Kraft General Foods The Merger A Case Study Solution and Analysis
Introduction
Kraft General Foods The Merger A Case Study Help is the largest publishing business with a highest market share in the China's book retail market. CMP has actually ended up being a specialized details provider and a large detailed Science and Technology publishing company through the integration of print media, audio-visual media and the network media.
Important Issues
Although, Kraft General Foods The Merger A Case Study Help has actually invested its 60 years journey efficiently, being a successful publishing house, however, the changing macro market trends and forces bring specific obstacles to the publishing market in general and CMP in specific. These aspects consist of;
• Entrance of the new publishing companies in the industry.
• Declining development of the publishing market.
• Market saturation.
• Introduction of digital publishing methods
• Improvement of science and technology.
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 circumstance? Do the long important experience, technical resources and the capabilities of the company could be utilized to pursue the future development unceasingly? How could the company sustain its long term competitive position in future?
Situational Analysis
Internal Analysis
SWOT Analysis
Strengths
Kraft General Foods The Merger A Case Study Analysis has certain strengths that can be utilized to lower the threats, get rid of the weakness and avail the chances. Strengths of CMP are provided as follows;
• The long term experience of Kraft General Foods The Merger A Case Study Analysis in the publishing industry i.e. 60 years enables the business to provide high quality items at a lower cost using its prior experiences.
• The technical resources and abilities generated by its effective journey supply a competitive advantage to CMP.
• Vast item portfolioof CMP helps it to diversify its danger and offer high value to its customers.
• Strong monetary position permits the business to consider a number of development opportunities without any worry of raising fund externally.
Weak points
Along with the strengths, the business has certain weak points which could increase restraints for the business in implementing its development program. The weak points of Kraft General Foods The Merger A Case Study Solution are provided as follows;
• Despite of being a science and innovation publishing company, the business still has conventional ways ofpublishing which are not compatible with the growing technological shift.
• CMP extremely relies over the Chinese markets for its development. It needs to propose particular expansion plans to avoid its reliance over the Chinese markets to achieve long term growth.
Opportunities
The growth of the publishing market is decreasing given that 2008, affecting Kraft General Foods The Merger A Case Study Solution as well, however the growth might be restored by availing particular chances provided in the market. The marketplace opportunities for CMP consist of;
• The business could also introduce Digital Publishing by utilizing its long term technical experience and a strong client acknowledgment in the market.
• CMP might consider an advancement program through the expansion towards foreign markets in order to decrease its reliance over Chinese markets by using its vast financial resources.
Hazards
The changing macro trends in the market and increasing competition in the publishing market has actually positioned specific dangers to Kraft General Foods The Merger A Case Study Solution including;( Gurel, 2017).
• Intro of digital publishing i.e. virtual libraries might result in decreasing market share of Kraft General Foods The Merger A Case Study Analysis due to the customer shift towards digital libraries.
• The existence of large number of rivals in the publishing market increase the threat for CMP to lose its competitive position in the market, as rivals can get a strong consumer base by using specific methods like aggressive promotion, quality items, and so on
• Entryway of new publishing firms in the industry in addition to existence of high competition increases the risk of losing the consumer base.
Financial Analysis.
Due to lack of information, the financial ratios of CMP could not be calculated. It might be evaluated from the Appendix III that the annual total earnings of Kraft General Foods The Merger A Case Study Analysis during the period 2000-2012 are growing at a high development rate, showing that the yearly demand of the products of CMP is growing and the company is rather efficient in bring in a large number of clients at a prospective cost.
In addition to it, the 2nd graph which shows the yearly development in the Kraft General Foods The Merger A Case Study Help overall possessions, shows that the business is rather effective in adding value to its possessions through its revenues. The growth in properties reveals that the total worth of the firm is likewise increasing with increasing the total revenues. (Unknown, 2013).
Another monetary analysis of the company utilizing the given information could be the analysis relating to the distribution of total revenues of the business. Huge part of the profits of CMP originates from the sales of its published books i.e. 64% as shown in the Case Appendix V. The business might move towards other service sectors with a potential growth to accomplish its future advancement goal.
PESTEL Analysis
PESTEL analysis could be carried out to learn the different external forces impacting the efficiency of the company and the current patterns in the external environment of the business. A quick PESTEL analysis of the business is given as follows; (Alanzi, 2018).
Political.
As the publishing sector might have a substantial effect on the frame of mind of individuals about the communist ideology of the federal government, therefore, the publishing sector is extremely monitored and assisted by the Promotion Department of the Communist Party of China. It might be stated that the total political forces impacting CMP business are high. The federal government policies concerning the publishing sector are likewise increasing with the passage of time.
Cost-effective.
Economic forces impacting the publishing sector in general and the CMP in particular includesthe prices of paper, the earnings level of customers, the inflation rate, and the general GDP development of the nation. All these forces combine effect the need for the publishing market.
