Frozen Food Products Cost Of Capital Case Study Solution and Analysis
Frozen Food Products Cost Of Capital Case Study Analysis is the biggest publishing business with a highest market share in the China's book retail market. CMP has become a specialized info supplier and a large extensive Science and Technology publishing company through the combination of print media, audio-visual media and the network media.
Although, Frozen Food Products Cost Of Capital Case Study Analysis has invested its 60 years journey smoothly, being a successful publishing home, nevertheless, the altering macro market trends and forces bring specific challenges to the publishing market in general and CMP in specific. These factors include;
• Entrance of the brand-new publishing companies in the market.
• Decreasing growth of the publishing market.
• Market saturation.
• Intro of digital publishing methods
• Improvement of science and technology.
The improvement of the macro markets have raised several concerns to the management at CPM that what could be the future of CMP in this circumstance? Do the long important experience, technical resources and the capabilities of the business could be used to strive for the future advancement unceasingly? How could the business sustain its long term competitive position in future?
Frozen Food Products Cost Of Capital Case Study Solution has specific strengths that can be made use of to reduce the dangers, conquer the weakness and get the opportunities. Strengths of CMP are given as follows;
• The long term experience of Frozen Food Products Cost Of Capital Case Study Analysis in the publishing industry i.e. 60 years permits the business to supply high quality products at a lower cost using its previous experiences.
• The technical resources and abilities generated by its successful journey offer a competitive advantage to CMP.
• Large product portfolioof CMP helps it to diversify its risk and supply high value to its consumers.
• Strong financial position allows the company to think about a number of advancement opportunities without any fear of raising fund externally.
Along with the strengths, the company has particular weak points which could increase restrictions for the business in executing its development program. The weaknesses of Frozen Food Products Cost Of Capital Case Study Analysis are offered as follows;
• Despite of being a science and innovation publishing company, the business still has conventional methods ofpublishing which are not compatible with the growing technological shift.
• CMP highly relies over the Chinese markets for its development. It needs to propose specific expansion plans to prevent its dependence over the Chinese markets to attain long term growth.
Although, the growth of the publishing market is declining given that 2008, affecting Frozen Food Products Cost Of Capital Case Study Solution also, however the development might be restored by availing certain chances presented in the market. The marketplace chances for CMP include;
• The business might likewise present Digital Publishing by utilizing its long term technical experience and a strong customer recognition in the market.
• CMP might consider an advancement program through the expansion towards foreign markets in order to minimize its reliance over Chinese markets by utilizing its huge financial resources.
The changing macro patterns in the market and increasing competition in the publishing market has actually posed particular threats to Frozen Food Products Cost Of Capital Case Study Help including;( Gurel, 2017).
• Introduction of digital publishing i.e. virtual libraries might cause decreasing market share of Frozen Food Products Cost Of Capital Case Study Analysis due to the customer shift towards virtual libraries.
• The presence of large number of competitors in the publishing industry increase the hazard for CMP to lose its competitive position in the market, as rivals can gain a strong consumer base by utilizing particular strategies like aggressive promo, quality items, and so on
• Entryway of brand-new publishing companies in the industry together with existence of high competition increases the hazard of losing the customer base.
Due to lack of data, the financial ratios of CMP could not be determined. It could be examined from the Appendix III that the annual total earnings of Frozen Food Products Cost Of Capital Case Study Help throughout the period 2000-2012 are growing at a high growth rate, showing that the annual demand of the products of CMP is growing and the company is rather efficient in bring in a big number of consumers at a potential rate.
Together with it, the 2nd chart which reveals the yearly growth in the Frozen Food Products Cost Of Capital Case Study Analysis overall properties, reveals that the business is quite efficient in adding value to its properties through its profits. The growth in properties shows that the total worth of the company is likewise increasing with increasing the total profits. (Unknown, 2013).
Another monetary analysis of the company using the offered information might be the analysis concerning the circulation of overall earnings of the company. Huge part of the profits of CMP originates from the sales of its released books i.e. 64% as displayed in the Case Appendix V. The business could move towards other business sectors with a possible development to achieve its future advancement goal.
PESTEL analysis might be conducted to learn the different external forces affecting the performance of the business and the current trends in the external environment of the business. A brief PESTEL analysis of the company is provided as follows; (Alanzi, 2018).
As the publishing sector might have a considerable influence on the frame of mind of individuals about the communist ideology of the government, for that reason, the publishing sector is extremely monitored and directed by the Promotion Department of the Communist Party of China. Therefore, it might be said that the general political forces affecting Frozen Food Products Cost Of Capital Case Study Help organisation are high. The federal government policies relating to the publishing sector are also increasing with the passage of time.
Financial forces impacting the publishing sector in basic and the CMP in specific includesthe costs of paper, the income level of customers, the inflation rate, and the general GDP growth of the nation. All these forces combine effect the demand for the publishing market.
Social and Demographical.
