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Incumbent firms have difficulties in acting and reacting to changing environments and in coping with new strategic challengesDevelopment of strategies and the difficulties of realignmentA- Theoretical part: Concept of a strategic pathB- Empirical part: - How and why a specific strategic pattern has emerged - why it is still maintained in quality newspapers

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Strategic Paths and Media Management A Path Dependency Analysis of the German Newspaper Branch of High Quality Journalism

Strategic Paths and Media Management A PathDependency Analysis of the German NewspaperBranch of High Quality JournalismPresented by: Rana ChahinePresented to: Dr. Tarek El BadawySpecialized Media Management 1- IntroductionIncumbent firms have difficulties in acting and reacting to changing environments and in coping with new strategic challengesDevelopment of strategies and the difficulties of realignmentA- Theoretical part: Concept of a strategic pathB- Empirical part: - How and why a specific strategic pattern has emerged - why it is still maintained in quality newspapers - Institutional approachesOrganizations rigidity Structural natureMyopic managerial behaviorResistance to changeinsufficient exploratory innovationsLack of knowledgeInsufficient response to environmental changesOrganizational rigidityThe capability of an organization for acting on changing environments absorptive capacitylevel of prior related knowledgehistorical developmentpast experiences

- Evaluation, utilization of environmental knowledgeResponsiveness- Required capacity for addressing new contexts

(3-- Institutional approachesThe ability to exert strategic decision making(4-Able to act and to react to changing environmentstherefore to be endowed with strategic choice In tn (past)

adopted routines and resources in tn + 1(future)absorptive capacityFirms absorptive capacity is basically a function of its exploitation in the past- Institutional approaches2-Path Dependency Theory and the Concept of Strategic PathsStrategy follows structureStrategies are not built independently from the structural context in which they are embedded.The strategic process is both context and also history related.Cumulative processes, in the sense that former events and decisions have an impact on those that follow2-Path Dependency Theory and the Concept of Strategic PathsFirms initial investments (additional costs/ losses) Structural properties (stable routines)Routine and resources (Inertia is a side effect of success)Why does history matter?strategic systems, are historical machines that are built on self-made structures and processesThey loose their ability to act strategically due to their own strategic actions in the past2-Path Dependency Theory and the Concept of Strategic PathsMore recently, self-induced limitations of organizational and strategic choice have been linked to path dependency processesIt explains the emergence of strategic pathsIn addition to; how and why strategic systems get rigid and trapped by a loss of their absorptive capacity. 2-1- The Processual Dynamic of Path Dependency: A Three-Phase-ModelPath dependency is the possible outcome of a dynamic organizational process: governed by one or more self-reinforcing mechanismsLeading to a narrowing of the scope of varietyNo ready made restrictions (unlike initial investments)Emerging pattern, a result of an ongoing processFocuses on the development of a special kind of pattern.

2-1- The Processual Dynamic of Path Dependency: A Three-Phase-ModelThe constitution of an organizational pathflexibilityinflexibilityself-reinforcing effects2-2- Linking Path Dependent and Strategic Processes: The Emergence of a Path Dependent Strategic PatternStrategy implies having choicesHoweverPath dependency narrow down the range of variety and thus the range of choices hindering a system from acting strategically

Strategic path implies bothsuccessful strategic pattern (+ve feedback)diminished scope of strategic choice.2-2- Linking Path Dependent and Strategic Processes: The Emergence of a Path Dependent Strategic PatternFirm must deal with a trade-off between Maximizing the scope of strategic choice (absorptive capacity) Maximizing those goals triggered by the self-reinforcing mechanisms.2-2- Linking Path Dependent and Strategic Processes: The Emergence of a Path Dependent Strategic PatternThere are certainly ways out of this path trapThe first necessary step out of a strategic lockin is to develop a better understanding of the dynamics standing behind such processes2-3- The Analysis of Strategic Paths: An Analytical FrameworkRetrospective analysis (explains the present rigidity of a strategic system by referring to its historical development)Starts with a path assumption (assuming existent rigidity related to a path dependent process.)Five steps analysis

