Timken Corporation Transfer Pricing Case Study Solution and Analysis
Introduction
Timken Corporation Transfer Pricing Case Study Solution is the largest publishing business with a highest market share in the China's book retail market. CMP offers a number of services consisting of; collecting details, processing information and communication services. Major company sectors of the business include; books, periodicals, consultancy and distribution. The company has a large item portfolio and its significant items consist of books, periodicals, online media, exhibitions, research study reports and so on. Timken Corporation Transfer Pricing Case Study Solution has actually become a specialized information service provider and a big comprehensive Science and Technology publishing business through the integration of print media, audio-visual media and the network media.
Critical Issues
CMP has actually invested its 60 years journey smoothly, being a successful publishing home, however, the changing macro market trends and forces bring particular difficulties to the publishing industry in basic and Timken Corporation Transfer Pricing Case Study Help in specific. These elements include;
• Entryway of the brand-new publishing firms in the market.
• Declining development of the publishing market.
• Market saturation.
• Intro of digital publishing methods
• Enhancement 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 abilities of the business could be utilized to pursue the future development unceasingly? How could the business sustain its long term competitive position in future?
Situational Analysis
Internal Analysis
SWOT Analysis
Strengths
Timken Corporation Transfer Pricing Case Study Analysis has certain strengths that can be utilized to minimize the threats, conquer the weak point and get the chances. Strengths of CMP are provided as follows;
• The long term experience of Timken Corporation Transfer Pricing Case Study Solution in the publishing industry i.e. 60 years enables the company to offer high quality products at a lower cost using its prior experiences.
• The technical resources and capabilities generated by its successful journey offer a competitive benefit to CMP.
• Huge product portfolioof CMP assists it to diversify its threat and provide high worth to its consumers.
• Strong financial position allows the company to consider numerous advancement chances without any fear of raising fund externally.
Weaknesses
Together with the strengths, the company has certain weak points which might increase restraints for the company in implementing its advancement program. The weak points of Timken Corporation Transfer Pricing Case Study Analysis are provided as follows;
• Despite of being a science and technology publishing firm, the business still has conventional ways 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 plans to prevent its reliance over the Chinese markets to attain long term development.
Opportunities
The growth of the publishing industry is decreasing since 2008, affecting Timken Corporation Transfer Pricing Case Study Help as well, however the development might be restored by availing particular chances provided in the market. The market opportunities for CMP include;
• The company might also introduce Digital Publishing by utilizing its long term technical experience and a strong consumer acknowledgment in the market.
• CMP might think about a development program through the growth towards foreign markets in order to minimize its reliance over Chinese markets by using its huge funds.
Dangers
The altering macro patterns in the market and increasing competition in the publishing industry has actually posed particular dangers to Timken Corporation Transfer Pricing Case Study Analysis including;( Gurel, 2017).
• Introduction of digital publishing i.e. virtual libraries might cause decreasing market share of Timken Corporation Transfer Pricing Case Study Help due to the consumer shift towards virtual libraries.
• The presence of large number of competitors in the publishing market increase the danger for CMP to lose its competitive position in the market, as rivals can acquire a strong consumer base by using particular strategies like aggressive promotion, quality items, and so on
• Entryway of brand-new publishing companies in the market in addition to existence of high competitors increases the danger of losing the client base.
Financial Analysis.
Due to absence of data, the monetary ratios of CMP could not be determined. It could be evaluated from the Appendix III that the annual total earnings of Timken Corporation Transfer Pricing Case Study Solution during the duration 2000-2012 are growing at a high growth rate, showing that the annual demand of the products of CMP is growing and the company is rather efficient in drawing in a large number of clients at a prospective rate.
Along with it, the second chart which reveals the annual growth in the Timken Corporation Transfer Pricing Case Study Analysis overall properties, shows that the company is quite efficient in including worth to its possessions through its profits. The development in properties shows that the total worth of the firm is also increasing with increasing the overall incomes. (Unknown, 2013).
Another financial analysis of the company utilizing the given data could be the analysis concerning the circulation of total profits of the business. Huge part of the incomes of CMP originates from the sales of its released books i.e. 64% as displayed in the Case Appendix V. The company might move towards other organisation sectors with a potential growth to attain its future advancement objective.
PESTEL Analysis
PESTEL analysis might be conducted to discover the different external forces impacting the performance of the company and the recent patterns in the external environment of the company. A short PESTEL analysis of the company is given as follows; (Alanzi, 2018).
Political.
As the publishing sector could have a considerable impact on the state of mind of the people about the communist ideology of the government, for that reason, the publishing sector is extremely supervised and guided by the Publicity Department of the Communist Party of China. It could be said that the general political forces impacting CMP company are high. The federal government policies concerning the publishing sector are likewise increasing with the passage of time.
