ht media .doc
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Table of content
Topic Page No.
Introduction 2
Competition analysis 3-8
Ratio analysis 8-15
Problem statements 16-17
Recommendations 18-23
Conclusion 24
Introduction
The Hindustan Times newspaper was formally inaugurated in 1924. In 1927, it was
reborn as Hindustan Times Ltd., a limited liability company. In 1936, The Hindi
daily Hindustan was launched. It also publishes two magazines in Hindi,
Kadambini a literary magazine established in 1960 and Nandan a children's
magazine, started in 1964. In 2003 the company incorporated all of its media
business under HT media limited in 2004. HT media Ltd was listed as a public
company and attracted external funding. It moving to Mumbai in 2005 with a new
product and content mix in 2006, fever 104 fm as launched, in technical collaboration
ith the virgin group. In 2007 Mint, the business paper in partnership with the wall
street journal was launched at Delhi and Mumbai. The Indian entertainment and
media industry is one of the fastest growing sectors in India. It is growing on the back
of India’s economic boom and rising income levels that the country has experienced
in past few years. An added factor to the boom of the entertainment and media
industry in India because of increased consumer spending due to rising disposable
incomes over the last decade by the young generation coming to the education and
employment markets.
Competitor Analysis
2
HT Media is India’s second largest print media company in terms of circulation of
daily newspapers. Their flagship brand “Hindustan Times” is one of India’s most well
recognized media brands. “Hindustan Times” was started in 1924 and it has over 80-
year history as one of India’s leading newspapers.
The competitor analysis of HT Media is done using SWOT analysis and Porter’s 5
forces model. The SWOT analysis of HT Media is below:
3
Porters 5 Forces Model in the HT Media
4
The competition in the news media industry can be explained by applying the Porters
5 forces model. Michael Porter in 1979 developed a framework to analyze and
structure an industry. It is a theoretical tool to elaborate the potential threats but also
the chances of a particular industry. Porter mentions five forces that have an impact
on an industry; suppliers, buyers, potential entrant, substitutes and the rivalry among
existing firms. It is a framework that classifies and analyzes the most important
forces affecting the intensity of competition in an industry and its profitability level.
Bargaining Power of Suppliers
If a firm’s suppliers have bargaining power they will:
Exercise that power
Sell their products at a higher price
Squeeze industry profits
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If the supplier forces up the price paid for inputs, profits will be reduced. It follows
that the more powerful the customer (buyer), the lower the price that can be
achieved by buying from them.
In case of HT media, the supplier for news needs to be authentic and main source of
their business success. There are only a few large suppliers of news. On the other
hand, the internet made the supplier of news very affordable now-a-days. As a
result, the other competitors of HT media also are getting their access to the news
supplier of HT media. For reliable sources, the HT media needs to pay more.
Bargaining Power of Buyers
Powerful buyers are able to exert pressure to drive down prices, or increase the
required quality for the same price, and therefore reduce profits in an industry.
The scope for HT media in this particular industry is the growing population in India.
The number of potential customers is increasing day by day, as the number of new
media is also emerging. The buyer can bargain much than before. The bargaining
power of the buyer is increased and resulted in low profit generation of the industry.
Now free internet also gives chance to the buyers to get free access to news and
other media.
Threat of Substitute Products
A substitute product can be regarded as something that meets the same need.
Substitute products are produced in a different industry –but crucially satisfy the
same customer need. If there are many credible substitutes to a firm’s product, they
will limit the price that can be charged and will reduce industry profits.
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The print media faces great challenge present days due to huge technological
changes. The technology drives the potential customers to internet and other TV
mediums of news. So newspaper is less appealing to the others. The FM radios also
get a piece of the customer for their relentless news airing.
Degree of Competitive Rivalry
If there is intense rivalry in an industry, it will encourage businesses to engage in
Price wars (competitive price reductions),
Investment in innovation & new products
Intensive promotion (sales promotion and higher spending on advertising)
Bennett Coleman group (Times of India Group) holds the first position while HT
media holds the second position in this industry. HT media has continuously
introduced new products in its newspaper segment, radio and internet division ahead
of its competitors.
Threat of New Entrants to an Industry
If new entrants move into an industry they will gain market share & rivalry will
intensify
The position of existing firms is stronger if there are barriers to entering the
market
If barriers to entry are low then the threat of new entrants will be high, and
vice versa
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In the last couple of years many major competitors entered this industry. Reliance
entered radio and film production, Tata group, through its subsidiary VSNL, coupled
up with Thomson group. There are many more companies are entering this industry
and make it difficult for HT media to hold its current market share.
Ratio Analysis
Profitability ratio : (rs in crs)
Gross profit margin
2005 = = = 0.99=99%
Gross profit margin tells how much profit is earned on your products without
considering indirect costs. Small changes in gross margin can significantly affect
profitability.