StepsFocus1st stepcontinuity and changedetect at least one time-consistent strategic issue2nd step+/- ve, neutral elements of feedbackat least one positive feedback3rd steprelevant changesrationality shift (before/after)4th stepchanges in the strategic activitieswith regard to the rationalityshift and the path assumption.5th stepform and degree of path dependencywhy and towhat extent the focal system is not able to cope with a new situation1,2,3 1st basic indicator for a path induced strategic lock-in.1,2,4 2nd basic indicator for a path induced strategic lock-in.strategic activitiesPath breaking ability2-3- The Analysis of Strategic Paths: An Analytical Framework5th step possible cases:a) There are no other possible strategic activities (resource limitation).b) Management does not recognize other possible strategic activities.c) Management does not recognize the necessity for other possible strategic activities.2-3- The Analysis of Strategic Paths: An Analytical FrameworkFour different levels of analysisLevel of analysis1strategic activitieswhat a strategic system does/not does2strategic discoursewhat a strategic system says/does not say3strategic reflectionhow a strategic system state a reason for what it does/says4strategic basic assumptionsto what kind of strategic premises a strategic system refersBy using this process we can explore the driving forces of the strategic path determining the strategic patterns of the players in the field.3- The Case of the Branch of National Daily Produced High Quality Newspapers in Germany3.1 Sample Selection and Introducing Case DescriptionThe media industry offers an ideal, albeit underdeveloped, field for strategic process research.In many countries the media are subject to deep, radical changing processes. (Digitization, internet, changed competitive situation..)There is no clear idea of their impact on an organizational and strategic level.Therefore, the key question at this moment for media management is how media organizations should cope with these developments. 3.1Sample Selection and Introducing Case DescriptionThis study focuses at a branch level on the strategic paths in the German market of high quality newspapersParadoxical situation:1- They still receive the highest estimation as an indispensable flagship of modern democratic society 2- They are confronted with changes that are reshaping the landscape of quality journalism profoundly and not least of all, are questioning their economic legitimacyThis crisis was triggered originally by the economic breakdown that began in 2001;- Severe impacts on the advertisement businessSlow continuous decline of readershipNew media challengesThe further development of the branch depends to a great extent on the strategic decisions the players take today, and these decisions in turn depend on the absorptive capacity and the range of strategic choice still available.3.1Sample Selection and Introducing Case Description3.2 Methods: Qualitative Study1- Qualitative Organizational path process2- Longitudinal Examining temporal processes3- Process research Path dependency research4- Case Study Thick description5- Interpretative to understand the logic and inner reasoning5- Explanatory Applying developed framework to empirical case3.3 Data Collection and Description

The case study databasePeriod between 1999-200680 Interviews 1000 Newspaper articles analysisQuantitative data (returns, adv., salaries, circulation, coverage..) ResourcesEnvironmental3.4 Data Analysis and Primary ResultsThe Main focus is to identify:

- Effects of self-reinforcement (on the rise of systematic strategic path)- Type of strategic pattern built- Impact on strategic development- Similarity of strategic behaviors of different players Following the 5 steps & the 4 levels of the analytical framework3.4 Data Analysis and Primary ResultsAdvertisementReadershipNew mediaResulted inFinancial ModelProduct ModelMarket Model Time consistent factors of step 1The Changes observed in step 3 due to; Step 3How can we explain the (relatively) time consistency of the FM, PM, or MM, if we consider the changes in advertisement, readership and new media?.

3.4 Data Analysis and Primary Results3 feedback mechanisms driving the idea of qualityLeading to differentiating strategic positioningEach player has a slight different conceptQuality Concept QCProduct Concept PCMarket Concept MCStep 4Strategic activities require additional/alternative financial returns or sourcesTo switch into a more feminine marketChecking the applicability of this deviation lead to estimate the remaining scope of choice.3.4 Data Analysis and Primary ResultsStep 5Focusing on the 3 reasons of persistence Figuring out the form and degree of path dependencyNo common explanation could be detected.The less comfortable the resource situation, the more the necessity for change is claimed, but at the same time considered impossible due to resource limitations4- Discussion: Reconceptualizing the Strategic Path of Quality NewspapersThe analysis has explored three different forms of self-reinforcing mechanismAdvertisement-quality-spiral

