Describes the 1990s consolidation on the newsprint industry. Questions whether consolidation will ever deliver on its promise. Whereas some industry observers maintain that the effects of consolidation are already visible, others argue that further consolidation is necessary. Others, however, claim that because newsprint is a commodity and firms compete on the basis of price, consolidation will not restore industry profitability. Data to build individual firm and industry supply curves for 2001 is available upon further request. Illustrates the transition from a perfectly competitive industry (demand and supply) to oligopolistic competition (Porter's five forces). To obtain further exhibits, please contact HBSP customer service for more information.
Authors :: Ramon Casadesus-Masanell, James Pyke, Nabil Al-Najjar
Swot Analysis of "Newsprint Industry" written by Ramon Casadesus-Masanell, James Pyke, Nabil Al-Najjar includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Consolidation Newsprint facing as an external strategic factors. Some of the topics covered in Newsprint Industry case study are - Strategic Management Strategies, Economy and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Newsprint Industry casestudy better are - – increasing transportation and logistics costs, there is backlash against globalization, talent flight as more people leaving formal jobs, challanges to central banks by blockchain based private currencies, wage bills are increasing, competitive advantages are harder to sustain because of technology dispersion, increasing household debt because of falling income levels,
there is increasing trade war between United States & China, increasing energy prices, etc
Introduction to SWOT Analysis of Newsprint Industry
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Newsprint Industry case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Consolidation Newsprint, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Consolidation Newsprint operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Newsprint Industry can be done for the following purposes –
1. Strategic planning using facts provided in Newsprint Industry case study
2. Improving business portfolio management of Consolidation Newsprint
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Consolidation Newsprint
Strengths Newsprint Industry | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Consolidation Newsprint in Newsprint Industry Harvard Business Review case study are -
Effective Research and Development (R&D)
– Consolidation Newsprint has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Newsprint Industry - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Low bargaining power of suppliers
– Suppliers of Consolidation Newsprint in the sector have low bargaining power. Newsprint Industry has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Consolidation Newsprint to manage not only supply disruptions but also source products at highly competitive prices.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Consolidation Newsprint digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Consolidation Newsprint has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Learning organization
- Consolidation Newsprint is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Consolidation Newsprint is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Newsprint Industry Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Innovation driven organization
– Consolidation Newsprint is one of the most innovative firm in sector. Manager in Newsprint Industry Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Training and development
– Consolidation Newsprint has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Newsprint Industry Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Organizational Resilience of Consolidation Newsprint
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Consolidation Newsprint does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High brand equity
– Consolidation Newsprint has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Consolidation Newsprint to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Superior customer experience
– The customer experience strategy of Consolidation Newsprint in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Analytics focus
– Consolidation Newsprint is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Ramon Casadesus-Masanell, James Pyke, Nabil Al-Najjar can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Cross disciplinary teams
– Horizontal connected teams at the Consolidation Newsprint are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Ability to lead change in Strategy & Execution field
– Consolidation Newsprint is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Consolidation Newsprint in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses Newsprint Industry | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Newsprint Industry are -
High operating costs
– Compare to the competitors, firm in the HBR case study Newsprint Industry has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Consolidation Newsprint 's lucrative customers.
Lack of clear differentiation of Consolidation Newsprint products
– To increase the profitability and margins on the products, Consolidation Newsprint needs to provide more differentiated products than what it is currently offering in the marketplace.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Consolidation Newsprint supply chain. Even after few cautionary changes mentioned in the HBR case study - Newsprint Industry, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Consolidation Newsprint vulnerable to further global disruptions in South East Asia.
Low market penetration in new markets
– Outside its home market of Consolidation Newsprint, firm in the HBR case study Newsprint Industry needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High cash cycle compare to competitors
Consolidation Newsprint has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Slow decision making process
– As mentioned earlier in the report, Consolidation Newsprint has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Consolidation Newsprint even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Need for greater diversity
– Consolidation Newsprint has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Interest costs
– Compare to the competition, Consolidation Newsprint has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Increasing silos among functional specialists
– The organizational structure of Consolidation Newsprint is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Consolidation Newsprint needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Consolidation Newsprint to focus more on services rather than just following the product oriented approach.
High bargaining power of channel partners
– Because of the regulatory requirements, Ramon Casadesus-Masanell, James Pyke, Nabil Al-Najjar suggests that, Consolidation Newsprint is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Newsprint Industry, it seems that the employees of Consolidation Newsprint don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Opportunities Newsprint Industry | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Newsprint Industry are -
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Consolidation Newsprint to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Consolidation Newsprint can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Learning at scale
– Online learning technologies has now opened space for Consolidation Newsprint to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Better consumer reach
– The expansion of the 5G network will help Consolidation Newsprint to increase its market reach. Consolidation Newsprint will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Consolidation Newsprint in the consumer business. Now Consolidation Newsprint can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Consolidation Newsprint can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Consolidation Newsprint can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Buying journey improvements
– Consolidation Newsprint can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Newsprint Industry suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Manufacturing automation
– Consolidation Newsprint can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Low interest rates
– Even though inflation is raising its head in most developed economies, Consolidation Newsprint can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Consolidation Newsprint can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Creating value in data economy
– The success of analytics program of Consolidation Newsprint has opened avenues for new revenue streams for the organization in the industry. This can help Consolidation Newsprint to build a more holistic ecosystem as suggested in the Newsprint Industry case study. Consolidation Newsprint can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– Consolidation Newsprint has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Newsprint Industry - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Consolidation Newsprint to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats Newsprint Industry External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Newsprint Industry are -
High dependence on third party suppliers
– Consolidation Newsprint high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Consumer confidence and its impact on Consolidation Newsprint demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Technology acceleration in Forth Industrial Revolution
– Consolidation Newsprint has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Consolidation Newsprint needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Newsprint Industry, Consolidation Newsprint may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Consolidation Newsprint with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Shortening product life cycle
– it is one of the major threat that Consolidation Newsprint is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Consolidation Newsprint in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Consolidation Newsprint will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Consolidation Newsprint in the Strategy & Execution sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Consolidation Newsprint can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Newsprint Industry .
Regulatory challenges
– Consolidation Newsprint needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
Stagnating economy with rate increase
– Consolidation Newsprint can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Consolidation Newsprint business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Newsprint Industry Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Newsprint Industry needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Newsprint Industry is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Newsprint Industry is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Newsprint Industry is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Consolidation Newsprint needs to make to build a sustainable competitive advantage.