Shanda Games A Buyout Of A Chinese Family Firm Case Study Solution and Analysis
Introduction
Shanda Games A Buyout Of A Chinese Family Firm Case Study Analysis is the biggest publishing company with a greatest market share in the China's book retail market. CMP has ended up being a specialized information service provider and a big extensive Science and Innovation publishing company through the integration of print media, audio-visual media and the network media.
Crucial Problems
CMP has actually spent its 60 years journey smoothly, being a successful publishing home, however, the changing macro market patterns and forces bring specific obstacles to the publishing market in general and Shanda Games A Buyout Of A Chinese Family Firm Case Study Solution in particular. These factors consist of;
• Entryway of the new publishing companies in the industry.
• Declining growth of the publishing market.
• Market saturation.
• Intro of digital publishing strategies
• Enhancement of science and innovation.
The change of the macro markets have raised numerous questions 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 abilities of the business could be used 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
Shanda Games A Buyout Of A Chinese Family Firm Case Study Solution has specific strengths that can be utilized to reduce the hazards, get rid of the weakness and avail the chances. Strengths of CMP are given as follows;
• The long term experience of Shanda Games A Buyout Of A Chinese Family Firm Case Study Help in the publishing industry i.e. 60 years permits the business to supply high quality items at a lower expense using its previous experiences.
• The technical resources and capabilities generated by its effective journey provide a competitive benefit to CMP.
• Huge item portfolioof CMP assists it to diversify its risk and provide high value to its customers.
• Strong monetary position enables the business to consider numerous advancement opportunities without any worry of raising fund externally.
Weak points
Along with the strengths, the company has particular weaknesses which could increase restraints for the company in implementing its development program. The weaknesses of Shanda Games A Buyout Of A Chinese Family Firm Case Study Help are offered as follows;
• Despite of being a science and innovation publishing firm, the company still has conventional methods ofpublishing which are not compatible with the growing technological shift.
• CMP extremely relies over the Chinese markets for its growth. It should propose specific expansion strategies to prevent its reliance over the Chinese markets to accomplish long term development.
Opportunities
The development of the publishing industry is decreasing because 2008, impacting Shanda Games A Buyout Of A Chinese Family Firm Case Study Solution as well, but the growth could be revived by availing particular opportunities provided in the market. The marketplace chances for CMP consist of;
• The business could 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 lower its reliance over Chinese markets by utilizing its vast funds.
Threats
The changing macro patterns in the market and increasing competition in the publishing industry has actually posed specific hazards to Shanda Games A Buyout Of A Chinese Family Firm Case Study Solution consisting of;( Gurel, 2017).
• Introduction of digital publishing i.e. virtual libraries might cause decreasing market share of Shanda Games A Buyout Of A Chinese Family Firm Case Study Help due to the consumer shift towards digital libraries.
• The presence of large number of competitors in the publishing market increase the threat for CMP to lose its competitive position in the market, as competitors can acquire a strong customer base by utilizing specific methods like aggressive promotion, quality items, etc.
• Entrance of brand-new publishing firms in the industry together with existence of high competitors increases the danger of losing the client base.
Monetary Analysis.
The company has a rather competitive financial efficiency. Due to lack of data, the financial ratios of CMP could not be computed. The general monetary efficiency of the company could be examined by using the graphs given in the case Appendices. It might be analyzed from the Appendix III that the annual total profits of CMP during the period 2000-2012 are growing at a high growth rate, showing that the annual need of the items of Shanda Games A Buyout Of A Chinese Family Firm Case Study Solution is growing and the business is rather effective in drawing in a large number of customers at a prospective rate.
Along with it, the 2nd chart which shows the yearly development in the Shanda Games A Buyout Of A Chinese Family Firm Case Study Help overall properties, shows that the company is quite efficient in adding value to its assets through its incomes. The development in possessions reveals that the total value of the firm is also increasing with increasing the total profits. (Unknown, 2013).
Another financial analysis of the company utilizing the provided information could be the analysis relating to the distribution of total revenues of the company. Huge part of the incomes of CMP originates from the sales of its published books i.e. 64% as shown in the Case Appendix V. The company might move towards other organisation segments with a possible growth to achieve its future development objective.
PESTEL Analysis
PESTEL analysis might be performed to find out the numerous external forces impacting the performance of the company and the recent patterns in the external environment of the company. A brief PESTEL analysis of the company is offered as follows; (Alanzi, 2018).
Political.
As the publishing sector could have a significant effect on the mindset of the people about the communist ideology of the government, for that reason, the publishing sector is highly supervised and directed by the Publicity Department of the Communist Celebration of China. It might be stated that the total political forces affecting CMP company are high. The federal government policies regarding the publishing sector are likewise increasing with the passage of time.
