Parent Company P And 80 Percent Owned Subsidiary Company S Case Study Solution and Analysis
Parent Company P And 80 Percent Owned Subsidiary Company S Case Study Solution is the biggest publishing business with a greatest market share in the China's book retail market. CMP supplies a variety of services consisting of; collecting details, processing info and communication services. Significant business segments of the company include; books, periodicals, consultancy and distribution. The business has a vast product portfolio and its significant items include books, periodicals, online media, exhibits, research reports and so on. Parent Company P And 80 Percent Owned Subsidiary Company S Case Study Solution has actually become a specialized info provider and a large thorough Science and Technology publishing business through the combination of print media, audio-visual media and the network media.
Although, Parent Company P And 80 Percent Owned Subsidiary Company S Case Study Help has invested its 60 years journey efficiently, being an effective publishing home, however, the changing macro market trends and forces bring certain obstacles to the publishing industry in basic and CMP in specific. These factors consist of;
• Entrance of the new publishing companies in the industry.
• Decreasing development 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 circumstance? Do the long valuable experience, technical resources and the abilities 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?
Parent Company P And 80 Percent Owned Subsidiary Company S Case Study Solution has certain strengths that can be used to minimize the dangers, get rid of the weak point and get the chances. Strengths of CMP are provided as follows;
• The long term experience of Parent Company P And 80 Percent Owned Subsidiary Company S Case Study Solution in the publishing industry i.e. 60 years enables the company to offer high quality products at a lower cost utilizing its previous experiences.
• The technical resources and capabilities created by its effective journey supply a competitive advantage to CMP.
• Huge product portfolioof CMP helps it to diversify its risk and supply high value to its clients.
• Strong financial position enables the company to consider a number of advancement opportunities without any fear of raising fund externally.
Together with the strengths, the company has certain weaknesses which could increase restrictions for the business in executing its development program. The weak points of Parent Company P And 80 Percent Owned Subsidiary Company S Case Study Help are given as follows;
• Despite of being a science and innovation publishing company, the business still has traditional ways ofpublishing which are not suitable with the growing technological shift.
• CMP extremely relies over the Chinese markets for its growth. It needs to propose certain expansion plans to prevent its reliance over the Chinese markets to attain long term growth.
Although, the growth of the publishing industry is decreasing given that 2008, impacting Parent Company P And 80 Percent Owned Subsidiary Company S Case Study Solution too, however the development could be restored by availing specific chances provided in the market. The market opportunities for CMP include;
• The company might likewise present Digital Publishing by utilizing its long term technical experience and a strong consumer acknowledgment in the market.
• CMP could consider a development program through the expansion towards foreign markets in order to minimize its reliance over Chinese markets by utilizing its vast financial resources.
The altering macro patterns in the market and increasing competition in the publishing market has posed particular threats to Parent Company P And 80 Percent Owned Subsidiary Company S Case Study Help consisting of;( Gurel, 2017).
• Intro of digital publishing i.e. virtual libraries could result in declining market share of Parent Company P And 80 Percent Owned Subsidiary Company S Case Study Help due to the customer shift towards virtual libraries.
• The existence 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 gain a strong consumer base by utilizing certain methods like aggressive promo, quality products, etc.
• Entryway of brand-new publishing firms in the market together with existence of high competition increases the hazard of losing the consumer base.
Due to absence of information, the financial ratios of CMP might not be determined. It might be analyzed from the Appendix III that the annual total revenues of Parent Company P And 80 Percent Owned Subsidiary Company S Case Study Help throughout the duration 2000-2012 are growing at a high development rate, showing that the annual need of the products of CMP is growing and the company is quite efficient in bring in a big number of consumers at a prospective cost.
Together with it, the 2nd graph which reveals the annual development in the Parent Company P And 80 Percent Owned Subsidiary Company S Case Study Analysis overall assets, shows that the company is quite effective in including value to its properties through its revenues. The development in properties shows that the total value of the company is also increasing with increasing the total incomes. (Unknown, 2013).
Another monetary analysis of the company using the given data might be the analysis relating to the distribution of overall incomes of the company. Major part of the earnings of CMP originates from the sales of its published books i.e. 64% as displayed in the Case Appendix V. The company might move towards other company segments with a prospective growth to attain its future advancement goal.
PESTEL analysis might be conducted to discover the different external forces impacting the performance of the company and the current patterns in the external environment of the business. A short PESTEL analysis of the company is given as follows; (Alanzi, 2018).
As the publishing sector could have a significant effect on the state of mind of the people about the communist ideology of the federal government, therefore, the publishing sector is extremely supervised and directed by the Promotion Department of the Communist Celebration of China. It could be said that the overall political forces impacting CMP business are high. The government policies regarding the publishing sector are likewise increasing with the passage of time.
Financial forces impacting the publishing sector in general and the Parent Company P And 80 Percent Owned Subsidiary Company S Case Study Analysis in specific includesthe rates of paper, the income level of customers, the inflation rate, and the general GDP growth of the nation. All these forces combine impact the demand for the publishing market. Along with it, the financial policies associated with the import of books impact the general organisation at CPM. However, China's economic conditions are quite beneficial for CMP with high GDP growth and customer earnings level.
Social and Demographical.
