Why The Highest Price Isnt The Best Price Case Study Solution and Analysis
Introduction
Why The Highest Price Isnt The Best Price Case Study Solution is the largest publishing company with a highest market share in the China's book retail market. CMP has actually ended up being a specialized details supplier and a big comprehensive Science and Innovation publishing company through the combination of print media, audio-visual media and the network media.
Crucial Problems
CMP has invested its 60 years journey smoothly, being a successful publishing home, nevertheless, the changing macro market trends and forces bring particular obstacles to the publishing industry in general and Why The Highest Price Isnt The Best Price Case Study Solution in particular. These elements include;
• Entrance of the new publishing firms in the industry.
• Decreasing growth of the publishing market.
• Market saturation.
• Introduction of digital publishing strategies
• Enhancement of science and technology.
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 circumstance? Do the long important experience, technical resources and the capabilities of the business could be used to strive for the future development unceasingly? How could the business sustain its long term competitive position in future?
Situational Analysis
Internal Analysis
SWOT Analysis
Strengths
Why The Highest Price Isnt The Best Price Case Study Solution has certain strengths that can be made use of to reduce the dangers, conquer the weakness and get the opportunities. Strengths of CMP are offered as follows;
• The long term experience of Why The Highest Price Isnt The Best Price Case Study Analysis in the publishing industry i.e. 60 years enables the company to supply high quality products at a lower cost using its prior experiences.
• The technical resources and abilities generated by its effective journey supply a competitive advantage to CMP.
• Huge item portfolioof CMP assists it to diversify its danger and offer high worth to its customers.
• Strong financial position permits the business to consider a number of advancement chances with no fear of raising fund externally.
Weaknesses
Along with the strengths, the business has certain weaknesses which could increase restrictions for the business in executing its advancement program. The weaknesses of Why The Highest Price Isnt The Best Price Case Study Solution 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 development. It needs to propose specific expansion plans to avoid its reliance over the Chinese markets to achieve long term growth.
Opportunities
Although, the growth of the publishing market is declining given that 2008, affecting Why The Highest Price Isnt The Best Price Case Study Help also, but the development could be revived by availing certain chances presented in the market. The market chances for CMP consist of;
• The business might likewise present Digital Publishing by utilizing its long term technical experience and a strong client acknowledgment in the market.
• CMP might think about an advancement program through the growth towards foreign markets in order to lower its reliance over Chinese markets by using its large funds.
Dangers
The altering macro trends in the market and increasing competition in the publishing industry has postured specific threats to Why The Highest Price Isnt The Best Price Case Study Analysis including;( Gurel, 2017).
• Introduction of digital publishing i.e. digital libraries might result in declining market share of Why The Highest Price Isnt The Best Price Case Study Solution due to the customer 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 gain a strong customer base by using particular techniques like aggressive promo, quality items, etc.
• Entrance of new publishing firms in the industry in addition to existence of high competition increases the hazard of losing the customer base.
Monetary Analysis.
Due to lack of data, the monetary ratios of CMP could not be computed. It could be evaluated from the Appendix III that the annual total earnings of Why The Highest Price Isnt The Best Price Case Study Analysis 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 large number of customers at a prospective price.
In addition to it, the 2nd chart which reveals the yearly development in the Why The Highest Price Isnt The Best Price Case Study Analysis total assets, shows that the business is quite effective in adding value to its properties through its revenues. The development in assets reveals that the overall value of the firm is likewise increasing with increasing the total incomes. (Unknown, 2013).
Another financial analysis of the business utilizing the given information could be the analysis relating to the distribution of total incomes of the business. Huge 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 business could move towards other service segments with a potential development to accomplish its future advancement objective.
PESTEL Analysis
PESTEL analysis could be conducted to learn the different external forces affecting the performance of the company and the current patterns in the external environment of the company. A quick PESTEL analysis of the company is given as follows; (Alanzi, 2018).
Political.
As the publishing sector might have a considerable influence on the frame of mind of the people about the communist ideology of the federal government, for that reason, the publishing sector is highly monitored and assisted by the Publicity Department of the Communist Party of China. It might be stated that the general political forces impacting CMP business are high. The federal government policies regarding the publishing sector are also increasing with the passage of time.
Economical.
Economic forces affecting the publishing sector in general and the CMP in specific includesthe rates of paper, the earnings level of consumers, the inflation rate, and the general GDP growth of the nation. All these forces combine impact the demand for the publishing market.
Social and Demographical.
Social and demographical forces include the population growth, the consumer's preferences towards checking out informative products and so on. China has the highest population in the world with a high population growth, revealing the increasing number of customers of the Why The Highest Price Isnt The Best Price Case Study Analysis. The customer preferences are moving towards digital publishing rather than the conventional was of publishing. In this regard, CMP ought to concentrate on digital publishing to satisfy the altering customer preferences.
Technological.
