H J Heinz Estimating The Cost Of Capital In Uncertain Times Case Study Solution and Analysis
Introduction
H J Heinz Estimating The Cost Of Capital In Uncertain Times Case Study Help is the biggest publishing business with a greatest market share in the China's book retail market. CMP has ended up being a specialized info provider and a big thorough Science and Innovation publishing business through the combination of print media, audio-visual media and the network media.
Vital Issues
CMP has actually invested its 60 years journey efficiently, being an effective publishing house, nevertheless, the changing macro market trends and forces bring particular challenges to the publishing market in general and H J Heinz Estimating The Cost Of Capital In Uncertain Times Case Study Analysis in particular. These factors include;
• Entrance of the brand-new publishing companies in the industry.
• Declining growth of the publishing market.
• Market saturation.
• Intro of digital publishing methods
• Improvement of science and innovation.
The change of the macro markets have raised several concerns to the management at CPM that what could be the future of CMP in this situation? Do the long valuable experience, technical resources and the capabilities of the business could be used to strive for the future development unceasingly? How could the company sustain its long term competitive position in future?
Situational Analysis
Internal Analysis
SWOT Analysis
Strengths
H J Heinz Estimating The Cost Of Capital In Uncertain Times Case Study Help has particular strengths that can be made use of to reduce the threats, conquer the weak point and get the opportunities. Strengths of CMP are provided as follows;
• The long term experience of H J Heinz Estimating The Cost Of Capital In Uncertain Times Case Study Analysis in the publishing market i.e. 60 years enables the company to supply high quality items at a lower cost utilizing its prior experiences.
• The technical resources and capabilities generated by its effective journey provide a competitive advantage to CMP.
• Huge item portfolioof CMP helps it to diversify its threat and provide high worth to its consumers.
• Strong financial position enables the business to consider numerous development chances with no worry of raising fund externally.
Weak points
Together with the strengths, the business has certain weak points which might increase constraints for the company in implementing its advancement program. The weaknesses of H J Heinz Estimating The Cost Of Capital In Uncertain Times Case Study Solution are given as follows;
• Despite of being a science and innovation publishing company, the business still has standard ways ofpublishing which are not compatible with the growing technological shift.
• CMP extremely relies over the Chinese markets for its growth. It must propose specific expansion plans to prevent its reliance over the Chinese markets to accomplish long term development.
Opportunities
The development of the publishing industry is decreasing given that 2008, impacting H J Heinz Estimating The Cost Of Capital In Uncertain Times Case Study Analysis as well, however the growth could be revived by availing particular opportunities provided in the market. The market opportunities for CMP include;
• The business could also present Digital Publishing by using its long term technical experience and a strong customer recognition in the market.
• CMP could think about a development program through the expansion towards foreign markets in order to decrease its dependence over Chinese markets by utilizing its large financial resources.
Risks
The altering macro patterns in the market and increasing competitors in the publishing industry has actually postured particular hazards to H J Heinz Estimating The Cost Of Capital In Uncertain Times Case Study Help consisting of;( Gurel, 2017).
• Introduction of digital publishing i.e. digital libraries could result in decreasing market share of H J Heinz Estimating The Cost Of Capital In Uncertain Times Case Study Analysis due to the consumer shift towards virtual libraries.
• The presence of large number of rivals in the publishing industry increase the danger for CMP to lose its competitive position in the market, as competitors can get a strong customer base by utilizing certain methods like aggressive promotion, quality products, etc.
• Entrance of brand-new publishing companies in the market along with existence of high competitors increases the risk of losing the client base.
Financial Analysis.
Due to absence of information, the financial ratios of CMP might not be calculated. It could be analyzed from the Appendix III that the annual total revenues of H J Heinz Estimating The Cost Of Capital In Uncertain Times Case Study Analysis during the duration 2000-2012 are growing at a high development rate, revealing that the annual demand of the products of CMP is growing and the business is quite efficient in attracting a large number of clients at a potential rate.
In addition to it, the 2nd chart which shows the annual growth in the H J Heinz Estimating The Cost Of Capital In Uncertain Times Case Study Analysis overall possessions, reveals that the company is quite efficient in adding value to its properties through its earnings. The development in properties reveals that the overall worth of the firm is likewise increasing with increasing the total profits. (Unidentified, 2013).
Another financial analysis of the company using the provided data might be the analysis concerning the distribution of total revenues of the company. Huge part of the incomes of CMP comes from the sales of its published books i.e. 64% as shown in the Case Appendix V. The company might move towards other service sections with a potential development to achieve its future advancement goal.
PESTEL Analysis
PESTEL analysis could be carried out to discover the various external forces affecting the efficiency of the business and the recent patterns in the external environment of the business. A short PESTEL analysis of the business is given as follows; (Alanzi, 2018).
Political.
As the publishing sector might have a considerable impact 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 Publicity Department of the Communist Celebration of China. Therefore, it might be stated that the total political forces impacting H J Heinz Estimating The Cost Of Capital In Uncertain Times Case Study Analysis business are high. The federal government policies relating to the publishing sector are also increasing with the passage of time.
Economical.
Economic forces affecting the publishing sector in general and the CMP in particular includesthe costs of paper, the income level of consumers, the inflation rate, and the general GDP development of the country. All these forces combine effect the need for the publishing market.
Social and Demographical.
