Environment and Situation Analysis
Increasing attention has been given to the idea of strategy in the management literature for a long time. A firm needs a well-defined sense of its mission, its unique place in its environment and scope and direction of growth, it also needs an approach to management itself that will make full use of its resources and energies to the realization of its mission. (Dobson&Starkey, 1993) As one of the world’s largest media conglomerates-News Corporation, its main aim is to seek appropriate strategies to expand to own multiple forms of businesses, it has already covered almost all the fields in media from news and films to television and internet.
Although The News Corporation is often identified with its head, Rupert Murdoch, who has no very detailed strategic plan, it has made numerous acquisitions throughout the world in the past decades and became the most successful corporate group. This essay is based on one study of News Corporation primarily aims at analyzing the bases of development since 1980s, evaluating strategies the company adopted and forecasting the future strategies and growth trends with different analytical theories and tools. The formulation of strategy is concerned with matching the capabilities of the organization with its environment.
(Dobson&Starkey, 1993) It is very important that an organization considers its environment before beginning the marketing process. In fact, environmental analysis should be continuous and feed all aspects of planning. (marketingteacher. com) Generally speaking, the organizational environment is subdivided into the internal environment, competitive environment and general environment. Modern organizations increasingly find that they are facing a more complex environment, thus PEST analysis is used to analyze the external environment of News Corporation and SWOT analysis are also applied to explore the internal environment.
Many countries in the world place strict regulations on their media industry, when News Corp entered UK, local regulations prevented national newspaper owners from owning more than 20% of a TV company, the Indian government law also limits foreign business and permission is required. According to the regulation of US, any media company is not allowed to take more than 35% of all the families, which is applied to constrain monopoly in the field. (www. edimsum. net) Therefore, the News Corp will have to meet different restrictions in different countries while it is maintaining a relatively fast expansion speed.
Although the regulations are changing under different authorities, the Australian government in 1979 tended to be more open to Murdoch to amend its policy for News Corp’s acquisition. Government rules play an important role in the expansion of News Corp, no matter what kind of policies adopted, Murdoch always has a way out. The success of News Corp in many countries is due to the support of local governments, Murdoch supports political leaders who are helpful for his business. When it entered the UK market, his newspapers supported Thatcher in her election which in turn his acquisition was declared not to violate the government rules.
At the end of the Thatcher era, Murdoch switched his support to Tony Blair. The closeness of his relationship with him and their secret meetings to discuss national policies was to become a political issue in Britain. (en. wikipedia. org) And the situation is the same in US, he also tried various methods to establish new relations with US politicians to extend News Corp’s influence. Murdoch’s closeness with political authorities greatly facilitated his expansion into certain regions. GDP is an important indicator in evaluating the strength of one country.
High GDP countries provide a sound environment for News Corp to enter as their citizens demands more access to the media. News Corp’s entry into Asia in 1993 demonstrated that Asian countries possess potential market for News Corp’s business, especially China and India which are countries with high GDP indicators. Figure1 shows the GDP rankings of major Asian countries in the year of 2005. The 1990s worldwide bank crisis resulted in News Corp facing great difficulty in their finance. The company had to obtain unanimous agreement to the restructuring from 146 banks.
The company was in heavy debt crisis which might lead to bankruptcy. News Corp experienced a heavy cash drain in the market as well as the crisis which caused severe financial problems for many companies worldwide. BSkyB’s success was mainly because of the increasing total subscriptions for its sports channel. People tend to enjoy a sport match in front of the TV instead of stepping out of their houses nowadays. The UK Office for National Statistics reported that around 85 percent of men and women watched television every day in 2002.
The latest Social Trends survey shows that television tops the list of leisure activities for the United Kingdom. (www. turnoffyourtv. com) US also has a similar situation, the department of Labor reported in 2004 that watching TV accounted for about half the leisure time on average for both American men and women, watching TV was third in total daily use of time behind working and sleeping. (www. turnoffyourtv. com) [see Appendix] News Corp makes it an easy way to have access to more live channels that people regard as their part of life.