Cost-effective.
Financial forces impacting the publishing sector in basic and the CMP in specific includesthe rates of paper, the income level of consumers, the inflation rate, and the general GDP growth of the nation. All these forces integrate effect the need for the publishing market.
Social and Demographical.
The consumer choices are shifting towards digital publishing rather than the conventional was of publishing. In this regard, CMP should focus on digital publishing to meet the changing customer choices.
Technological.
Technological forces impacting the CMP include the technological development in the reading techniques and so on. Improvement of science and technology along with the rise of digital publishing might lower the demand for the CMP products, if certain actions would not be taken quickly.
Environmental.
Ecological forces impacting Shanda Games A Buyout Of A Chinese Family Firm Case Study Help includes the concerns of ecological communities over the usage of paper in publishing books. The paper used in the books while publishing is required to be non reusable and the ink used while publishing needs to not be damaging for the environment.
Legal.
Legal regulations for the publishing sector at whole are high. Publishing Ordinance 1997 requires the publishers to be authorized initially by the Government to be gone into in the publishing market.
Market Analysis (Porter's 5 Forces Model).
Porter's Five Forces Design might be utilized to examine the attractiveness of the publishing market China. A short analysis of the Porter's 5 Forces is given as follows;.
Risk of New Entrants.
Threats of brand-new entrants in the Chinese Publishing Industry is moderate. The possible growth in the market tends to draw in brand-new entrants to the publishing market. Nevertheless, the presence of intense competitors and the requirement of big capital tends to demotivate brand-new entrants to enter in the market.
Danger of Replacement.
Hazard of Alternative is high for the Chinese Publishing Market. The substitute items for the released documents is the documents provided in the virtual libraries on particular sites. The altering consumer choices towards digital learning increase the threat of substitution for the industry.
Competitive Rivalry.
Competitive rivalry 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 rivalry for CMP. Along with it, new entrants are likewise entering into the market increasing the competitors for CMP.
Bargaining Power of Provider.
The major suppliers of the Shanda Games A Buyout Of A Chinese Family Firm Case Study Analysis include the suppliers of the paper for publishing documents. As CMP is the largest publisher in the Chinese Publishing Market, for that reason the general bargaining power of provider for CMP is low.
Bargaining Power of Buyer.
Negotiating 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 prices.
Competitors Analysis.
CMP operates in an extremely competitive market with the existence of large number of rivals. The business has a competitive position in the market with the greatest market share in the Chinese publishing market. Significant rivals of Shanda Games A Buyout Of A Chinese Family Firm Case Study Analysis include;.
• Chemical Industry Press (CIP).
• Posts and telecommunication Press (PTP).
Chemical Market Press (CIP).
CIP acts as a threat for CMP as it could 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 easily in the current market scenario.
Posts and telecommunication Press (PTP).
Another close rival of CMP is PTP. It was also founded in the exact same period as CMP and CIP. It ranks sixth in the state-owned publishers in terms of organisation scale. It is likewise one of the popular players in the publishing market with a yearly total profits of RMB 550 million in 2010.
Alternatives
Alternative-1: Broaden towards New Markets
Pros
• Lowering dependence over the Chinese markets.
• Increasing number of Consumers
• Development chances.
• Avoiding the effect of market saturation in the Chinese publishing market.
Cons
• Use of prospective resources in growth.
• Risk of failure in brand-new markets.
• Time consuming.
Alernative-2: Introduce Digital Publishing
Pros
• Sustaining customer base.
• Approaching brand-new markets.
• Easy to present utilizing existing capabilities.
• Low danger of Failure.
• Low requirement for funds.
• Increased product portfolio supplies high worth to customers.
Cons
• Competition in the market by CIP, who has prior focus on the digital publishing.
• Shift of focus from the core service sectors to the new one can lead the business to lose need of its items in the market.
Recommendations
As the preferences are moving towards digital publishing and the business need an immediate service to avoid the decreasing industry development. 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 item portfolio, the business ought to initially collects the information connected to the consumer demand, the possible markets, the government policies and the data related to the competitors provided in the market. After that, the business should choose one possible sector for its preliminary offering. It needs to collect research study that how it could distinguish its digital publishing from the existing competitors' products. The actions above the company must go for the preliminary offering. The company needs to go for the other markets if the initial offering shows a success. In this way the business would have the ability to execute its digital publishing program.
Conclusion
Although, the growth of the publishing market is declining given that 2008, revealing a danger to the company's long term presence, however the circumstance can be managed by considering an advancement plan in the future. The company might think about presenting digital publishingin its existing market to execute its advancement program at immediate basis and to prevent the threat of failure for entryway in the new markets.