Social and demographical forces consist of the population growth, the consumer's choices towards reading helpful products etc. China has the greatest population in the world with a high population development, showing the increasing variety of customers of the H J Heinz Estimating The Cost Of Capital In Uncertain Times Case Study Analysis. The customer choices are shifting towards digital publishing rather than the standard was of publishing. In this regard, CMP ought to concentrate on digital publishing to satisfy the altering customer preferences.
Technological.
Technological forces affecting the CMP consist of the technological advancement in the reading techniques etc. Enhancement of science and innovation in addition to the rise of digital publishing could minimize the need for the CMP items, if specific actions would not be taken soon.
Environmental.
Environmental forces impacting H J Heinz Estimating The Cost Of Capital In Uncertain Times Case Study Analysis consists of the concerns of ecological communities over the use of paper in publishing books. The paper used in the books while publishing is required to be disposable and the ink used while publishing should not be hazardous for the environment.
Legal.
Legal guidelines for the publishing sector at whole are high. The legal policies concerning the publishing sector is controlled by the General Administration of Press and Publication. Publishing Regulation 1997 needs the publishers to be authorized first by the Federal government to be gone into in the publishing market. The ordinance prohibits direct involvement of foreign entities and individuals in the publishing sector.
Industry Analysis (Porter's 5 Forces Model).
Porter's Five Forces Model might be used to analyze the appearance of the publishing industry China. A brief analysis of the Porter's 5 Forces is offered as follows;.
Danger of New Entrants.
Hazards of brand-new entrants in the Chinese Publishing Market is moderate. The prospective development in the market tends to draw in brand-new entrants to the publishing industry. Nevertheless, the existence of extreme competitors and the requirement of big capital tends to demotivate brand-new entrants to go into in the market.
Risk of Alternative.
Threat of Alternative is high for the Chinese Publishing Industry. The replacement products for the published files is the files presented in the virtual libraries on particular websites. The changing consumer preferences towards digital learning increase the risk of substitution for the market.
Competitive Competition.
Competitive competition in the publishing industry is high. The existence of a great deal of consumers in the Chinese Publishing Market like CIP, PTP etc. tends to produce high competitive rivalry for CMP. Together with it, new entrants are likewise participating in the market increasing the competition for CMP.
Bargaining Power of Supplier.
The significant providers of the H J Heinz Estimating The Cost Of Capital In Uncertain Times Case Study Analysis include the providers of the paper for releasing files. As CMP is the biggest publisher in the Chinese Publishing Market, for that reason the overall bargaining power of provider for CMP is low.
Bargaining Power of Buyer.
Negotiating power of purchaser in the publishing industry is high. Due to the presence of a a great deal of publishers in the Chinese market and the market saturation, the buyers requires high quality files at competitive rates.
Rivals Analysis.
CMP runs in an extremely competitive market with the presence of large number of competitors. The business has a competitive position in the market with the greatest market share in the Chinese publishing market. Major rivals of H J Heinz Estimating The Cost Of Capital In Uncertain Times Case Study Analysis include;.
• Chemical Market Press (CIP).
• Posts and telecommunication Press (PTP).
Chemical Market Press (CIP).
CIP acts as a hazard for CMP as it might wean its market share due to its long term competitive background. CIP is focused on digital publishing and might wean the market share of CMP easily in the current market scenario.
Posts and telecommunication Press (PTP).
It was also founded in the exact same period as H J Heinz Estimating The Cost Of Capital In Uncertain Times Case Study Solution and CIP. It is likewise one of the prominent gamers in the publishing market with a yearly overall earnings of RMB 550 million in 2010.
Alternatives
Alternative-1: Expand towards New Markets
Pros
• Reducing dependence over the Chinese markets.
• Increasing variety of Consumers
• Development opportunities.
• Avoiding the effect of market saturation in the Chinese publishing market.
Cons
• Usage of potential resources in expansion.
• Risk of failure in brand-new markets.
• Time consuming.
Alernative-2: Present Digital Publishing
Pros
• Sustaining consumer base.
• Approaching brand-new markets.
• Easy to introduce using current abilities.
• Low risk of Failure.
• Low requirement for funds.
• Increased product portfolio provides high value to clients.
Cons
• Competitors in the market by CIP, who has prior focus on the digital publishing.
• Shift of focus from the core service sections to the new one can lead the business to lose need of its products in the market.
Suggestions
With the deep analysis of the external and internal environment of the business together with the market analysis and the competitor analysis, Alternative 2 is suggested to CMP to accomplish its future advancement. As the preferences are shifting towards digital publishing and the company require an instant service to avoid the declining industry development. Introduction of digital publishing could show to be an instant service with low quantity of threat for the company. The company could also consider the growth program after the success of its digital publishing program.
Application
In order to introduce digital publishing in its item portfolio, the company should initially gathers the data related to the customer demand, the possible markets, the federal government policies and the data related to the rivals presented in the market. If the initial offering shows a success, the business needs to go for the other markets. In this way the business would be able to implement its digital publishing program.
Conclusion
Although, the development of the publishing industry is decreasing since 2008, showing a danger to the company's long term existence, but the circumstance can be managed by thinking about a development strategy in the future. The company might consider presenting digital publishingin its existing market to execute its advancement program at immediate basis and to avoid the risk of failure for entryway in the new markets.
