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Strategic Management module assignment case 2 (The News Corporation)
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A strategic case report about The News Corporation (Rubert Murdoch), including individual essays at the end of the report.
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Strategic Management3/26/2014
STENDEN
UNIVERSITY CASE REPORT 2
| Daphne Bennink, Linda van Duijvenvoorde, Robin van Rossum,
Boyan de Boer and Chloë Karsseboom
, Case reports 2
The News Corporation (TNC)
Commissioned by Stenden University Leeuwarden
Media and Entertainment Management
Module: Strategic Management in the Media
Tutor: Fan Ding
Submission date: 26-03-2014
Authors:
Daphne Bennink 208728
Linda van Duijvenvoorde 236454
Robin van Rossum 218634
Boyan de Boer 225878
Chloë Karsseboom 203955
1
,Preface
Strategy Consulting, commissioned by Stenden University Leeuwarden, writes this strategic
proposal. This assignment was to write a case report about the News Corporation.
By means of this preface we want to thank some people who were helping us during this
process. Our word of thanks goes to Fan Ding in the first place, who helped us these four
weeks and clarified some issues in regard to this case report. Furthermore we want to thank
Ronald Dikkeboom for the lectures he gave us with a lot of information. Finally, we want to
thank the second sources we used for this process. Without these sources it would have
been more difficult to come up with some scenarios for the News Corporation and what can
happen in the external environment.
Daphne Bennink, Linda van Duijvenvoorde, Robin van Rossum, Boyan de Boer and Chloë
Karsseboom
2
,Management summary
TNC created a lot of opportunities. TNC became big by the popularity in Australia, which was a
springboard for multinational status to make successful worldwide magazines. Other opportunities
are buying the company Century Fox, which would provide them studios, the introduction of Sky
Television, which created a new approach to the distribution of program material and with buying
Myspace TNC created new opportunities for internet as a distribution channel.
Threats are the debt levels, like taking financial risks. Other threats are the decreasing by cable
operators when NewsCorp bought a satellite, the extensive upgrading of the British cable system
(for rivalry), the advances in technology of telecommunications created a threat to totalitarian
regimes, and political changes that encouraged liberalization and deregulation of national
broadcasting monopolies or oligopolies. The impact of this environment changed the whole media
industry as everyone was used to.
The News Corporation started to expand globally by purchasing ‘News of the World’ (UK). This was
the start of vertical integration. Furthermore, they started to broadcast their own shows. The
acquisition of the film company 20th Century Fox was the beginning of a large growth for The News
Corporation. When this happened (1984) The News Corporation started with horizontal integration.
Nowadays, it is a company that is involved in several sectors within the media industry. The News
Corporation is using the localization strategy, because of the high pressure for local responsiveness
and the low pressure for cost reduction.
The News Corporation is involved in several sectors within the media industry and with different
products so they have created a high level of diversity. The News Corporation has a lot of
acquisitions and mergers and therefore they have reduced the costs. This means that there is a high
synergy.
Rupert Murdoch is the founder and CEO of The News Corporation. He has a lot of influence on the
development of the company and the corporate strategy, because he also has a 40% stock of the
company. According to a financial analyst Murdoch understands its business and the business that
he is in. He also has a lot of vision as to where the business should be going. Murdoch has another
advantage, because he has political connections, which provides support from higher sources.
One of the problems that challenge TNC’s future strategy is that the business segments direct
broadcast satellite TV and publishing are not making enough to non-revenues. Therefore they will
eventually only cost money. Another problem is that TNC can’t ask money for online news articles,
since they are mostly already online for free. And at last TNC is planning to expand their company
through strategic acquisitions, but this will cost a lot of money.
Corporate governance is the system of rules, processes and practices of a company. Rupert Murdoch
is the chairman of the board of directors, in which twelve people are operating.
TNC has nine key stakeholders: Governments, Creditors, Board members, Stockholders, Managers,
General public, Customers, Suppliers and the Employees of TNC.
TNC had a big ethic issue three years ago. Many phones of celebrities and other important people
were hacked. TNC has a Code of Ethics for the chief executive officer and for the senior financial
officers. To avoid (more) ethical issues in the future, this code has to be more respected.
3
, Table of contents
Inhoud
Management summary.............................................................................................................. 3
Table of contents ....................................................................................................................... 4
Opening ...................................................................................................................................... 6
Summary of case 2: The News Corporation .......................................................................... 6
Development of TNC ............................................................................................................. 8
The recent developments of TNC ........................................................................................ 10
Problem statement and sub-questions ................................................................................... 11
Problem statement .............................................................................................................. 11
Sub-questions ...................................................................................................................... 11
Historical analysis ..................................................................................................................... 12
What external environment changes during the period of the case have created
opportunities and threats for TNC? ..................................................................................... 12
What impact do these environmental changes have on the time-based media industry? 13
Corporate and global strategy ................................................................................................. 14
What are the corporate and global strategies of TNC and how do the strategies create
diversity and synergy? ......................................................................................................... 14
Corporate strategies ............................................................................................................ 14
Global strategies .............................................................................................................. 14
Diversity and synergy ....................................................................................................... 14
What is the logic of the mix of business in The News Corporation’s portfolio according to
the BCG-matrix? ................................................................................................................... 15
The role of Rupert Murdoch ................................................................................................ 17
Future issues/problems ....................................................................................................... 18
Corporate Governance ............................................................................................................ 19
What are the governance mechanisms of TNC and what are the six stakeholders? .......... 19
Decision-making ....................................................................................................................... 22
Scenario 1 – No more advertisements in the traditional print media. ............................... 22
Scenario 2: less viewers at BSkyB's TV channels ................................................................. 22
Scenario 3 – Rupert Murdoch’s retirement ......................................................................... 22
Scenario 4 – TNC will focus their strategy more and more on 20 th century fox. ................ 23
4
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