Risk Management And Real Option Case Study Solution and Analysis
Intro
Risk Management And Real Option Case Study Help is the largest publishing business with a highest market share in the China's book retail market. CMP has ended up being a specialized information company and a big extensive Science and Technology publishing company through the integration of print media, audio-visual media and the network media.
Crucial Issues
CMP has spent its 60 years journey smoothly, being a successful publishing house, however, the changing macro market patterns and forces bring specific obstacles to the publishing industry in general and Risk Management And Real Option Case Study Solution in particular. These aspects include;
• Entrance of the brand-new publishing companies in the industry.
• Declining growth of the publishing market.
• Market saturation.
• Introduction of digital publishing methods
• Enhancement of science and innovation.
The improvement of the macro markets have raised a number of 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 company could be made use of 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
Risk Management And Real Option Case Study Analysis has specific strengths that can be made use of to lower the threats, conquer the weakness and get the chances. Strengths of CMP are provided as follows;
• The long term experience of Risk Management And Real Option Case Study Solution in the publishing market i.e. 60 years allows the company to provide high quality products at a lower cost utilizing its previous experiences.
• The technical resources and capabilities generated by its successful journey offer a competitive benefit to CMP.
• Vast item portfolioof CMP assists it to diversify its risk and offer high value to its consumers.
• Strong monetary position allows the business to think about numerous development opportunities with no fear of raising fund externally.
Weaknesses
In addition to the strengths, the business has particular weak points which might increase restraints for the business in implementing its advancement program. The weak points of Risk Management And Real Option Case Study Solution are provided as follows;
• Despite of being a science and innovation publishing company, the company still has traditional ways ofpublishing which are not compatible with the growing technological shift.
• CMP extremely relies over the Chinese markets for its development. It should propose particular growth plans to prevent its reliance over the Chinese markets to attain long term growth.
Opportunities
The development of the publishing market is decreasing considering that 2008, affecting Risk Management And Real Option Case Study Analysis as well, but the development might be restored by availing particular chances provided in the market. The marketplace chances for CMP consist of;
• The company might likewise introduce Digital Publishing by utilizing its long term technical experience and a strong client recognition in the market.
• CMP could consider an advancement program through the growth towards foreign markets in order to reduce its dependence over Chinese markets by utilizing its vast funds.
Risks
The altering macro patterns in the market and increasing competition in the publishing market has postured particular hazards to Risk Management And Real Option Case Study Solution including;( Gurel, 2017).
• Intro of digital publishing i.e. digital libraries could lead to decreasing market share of Risk Management And Real Option Case Study Analysis due to the consumer shift towards virtual libraries.
• The presence of large number of rivals in the publishing market increase the threat for CMP to lose its competitive position in the market, as competitors can gain a strong consumer base by using specific strategies like aggressive promotion, quality products, and so on
• Entryway of brand-new publishing firms in the industry in addition to existence of high competitors increases the risk of losing the client base.
Financial Analysis.
Due to absence of information, the financial ratios of CMP could not be calculated. It could be examined from the Appendix III that the annual total earnings of Risk Management And Real Option Case Study Help throughout the period 2000-2012 are growing at a high development rate, showing that the annual demand of the products of CMP is growing and the company is quite efficient in attracting a big number of consumers at a potential price.
In addition to it, the 2nd chart which reveals the annual growth in the Risk Management And Real Option Case Study Solution overall possessions, reveals that the business is rather effective in including worth to its assets through its profits. The growth in assets reveals that the total worth of the firm is likewise increasing with increasing the overall incomes. (Unknown, 2013).
Another financial analysis of the business utilizing the given information could be the analysis relating to the circulation of overall profits of the business. Huge part of the incomes of CMP originates from the sales of its released books i.e. 64% as shown in the Case Appendix V. The company might move towards other company segments with a possible development to attain its future development objective.
PESTEL Analysis
PESTEL analysis could be carried out to learn the different external forces affecting the performance of the business and the current patterns in the external environment of the company. 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 mindset of individuals about the communist ideology of the government, for that reason, the publishing sector is highly monitored and assisted by the Promotion Department of the Communist Party of China. Therefore, it might be stated that the general political forces affecting Risk Management And Real Option Case Study Help service are high. The government policies relating to the publishing sector are likewise increasing with the passage of time.
Economical.
Economic forces affecting the publishing sector in general and the Risk Management And Real Option Case Study Help in particular includesthe prices of paper, the earnings 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. Together with it, the financial policies connected to the import of books affect the overall business at CPM. Nevertheless, China's economic conditions are quite favorable for CMP with high GDP growth and consumer income level.
Social and Demographical.
