Identifying Firm Capital Structure Case Study Solution and Analysis
Introduction
Identifying Firm Capital Structure Case Study Analysis is the biggest publishing company with a highest market share in the China's book retail market. CMP has become a specialized info service provider and a big comprehensive Science and Innovation publishing company through the combination of print media, audio-visual media and the network media.
Vital Problems
Although, Identifying Firm Capital Structure Case Study Analysis has actually invested its 60 years journey efficiently, being a successful publishing home, nevertheless, the changing macro market patterns and forces bring particular difficulties to the publishing industry in basic and CMP in particular. These aspects consist of;
• Entryway of the brand-new publishing companies in the market.
• Declining growth of the publishing market.
• Market saturation.
• Introduction of digital publishing techniques
• Improvement of science and technology.
The change of the macro markets have raised several questions to the management at CPM that what could be the future of CMP in this situation? Do the long important experience, technical resources and the abilities of the business could be utilized to strive for the future advancement unceasingly? How could the business sustain its long term competitive position in future?
Situational Analysis
Internal Analysis
SWOT Analysis
Strengths
Identifying Firm Capital Structure Case Study Help has certain strengths that can be made use of to decrease the hazards, get rid of the weakness and avail the opportunities. Strengths of CMP are provided as follows;
• The long term experience of Identifying Firm Capital Structure Case Study Analysis in the publishing market i.e. 60 years permits the company to provide high quality products at a lower cost using its prior experiences.
• The technical resources and abilities created by its successful journey offer a competitive benefit to CMP.
• Large item portfolioof CMP assists it to diversify its danger and offer high worth to its clients.
• Strong monetary position permits the company to consider several development chances with no fear of raising fund externally.
Weak points
In addition to the strengths, the business has specific weaknesses which could increase constraints for the company in implementing its advancement program. The weaknesses of Identifying Firm Capital Structure Case Study Analysis are given as follows;
• Despite of being a science and technology publishing company, the company still has traditional methods ofpublishing which are not suitable with the growing technological shift.
• CMP highly relies over the Chinese markets for its growth. It needs to propose particular expansion strategies to prevent its reliance over the Chinese markets to attain long term growth.
Opportunities
Although, the growth of the publishing industry is declining considering that 2008, affecting Identifying Firm Capital Structure Case Study Analysis as well, but the growth might be revived by availing specific chances provided in the market. The marketplace chances for CMP include;
• The company could likewise present Digital Publishing by utilizing its long term technical experience and a strong customer acknowledgment in the market.
• CMP could consider an advancement program through the expansion towards foreign markets in order to reduce its dependence over Chinese markets by utilizing its vast financial resources.
Threats
The altering macro patterns in the market and increasing competitors in the publishing industry has posed certain dangers to Identifying Firm Capital Structure Case Study Analysis consisting of;( Gurel, 2017).
• Introduction of digital publishing i.e. digital libraries could cause declining market share of Identifying Firm Capital Structure Case Study Solution due to the customer shift towards virtual libraries.
• The presence of a great deal of rivals in the publishing industry increase the risk for CMP to lose its competitive position in the market, as rivals can gain a strong consumer base by utilizing particular methods like aggressive promo, quality items, and so on
• Entryway of new publishing companies in the market along with presence of high competitors increases the danger of losing the customer base.
Financial Analysis.
The company has a quite competitive financial efficiency. Due to absence of information, the monetary ratios of CMP might not be calculated. The overall monetary efficiency of the company might be analyzed by using the graphs provided in the case Appendices. It could be examined from the Appendix III that the yearly total earnings of CMP during the period 2000-2012 are growing at a high development rate, showing that the annual need of the products of Identifying Firm Capital Structure Case Study Analysis is growing and the company is quite efficient in drawing in a a great deal of consumers at a prospective price.
Together with it, the second graph which shows the annual development in the Identifying Firm Capital Structure Case Study Analysis overall properties, shows that the business is rather efficient in adding worth to its assets through its incomes. The development in assets shows that the total value of the company is likewise increasing with increasing the total earnings. (Unidentified, 2013).
Another financial analysis of the business utilizing the given information could be the analysis relating to the distribution of total earnings of the business. Major part of the earnings of CMP comes from the sales of its published books i.e. 64% as displayed in the Case Appendix V. The company might move towards other organisation sectors with a potential development to accomplish its future development objective.
PESTEL Analysis
PESTEL analysis could be carried out to discover the numerous external forces impacting the performance of the company and the recent trends in the external environment of the company. A brief PESTEL analysis of the company is provided as follows; (Alanzi, 2018).
Political.
As the publishing sector might have a substantial effect on the mindset of the people about the communist ideology of the federal government, therefore, the publishing sector is extremely supervised and directed by the Publicity Department of the Communist Party of China. Therefore, it could be said that the overall political forces impacting Identifying Firm Capital Structure Case Study Help business are high. The federal government policies regarding the publishing sector are also increasing with the passage of time.