Social and demographical forces include the population development, the consumer's choices towards checking out informative products and so on. China has the highest population worldwide with a high population development, revealing the increasing variety of customers of the Parent Company P And 80 Percent Owned Subsidiary Company S Case Study Help. Nevertheless, the consumer choices are moving towards digital publishing rather than the traditional was of publishing. In this regard, CMP should concentrate on digital publishing to satisfy the changing customer preferences.
Technological forces impacting the CMP consist of the technological advancement in the reading strategies and so on. Improvement of science and technology together with the increase of digital publishing could decrease the need for the CMP items, if particular actions would not be taken soon.
Environmental forces affecting Parent Company P And 80 Percent Owned Subsidiary Company S Case Study Analysis consists of the issues of ecological neighborhoods over the use of paper in publishing books. The paper utilized in the books while publishing is required to be disposable and the ink utilized while publishing should not be harmful for the environment.
Legal regulations for the publishing sector at whole are high. Publishing Ordinance 1997 requires the publishers to be authorized first by the Government to be entered in the publishing market.
Market Analysis (Porter's 5 Forces Design).
Porter's Five Forces Design might be utilized to evaluate the attractiveness of the publishing market China. A brief analysis of the Porter's Five Forces is given as follows;.
Danger of New Entrants.
Risks of new entrants in the Chinese Publishing Industry is moderate. The possible development in the industry tends to bring in brand-new entrants to the publishing industry. The presence of extreme competition and the requirement of big capital tends to demotivate brand-new entrants to go into in the market.
Risk of Substitution.
Danger of Substitution is high for the Chinese Publishing Market. The replacement items for the released documents is the documents provided in the virtual libraries on particular websites. The altering customer choices towards digital knowing increase the hazard of substitution for the industry.
Competitive rivalry in the publishing market is high. The existence of a great deal of customers in the Chinese Publishing Market like CIP, PTP and so on tends to produce high competitive competition for CMP. In addition to it, new entrants are also participating in the market increasing the competitors for CMP.
Bargaining Power of Supplier.
The major suppliers of the Parent Company P And 80 Percent Owned Subsidiary Company S Case Study Analysis include the providers of the paper for publishing documents. As CMP is the largest publisher in the Chinese Publishing Market, therefore the general bargaining power of provider for CMP is low.
Bargaining Power of Buyer.
Bargaining power of buyer in the publishing industry is high. Due to the presence of a large number of publishers in the Chinese market and the marketplace saturation, the buyers requires high quality documents at competitive prices.
CMP operates in a highly competitive industry with the presence of a great deal of competitors. However, the company has a competitive position in the market with the highest market share in the Chinese publishing market. Major rivals of Parent Company P And 80 Percent Owned Subsidiary Company S Case Study Analysis include;.
• Chemical Industry Press (CIP).
• Posts and telecommunication Press (PTP).
Chemical Industry Press (CIP).
CIPis one of the close competitors of CMP. Established in the exact same period, CIP publishes comparable type of books. For a big time period, CIP held the largest market share, and still ranks third and second in different market sectors, with a major focus on instructional publications. CIP functions as a threat for CMP as it could wean its market share due to its long term competitive background. CIP is concentrated on digital publishing and could wean the market share of Parent Company P And 80 Percent Owned Subsidiary Company S Case Study Help quickly in the existing market circumstance.
Posts and telecommunication Press (PTP).
Another close competitor 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 terms of business scale. It is also one of the prominent gamers in the publishing market with an annual total profits of RMB 550 million in 2010.
Alternative-1: Expand towards New Markets
• Decreasing reliance over the Chinese markets.
• Increasing number of Consumers
• Growth chances.
• Preventing the effect of market saturation in the Chinese publishing market.
• Usage of prospective resources in growth.
• Threat of failure in new markets.
• Time consuming.
Alernative-2: Introduce Digital Publishing
• Sustaining consumer base.
• Approaching new markets.
• Easy to introduce utilizing present capabilities.
• Low risk of Failure.
• Low requirement for funds.
• Increased product portfolio supplies high value to consumers.
• Competitors in the market by CIP, who has prior concentrate on the digital publishing.
• Shift of focus from the core business sections to the 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 business in addition to the market analysis and the rival analysis, Alternative 2 is recommended to CMP to accomplish its future advancement. As the preferences are moving towards digital publishing and the company require an immediate option to prevent the declining market development. Intro of digital publishing could prove to be an instant option with low quantity of threat for the business. The business could likewise consider the expansion program after the success of its digital publishing program.
In order to present digital publishing in its item portfolio, the business needs to initially collects the data associated with the consumer demand, the potential markets, the federal government regulations and the data connected to the rivals presented in the market. After that, the company ought to decide one possible segment for its preliminary offering. It needs to gather research that how it might differentiate its digital publishing from the existing rivals' products. The actions above the business need to go for the preliminary offering. The business ought to go for the other markets if the initial offering proves a success. In this method the company would be able to implement its digital publishing program.
Although, the development of the publishing industry is decreasing since 2008, showing a danger to the company's long term presence, but the scenario can be managed by thinking about an advancement strategy in the future. The company might think about presenting digital publishingin its existing market to execute its development program at immediate basis and to prevent the danger of failure for entryway in the brand-new markets.