Reader’s Digest
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Transcript of Reader’s Digest
READER’S DIGESTGROUP FIVE
KEY TERM• Mission “we are a global multi-brand and marketing company that educates, entertains
and connects audiences around the world. We are dedicated to providing our customers with the inspiration, ideas and tools that simplify and enrich their lives”• -Vision “create the world’s largest multiplatform communities based on branded content”• -Primary activity: produce monthly subscription magazine filled with meaningful stories
that are not necessarily news-worthy but memorable • -support activities: maintain a web presence in order to attract younger consumer,
control and seek advertisement revenue
FINANCIAL ANALYSIS• 2007 & 2008 liquidity and solvency ratios of RDA• Current ratio = current assets/current liabilities
2007: .86 2008: .83• Quick ratio = (current assets - inventory)/current liabilities
2007: .65 2008: .63• Debt-to-equity ratio = total debt/total equity
2007: 2.91 2008: 8.3• Debt-to-assets ratio = total debt/total assets
2007: .45 2008: .53
EXTERNAL ANALYSIS
Intensity of rivalry among
competitors in the
industry: high
Threat of new
entrants: high
Bargaining power of buyers:
high
Threat of substitute products
and services:
high
Bargaining power of suppliers:
low Threat of new entrants: high Costs to enter are little on time and
money Little protection for key technologies Low product differentiation
Bargaining newer of buyers: high Low switching cost High number of buyers, but they are
concentrated into very few categories Big importance of the each buyer
categories
Threat of Substitute Products: highBargaining power of suppliers: low Low uniqueness in the services
Intensity of rivalry among competitors in the industry: high
Numerous of equally balanced competitors
Slow industry growth Lack of differentiation or switching
costs
EXTERNAL ANALYSIS• Stage of industry• Decline stage
• no assurances that Reader’s Digest will generate sufficient cash flows from operations to fund day-to-day
• may result in bankruptcy or liquidation
EXTERNAL ANALYSIS• Demographic
• Aging population • 53 median
• Unable to increase advertising revenue: 18-35 not reached
• Socioculture • Greater concern for health and diet • Greater concern for the environment
• Political/Legal • Committee of Advertising Code
• UK dealing with abusing advertising
EXTERNAL ANALYSIS• Technological
• Emergence of internet technology • Wireless technology
• Economic • Print is “dead”
• Global • Emergence in economies all over the world
• Philippines, Malaysia, Canada, Argentina, etc.. Reader’s Digest Korea
VRIO ANALYSIS• Value: brand value, readers’ foundation• Rarity: one of the most popular magazine around the world• Imitation: long history• Organization: how to organize reader’s digest’s advantages?
SWOT ANALYSISStrengthBest-Selling, Worldwide, Readable, fiction
WeaknessOther magazines, internet
SWOT
READER’S DIGEST VS COMPETITORS
• Reader’s Digest strategy • Divesting business • Reconfiguring the RDA web presence • Redesigning the flagship magazine • Continuing global expansion • Launch new magazines
• Launch growth initiatives, reduce costs and transform company culture worked in opposite ways with reduced consumer spending and a drop in magazine advertising worldwide
• Customer-centered approach • Less advertising money for Reader’s Digest
• Horizontal diversification• Related business • Geographic diversification
READER’S DIGEST VS COMPETITORS
Business Growth Rate
Relative position (market share)
Reader’s Digest US
Readers Digest Int.
Music and Videos
Food and Gift
Firm Analysis • Divestitures
• Sold QSP, Inc. • Fundraising business
• Taste of Home Entertaining • Books are Fun • Gareth Stevens • World Almanac Education
Library • Joint ventures
• ChangeOne, online weight loss program
• Everyday with Rachel Ray• Acquisitions
• In 2000, Reiman Publications • Reduced sweepstakes and
magazine sales • Allrecipes.com
STRATEGIC RECOMMENDATIONS
• Minimize Reader’s Digest US, Focus on Reader’s Digest International • Increase web presence
• PDF version of magazine • Interactive web activities for younger generations
• Separate the variety of subjects in Reader’s Digest to different magazine • Health and wellness• Food and entertainment • Personal stories
• Increase revenue through advertising is a must
THANK YOU FOR YOUR PATIENCE!
GROUP FIVE