Operating profit margin❷
2006 = = = 0.10=10.97%
2005 = = = 0.089=8.94%
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This ratio is the measure of the operating income generated by each dollar of sales.
In 2006 the operating income under 1 dollar is .10 dollar and in 2005 it was .089
dollar. So in 2006 it was better
❸ Net profit margin
2006 = = = 0.00028=0.028%
2005 = = = 0.00037=0.037%
This ration says that how much money are you making per every $ of sales. This
ratio measures your ability to cover all operating costs including indirect costs. After
analyzing the net profit margin of 2006 and 2005 we can say that the result is not so
differ. It is almost same.
Return on total asset ❹
2006 = = = 0.016=1.68%
2005 = = = 0.012=1.29%
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It is the ratio to measures your ability to turn assets into profit. This is a very useful
measure of comparison within an industry. The return on total asset of Ht media in
2006 is better than 2005
❺ Return on stockholder’s equity
2006 = = = 0.00043=0.043%
2005 = = = 0.00076=0.076%
Rate of return on investment by shareholders. This is one of the most important
ratios to investors. This ratio tells how to make enough profit to compensate for the
risk of being in business. The ROE of HT media in 2005 is better than 2006.
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❻ Return on invested capital
2006 = = =0.0014 = 0.14%
2005 = = =0.0011 =0.11 %
This ratio measures the income earned on the invested capital. Here the return on
invested capital of roger in 2006 is better than 2005.
Liquidity Ratio :
❶ Current ratio
2006 = = = 3.05
2005 = = = 1.67
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This ratio reveal HT media ability to pay off its shortterms debts obligations.
Although, having a current ratio over 1 is normally acceptable, however, current ratio
would overestimate a company's shortterm financial strength.This ratio tells how
much dollar you have to pay per dollar debt.So here the ability to pay its liabilities in
2006 is better than 2005.
❷ Quick ratio
2006 = = = 3.00
2005 = = = 1.60
Quick ratio that excludes inventories has been calculated. It tells us that most part of
the assumed liquidity of Rogers’ belongs to inventory. As we know, most of times it is
difficult to turn inventories to cash. Here 2006 was better than 2005.
Leverage Ratio:
❶ Debt to asset ratio
2006 = = = 0.195
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2005 = = = 0.296
Debt to asset ratio provides information about the company's ability to absorb asset
reductions arising from losses without jeopardizing the interest of creditors. This ratio
also provides information about how much debt against per dollar. So after
calculating this ratio the roger was in better position in 2005 compared to 2006.
❷ Long term debt to capital ratio
2006 = = = 32%
2005 = = =39.16%
This ratio indicates long-term debt usage. This ratio in 2006 and 2005 are almost
same.
❸ Debt to equity ratio
2006 = = = 0.245
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2005 = = = 0.421
This ratio Compares capital invested by owners/funders (including grants) and funds
provided by lenders.IN this situation we can say that roger was in better situation in
2005.
Long term Debt to equity ratio❹
2006 = = = 0.1794
2005 = = = 0.2951
This ratio Indicates how well creditors are protected in case of the company's
insolvency.Here Rogers were also in better possition in 2005.
❺ Times-Interest earned ratio
2006 = = = 7.97
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2005 = = = 10.23
This ratio indicates a company’s ability to meet the interest payment on its debt.In
2006 the company is earing 7.97 times the amount it is required to pay its lenders for
interest. And in 2005 it was 10.23 times.
Activity Ratio:
❶ Days of Inventory
2006 = = = = days
2005 = = = 670.71=670 days
This ratio measures the number of days a company takes to sell its average balance
of inventory
❷ Inventory turn over
2005 = = = 0.579
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Inventory turnover ratio is used to measure the inventory management efficiency of a
business. In general, a higher value of inventory turnover indicates better
performance and lower value means inefficiency in controlling inventory levels.The
Inventory turnover of Roger in 2006 and 2005 are almost same.
❸ Average collection period
2006 = = = 3.41 =3 days
2005 = = = 3.70=3 days
The Average Collection Period (ACP) is another litmus test for the quality of your
receivables business; giving you the average length of the collection period. In this
situation HT media had better ability in 2006.
❹ Total asset turnover
2006 = = = 1.09
2005 = = = 1.35
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2004== = = 0.98
This ratio tells how efficiently your business generates sales on each dollar of
assets. An increasing ratio indicates you are using your assets more productively.
The total asset turnover of Rogers chocolate in 2006 and 2005 are almost same and
2004 is 0.98.
Problem Statement
The Problem we found on this case study is discussed on the below:
Strategic Glitch: With the fast moving market, Media industry have adapted to the
changes the market demanded. Quite often the companies had bought in major
strategic changes in their policy to remain competitive. HT Media did not respond to
the market demand and chose to target only a selected market segment. They
continued to operate following the Focused differentiation strategy by targeting only
a niche market. This limited their market reach with a small customer base.
