Financial Times in Today's Hyper-Competitive, Global MediaSWOT

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Financial Times

In today's hyper-competitive, global media market, media organizations need to continually assess their current positioning, in the marketplace, in order to remain competitive and gain valuable market share in a mature market. Following is an analysis of Financial Times positioning. This includes: a SWOT analysis, PESTEL analysis, Michael Porter's Five Forces Analysis, Michael Porter's Generic Strategies, Michael Porter's Value Chain, the Boston Matrix, and the Ansoff Matrix, as tools.

Strengths:

Financial Times has several strengths that it has to draw upon in order to be competitive in the marketplace. They are as follows:

Strong brand name that has been a part of the media industry for generations

Solid, historic reputation for accurate information

First rise in circulation in four years, in April 2005, by 2%, since 2001.

Reached break even in final quarter of 2004

Market entry in 140 countries, with 23 presses, including their newest entry into Asia

New publishing system being installed that will allow for total integration between print and online papers

Implementation of FT PM, a single A4 sheet distributed in the afternoon that acts as a teaser for the following day's paper (Robinson, 2005)

Weaknesses:

Despite the above strengths, Financial Times also has a variety of weaknesses that are holding them back from being as competitive as possible in the marketplace.

The company has suffered huge losses, in the past

150 million pound investment, in FT.com, has yet to pay off They have been experiencing a difficult circulation battle with Wall Street Journal

Rumors that the paper will be sold are damaging to the paper

The paper's historic reputation for accuracy is perceived, by some, as faltering, as they strive to focus on more news breaking scoops

37 million pound lawsuit over the Collins Stewart Tullett story published in Summer 2003, still damages Financial Times' reputation and is an added legal expense

Position in the United States is weak, with only 130,000 subscribers, compared to WSJ's 2 million subscribers

FT.com has 3.5 million unique users, but only 80,000 subscribers (Robinson, 2005)

FT remains heavily dependent on its home market. The North American and European markets, which together account for more than a quarter of revenues, both suffered from a fall in turnover, in 2004 (Griffiths, 2004)

Opportunities:

There are several opportunities that Financial Times has yet to take full advantage of.

Online subscriptions of the same newspaper print subscribers have, on the day of publication

Entry into new global markets

Continued expansion into existing global markets

Newspapers taking on a more blog-like feel, where readers can respond to articles (Miller, 2005)

Threats:

In this hyper-competitive marketplace, the threats to Financial Times are many.

There has been an advertising recession in the newspaper industry

UK circulation for newspapers has fallen, in general

Corporate scandals has shaken consumer confidence in corporations (Robinson, 2005)

More users are getting their daily news from the Internet, with thousands of choices available to broadband users

Majority of citizen feel newspapers to be untrustworthy, not useful, and not entertaining (Miller, 2005)

PESTEL Analysis:

There are six factors to consider when performing a PESTEL analysis: Political, economic, socio-cultural, technological, environmental, and legal. The political factors that are pertinent to Financial Times include the regulations designed by ABC and whether or not they decide to include online subscriptions in their counts. If so, competitors, such as The Times could show significant readership and advertisers may be more attracted to that or other competitor newspapers.

Economic factors are also important. In a troubled economy, advertising budgets, for corporations, are typically reduced. This could further the advertising recession the industry is already facing.

Socio-cultural factors are perhaps the biggest challenge for Financial Times.

Today's citizens are more likely than ever to get their news from an online source, as opposed to a newspaper. In addition to the Internet, cable news networks allow for 24-hour a day news reporting that users can access at their convenience.

Environmental factors are exacerbated by socio-cultural factors. Simply put, online news retrieve is more environmentally friendly than newspapers, despite the active recycling campaigns.

Lastly, legal factor have and will continue to impact Financial Times. They are currently in a multi-million pound lawsuit regarding a story that was released in Summer 2003. As the organization becomes more desperate for more sensational stories, the likelihood of lawsuits from individuals and companies featured in these stories will increase.

Michael Porter's Five Forces Analysis:

The Michael Porter's Five Forces include: Potential entrants, bargaining power of buyers, threat of substitutes, and bargaining power of suppliers. Potential entrants to the media industry is significant. Thanks to the Internet, electronic newspapers can be started with minimal cost. There are now thousands of news choices for Internet users.

This enhances the bargaining power of buyers. Add to this the easily obtained substitutes. Even traditional print newspapers can be ordered and canceled with a phone call or a click of a mouse. Plus, suppliers do also have significant power, as there are very few paper companies, printing press manufacturers, and ink manufacturers.

Michael Porter's Generic Strategies:

Michael Porter's Generic Strategies are: Cost leadership, differentiation, cost focus, and differentiation focus. Financial Times has successfully utilized an industry wide differentiation strategy. They have touted themselves as the most reliable news source in the industry. And, by utilizing pieces like the FT PM, they have further differentiated themselves from many of the competitors who do not offer this teaser preview sheet.

Michael Porter's Value Chain:

Michael Porter's Value Chain analysis involves analyzing: inbound logistics, operations, outbound logistics, marketing and sales, and service. Financial Times' inbound logistics include their newsgathering facets. The organization has a staff of qualified reporters and editors that are in control of the input materials.

Their operations have created value by efficiently turning these stories into the printed and online documents that the subscribers experience. The implementation of their new publishing system will further enhance this value.

Outbound logistics includes warehousing, subscription delivery, and other distribution such as to newsstands and online. Financial Times has been able to utilize these logistics effectively and efficiently, however, they could increase distribution in certain key foreign markets.

Marketing and sales is one area where Financial Times is lagging. Although they broke even last year, this was due more to a decrease in costs, than an increase in revenues. Sales in the U.S. And in Europe are declining, yet represent a considerable percentage of Financial Times' total revenue. Pricing appears to be at the top end of the industry, for traditional newspapers, which may be affecting value conscience consumers decision to switch to other media outlets.

Lastly, service for Financial Times has always been outstanding. They maintain a high level of customer satisfaction and have an efficient and effective customer support team to address any concerns that arise. However, as consumers turn more and more to the convenience of Internet new available immediately online, service for Financial Times will have to include 24-hour coverage, if they are going to remain competitive.

The Boston Matrix:

The Boston Matrix involves four categories of business units. The cash cow is a unit that has a large market share in a mature, slow growing industry. These units require little investment to generate cash that can be used to invest in other business units. The star is a unit that has a large market share, but is in a fast growing industry. They generate cash, but since the market is growing rapidly, they require investment to maintain their lead. If successful, a star will mature into a cash cow. The question mark is a unit with small market share, in a high growth market. The unit requires resources to grow market share, but they may or may not develop into a star. And, finally, a dog is a business unit that has small market share in a… [END OF PREVIEW]

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