The Profit Maximizing Firm As Multinational Corporation 2 Case Study Solution and Analysis
Introduction
The Profit Maximizing Firm As Multinational Corporation 2 Case Study Analysis is the biggest publishing business with a greatest market share in the China's book retail market. CMP has ended up being a specialized info service provider and a big detailed Science and Technology publishing business through the combination of print media, audio-visual media and the network media.
Vital Issues
Although, The Profit Maximizing Firm As Multinational Corporation 2 Case Study Solution has actually invested its 60 years journey efficiently, being an effective publishing home, nevertheless, the altering macro market patterns and forces bring specific challenges to the publishing market in general and CMP in particular. These elements include;
• Entrance of the new publishing firms in the industry.
• Declining growth of the publishing market.
• Market saturation.
• Intro of digital publishing strategies
• Enhancement of science and innovation.
The transformation 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 scenario? Do the long important experience, technical resources and the abilities of the company could be used 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
The Profit Maximizing Firm As Multinational Corporation 2 Case Study Solution has specific strengths that can be made use of to minimize the threats, overcome the weak point and get the chances. Strengths of CMP are offered as follows;
• The long term experience of The Profit Maximizing Firm As Multinational Corporation 2 Case Study Analysis in the publishing market i.e. 60 years permits the business to supply high quality products at a lower expense using its prior experiences.
• The technical resources and abilities produced by its successful journey provide a competitive benefit to CMP.
• Huge item portfolioof CMP helps it to diversify its threat and provide high worth to its customers.
• Strong financial position allows the business to think about numerous advancement chances without any fear of raising fund externally.
Weaknesses
Together with the strengths, the company has specific weaknesses which could increase restraints for the business in implementing its advancement program. The weaknesses of The Profit Maximizing Firm As Multinational Corporation 2 Case Study Analysis are given as follows;
• Despite of being a science and innovation publishing firm, the business still has standard methods ofpublishing which are not compatible with the growing technological shift.
• CMP highly relies over the Chinese markets for its development. It must propose particular expansion strategies to prevent its dependence over the Chinese markets to achieve long term development.
Opportunities
The growth of the publishing market is decreasing since 2008, affecting The Profit Maximizing Firm As Multinational Corporation 2 Case Study Solution as well, but the growth might be revived by availing certain chances provided in the market. The market opportunities for CMP include;
• The company could also introduce Digital Publishing by using its long term technical experience and a strong client recognition in the market.
• CMP might consider an advancement program through the expansion towards foreign markets in order to reduce its dependence over Chinese markets by utilizing its large financial resources.
Risks
The altering macro trends in the market and increasing competition in the publishing industry has positioned particular threats to The Profit Maximizing Firm As Multinational Corporation 2 Case Study Solution consisting of;( Gurel, 2017).
• Intro of digital publishing i.e. digital libraries could result in declining market share of The Profit Maximizing Firm As Multinational Corporation 2 Case Study Help due to the consumer shift towards virtual libraries.
• The presence of large number of competitors in the publishing market increase the hazard for CMP to lose its competitive position in the market, as competitors can get a strong customer base by utilizing specific methods like aggressive promo, quality products, etc.
• Entrance of new publishing companies in the market along with existence of high competitors increases the threat of losing the client base.
Financial Analysis.
The business has a rather competitive financial efficiency. Due to lack of data, the financial ratios of CMP might not be computed. The general financial performance of the business could be examined by utilizing the charts given in the case Appendices. It could be examined from the Appendix III that the annual total incomes of CMP throughout the duration 2000-2012 are growing at a high development rate, revealing that the annual demand of the products of The Profit Maximizing Firm As Multinational Corporation 2 Case Study Help is growing and the company is quite effective in attracting a a great deal of customers at a possible cost.
In addition to it, the 2nd graph which reveals the annual growth in the The Profit Maximizing Firm As Multinational Corporation 2 Case Study Solution total assets, shows that the company is rather efficient in including value to its assets through its profits. The development in possessions reveals that the overall value of the firm is also increasing with increasing the overall revenues. (Unidentified, 2013).
Another monetary analysis of the company using the provided information might be the analysis regarding the circulation of overall incomes of the company. Huge part of the profits of CMP originates from the sales of its published books i.e. 64% as displayed in the Case Appendix V. The business could move towards other organisation sectors with a prospective growth to achieve its future development objective.
PESTEL Analysis
PESTEL analysis might be conducted to discover the numerous external forces affecting the efficiency of the business and the current patterns in the external environment of the business. A quick PESTEL analysis of the company is provided as follows; (Alanzi, 2018).
Political.
As the publishing sector could have a considerable influence on the mindset of individuals about the communist ideology of the federal government, therefore, the publishing sector is highly supervised and directed by the Publicity Department of the Communist Celebration of China. It could be said that the general political forces impacting CMP business are high. The federal government policies relating to the publishing sector are likewise increasing with the passage of time.
Affordable.
Financial forces affecting the publishing sector in general and the CMP in particular includesthe rates of paper, the income level of consumers, the inflation rate, and the overall GDP development of the nation. All these forces combine impact the need for the publishing market.