Cost-effective.
Financial forces affecting the publishing sector in basic and the Timken Corporation Transfer Pricing Case Study Help in particular includesthe prices of paper, the income level of customers, the inflation rate, and the overall GDP growth of the country. All these forces integrate effect the demand for the publishing market. Along with it, the financial policies related to the import of books affect the total company at CPM. China's economic conditions are rather beneficial for CMP with high GDP development and customer earnings level.
Social and Demographical.
The customer preferences are moving towards digital publishing rather than the standard was of publishing. In this regard, CMP should focus on digital publishing to meet the altering consumer preferences.
Technological.
Technological forces affecting the CMP include the technological advancement in the reading strategies etc. Enhancement of science and technology together with the rise of digital publishing might reduce the demand for the CMP items, if certain actions would not be taken soon.
Environmental.
Ecological forces affecting Timken Corporation Transfer Pricing Case Study Solution includes the concerns of environmental 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 utilized while publishing should not be damaging for the environment.
Legal.
Legal guidelines for the publishing sector at whole are high. Publishing Ordinance 1997 requires the publishers to be authorized first by the Government to be gone into in the publishing market.
Market Analysis (Porter's Five Forces Design).
Porter's 5 Forces Model might be used to examine the beauty of the publishing market China. A brief analysis of the Porter's 5 Forces is given as follows;.
Danger of New Entrants.
Risks of new entrants in the Chinese Publishing Industry is moderate. The possible growth in the industry tends to bring in new entrants to the publishing industry. However, the presence of intense competition and the requirement of substantial capital tends to demotivate brand-new entrants to go into in the market.
Risk of Alternative.
Hazard of Replacement is high for the Chinese Publishing Industry. The replacement items for the released documents is the files presented in the digital libraries on particular sites. The changing consumer choices towards digital knowing increase the threat of substitution for the market.
Competitive Competition.
Competitive competition in the publishing industry is high. The existence of a great deal of consumers in the Chinese Publishing Market like CIP, PTP and so on tends to produce high competitive rivalry for CMP. In addition to it, new entrants are likewise participating in the market increasing the competitors for CMP.
Bargaining Power of Provider.
The major providers of the Timken Corporation Transfer Pricing Case Study Help consist of the providers of the paper for publishing documents. 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 Purchaser.
Negotiating power of buyer in the publishing market is high. Due to the presence of a a great deal of publishers in the Chinese market and the market saturation, the purchasers requires high quality documents at competitive prices.
Competitors Analysis.
CMP operates in a highly 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. Significant rivals of Timken Corporation Transfer Pricing Case Study Help include;.
• Chemical Market Press (CIP).
• Posts and telecommunication Press (PTP).
Chemical Market Press (CIP).
CIPis one of the close competitors of CMP. Established in the very same period, CIP releases comparable kind of books. For a big time period, CIP held the largest market share, and still ranks 3rd and 2nd in numerous market sections, with a major focus on academic publications. CIP acts as a hazard 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 marketplace share of Timken Corporation Transfer Pricing Case Study Analysis quickly in the existing market situation.
Posts and telecommunication Press (PTP).
Another close rival of CMP is PTP. It was also founded in the very same period as CMP and CIP. It ranks sixth in the state-owned publishers in regards to organisation scale. It is likewise among the prominent players in the publishing industry with a yearly total earnings of RMB 550 million in 2010.
Alternatives
Alternative-1: Broaden towards New Markets
Pros
• Reducing reliance over the Chinese markets.
• Increasing variety of Customers
• Development opportunities.
• Avoiding the effect of market saturation in the Chinese publishing market.
Cons
• Use of potential resources in growth.
• Risk of failure in 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 clients.
Cons
• Competition 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.
Suggestions
With the deep analysis of the internal and external environment of the company together with the market analysis and the rival analysis, Alternative 2 is advised to CMP to accomplish its future advancement. As the choices are moving towards digital publishing and the business require an instant service to prevent the decreasing industry development. For that reason, introduction of digital publishing could prove to be an immediate service with low quantity of risk for the business. The company could also consider the growth program after the success of its digital publishing program.
Execution
In order to present digital publishing in its product portfolio, the company should initially collects the data connected to the consumer need, the potential markets, the federal government policies and the information related to the rivals provided in the market. After that, the company must decide one prospective sector for its preliminary offering. It ought to gather research that how it could separate its digital publishing from the existing competitors' products. The steps above the company ought to go for the initial offering. The business must go for the other markets if the preliminary offering proves a success. In this method the business would have the ability to implement its digital publishing program.
Conclusion
The development of the publishing market is decreasing given that 2008, showing a hazard to the company's long term existence, but the scenario can be managed by thinking about an advancement plan in the future. The business could think about introducing 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.