The customer preferences are shifting towards digital publishing rather than the standard was of publishing. In this regard, CMP should focus on digital publishing to meet the changing consumer preferences.
Technological.
Technological forces impacting the CMP include the technological development in the reading methods etc. Enhancement of science and technology along with the increase of digital publishing might lower the need for the CMP items, if particular actions would not be taken soon.
Environmental.
Ecological forces impacting Risk Management And Real Option Case Study Analysis consists of the concerns of environmental communities over the usage of paper in publishing books. The paper used in the books while publishing is needed to be non reusable and the ink used while publishing should not be hazardous for the environment.
Legal.
Legal policies for the publishing sector at whole are high. The legal regulations concerning the publishing sector is controlled by the General Administration of Press and Publication. Publishing Regulation 1997 needs the publishers to be authorized initially by the Federal government to be gone into in the publishing market. The regulation prohibits direct participation of foreign entities and individuals in the publishing sector.
Industry Analysis (Porter's Five Forces Design).
Porter's 5 Forces Design could be utilized to analyze the attractiveness of the publishing market China. A short analysis of the Porter's 5 Forces is provided as follows;.
Risk of New Entrants.
Risks of new entrants in the Chinese Publishing Industry is moderate. The possible development in the industry tends to attract new entrants to the publishing market. However, the existence of intense competitors and the requirement of huge capital tends to demotivate brand-new entrants to go into in the marketplace.
Risk of Substitution.
Danger of Alternative is high for the Chinese Publishing Market. The alternative items for the published files is the documents provided in the virtual libraries on particular websites. The altering consumer choices towards digital learning increase the danger of replacement for the industry.
Competitive Rivalry.
Competitive rivalry in the publishing industry is high. The existence of large number of customers in the Chinese Publishing Market 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 competitors for CMP.
Bargaining Power of Provider.
The significant suppliers of the Risk Management And Real Option Case Study Analysis include the providers of the paper for releasing files. As CMP is the largest publisher in the Chinese Publishing Market, therefore the general bargaining power of supplier for CMP is low.
Bargaining Power of Purchaser.
Bargaining 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 marketplace saturation, the purchasers needs high quality documents at competitive rates.
Rivals Analysis.
CMP operates in an extremely competitive market with the presence of a great deal of rivals. The company has a competitive position in the market with the greatest market share in the Chinese publishing market. Major competitors of Risk Management And Real Option Case Study Help include;.
• Chemical Industry Press (CIP).
• Posts and telecommunication Press (PTP).
Chemical Industry Press (CIP).
CIPis among the close rivals of CMP. Established in the exact same period, CIP publishes similar kind of books. For a large period, CIP held the biggest market share, and still ranks third and second in various market sections, with a major focus on educational publications. CIP acts as a risk 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 Risk Management And Real Option Case Study Analysis easily in the present market scenario.
Posts and telecommunication Press (PTP).
Another close rival of CMP is PTP. It was also founded in the same duration as CMP and CIP. It ranks 6th in the state-owned publishers in regards to company scale. It is also among the prominent gamers in the publishing industry with a yearly total incomes of RMB 550 million in 2010.
Alternatives
Alternative-1: Expand towards New Markets
Pros
• Reducing dependence over the Chinese markets.
• Increasing number of Consumers
• Development opportunities.
• Preventing the effect of market saturation in the Chinese publishing industry.
Cons
• Use of prospective resources in growth.
• Danger of failure in brand-new markets.
• Time consuming.
Alernative-2: Introduce Digital Publishing
Pros
• Sustaining consumer base.
• Approaching new markets.
• Easy to present using current capabilities.
• Low risk of Failure.
• Low requirement for funds.
• Increased item portfolio provides high worth to consumers.
Cons
• Competition 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 company to lose need of its items in the market.
Recommendations
With the deep analysis of the external and internal environment of the company in addition to the market analysis and the competitor analysis, Alternative 2 is advised to CMP to achieve its future advancement. As the choices are shifting towards digital publishing and the company require an immediate option to prevent the decreasing market growth. Introduction of digital publishing could show to be an immediate solution with low amount of threat for the business. However, the company might likewise 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 initially collects the information related to the customer demand, the potential markets, the federal government policies and the information related to the rivals provided in the market. If the preliminary offering proves a success, the company must go for the other markets. In this method the company would be able to implement its digital publishing program.
Conclusion
Although, the growth of the publishing market is decreasing since 2008, showing a threat to the company's long term existence, however the scenario can be controlled by considering an advancement plan in the future. The business might consider introducing digital publishingin its existing market to implement its advancement program at immediate basis and to avoid the threat of failure for entrance in the new markets.