2) Quality-product concept- spiral

3) Product-concept-readership-spiralFinance Model

B) Product Model

C) Market ModelDecline in advertisingInternet ChallengesNew media &Decline in readership4- Discussion: Reconceptualizing the Strategic Path of Quality Newspapers4.1 The Financial Model

Sold under production costImpossible Without advertisingThe advertisement-quality-spiral4- Discussion: Reconceptualizing the Strategic Path of Quality Newspapers4.2 The Product Model

The quality-product-concept-spiral4- Discussion: Reconceptualizing the Strategic Path of Quality NewspapersOnline business modelThe business model for online journalism actually refers to almost 100% of advertising revenues- More complex market than it is in the world of printed journalism.4- Discussion: Reconceptualizing the Strategic Path of Quality NewspapersRepositioning The product model in the context of other media products

Employing weekly format - New weekly products -Going onlineStill they are in a fragile situation4- Discussion: Reconceptualizing the Strategic Path of Quality Newspapers4.3 The Market Model

Habit readershipThe product-concept-readership-spiral4. 4 The Driving Self-Reinforcing EffectsThe three different models represent the disposition of the newspaper organizations for the different self-reinforcing mechanismsLeading to different emerging patterns:Finance Model: refers to cost effects in the form of economies of scale concerning the production costs

Product Model: readers habits reinforce a specific product concept flow of reading

Market Model: related to product concept and the approachable readershipnewspapers identity (brand)4. 5 The Strategic Pattern- The three different models constitute an important part of the strategic path.Advertising impactOnline impactReadership A. Responses to Change 1(concerning the FM)B. Responses to Change 2(concerning the PM)C. Responses to Change 3(concerning the MM)-cost reduction (short-run/long lasting)- adopting alternative modelsof ownership- augmentation of prices- acquiring other alternativebut complementary returns- regarding online as a complementto the printed version- adopting a more weekly formatin the printed versionAcquiring a new profile and anew legibility- by permanently changing thecore product- by relaunching the core product- by introducing complementaryproducts with differentdegrees of legibility- by introducing new relatedproducts to develop and/orto benefit from the brand4. 5 The Strategic Pattern- The three different models constitute an important part of the strategic path.

Cross impactsCounterproductive effects4. 5 The Strategic PatternThe three consequences: There are different cross impacts and even counterproductive effectsLack of decisivenessConceivable strategic activities not taken into consideration

The analysis reveals much about the scope of strategic choice in the field.4. 5 The Strategic PatternThe interpretation process of the data on the three additional levels of path analysis reveals four basic assumptionsStrategic discourseReflectionBasic assumptionsDefinition of quality in journalismQuality is coupled with printingSubsidized is a mustEconomic & quality separation is a mustPath LevelsAssumptions4. 5 The Strategic PatternThe strategic pattern

4. 5 The Strategic PatternDeeply rooted ProcessInduced byThis strategic pattern is the result of an ongoing process concerning the strategic development of the newspaper companies.Maintained bythe strategic pathself-reinforcing mechanisms4. 5 The Strategic PatternHaving strategic choices > acting strategically > overcome the strategic pathTransforming the changes in strategic opportunities and to creating a new and convincing business model.5. Conclusion and Final RemarksConcept: - Introduction of the concept of the strategic path and an analytical framework to analyze strategic processes. - Focusing on self-reinforcing socioeconomic mechanisms - Explaining how and why firms lose their absorptive capacity5. Conclusion and Final RemarksResults indicate:- How to difficult it is to overcome a strategic pathQuality is at the core of the strategic patternQuality is entwined with strategic path, determining the range of choicesReacting strategically:Disentangling the core quality from the structural representation.Any quality threat will be rejected

5. Conclusion and Final RemarksIndustry facts:Industry as a whole is facing same difficultiesThe lock-in of the present situation becomes all too evidentAny strategic move assumed to lead to a decline in market performance None of the players will move due to the competitive natureConsequences:Successful change requires more than a single actionCompetitive situations reinforce the assumption of endgame theory5. Conclusion and Final RemarksPath-breaking changes:Frankfurter Rundschau: has introduced a radical new product concept and switched over to the tabloid format- Die Welt: has radically changed the organizational structureof its editorial department.These attempts are not in vain, helping to re-embed daily quality journalism in a prospective product-market concept.Thank You