The customer choices are moving towards digital publishing rather than the conventional was of publishing. In this regard, CMP needs to focus on digital publishing to satisfy the changing consumer choices.
Technological forces impacting the CMP consist of the technological advancement in the reading strategies and so on. Enhancement of science and innovation together with the rise of digital publishing could reduce the demand for the CMP items, if certain actions would not be taken quickly.
Ecological forces impacting Frozen Food Products Cost Of Capital Case Study Solution includes the issues of environmental communities over the use of paper in publishing books. The paper used in the books while publishing is needed to be disposable and the ink used while publishing must not be damaging for the environment.
Legal policies for the publishing sector at whole are high. Publishing Ordinance 1997 needs the publishers to be authorized first by the Federal government to be entered in the publishing market.
Industry Analysis (Porter's Five Forces Model).
Porter's 5 Forces Design could be used to analyze the beauty of the publishing industry China. A quick analysis of the Porter's Five Forces is offered as follows;.
Danger of New Entrants.
Hazards of brand-new entrants in the Chinese Publishing Industry is moderate. The prospective growth in the industry tends to draw in brand-new entrants to the publishing market. The existence of intense competition and the requirement of huge capital tends to demotivate new entrants to enter in the market.
Danger of Alternative.
Risk of Substitution is high for the Chinese Publishing Industry. The replacement products for the released documents is the files presented in the virtual libraries on particular sites. The changing consumer preferences towards digital knowing increase the hazard of replacement for the industry.
Competitive rivalry in the publishing market is high. The presence of large number of consumers in the Chinese Publishing Industry like CIP, PTP etc. tends to produce high competitive rivalry for CMP. In addition to it, new entrants are likewise participating in the marketplace increasing the competition for CMP.
Bargaining Power of Provider.
The major providers of the Frozen Food Products Cost Of Capital Case Study Help include the suppliers of the paper for publishing documents. As CMP is the largest publisher in the Chinese Publishing Market, therefore the overall bargaining power of provider for CMP is low.
Bargaining Power of Buyer.
Bargaining power of purchaser in the publishing market is high. Due to the existence of a a great deal of publishers in the Chinese market and the market saturation, the purchasers needs high quality files at competitive prices.
CMP operates in a highly competitive industry with the presence of large number of rivals. The business has a competitive position in the market with the highest market share in the Chinese publishing market. Significant competitors of Frozen Food Products Cost Of Capital Case Study Solution include;.
• Chemical Industry Press (CIP).
• Posts and telecommunication Press (PTP).
Chemical Market Press (CIP).
CIPis one of the close competitors of CMP. Founded in the very same period, CIP publishes comparable type of books. For a big time period, CIP held the biggest market share, and still ranks third and second in various market segments, with a major concentrate on instructional publications. CIP acts as a danger for CMP as it might wean its market share due to its long term competitive background. CIP is concentrated on digital publishing and could wean the marketplace share of Frozen Food Products Cost Of Capital Case Study Help easily in the existing market scenario.
Posts and telecommunication Press (PTP).
It was likewise established in the exact same duration as Frozen Food Products Cost Of Capital Case Study Help and CIP. It is likewise one of the prominent players in the publishing market with an annual overall revenues of RMB 550 million in 2010.
Alternative-1: Expand towards New Markets
• Decreasing dependence over the Chinese markets.
• Increasing variety of Clients
• Development opportunities.
• Preventing the effect of market saturation in the Chinese publishing industry.
• Usage of prospective resources in expansion.
• Risk of failure in new markets.
• Time consuming.
Alernative-2: Introduce Digital Publishing
• Sustaining consumer base.
• Approaching new markets.
• Easy to present using present capabilities.
• Low danger of Failure.
• Low requirement for funds.
• Increased product portfolio supplies high value to clients.
• Competitors in the market by CIP, who has prior focus on the digital publishing.
• Shift of focus from the core service sections to the brand-new one can lead the company to lose demand of its products in the market.
With the deep analysis of the external and internal environment of the company together with the industry analysis and the rival analysis, Alternative 2 is advised to CMP to attain its future advancement. As the preferences are shifting towards digital publishing and the business need an immediate option to prevent the declining market growth. For that reason, introduction of digital publishing might prove to be an immediate solution with low amount of danger for the company. Nevertheless, the business could likewise consider the expansion program after the success of its digital publishing program.
In order to introduce digital publishing in its product portfolio, the company must first collects the information related to the consumer demand, the potential markets, the federal government policies and the data related to the rivals presented in the market. If the initial offering shows a success, the company ought to go for the other markets. In this way the company would be able to implement its digital publishing program.
Although, the development of the publishing industry is declining considering that 2008, showing a threat to the business's long term existence, however the situation can be controlled by considering a development strategy in the future. The business could consider presenting digital publishingin its existing market to implement its development program at immediate basis and to prevent the threat of failure for entryway in the brand-new markets.