Social and Demographical.
The consumer choices are moving towards digital publishing rather than the standard was of publishing. In this regard, CMP must focus on digital publishing to satisfy the changing customer preferences.
Technological.
Technological forces affecting the CMP include the technological improvement in the reading methods etc. Enhancement of science and technology in addition to the increase of digital publishing could lower the demand for the CMP items, if particular actions would not be taken soon.
Environmental.
Ecological forces impacting The Profit Maximizing Firm As Multinational Corporation 2 Case Study Analysis includes the issues of environmental neighborhoods over the usage of paper in publishing books. The paper utilized in the books while publishing is needed to be disposable and the ink utilized while publishing needs to not be damaging for the environment.
Legal.
Legal regulations for the publishing sector at whole are high. Publishing Regulation 1997 needs the publishers to be authorized first by the Government to be gone into in the publishing market.
Industry Analysis (Porter's 5 Forces Design).
Porter's Five Forces Model could be used to analyze the beauty of the publishing market China. A brief analysis of the Porter's Five Forces is given as follows;.
Danger of New Entrants.
Threats of new entrants in the Chinese Publishing Market is moderate. The potential development in the market tends to bring in new entrants to the publishing industry. The existence of extreme competitors and the requirement of substantial capital tends to demotivate new entrants to enter in the market.
Danger of Replacement.
Threat of Alternative is high for the Chinese Publishing Market. The replacement items for the published files is the files provided in the virtual libraries on specific websites. The changing consumer choices towards digital learning increase the threat of replacement for the market.
Competitive Rivalry.
Competitive competition in the publishing industry is high. The existence of a great deal of customers in the Chinese Publishing Market like CIP, PTP etc. tends to produce high competitive rivalry for CMP. Along with it, brand-new entrants are also participating in the marketplace increasing the competitors for CMP.
Bargaining Power of Provider.
The major suppliers of the The Profit Maximizing Firm As Multinational Corporation 2 Case Study Help include the suppliers of the paper for releasing files. As CMP is the largest publisher in the Chinese Publishing Market, therefore the overall bargaining power of supplier for CMP is low.
Bargaining Power of Buyer.
Bargaining power of buyer in the publishing industry is high. Due to the existence of a large number of publishers in the Chinese market and the marketplace saturation, the purchasers requires high quality files at competitive rates.
Rivals Analysis.
CMP runs in an extremely competitive market with the existence of large number of rivals. The company has a competitive position in the market with the greatest market share in the Chinese publishing market. Major competitors of The Profit Maximizing Firm As Multinational Corporation 2 Case Study Solution consist of;.
• Chemical Industry Press (CIP).
• Posts and telecommunication Press (PTP).
Chemical Industry Press (CIP).
CIPis one of the close competitors of CMP. Established in the same period, CIP releases similar kind of books. For a large time period, CIP held the biggest market share, and still ranks second and 3rd in various market sections, with a significant focus on academic 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 might wean the marketplace share of The Profit Maximizing Firm As Multinational Corporation 2 Case Study Analysis quickly in the existing market circumstance.
Posts and telecommunication Press (PTP).
Another close competitor of CMP is PTP. It was likewise established in the exact same period as CMP and CIP. It ranks 6th in the state-owned publishers in regards to service scale. It is likewise one of the prominent players in the publishing industry with a yearly overall incomes of RMB 550 million in 2010.
Alternatives
Alternative-1: Broaden towards New Markets
Pros
• Lowering dependence over the Chinese markets.
• Increasing variety of Consumers
• Growth opportunities.
• Preventing the effect of market saturation in the Chinese publishing market.
Cons
• Usage of possible resources in expansion.
• Threat of failure in brand-new markets.
• Time consuming.
Alernative-2: Introduce Digital Publishing
Pros
• Sustaining consumer base.
• Approaching new markets.
• Easy to present utilizing current capabilities.
• Low danger of Failure.
• Low requirement for funds.
• Increased product portfolio provides high worth to consumers.
Cons
• Competitors in the market by CIP, who has prior concentrate on the digital publishing.
• Shift of focus from the core organisation segments to the brand-new one can lead the company to lose need of its products in the market.
Suggestions
With the deep analysis of the internal and external environment of the business along with the market analysis and the rival analysis, Alternative 2 is recommended to CMP to attain its future development. As the choices are moving towards digital publishing and the business require an instant service to prevent the decreasing industry development. Intro of digital publishing could show to be an immediate service with low amount of risk for the company. However, the company might also think about the expansion program after the success of its digital publishing program.
Implementation
In order to introduce digital publishing in its item portfolio, the business ought to first collects the data related to the consumer demand, the prospective markets, the government policies and the data related to the rivals provided in the market. If the initial offering shows a success, the business ought to go for the other markets. In this way the business would be able to implement its digital publishing program.
Conclusion
Although, the growth of the publishing market is declining considering that 2008, revealing a threat to the business's long term existence, however the scenario can be managed by considering an advancement strategy in the future. The company could 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.