Affordable.
Financial forces affecting the publishing sector in basic and the CMP in specific includesthe costs of paper, the earnings level of consumers, the inflation rate, and the total GDP development of the country. All these forces integrate impact the need for the publishing market.
Social and Demographical.
Social and demographical forces consist of the population development, the customer's choices towards checking out informative materials and so on. China has the greatest population worldwide with a high population growth, showing the increasing number of customers of the Identifying Firm Capital Structure Case Study Solution. However, the customer preferences are shifting towards digital publishing instead of the traditional was of publishing. In this regard, CMP needs to concentrate on digital publishing to satisfy the changing customer preferences.
Technological.
Technological forces impacting 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 might lower the demand for the CMP products, if particular actions would not be taken quickly.
Environmental.
Ecological forces affecting Identifying Firm Capital Structure Case Study Solution consists of the issues of ecological communities over the usage 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 harmful for the environment.
Legal.
Legal guidelines for the publishing sector at whole are high. The legal policies relating to the publishing sector is managed by the General Administration of Press and Publication. Publishing Regulation 1997 needs the publishers to be approved first by the 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 could be utilized to examine the appearance of the publishing industry China. A brief analysis of the Porter's Five Forces is given as follows;.
Threat of New Entrants.
Dangers of new entrants in the Chinese Publishing Industry is moderate. The prospective development in the industry tends to bring in new entrants to the publishing industry. Nevertheless, the presence of intense competition and the requirement of substantial capital tends to demotivate brand-new entrants to enter in the market.
Danger of Substitution.
Risk of Alternative is high for the Chinese Publishing Market. The replacement products for the published files is the documents presented in the digital libraries on certain websites. The changing customer choices towards digital knowing increase the risk of alternative for the industry.
Competitive Competition.
Competitive competition in the publishing industry is high. The presence of large number of customers in the Chinese Publishing Market like CIP, PTP and so on tends to produce high competitive competition for CMP. Together with it, brand-new entrants are likewise participating in the market increasing the competitors for CMP.
Bargaining Power of Supplier.
The major suppliers of the Identifying Firm Capital Structure Case Study Solution include the suppliers of the paper for releasing files. As CMP is the biggest publisher in the Chinese Publishing Market, for that reason the general bargaining power of supplier for CMP is low.
Bargaining Power of Buyer.
Haggling power of buyer 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 costs.
Competitors Analysis.
CMP operates in an extremely competitive industry with the presence of a great deal of competitors. Nevertheless, the business has a competitive position in the market with the greatest market share in the Chinese publishing market. Major rivals of Identifying Firm Capital Structure Case Study Help include;.
• Chemical Market Press (CIP).
• Posts and telecommunication Press (PTP).
Chemical Market Press (CIP).
CIPis among the close competitors of CMP. Established in the same duration, CIP publishes comparable type of books. For a large time period, CIP held the largest market share, and still ranks 2nd and 3rd in numerous market sections, with a significant concentrate on educational publications. CIP serves as a threat for CMP as it might wean its market share due to its long term competitive background. CIP is concentrated on digital publishing and might wean the marketplace share of Identifying Firm Capital Structure Case Study Analysis quickly in the existing market circumstance.
Posts and telecommunication Press (PTP).
It was likewise established in the same period as Identifying Firm Capital Structure Case Study Help and CIP. It is also one of the popular players in the publishing market with an annual total profits of RMB 550 million in 2010.
Alternatives
Alternative-1: Broaden towards New Markets
Pros
• Minimizing dependence over the Chinese markets.
• Increasing variety of Clients
• Development opportunities.
• Preventing the impact of market saturation in the Chinese publishing market.
Cons
• Usage of prospective resources in expansion.
• Risk of failure in new markets.
• Time consuming.
Alernative-2: Present Digital Publishing
Pros
• Sustaining consumer base.
• Approaching brand-new markets.
• Easy to present using current capabilities.
• Low threat of Failure.
• Low requirement for funds.
• Increased item portfolio offers high worth to clients.
Cons
• Competition in the market by CIP, who has prior concentrate on the digital publishing.
• Shift of focus from the core business sectors to the brand-new one can lead the company to lose demand of its items in the market.
Recommendations
As the choices are shifting towards digital publishing and the business need an instant solution to avoid the decreasing industry growth. The business could likewise consider the expansion program after the success of its digital publishing program.
Execution
In order to present digital publishing in its product portfolio, the business needs to first collects the data related to the consumer need, the prospective markets, the federal government regulations and the data related to the rivals provided in the market. If the initial offering shows a success, the company must go for the other markets. In this way the company would be able to implement its digital publishing program.
Conclusion
Although, the development of the publishing market is declining because 2008, revealing a risk to the company's long term existence, however the situation can be controlled by considering a development strategy in the future. The business might think about introducing digital publishingin its existing market to execute its advancement program at instant basis and to avoid the risk of failure for entryway in the brand-new markets.
