Cable Networks etc.
CORPORATE STRATEGIES Corporate strategy refers to the overarching strategy of the diversified firm. Vertical Integration : News Corp produces the programs and content for its own
. Chan Kim and Renée Mauborgne. According to Michael Porter.
.channels and has in-house agencies providing all the content for its entertainment content. Virtual Corporation : Although News Corp is a Newspaper Company that is offline
but it has made various forays to change into a virtual corporation it has acquired major assets in this regard the most famous being my-space.
Market Focus: News Corp follows a clear market focus they produce content and programs specific to market and consumers for example when people’s taste changed and they started appreciating movies with specialized content News Corp created a company called Fox Searchlight Pictures without diluting the 20th century Fox Brand.
Product Differentiation: News Corp delivers clearly differentiated products in its market for example its Wall Street Journal is considered the official news bulletin of the Wall Street it is much more than a news paper.
Cost Minimization : News Corp due to its scale has been very successful in minimizing costs and due to its content database it saves a lot of cost and due to its scale its cost of production and distribution is very low. Economies of Scale and Synergy : In the media business scale is what matters being an old company News Corp has established and strong distribution networks which helps it to leverage its fixed cost and get profits. 5. 3. Blue Ocean Strategy : News Corp attempted to use the Blue ocean strategy by having a combination of both low cost and differentiation it having various businesses helps in product differentiation and due to its size it can drive huge bargains in terms of cost.
and information technology management strategies. It must operate within a budget but is not at liberty to adjust or create that budget. Since the turn of the millennium. An additional level of strategy called operational strategy was encouraged by Peter Drucker in his theory of management by objectives (MBO). and price setting. engineering organization or IT department. legal strategies. The emphasis is on short and medium term plans and is limited to the domain of each department’s functional responsibility.
. A technology strategy. It is felt that knowledge management systems should be used to share information and create common goals. may include dimensions that are beyond the scope of a single business unit. financial strategies. new product decisions. human resource strategies. and hence to some extent their strategies are derived from broader corporate strategies. This work builds on that of Brown and Eisenhart as well as Christensen and portrays firm strategy. Such change and implementation are usually built into the strategy through the staging and pacing facets. for example. and the seamless integration of strategy formulation and implementation.Functional strategies include marketing strategies. although it is focused on technology as a means of achieving an organization's overall objective(s). An SBU is treated as an internal profit centre by corporate headquarters. supply-chain strategies. Strategic divisions are thought to hamper this process. Operational level strategies are informed by business level strategies which. in turn. This notion of strategy has been captured under the rubric of dynamic strategy. It is very narrow in focus and deals with day-to-day operational activities such as scheduling criteria. as necessarily embracing ongoing strategic change. A strategic business unit is a semi-autonomous unit that is usually responsible for its own budgeting. hiring decisions. Many companies feel that a functional organizational structure is not an efficient way to organize activities so they have reengineered according to processes or SBUs. are informed by corporate level strategies. new product development strategies. Each functional department attempts to do its part in meeting overall corporate objectives. popularized by Carpenter and Sanders's textbook . some firms have reverted to a simpler strategic structure driven by advances in information technology. both business and corporate.
2. Repackaging – Since it has presence in all the continents hit programs in one territory are repackages and sold in other territories it helps a lot as you can expect the audience response for example a famous program who wants to be a millionaire was repackaged and made in India as Kaun banega Crorepati this helped in gaining much needed market share in India and the middle east markets. 2. Supply Chain – News Corp believes in controlling the complete supply chain it produces its own programs which are distributed through its own channels and this is done through its cable networks.
ORGANIZATIONAL STRATEGIES (HR STARATEGIES)
News Corp is famous for using the old school of Human Resource Management so it calls its
. Technology and IT –News Corp makes use of Technology and IT fairly well to generate profits and to derive value all the advancements in movie making screening and the satellite distribution has been possible due to extensive use of Technology and IT. Debt Financing – News Corp has made many acquisitions over the years but if we observe the pattern although news corp enjoys a very good name in the equity markets it has always gone for short term debt financing. Mezzanine Financing – News Corp has gone for mezzanine financing to expand various capacities it treats its subsidiaries like new businesses and they go for individual mezzanine financing its like venture capital funding but on a project level and for an established company. FINANCIAL STRATEGIES 1.OPERATIONAL STRATEGIES 1. 3.
3. New Product development : News Corp uses new product development as a strategic lever it has always been bullish on new product development that has helped an age old media company to be relevant for a changing environment and changing face of the customers. Knowledge Management : New Corp being a knowledge driven organization it believes in knowledge management so it has a huge database of entertainment content developed by it over the years. 2. Pay for Performance : compensation structures at news corp show that they believe more in variable component of the pay which is completely based on the performance of the individual and the business unit. 1. Associations : News Corp when it expands geographically it associates its brand name with a local player or a celebrity to create more awareness and to internalize the brand in the minds of the consumers.HRM as Organizational Department. Brand management : Brand management plays a major role in handling marketing at
News Corp as it’s a service based media company in various geographies handling the brand is very important it has created globally respected brands which it leverages example Fox is a famous and established brand and 20th Century Fox has been there for years now when news corp had to expand in a new segment of intelligent cinema it used the same brand name to create Fox Searchlight Pictures. Freedom to Senior Management : Senior management enjoys complete freedom in terms of
decision making this helps in running each business unit as a separate business this helps in focus and accountability but this has also come under criticism for attitudinal issue swith the bosses.