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Non-Diversified Product Line: “Survival of the fittest” – In today’s cut throat
competitive market, companies have diversified their product line in order to
maximize their market share and growth. Companies have tailored products as per
the need to the Customers. HT Media offers only specific product. It is a good
strategy only in order to target a certain market segment but to reach the mass
market it is ideal to diversify the product line.
Supply Chain Snags: Traditional Supply Chain practice is obsolete. Companies
have realized the significance of integrating the Supply Chain under one roof,
preferably be self-sufficient. HT Media have low backend integration and this adds to
increase in price of raw material and therefore the overall expense head increases.
Weak Distribution Chain: The product life of the Media Industry in usually very
short. For the daily news the product life last barely for few hours. HT Media’s
distribution channel is weak as compared to its competitors. The delivery process is
very slow which leads customers choosing their competitors’ products.
Obsolete IT Infrastructure: “Pen is mightier than a Sword” - The Media industry is
often addressed by this. They Media Industry are the only source that can reach the
people and bring upon a change and awareness in people with the spread of news
and information. With the technological developments and new deployments of
mediums, the Companies have exploited the recent technological developments and
have tried to reach their customers in all always possible way and provide the best
possible experience. HT Media is yet to benefit from the technological advancement
as they are yet to exploit it to the fullest. HT Media does not have the latest IT facility
to broadcast on TV and other electronic media as compared to its competitors.
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Recommendations
Here we give some recommendations for solving the problem of HT Media.
Strategic Recommendation:
In the problem statements we try to focus on some core problematic issues that HT
media actually faces. We, here try to provide some possible and feasible strategic
recommendations based on the problems and given situation by conducting the
analysis of competitors and ratio of financial condition. In this recommendation part
we sought out how the business can cope with present situation by taking corrective
measures in their several faulty activities.
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Here we divide our strategic recommendation into 2 parts. We first try to focus on its
main problems' strategic recommendations from a general view after that we will
describe the recommendations for other problems from other factors or problems
generated from the value chain or implementation of strategy etc.
Major Problems' Recommendation:
1. HT media is now following the basic “Focused differentiation" strategy. But to
be a market leader as it is their aim, they have to focus on the "Broad
Differentiation" strategy. Because it will be broaden the customer base. The
company should focus on only high quality content with differentiated price among
various rivals by using differentiated operation to attract as many readers or viewers
as possible. Because when the number of the customers who are willing to pay more
for differentiated products is high that means the profit margin is also high.
2. The company is focusing only a few products. To survive in the competitive
market and to compete with the market leader the company needs to implement the
combination of strategic approaches. In this situation they have to think beyond the
adoption of only the basic strategy. The company has to integrate “Diversification
strategy or Multi-Platform Strategy”.
3. The company has also faced problems in their Value Chain. They are facing
problems in both in primary and supportive functions in the value chain.
A) In the primary function the company has low backward integration which
increases the raw materials cost. Sustainable and proper backward integration will
helps to lowering the materials cost.
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B) The company has inefficient distribution. In case of the News, the shelf life of the
products exists for few hours. So the content should be viable, reliable and more
importantly faster reaching towards the customers.
C) As supportive function the infrastructure and technology in the value chain plays a
vital role for these types of company. The competitors have more efficient technology
to broadcast their products. But the company has no infrastructure and technology to
broadcast. So they have to implement necessary steps to install modern technology
in the TV media and internet services sectors.
4. The company needs to make the right blend of 3 Cs. They are- Classifieds,
Content and Communities. All of them help to gain a formidable platform in attracting
more and customers and driving higher margin of revenue and profit.
Associated and others problems’ recommendations:
The above strategic recommendations only provide from the general perception.
Now we try to describe it more specifically and also to provide recommendations for
the other problems generated from the other important factors which can make the
company more vulnerable in future. Now in the quest of the implementation of
recommendations their raises some questions as the above recommendations only
comes from general view such as-
A) How to attract more customers to adopt Broad Differentiation Strategy?
B) In which product the company should be diversified?
C) How the company can be more efficient in backward integration?
D) How the distribution channel will be more effective in the term of faster reaching?
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E) In which ways the company should expand? Etc.
So here we try to provide more specific recommendations:
1. The company should focus on more in changing customers’ preference. As they
prefer more they virtual integration of all news or medium so that the news on paper
becomes less attractive. They need to make presence in TV media. In this way the
company will be able to gain more customers.
2. The company should also focus on web based service to provide instantaneous
news which will also help to reduce the major production and distribution cost of daily
newspaper with the support of global news resources. Moreover, the customer base
will be broaden as they distribution of the products in the media industry through
internet is faster and in India the number of internet user and mobile user are now
increasing significantly.
