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” -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

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

external analysis Bargaining power of suppliers: low 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 Bargaining power of suppliers: low Low uniqueness in the services Threat of Substitute Products: high 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 new entrants: high Costs to enter are little on time and money Little protection for key technologies Low product differentiation Intensity of rivalry among competitors in the industry: high Numerous of equally balanced competitors Slow industry growth Lack of differentiation or switching costs

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

External analysis Demographic Socioculture Political/Legal 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

External analysis Technological Economic Global Reader’s Digest Korea Technological Emergence of internet technology Wireless technology Economic Print is “dead” Global Emergence in economies all over the world Philippines, Malaysia, Canada, Argentina, etc..

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?

SWOT Analysis SWOT Best-Selling, Worldwide, Readable, fiction Strength Other magazines, internet Weakness Well developed distribution network, vast legacy, broader base of readers Opportunity The popularity is declining, more leisure options, regional language magazines Threats

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

Reader’s Digest VS competitors

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 Music and Videos Readers Digest Int. Food and Gift Business Growth Rate Reader’s Digest US Relative position (market share)

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

Thank you for your patience! Group five