reader’s digest

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READER’S DIGEST GROUP FIVE

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Reader’s Digest. Group five. Key Term. Mission “we are a global multi-brand and marketing company that educates, entertains and connects audiences around the world. We are dedicated to providing our customers with the inspiration, ideas and tools that simplify and enrich their lives” - PowerPoint PPT Presentation

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Page 1: Reader’s Digest

READER’S DIGESTGROUP FIVE

Page 2: Reader’s Digest

KEY TERM• Mission “we are a global multi-brand and marketing company that educates, entertains

and connects audiences around the world. We are dedicated to providing our customers with the inspiration, ideas and tools that simplify and enrich their lives”• -Vision “create the world’s largest multiplatform communities based on branded content”• -Primary activity: produce monthly subscription magazine filled with meaningful stories

that are not necessarily news-worthy but memorable • -support activities: maintain a web presence in order to attract younger consumer,

control and seek advertisement revenue

Page 3: Reader’s Digest

FINANCIAL ANALYSIS• 2007 & 2008 liquidity and solvency ratios of RDA• Current ratio = current assets/current liabilities

2007: .86 2008: .83• Quick ratio = (current assets - inventory)/current liabilities

2007: .65 2008: .63• Debt-to-equity ratio = total debt/total equity

2007: 2.91 2008: 8.3• Debt-to-assets ratio = total debt/total assets

2007: .45 2008: .53

Page 4: Reader’s Digest

EXTERNAL ANALYSIS

Intensity of rivalry among

competitors in the

industry: high

Threat of new

entrants: high

Bargaining power of buyers:

high

Threat of substitute products

and services:

high

Bargaining power of suppliers:

low Threat of new entrants: high Costs to enter are little on time and

money Little protection for key technologies Low product differentiation

Bargaining newer of buyers: high Low switching cost High number of buyers, but they are

concentrated into very few categories Big importance of the each buyer

categories

Threat of Substitute Products: highBargaining power of suppliers: low Low uniqueness in the services

Intensity of rivalry among competitors in the industry: high

Numerous of equally balanced competitors

Slow industry growth Lack of differentiation or switching

costs

Page 5: Reader’s Digest

EXTERNAL ANALYSIS• Stage of industry• Decline stage

• no assurances that Reader’s Digest will generate sufficient cash flows from operations to fund day-to-day

• may result in bankruptcy or liquidation

Page 6: Reader’s Digest

EXTERNAL ANALYSIS• Demographic

• Aging population • 53 median

• Unable to increase advertising revenue: 18-35 not reached

• Socioculture • Greater concern for health and diet • Greater concern for the environment

• Political/Legal • Committee of Advertising Code

• UK dealing with abusing advertising

Page 7: Reader’s Digest

EXTERNAL ANALYSIS• Technological

• Emergence of internet technology • Wireless technology

• Economic • Print is “dead”

• Global • Emergence in economies all over the world

• Philippines, Malaysia, Canada, Argentina, etc.. Reader’s Digest Korea

Page 8: Reader’s Digest

VRIO ANALYSIS• Value: brand value, readers’ foundation• Rarity: one of the most popular magazine around the world• Imitation: long history• Organization: how to organize reader’s digest’s advantages?

Page 9: Reader’s Digest

SWOT ANALYSISStrengthBest-Selling, Worldwide, Readable, fiction

WeaknessOther magazines, internet

SWOT

Page 10: Reader’s Digest

READER’S DIGEST VS COMPETITORS

• Reader’s Digest strategy • Divesting business • Reconfiguring the RDA web presence • Redesigning the flagship magazine • Continuing global expansion • Launch new magazines

• Launch growth initiatives, reduce costs and transform company culture worked in opposite ways with reduced consumer spending and a drop in magazine advertising worldwide

• Customer-centered approach • Less advertising money for Reader’s Digest

• Horizontal diversification• Related business • Geographic diversification

Page 11: Reader’s Digest

READER’S DIGEST VS COMPETITORS

Page 12: Reader’s Digest

Business Growth Rate

Relative position (market share)

Reader’s Digest US

Readers Digest Int.

Music and Videos

Food and Gift

Firm Analysis • Divestitures

• Sold QSP, Inc. • Fundraising business

• Taste of Home Entertaining • Books are Fun • Gareth Stevens • World Almanac Education

Library • Joint ventures

• ChangeOne, online weight loss program

• Everyday with Rachel Ray• Acquisitions

• In 2000, Reiman Publications • Reduced sweepstakes and

magazine sales • Allrecipes.com

Page 13: Reader’s Digest

STRATEGIC RECOMMENDATIONS

• Minimize Reader’s Digest US, Focus on Reader’s Digest International • Increase web presence

• PDF version of magazine • Interactive web activities for younger generations

• Separate the variety of subjects in Reader’s Digest to different magazine • Health and wellness• Food and entertainment • Personal stories

• Increase revenue through advertising is a must

Page 14: Reader’s Digest

THANK YOU FOR YOUR PATIENCE!

GROUP FIVE