3. The company should provide customized product and service development to
improve customer loyalty. One of the major steps in this regards can be providing
more local content. Moreover they have to maintain "high quality content to attract
readers" which means superior product with distinctive images. The content should
have reliability, appeal, entertainment value and interactivity. These steps will enable
them to keep existing customers and attract new customers who are willing to pay
more for the quality of the products.
4. The company has low backward integration. So the company has to reduce the
raw materials cost by the implementation of better purchasing power through a large
size of operation where larger amount of raw materials is needed. Another possible
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solution can be maintaining long term good relationship with leading international
newsprint manufacturer to purchase raw material at a lower than market price.
5. The expansion is one of the most important critical factors in their way of success.
The further “Reach” can be possible through geographic reach or market
penetration.
6. The company still needs to get presence in different region such as in the east
and south India with more customized products accordingly their customer
preference. The larger size of the company through expansion will also enhance
value towards the suppliers. It also helps them to increase their revenue and also
make pressure on the suppliers.
7. HT media should expand their business operation outside of the country as their
competitors have successfully done it. In this regard they can commit with strategic
alliance or acquisition with local company outside of the India.
On the other hand, the strategic alliances and collaborative partnership or acquisition
of other companies also allow them to increase the regional presence. All this
options will allow the company to grow using the complementary strengths of its
collaborators.
8. The efficient journalist, focusing on the local and entertaining content, content
packaging from various sources and trained labor force will able the company to
send the current news which ensure the efficiency of the distribution channel in both
paper based media and in future in internet or TV media when they will enter in
these sectors.
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9. The company should invest more on the technology and news quality to ensure
the growth in the radio market where there are a few competitors to compete. Above
all they have to invest more on IT and modern printing technology which will help to
maintain the current market position and growth in the new market.
10. The company is not investing into the TV and films and internet sectors which
are most profitable. Eventually they have no presence in this vital sector. The Indian
entertainment and media industry is one of the fastest growing sectors in India where
the rivals are resourceful and maintaining multiple medium. So to ensure the
sustainable profit margin they have to diversify the products with efficient distribution
all over the country.
11. From the financial statement analysis the firm is financing more from the equity
than debt. But the debt leverage helps an organization to reduce tax and intensify
profitability. To enjoy more financial return the company can use optimal leveraging
method in debt-equity ratio. In a secure financial strategy the debt leverage will allow
them to enjoy more profitability than others. As a market is full of customers and few
competitors so that debt equity will be their best choice under this circumstances.
12. The company current ratio is decreasing. But to gain the short-term credit to
utilize the debt to equity ratio they need to make ratio in an optimal level so that the
short-term creditor will prefer the company as their risk is reduced. So they need to
hold a certain level of current asset so that the creditor will provide the loan.
Actually, we use the term “Optimal level” not “Maximum level” as the company
also needs to attract the shareholders because they prefer lower current ratio as it
indicates the company is using the assets to grow the operation.
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13. The selling and distribution cost is very high in the HT media because of the
marketing and promotion campaign. So to reduce the cost they can outsource
certain activities in campaigning specially in Mumbai which will allow them to gain
cost advantages.
14. HT media should be more responsive in some initiate and challenge. Both in
radio segment and newspaper business the company needs to present themselves
as a market leader. In this regards, they needs to follow such strategy which will
helps them to achieve a sustainable competitive edge. More specifically they have to
adopt offensive rather than defensive strategy in their products-line as they want to
be the market leaders. So they need to continuously introduce new and better
products which will help to build a reputation as market leader in its Radio and
Newspaper segment.
Another approach in this offensive strategy which can be created successful Broad
Differentiation strategy based on technological superiority, outstanding customers
service and rapid product innovations as their buyers are price conscious and
performance oriented.
Conclusion
The HT media has to focus on its rival and their moves. They have to come out from
the traditional products. New features and modern products will help the organization
to get more acceptances all over the market. Moreover, to retain more profit the
company has to focus on different financial ratio and the condition of their
competitors. They should implement their strategy in a way so that first they can be
the market leader. The step by step process will allow them to create a sustainable
position within the market.
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The company has some lacking in their common strategy and collecting their raw
materials as well as in growth decision. The modernized world acceptance is faster
service from the media line in this regard the company will face dilemma while the
nature of the products and the competition as well as cost of the materials of the
products are shown as weakness for them. The new entrants will also create
obstacle in this traditional mode of business as the rivals are more resourceful. So
that company should be more conscious in the implementation of the successful
recommended broad differentiation strategy to bit the rivals and secure their position
for long term. Because only a good strategy is not enough to ensure the success the
proper execution, corrective and adaptive stages are also the vital parts to be the
most successful organization.
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