Social and Demographical.
The consumer preferences are shifting towards digital publishing rather than the standard was of publishing. In this regard, CMP ought to focus on digital publishing to fulfill the changing consumer preferences.
Technological.
Technological forces affecting the CMP include the technological advancement in the reading strategies etc. Improvement of science and innovation along with the increase of digital publishing could lower the demand for the CMP items, if specific actions would not be taken soon.
Environmental.
Environmental forces affecting Kraft General Foods The Merger A Case Study Analysis consists of the concerns of environmental neighborhoods 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 hazardous for the environment.
Legal.
Legal guidelines for the publishing sector at whole are high. The legal policies regarding the publishing sector is managed by the General Administration of Press and Publication. Publishing Ordinance 1997 requires the publishers to be authorized initially by the Federal government to be entered in the publishing market. The ordinance prohibits direct participation of foreign entities and individuals in the publishing sector.
Market Analysis (Porter's 5 Forces Model).
Porter's 5 Forces Design could be used to examine the attractiveness of the publishing market China. A quick analysis of the Porter's Five Forces is provided as follows;.
Threat of New Entrants.
Threats of new entrants in the Chinese Publishing Industry is moderate. The possible development in the market tends to attract new entrants to the publishing industry. The presence of intense competitors and the requirement of substantial capital tends to demotivate brand-new entrants to go into in the market.
Hazard of Substitution.
Threat of Replacement is high for the Chinese Publishing Industry. The replacement products for the released files is the files presented in the digital libraries on specific websites. The altering consumer preferences towards digital knowing increase the danger of alternative for the industry.
Competitive Rivalry.
Competitive competition in the publishing industry is high. The presence of large number of consumers in the Chinese Publishing Industry like CIP, PTP etc. tends to produce high competitive competition for CMP. Along with it, brand-new entrants are also participating in the market increasing the competition for CMP.
Bargaining Power of Supplier.
The major providers of the Kraft General Foods The Merger A Case Study Solution include the providers of the paper for releasing files. As CMP is the biggest publisher in the Chinese Publishing Market, therefore the overall bargaining power of provider for CMP is low.
Bargaining Power of Purchaser.
Haggling 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 needs high quality documents at competitive prices.
Competitors Analysis.
CMP runs in an extremely competitive market with the presence of a great deal of rivals. The business has a competitive position in the market with the greatest market share in the Chinese publishing market. Significant rivals of Kraft General Foods The Merger A Case Study Analysis consist of;.
• Chemical Industry Press (CIP).
• Posts and telecommunication Press (PTP).
Chemical Market Press (CIP).
CIP acts as a threat for CMP as it might wean its market share due to its long term competitive background. CIP is focused on digital publishing and could wean the market share of CMP quickly in the present market circumstance.
Posts and telecommunication Press (PTP).
Another close rival of CMP is PTP. It was also established in the same period as CMP and CIP. It ranks sixth in the state-owned publishers in regards to service scale. It is likewise one of the popular gamers in the publishing industry with an annual overall incomes of RMB 550 million in 2010.
Alternatives
Alternative-1: Broaden towards New Markets
Pros
• Lowering reliance over the Chinese markets.
• Increasing variety of Clients
• Development chances.
• Avoiding the impact of market saturation in the Chinese publishing market.
Cons
• Use of prospective resources in growth.
• Danger of failure in new markets.
• Time consuming.
Alernative-2: Introduce Digital Publishing
Pros
• Sustaining consumer base.
• Approaching new markets.
• Easy to introduce utilizing present capabilities.
• Low danger of Failure.
• Low requirement for funds.
• Increased item portfolio provides high value to consumers.
Cons
• Competition in the market by CIP, who has prior concentrate on the digital publishing.
• Shift of focus from the core service sections to the new one can lead the business to lose demand of its products in the market.
Suggestions
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 recommended to CMP to achieve its future advancement. As the choices are shifting towards digital publishing and the company require an immediate service to avoid the decreasing industry development. Therefore, introduction of digital publishing could show to be an immediate option with low amount of threat for the company. However, the company could also think about the expansion program after the success of its digital publishing program.
Execution
In order to present digital publishing in its product portfolio, the business ought to first gathers the information related to the consumer demand, the possible markets, the government regulations and the data associated with the rivals presented in the market. After that, the company should choose one prospective segment for its preliminary offering. It ought to gather research study that how it might separate its digital publishing from the existing rivals' products. The actions above the business should go for the initial offering. The business ought to go for the other markets if the preliminary offering proves a success. In this way the business would have the ability to execute its digital publishing program.
Conclusion
The development of the publishing market is decreasing because 2008, showing a hazard to the company's long term existence, however the circumstance can be managed by thinking about a development plan in the future. The company could consider presenting digital publishingin its existing market to execute its development program at instant basis and to prevent the danger of failure for entrance in the new markets.
