Random House: Shifting to E-Books in a Globalized World SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Random House: Shifting to E-Books in a Globalized World
The publisher Random House, a fully owned subsidiary of the German family company Bertelsmann SE & Co. KgaA, faces significant changes in its markets and internal structure. While printed books have been the company's core competence from its earliest years, with the advent of the Internet, customers, especially in the West, are beginning to prefer electronic books. Will printed books be completely replaced by digital ones, or will e-books remain a niche market? How will this development affect production, distribution and marketing? Will Random House be able to compete for authors and sales with such online e-book giants as Amazon? The imminent merger with the U.K. publishing house Penguin also provides an opportunity and incentive to expand Random House's operations into China as part of the internationalization strategy of the parent company. A post-merger integration plan must be established since the two publishers' regional presences and product offerings are in part complementary. How can the new Penguin Random House strengthen its position as the world's biggest and most successful publisher? Thorsten Knauer; Andrea Schroer are affiliated University Muenster
Authors :: Sarah Bickert, Volker Diestegge, Thorsten Knauer, Katja Moslang
Swot Analysis of "Random House: Shifting to E-Books in a Globalized World" written by Sarah Bickert, Volker Diestegge, Thorsten Knauer, Katja Moslang includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Random Books facing as an external strategic factors. Some of the topics covered in Random House: Shifting to E-Books in a Globalized World case study are - Strategic Management Strategies, Strategy and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Random House: Shifting to E-Books in a Globalized World casestudy better are - – there is increasing trade war between United States & China, increasing government debt because of Covid-19 spendings, competitive advantages are harder to sustain because of technology dispersion, customer relationship management is fast transforming because of increasing concerns over data privacy, cloud computing is disrupting traditional business models, technology disruption, supply chains are disrupted by pandemic ,
banking and financial system is disrupted by Bitcoin and other crypto currencies, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Random House: Shifting to E-Books in a Globalized World
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Random House: Shifting to E-Books in a Globalized World case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Random Books, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Random Books 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 Random House: Shifting to E-Books in a Globalized World can be done for the following purposes –
1. Strategic planning using facts provided in Random House: Shifting to E-Books in a Globalized World case study
2. Improving business portfolio management of Random Books
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Random Books
Strengths Random House: Shifting to E-Books in a Globalized World | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Random Books in Random House: Shifting to E-Books in a Globalized World Harvard Business Review case study are -
Strong track record of project management
– Random Books is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High switching costs
– The high switching costs that Random Books has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Cross disciplinary teams
– Horizontal connected teams at the Random Books 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 Leadership & Managing People field
– Random Books 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 Random Books in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Diverse revenue streams
– Random Books is present in almost all the verticals within the industry. This has provided firm in Random House: Shifting to E-Books in a Globalized World case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Superior customer experience
– The customer experience strategy of Random Books in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Successful track record of launching new products
– Random Books has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Random Books has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Low bargaining power of suppliers
– Suppliers of Random Books in the sector have low bargaining power. Random House: Shifting to E-Books in a Globalized World has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Random Books to manage not only supply disruptions but also source products at highly competitive prices.
Analytics focus
– Random Books 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 Sarah Bickert, Volker Diestegge, Thorsten Knauer, Katja Moslang 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.
High brand equity
– Random Books has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Random Books to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Sustainable margins compare to other players in Leadership & Managing People industry
– Random House: Shifting to E-Books in a Globalized World firm has clearly differentiated products in the market place. This has enabled Random Books to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Random Books to invest into research and development (R&D) and innovation.
Learning organization
- Random Books 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 Random Books is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Random House: Shifting to E-Books in a Globalized World Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses Random House: Shifting to E-Books in a Globalized World | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Random House: Shifting to E-Books in a Globalized World are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Random House: Shifting to E-Books in a Globalized World, is just above the industry average. Random Books needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Workers concerns about automation
– As automation is fast increasing in the segment, Random Books needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Slow to strategic competitive environment developments
– As Random House: Shifting to E-Books in a Globalized World HBR case study mentions - Random Books takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Skills based hiring
– The stress on hiring functional specialists at Random Books has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
High operating costs
– Compare to the competitors, firm in the HBR case study Random House: Shifting to E-Books in a Globalized World 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 Random Books 's lucrative customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Random House: Shifting to E-Books in a Globalized World, it seems that the employees of Random Books 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Random House: Shifting to E-Books in a Globalized World, in the dynamic environment Random Books has struggled to respond to the nimble upstart competition. Random Books has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Random Books is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Random House: Shifting to E-Books in a Globalized World can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Aligning sales with marketing
– It come across in the case study Random House: Shifting to E-Books in a Globalized World that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Random House: Shifting to E-Books in a Globalized World can leverage the sales team experience to cultivate customer relationships as Random Books is planning to shift buying processes online.
Products dominated business model
– Even though Random Books has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Random House: Shifting to E-Books in a Globalized World should strive to include more intangible value offerings along with its core products and services.
Slow decision making process
– As mentioned earlier in the report, Random Books 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. Random Books 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.
Opportunities Random House: Shifting to E-Books in a Globalized World | 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 Random House: Shifting to E-Books in a Globalized World 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 Random Books 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. Random Books can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Developing new processes and practices
– Random Books can develop new processes and procedures in Leadership & Managing People 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.
Buying journey improvements
– Random Books can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Random House: Shifting to E-Books in a Globalized World 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.
Building a culture of innovation
– managers at Random Books can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Leadership & Managing People segment.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Random Books is facing challenges because of the dominance of functional experts in the organization. Random House: Shifting to E-Books in a Globalized World case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
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 Random Books in the consumer business. Now Random Books can target international markets with far fewer capital restrictions requirements than the existing system.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Random Books can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Better consumer reach
– The expansion of the 5G network will help Random Books to increase its market reach. Random Books 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.
Using analytics as competitive advantage
– Random Books 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 Random House: Shifting to E-Books in a Globalized World - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Random Books to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Manufacturing automation
– Random Books can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Random Books to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Random Books to hire the very best people irrespective of their geographical location.
Creating value in data economy
– The success of analytics program of Random Books has opened avenues for new revenue streams for the organization in the industry. This can help Random Books to build a more holistic ecosystem as suggested in the Random House: Shifting to E-Books in a Globalized World case study. Random Books can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats Random House: Shifting to E-Books in a Globalized World External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Random House: Shifting to E-Books in a Globalized World are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Random Books with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
High dependence on third party suppliers
– Random Books 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Random House: Shifting to E-Books in a Globalized World, Random Books may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
Technology acceleration in Forth Industrial Revolution
– Random Books has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Random Books needs to keep up with the evolution of technology in the Leadership & Managing People 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.
Environmental challenges
– Random Books needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Random Books can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Random Books can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing wage structure of Random Books
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Random Books.
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 Random Books in the Leadership & Managing People sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Random Books 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.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Random Books.
Consumer confidence and its impact on Random Books 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Random Books in the Leadership & Managing People industry. The Leadership & Managing People 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.
Weighted SWOT Analysis of Random House: Shifting to E-Books in a Globalized World 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 Random House: Shifting to E-Books in a Globalized World 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 Random House: Shifting to E-Books in a Globalized World 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 Random House: Shifting to E-Books in a Globalized World 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 Random House: Shifting to E-Books in a Globalized World 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 Random Books needs to make to build a sustainable competitive advantage.