Technological forces impacting the CMP consist of the technological advancement in the reading methods etc. Enhancement of science and technology in addition to the increase of digital publishing could decrease the need for the CMP products, if certain actions would not be taken quickly.
Environmental.
Ecological forces affecting Why The Highest Price Isnt The Best Price Case Study Help includes the concerns of ecological communities over the use of paper in publishing books. The paper utilized in the books while publishing is needed to be non reusable and the ink used while publishing needs to not be hazardous for the environment.
Legal.
Legal regulations for the publishing sector at whole are high. The legal guidelines regarding the publishing sector is managed by the General Administration of Press and Publication. Publishing Ordinance 1997 requires the publishers to be approved initially by the Government to be entered in the publishing market. The ordinance prohibits direct involvement of foreign entities and people in the publishing sector.
Market Analysis (Porter's 5 Forces Model).
Porter's Five Forces Design could be used to evaluate the attractiveness of the publishing market China. A brief analysis of the Porter's 5 Forces is provided as follows;.
Threat of New Entrants.
Threats of brand-new entrants in the Chinese Publishing Market is moderate. The prospective development in the industry tends to draw in new entrants to the publishing industry. Nevertheless, the presence of extreme competitors and the requirement of big capital tends to demotivate brand-new entrants to go into in the marketplace.
Risk of Substitution.
Hazard of Alternative is high for the Chinese Publishing Industry. The alternative items for the published documents is the files provided in the digital libraries on particular websites. The changing consumer preferences towards digital knowing increase the hazard of alternative for the industry.
Competitive Competition.
Competitive competition in the publishing industry is high. The existence of a great deal of customers in the Chinese Publishing Industry like CIP, PTP etc. tends to produce high competitive rivalry for CMP. Together with it, new entrants are also participating in the market increasing the competitors for CMP.
Bargaining Power of Supplier.
The significant suppliers of the Why The Highest Price Isnt The Best Price Case Study Solution include the providers of the paper for publishing 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 Purchaser.
Haggling 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 market saturation, the buyers requires high quality files at competitive prices.
Rivals Analysis.
CMP operates in an extremely competitive industry with the existence of large number of rivals. Nevertheless, the business has a competitive position in the market with the highest market share in the Chinese publishing market. Significant rivals of Why The Highest Price Isnt The Best Price Case Study Help consist of;.
• Chemical Market Press (CIP).
• Posts and telecommunication Press (PTP).
Chemical Market Press (CIP).
CIPis one of the close rivals of CMP. Established in the same duration, CIP publishes comparable kind of books. For a big time period, CIP held the largest market share, and still ranks second and 3rd in different market segments, with a significant focus on educational publications. CIP functions as a hazard for CMP as it could wean its market share due to its long term competitive background. CIP is concentrated on digital publishing and might wean the marketplace share of Why The Highest Price Isnt The Best Price Case Study Help easily in the current market circumstance.
Posts and telecommunication Press (PTP).
It was also established in the same period as Why The Highest Price Isnt The Best Price Case Study Solution and CIP. It is likewise one of the prominent gamers in the publishing market with a yearly total revenues of RMB 550 million in 2010.
Alternatives
Alternative-1: Expand towards New Markets
Pros
• Lowering reliance over the Chinese markets.
• Increasing variety of Customers
• Development chances.
• Preventing the impact of market saturation in the Chinese publishing market.
Cons
• Use of possible resources in expansion.
• Threat of failure in new markets.
• Time consuming.
Alernative-2: Present Digital Publishing
Pros
• Sustaining consumer base.
• Approaching new markets.
• Easy to introduce utilizing existing abilities.
• Low threat of Failure.
• Low requirement for funds.
• Increased product portfolio provides high value to clients.
Cons
• Competition in the market by CIP, who has prior concentrate on the digital publishing.
• Shift of focus from the core company sectors to the brand-new one can lead the business to lose need of its products in the market.
Recommendations
With the deep analysis of the external and internal environment of the company along with the market analysis and the rival analysis, Alternative 2 is recommended to CMP to attain its future development. As the preferences are moving towards digital publishing and the company require an immediate option to avoid the declining industry growth. Therefore, introduction of digital publishing might show to be an immediate service with low quantity of danger for the business. The company could likewise consider the expansion program after the success of its digital publishing program.
Implementation
In order to present digital publishing in its item portfolio, the business must initially gathers the information related to the consumer demand, the prospective markets, the government regulations and the information related to the competitors presented in the market. If the initial offering proves a success, the company should go for the other markets. In this way the company would be able to execute its digital publishing program.
Conclusion
Although, the development of the publishing market is declining given that 2008, revealing a risk to the company's long term existence, however the scenario can be managed by thinking about an advancement strategy in the future. The business could consider introducing digital publishingin its existing market to execute its development program at instant basis and to prevent the risk of failure for entrance in the brand-new markets.
